Exhibit 10.1

 

LOAN AGREEMENT

 

Dated as of April 10, 2018

 

Between

 

 

ARHC HDLANCA01, LLC, ARHC NHCANGA01, LLC,

ARHC FMMUNIN03, LLC, ARHC BMLKWCO01, LLC,

ARHC ECMCYNC01, LLC, ARHC ECCPTNC01, LLC,

ARHC LPELKCA01, LLC, ARHC MMTCTTX01, LLC,

ARHC MRMRWGA01, LLC, ARHC OLOLNIL01, LLC,

ARHC PPHRNTN01, LLC, ARHC SMERIPA01, LLC,

ARHC AMGLNAZ02, LLC, ARHC PHNLXIL01, LLC,

ARHC AMGLNAZ01, LLC, ARHC SFSTOGA01, LLC,

ARHC VCSTOGA01, LLC, ARHC WLWBYMN01, LLC,

ARHC AHPLYWI01, LLC, and ARHC PRPEOAZ03, LLC

 

 

as Borrower

 

and

 

KEYBANK NATIONAL ASSOCIATION,

 

as Lender

 

Loan No. 10183025

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1 Section 1.1
Definitions 1 Section 1.2 Principles of Construction 32       ARTICLE II -
GENERAL TERMS 34 Section 2.1 Loan Commitment; Disbursement to Borrower 34 2.1.1
Agreement to Lend and Borrow 34 2.1.2 Single Disbursement to Borrower 34 2.1.3
The Note, Security Instrument and Loan Documents 34 2.1.4 Use of Proceeds 34
Section 2.2 Interest Rate 34 2.2.1 Interest Rate 34 2.2.2 Interest Calculation
34 2.2.3 Default Rate 35 2.2.4 Usury Savings 35 Section 2.3 Loan Payment 35
Section 2.4 Prepayments 35 Section 2.5 Intentionally Omitted 35 Section 2.6
Release of Property 36 2.6.1 Release of Property 36 2.6.2 Partial Release 36
2.6.3 Property Substitution 39 2.6.4 Partial Release – Munster Release Parcel 45
Section 2.7 Clearing Account/Cash Management 45 2.7.1 Clearing Account 45 2.7.2
Cash Management Account 47 2.7.3 Payments Received under the Cash Management
Agreement 47       ARTICLE III - INTENTIONALLY OMITTED 47       ARTICLE IV -
REPRESENTATIONS AND WARRANTIES 47 Section 4.1 Borrower Representations 47 4.1.1
Organization 47 4.1.2 Proceedings 48 4.1.3 No Conflicts 48 4.1.4 Litigation 48
4.1.5 Agreements 48 4.1.6 Title 49 4.1.7 Solvency 49 4.1.8 Full and Accurate
Disclosure 50 4.1.9 No Plan Assets 50 4.1.10 Compliance 50 4.1.11 Financial
Information 50 4.1.12 Condemnation 51

 

 

 

 

4.1.13 Federal Reserve Regulations 51 4.1.14 Utilities and Public Access 51
4.1.15 Not a Foreign Person 51 4.1.16 Separate Lots 51 4.1.17 Assessments 51
4.1.18 Enforceability 51 4.1.19 No Prior Assignment 52 4.1.20 Insurance 52
4.1.21 Use of Property 52 4.1.22 Certificate of Occupancy; Licenses 52 4.1.23
Flood Zone 52 4.1.24 Physical Condition 52 4.1.25 Boundaries 52 4.1.26 Leases 53
4.1.27 Survey 53 4.1.28 Inventory 53 4.1.29 Filing and Recording Taxes 53 4.1.30
Special Purpose Entity/Separateness/No Prohibited Entity/Ownership Structure 54
4.1.31 Management Agreement 55 4.1.32 Illegal Activity 55 4.1.33 Intentionally
Omitted 55 4.1.34 Investment Company Act 55 4.1.35 Embargoed Person 55 4.1.36
Principal Place of Business; State of Organization 55 4.1.37 Environmental
Representations and Warranties 56 4.1.38 Cash Management Account 56 4.1.39
Ground Leases 57 Section 4.2 Survival of Representations 57 Section 4.3 Lender:
No Plan Assets 57       ARTICLE V - BORROWER COVENANTS 57 Section 5.1
Affirmative Covenants 57 5.1.1 Existence; Compliance with Legal Requirements 58
5.1.2 Taxes and Other Charges 59 5.1.3 Litigation 59 5.1.4 Access to Property 59
5.1.5 Notice of Material Adverse Change 59 5.1.6 Cooperate in Legal Proceedings
60 5.1.7 Perform Loan Documents 60 5.1.8 Award and Insurance Benefits 60 5.1.9
Further Assurances 60 5.1.10 Principal Place of Business, State of Organization
61 5.1.11 Financial Reporting 61 5.1.12 Business and Operations 64 5.1.13 Title
to the Property 64 5.1.14 Costs of Enforcement 65

 

ii 

 

 

5.1.15 Estoppel Statement 65 5.1.16 Loan Proceeds 65 5.1.17 Intentionally
Omitted 66 5.1.18 Confirmation of Representations 66 5.1.19 Environmental
Covenants 66 5.1.20 Leasing Matters 69 5.1.21 Alterations 70 5.1.22 Operation of
Property 73 5.1.23 Embargoed Person 74 5.1.24 Ground Lease 74 Section 5.2
Negative Covenants 79 5.2.1 Operation of Property 79 5.2.2 Liens 79 5.2.3
Dissolution 79 5.2.4 Change In Business 80 5.2.5 Debt Cancellation 80 5.2.6
Zoning 80 5.2.7 No Joint Assessment 80 5.2.8 Intentionally Omitted 80 5.2.9
ERISA 80 5.2.10 Transfers 81       ARTICLE VI - INSURANCE; CASUALTY;
CONDEMNATION 85 Section 6.1 Insurance 85 Section 6.2 Casualty 89 Section 6.3
Condemnation 90 Section 6.4 Restoration 90       ARTICLE VII - RESERVE FUNDS 95
Section 7.1 Required Repairs 95 7.1.1 Deposits 95 7.1.2 Release of Required
Repair Funds 96 Section 7.2 Tax and Insurance Escrow Fund 97 Section 7.3
Replacements and Replacement Reserve 97 7.3.1 Replacement Reserve Fund 97 7.3.2
Disbursements from Replacement Reserve Account 98 7.3.3 Performance of
Replacements 99 7.3.4 Failure to Make Replacements 99 7.3.5 Balance in the
Replacement Reserve Account 99 Section 7.4 Rollover Reserve 99 7.4.1 Deposits to
Rollover Reserve Fund 100 7.4.2 Disbursements from Rollover Reserve Account 100
Section 7.5 Excess Cash Flow Reserve Fund 101 7.5.1 Deposits to Excess Cash Flow
Reserve Fund 101 7.5.2 Release of Excess Cash Flow Reserve Funds 101 Section 7.6
Reserve Funds, Generally 102 Section 7.7 Ground Rent Reserve Funds 103 7.7.1
Deposits to Ground Rent Reserve Fund 103

 

iii 

 

 

7.7.2 Disbursements from Ground Rent Reserve Fund 103 Section 7.8 CarolinaEast
Reserve Fund 103 7.8.1 CarolinaEast Reserve Deposit 103 7.8.2 Release of
CarolinaEast Reserve Funds 103       ARTICLE VIII - DEFAULTS 104 Section 8.1
Event of Default 104 Section 8.2 Remedies 106 Section 8.3 Remedies Cumulative;
Waivers 108       ARTICLE IX - SPECIAL PROVISIONS 108 Section 9.1 Securitization
108 9.1.1 Sale of Notes and Securitization 108 9.1.2 Securitization Costs 110
Section 9.2 Right To Release Information 110 Section 9.3 Exculpation 110 Section
9.4 Matters Concerning Manager 113 Section 9.5 Servicer 113 Section 9.6
Lender/Servicer Loan Administration 113       ARTICLE X - MISCELLANEOUS 114
Section 10.1 Survival 114 Section 10.2 Intentionally Omitted 114 Section 10.3
Governing Law 114 Section 10.4 Modification, Waiver in Writing 115 Section 10.5
Delay Not a Waiver 115 Section 10.6 Notices 116 Section 10.7 Trial by Jury 117
Section 10.8 Headings 117 Section 10.9 Severability 117 Section 10.10
Preferences 117 Section 10.11 Waiver of Notice 117 Section 10.12 Remedies of
Borrower 117 Section 10.13 Expenses; Indemnity 118 Section 10.14 Schedules
Incorporated 119 Section 10.15 Offsets, Counterclaims and Defenses 119 Section
10.16 No Joint Venture or Partnership; No Third Party .Beneficiaries 119 Section
10.17 Publicity 119 Section 10.18 Waiver of Marshalling of Assets 120 Section
10.19 Waiver of Counterclaim 120 Section 10.20 Conflict; Construction of
Documents; Reliance 120 Section 10.21 Brokers and Financial Advisors 120 Section
10.22 Prior Agreements 120 Section 10.23 Liability 121 Section 10.24 Certain
Additional Rights of Lender (VCOC) 121 Section 10.25 OFAC 121 Section 10.26
Duplicate Originals; Counterparts 121 Section 10.26 Confidentiality 122

 

iv 

 

 

ARTICLE XI – LOCAL LAW PROVISIONS 122 Section 11.1 Inconsistencies 122 Section
11.2 Arizona Law Provisions 122 Section 11.3 California Law Provisions 123
Section 11.4 Colorado Law Provisions 123 Section 11.5 Illinois Law Provisions
123

 

SCHEDULES

 

Schedule I – Rent Roll       Schedule II –

Required Repairs - Deadlines for Completion

 

Schedule III – Organizational Chart of Borrower       Schedule IV – Allocated
Loan Amounts       Schedule V – Property Managers and Underwritten Management
Fees       Schedule VI –

Tenant Direction Letter Form

 

Schedule VII – Disbursement Certification and Schedule

 

v 

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT is made as of April 10, 2018 (this “Agreement”), between
KEYBANK NATIONAL ASSOCIATION, a national banking association, having an address
at 11501 Outlook, Suite 300, Overland Park, Kansas 66211 (“Lender”) and ARHC
HDLANCA01, LLC, ARHC NHCANGA01, LLC, ARHC FMMUNIN03, LLC, ARHC BMLKWCO01, LLC,
ARHC ECMCYNC01, LLC, ARHC ECCPTNC01, LLC, ARHC LPELKCA01, LLC, ARHC MMTCTTX01,
LLC, ARHC MRMRWGA01, LLC, ARHC OLOLNIL01, LLC, ARHC PPHRNTN01, LLC, ARHC
SMERIPA01, LLC, ARHC AMGLNAZ02, LLC, ARHC PHNLXIL01, LLC, ARHC AMGLNAZ01, LLC,
ARHC SFSTOGA01, LLC, ARHC VCSTOGA01, LLC, ARHC WLWBYMN01, LLC, ARHC AHPLYWI01,
LLC, and ARHC PRPEOAZ03, LLC, each a Delaware limited liability company, and
each having its principal place of business at 405 Park Avenue, New York, New
York 10022 (individually, collectively, jointly and severally, as the context
requires, “Borrower”).

 

RECITALS:

 

A.          Borrower desires to obtain the Loan (as hereinafter defined) from
Lender.

 

B.           Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).

 

NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1           Definitions. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:

 

“Accrual Period” means the period commencing on and including the first (1st)
day of each calendar month during the term of the Loan and ending on and
including the final calendar date of such calendar month; however, the initial
Accrual Period shall commence on and include the Closing Date and shall end on
and include the final calendar date of the calendar month in which the Closing
Date occurs.

 

“Action” has the meaning set forth in Section 10.3 hereof.

 

“Additional Insolvency Opinion” means any subsequent Insolvency Opinion.

 

“Additional Permitted Transfer” has the meaning set forth in Section 5.2.10(f)
hereof.

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.

 

 

 

 

“Affiliated Manager” means any Manager in which Borrower or Guarantor has,
directly or indirectly, any material legal, beneficial or economic interest.

 

“Agent” means KeyBank National Association, or any successor Eligible
Institution acting as Agent under the Cash Management Agreement.

 

“Allocated Loan Amount” shall mean the portion of the principal amount of the
Loan allocated to any applicable Individual Property as set forth on Schedule IV
hereof, as such amounts may be adjusted from time to time as hereinafter set
forth. Notwithstanding the foregoing or anything herein to the contrary, in the
event of a Casualty or Condemnation whereby Net Proceeds (or any portion
thereof) are to be applied to the principal amount of the Debt pursuant to the
terms of Article VI hereof (such Net Proceeds, the “Applied Net Proceeds”), (a)
then such Applied Net Proceeds shall be applied (1) first, to reduce the
Allocated Loan Amount of the Individual Property affected by such Casualty or
Condemnation until reduced to zero and (2) second, pro rata to reduce the
Allocated Loan Amounts of each of the other Individual Properties and (b)
notwithstanding the terms of the foregoing clause (a), with respect to a
Condemnation or Casualty affecting one hundred percent (100%) of an Individual
Property, the Allocated Loan Amount for such Individual Property shall be
reduced to zero (such Allocated Loan Amount prior to reduction being referred to
as the “Withdrawn Allocated Amount”) and each other Allocated Loan Amount shall,
if the Withdrawn Allocated Amount exceeds the Applied Net Proceeds realized with
respect to such Individual Property (such excess being referred to as the
“Proceeds Deficiency”), be increased by an amount equal to the product of (1)
the Proceeds Deficiency and (2) a fraction, the numerator of which is the
applicable Allocated Loan Amount (prior to the adjustment in question) and the
denominator of which is the aggregate of all of the Allocated Loan Amounts
(prior to the adjustment in question) other than the Withdrawn Allocated Amount.
Additionally, in connection with any Partial Release, the Allocated Loan Amounts
for the Individual Properties shall be adjusted as provided for in Section
2.6.2(k) hereof.

 

“Annual Budget” means an operating budget, including all planned Capital
Expenditures, for the each Individual Property prepared by Borrower in
accordance with Section 5.1.11(g) hereof for the applicable Fiscal Year or other
period.

 

“Appraisal” shall mean an appraisal prepared in accordance with the requirements
of FIRREA, prepared by an independent third party appraiser holding an MAI
designation, who is state licensed or state certified if required under the laws
of the state where each applicable Individual Property is located, who meets the
requirements of FIRREA and who is otherwise satisfactory in Lender’s reasonable
discretion.

 

“Approved Annual Budget” has the meaning set forth in Section 5.1.11(g) hereof.

 

“Assignment of Management Agreement” means, individually or collectively as the
context requires, each Assignment of Management Agreement and Subordination of
Management Fees, dated as of the date hereof, among Lender, Borrower and
Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

 

 2 

 

 

“Availability Threshold” means $1,000,000.

 

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

 

“Bankruptcy Action” means with respect to any Person (a) such Person filing a
voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (b) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law; (c) such Person filing an answer consenting in writing to 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,
provided that, notwithstanding the foregoing, the delivery and/or submission of
factual statements in connection with any involuntary petition filed against a
Person as required by Legal Requirements shall not constitute a Bankruptcy
Action; (d) such Person consenting in writing to or joining in an application
for the appointment of a custodian, receiver, trustee, or examiner for such
Person or any portion of the Property; (e) such Person making an assignment for
the benefit of creditors, or admitting, in writing or in any legal proceeding,
its insolvency or inability to pay its debts as they become due provided that,
notwithstanding the foregoing, the delivery and/or submission of factual
statements in connection with any involuntary petition filed against a Person as
required by Legal Requirements shall not constitute a Bankruptcy Action.

 

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §101, et
seq., as the same may be 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 or any other Federal or state bankruptcy or insolvency law.

 

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

 

“Business Day” means a day upon which commercial banks are not authorized or
required by law to close in New York City or such other city designated in
writing by Lender from time to time as the place for receipt of payments.

 

“Capital Expenditures” means, for any period, the amount expended for items
capitalized under GAAP (including expenditures for building improvements or
major repairs, leasing commissions and tenant improvements).

 

“CarolinaEast Reserve Account” has the meaning set forth in Section 7.8.1
hereof.

 

“CarolinaEast Reserve Fund” has the meaning set forth in Section 7.8.1 hereof.

 

“Cash Management Account” has the meaning set forth in Section 2.7.2 hereof.

 

“Cash Management Agreement” means that certain Cash Management Agreement, dated
as of the date hereof, by and among Borrower, Lender and Agent, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

 3 

 

 

“Cash Sweep Event” means the occurrence of: (a) an Event of Default; (b) any
Bankruptcy Action of Borrower; (c) a Manager Trigger Event; or (d) a DSCR
Trigger Event.

 

“Cash Sweep Event Cure” means:

 

(a) if the Cash Sweep Event is caused solely by the occurrence of a DSCR Trigger
Event, (i) the occurrence of a DSCR Cure, (ii) the delivery by Borrower to
Lender of the DSCR Cure – Letter of Credit in accordance with the terms hereof,
or (iii) Borrower’s completion of a DSCR Cure –Partial Prepayment in accordance
with the terms hereof;

 

(b) if the Cash Sweep Event is caused by an Event of Default, a cure of such
Event of Default (which cure Lender is not obligated to accept and may reject or
accept in its discretion); or

 

(c) if the Cash Sweep Event is caused by a Manager Trigger Event, the earlier to
occur of (i) Borrower replacing such Manager with a Qualified Manager under a
Replacement Management Agreement, or (ii) the Excess Cash Flow Reserve Account
contains funds equal to the then applicable Excess Cash Flow Cap;

 

provided, however, that, such Cash Sweep Event Cure set forth in this definition
shall be subject to the following conditions, (i) no Event of Default shall have
occurred and be continuing under this Agreement or any of the other Loan
Documents, (ii) a Cash Sweep Event Cure may occur no more than a total of eight
(8) times in the aggregate during the term of the Loan, and (iii) Borrower shall
have paid all of Lender’s reasonable out-of-pocket expenses incurred in
connection with such Cash Sweep Event Cure including, reasonable out-of-pocket
attorney’s fees and expenses. Notwithstanding any provision in this Agreement to
the contrary, in no event shall Borrower have the right to cure any Cash Sweep
Event caused by a Bankruptcy Action of Borrower.

 

“Cash Sweep Period” means each period commencing on the occurrence of a Cash
Sweep Event and continuing until the earlier of (a) the Payment Date next
occurring following the related Cash Sweep Event Cure, or (b) until payment in
full of all principal and interest on the Loan and all other amounts payable
under the Loan Documents.

 

“Casualty” has the meaning set forth in Section 6.2 hereof.

 

“Casualty Consultant” has the meaning set forth in Section 6.4(b)(iii) hereof.

 

“Casualty Retainage” has the meaning set forth in Section 6.4(b)(iv) hereof.

 

“Clearing Account” has the meaning set forth in Section 2.7.1 hereof.

 

“Clearing Account Agreement” means that certain Clearing Account - Deposit
Account Control Agreement dated the date hereof among Borrower, Lender and
Clearing Bank, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, relating to funds deposited in the
Clearing Account.

 

 4 

 

 

“Clearing Bank” means the clearing bank which establishes, maintains and holds
the Clearing Account, which shall be an Eligible Institution acceptable to
Lender in its reasonable discretion.

 

“Closing Date” means the date of the funding of the Loan.

 

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

 

“Condemnation” means 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.

 

“Condemnation Proceeds” has the meaning set forth in Section 6.4(b) hereof.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities, by contract or otherwise.
“Controlled” and “Controlling” have correlative meanings.

 

“Crowdfunding” means, any offer or sale of equity or debt securities of Borrower
or Guarantor or any Affiliate of any of them, involving or relating to direct or
indirect interests, or any combination of direct or indirect interests, in any
of the foregoing Persons, that is conducted or proposed to be conducted via the
internet or through the use of other general solicitation or advertising of the
investment opportunity to prospective investors by the issuer of such securities
or an online or other funding portal in a transaction or series of transactions
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended, including but not limited to pursuant to the exemptions
provided by Section 4(a)(6) thereof or Rule 506(c) promulgated thereunder, any
other similar state securities law, or any similar transaction.

 

“Current Owner” has the meaning set forth in Section 5.2.10(f) hereof.

 

“Debt” means the outstanding principal amount of the Loan set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including any Prepayment Consideration (as
defined in the Note)) due to Lender in respect of the Loan under the Note, this
Agreement, the Security Instrument or any other Loan Document.

 

“Debt Service” means, with respect to any particular period of time, the
scheduled interest payments due under this Agreement and the Note.

 

“Debt Service Coverage Ratio” means a ratio for the applicable period in which:

 

(a)          the numerator is the Net Operating Income (excluding interest on
credit accounts and using annualized operating expenses for any recurring
expenses not paid monthly (e.g., Taxes and Insurance Premiums)) for such period
as set forth in the statements required hereunder, without deduction for (i)
actual management fees incurred in connection with the operation of the
Property, or (ii) amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of 3.48% of Gross Income
from Operations and (2) the actual management fees incurred, and (B) annual
Replacement Reserve Fund contributions equal to $0.31 per square foot of gross
leasable area at the Property, and (C) annual Rollover Reserve Fund
contributions equal to $1.69 per square foot of gross leasable area at the
Property; and

 

 5 

 

 

(b)          the denominator is the aggregate amount of Debt Service for such
period.

 

“Debt Service Coverage Ratio as of the Closing Date” means 1.92 to 1.00.

 

“Debt Yield” means a ratio in which:

 

(a)          the numerator is the same numerator that would be calculated in
connection with the definition of Debt Service Coverage Ratio herein; and

 

(b)          the denominator is the outstanding balance of the Loan as of the
date of calculation.

 

“Debt Yield as of the Closing Date” means 8.82%.

 

“Default” means 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
be an Event of Default.

 

“Default Rate” means, with respect to the Loan, a rate per annum equal to the
lesser of (a) the Maximum Legal Rate or (b) four percent (4%) above the Interest
Rate.

 

“Disbursement Certification and Schedule” means a certificate in the form
attached hereto as Schedule VII, delivered to Lender by Borrower which is signed
by an authorized officer of Borrower or the general partner, managing member or
sole member of Borrower, as applicable.

 

“Disclosure Documents” means, collectively and as applicable, any offering
circular, prospectus, prospectus supplement, private placement memorandum or
other offering document, in each case, in connection with a Securitization.

 

“DSCR Cure” means the achievement of a Debt Service Coverage Ratio of 1.55 to
1.00 or greater for two (2) consecutive quarters based upon the trailing three
(3) month period immediately preceding the date of determination.

 

 6 

 

 

“DSCR Cure – Letter of Credit” means an unconditional irrevocable letter of
credit (together with any related documentation reasonably required by Lender,
the “Letter of Credit”) in an amount that, if the same were applied as a partial
prepayment (including any required Prepayment Consideration) of the Loan, would
result in the achievement of a Debt Service Coverage Ratio of 1.55 to 1.00 or
greater for the trailing three (3) month period immediately preceding the date
of determination, issued by an issuer and otherwise in form and substance
reasonably acceptable to Lender, Lender agreeing that KeyBank National
Association is an acceptable issuer of such a letter of credit. The DSCR Cure –
Letter of Credit (a) shall be obtained by an “applicant” that is not the
Borrower, (b) shall provide that it is transferable by Lender and its successors
at no cost to them, and that the issuer of such a letter of credit will look
solely to parties other than Lender for any transfer costs or fees, (c) shall
provide for partial draws thereon, (d) shall be payable by sight draft only and
shall not include any requirements or conditions for draws other than Lender’s
demand therefore, and (e) shall have a term expiring not earlier than thirteen
(13) months from the date of its issuance. Not less than thirty (30) days prior
to the expiration date of the DSCR Cure – Letter of Credit then held by Lender
hereunder, Borrower shall deposit with Lender a replacement DSCR Cure – Letter
of Credit complying with the requirements of this paragraph or provide Lender
with evidence reasonably satisfactory to Lender that the expiration date of the
existing DSCR Cure – Letter of Credit has been extended an additional twelve
(12) months. Borrower’s failure to provide to Lender such replacement or
extension as required by the immediately prior sentence shall allow Lender to
draw the entire remaining proceeds thereof and deposit the same in the Excess
Cash Flow Reserve Account. The DSCR Cure – Letter of Credit and all proceeds
thereof shall be deemed part of the Reserve Funds, and shall be held in escrow
by Lender according to the terms of this Agreement. Borrower will pay all costs
associated with the initial issuance, any modification or re-issuance of the
DSCR Cure – Letter of Credit, now or in the future, in connection with any
transfer of the Loan by Lender, in connection with any Securitization or
otherwise. Upon such transfer, Borrower agrees that Lender is released from all
liability in respect of the DSCR Cure – Letter of Credit, and that Borrower
shall look solely to the transferee with respect to all matters relating to the
DSCR Cure – Letter of Credit. In the event that a DSCR Cure occurs during a
period wherein Lender is in possession of the DSCR Cure – Letter of Credit,
Lender will promptly return the DSCR Cure – Letter of Credit to Borrower.

 

“DSCR Cure – Partial Prepayment” means a partial prepayment of the Loan in
accordance with Section 9 of the Note in an amount (including any required
Prepayment Consideration) that results in a reduction of the principal balance
of the Loan sufficient to achieve a Debt Service Coverage Ratio of 1.55 to 1.00
for the trailing three (3) month period immediately preceding the date of
determination.

 

“DSCR Trigger Event” means, that as of the date of determination, the Debt
Service Coverage Ratio based on the trailing three (3) month period immediately
preceding the date of such determination is less than 1.55 to 1.00.

 

“Eligible Account” means a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts 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 either case a combined capital and surplus of at least $50,000,000.00
and subject to supervision or examination by federal and state authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.

 

 7 

 

 

“Eligible Institution” means KeyBank National Association or a depository
institution or trust company insured by the Federal Deposit Insurance
Corporation, 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 accounts in which funds are held for more than thirty (30) days,
the long-term unsecured debt obligations of which are rated at least “AA-” by
Fitch and S&P and “Aa3” by Moody’s).

 

“Embargoed Person” means any person, entity or government subject to trade
restrictions under U.S. law, including The USA PATRIOT Act (including the anti
terrorism provisions thereof), 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 including
those related to Specially Designated Nationals and Specially Designated Global
Terrorists, with the result that the investment in Borrower or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan
made by the Lender is in violation of law.

 

“Emergency Expenses” means an expense which, in Borrower’s good faith judgment
is necessary to (a) prevent an immediate threat to the health, safety or welfare
of any person in the immediate vicinity of the Property, (b) prevent immediate
material damage or material loss to the Property, (c) avoid the suspension of
any necessary service in or to any portion of the Property, or (d) avoid
criminal liability or material civil liability on the part of Borrower with
respect to activities at the Property or pursuant to this Agreement or the other
Loan Documents.

 

“Environmental Indemnity” means 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.

 

“Environmental Law” means any applicable federal, state and local laws,
statutes, ordinances, rules and regulations, as well as common law, now or in
the future relating to protection of human health or the environment, relating
to Hazardous Substances, or relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances. Environmental Law includes the
following statutes, as amended, any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local corollary statutes,
ordinances, rules and regulations: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including Subtitle I relating to underground
storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air
Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the
environmental provisions of the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
environmental provisions of the River and Harbors Appropriation Act.
Environmental Law also includes any applicable federal, state and local laws,
statutes, ordinances, rules and regulations, as well as common law, now or in
the future: conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of the
Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other Person, whether or not in connection with transfer of title
to or interest in property; or imposing conditions or requirements relating to
the Hazardous Substances in connection with environmental permits or other
environmental authorization for lawful activity with respect to the Property.

 

 8 

 

 

“Environmental Liens” has the meaning set forth in Section 5.1.19 hereof.

 

“Environmental Report” has the meaning set forth in Section 4.1.37 hereof.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder.

 

“Event of Default” has the meaning set forth in Section 8.1(a) hereof.

 

“Excess Cash Flow” has the meaning set forth in the Cash Management Agreement.

 

“Excess Cash Flow Reserve Account” has the meaning set forth in Section 7.5.1
hereof.

 

“Excess Cash Flow Cap” has the meaning set forth in Section 7.5.1 hereof.

 

“Excess Cash Flow Reserve Fund” has the meaning set forth in Section 7.5.1
hereof.

 

“Extraordinary Expense” has the meaning set forth in Section 5.1.11(h) hereof.

 

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

 

“Fitch” means Fitch, Inc.

 

“Foreclosure Sale” has the meaning set forth in Section 9(c) of the Note.

 

“GAAP” means generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.

 

“Governing State” has the meaning set forth is Section 10.3 hereof.

 

“Governmental Authority” means any court, board, agency, commission, office or
other authority of any nature whatsoever for any governmental unit (foreign,
federal, state, county, district, municipal, city or otherwise) whether now or
hereafter in existence having jurisdiction over Borrower or the applicable
Individual Property.

 

 9 

 

 

“Gross Income from Operations” means, during any period, all regular and
recurring income as reported on the financial statements delivered by Borrower
in accordance with this Agreement, computed in accordance with GAAP, derived
from the ownership and operation of the Property from whatever source during
such period, including (i) Rents from Tenants that are in occupancy and paying
contractual rent without right of offset or credit, (ii) utility charges, (iii)
escalations, (iv) forfeited security deposits, (v) interest on credit accounts,
(vi) service fees or charges, (vii) license fees, (viii) parking fees, (ix) rent
concessions or credits, (x) income from vending machines, (xi) business
interruption or other loss of income or rental insurance proceeds, (xii) other
required pass-throughs and (xiii) interest on Reserve Funds, if any, but
excluding (i) Rents from month-to-month Tenants, Tenants during a free-rent
period, or Tenants that are the subject of any Bankruptcy Action, (ii) sales,
use and occupancy or other taxes on receipts required to be accounted for by
Borrower to any Governmental Authority, (iii) refunds and uncollectible
accounts, (iv) sales of furniture, fixtures and equipment, (v) Insurance
Proceeds (other than business interruption or other loss of income or rental
insurance), (vi) Awards (other than as a result of a temporary Taking), (vii)
unforfeited security deposits, (viii) utility and other similar deposits, and
(ix) any disbursements to Borrower from the Reserve Funds, if any (provided,
however, that Gross Income from Operations shall include any Reserve Funds
disbursements that are intended to be in substitution of Rent that would be
payable by any Tenant during any period where such Tenant does not have the
obligation to pay Rent under its Lease). Gross income shall not be diminished as
a result of the Security Instrument or the creation of any intervening estate or
interest in the Property or any part thereof.

 

“Ground Lease” means, individually or collectively, as the context requires, the
following leases that exist as of the closing of the Loan, together with any
ground lease evidencing a Borrower’s leasehold interest in a Substitution
Property added to the Property pursuant to a completed Substitution:

 

(a)          the Ground Lease Agreement dated August 1, 2016 (as amended, the
“Arrowhead I Ground Lease”), between VHS of Arrowhead, Inc., a Delaware
corporation d/b/a Arrowhead Community Hospital and Medical Center (the
“Arrowhead I Lessor”), as ground lessor, and PMB Arrowhead #1 LLC, a Delaware
limited liability company (predecessor to ARHC AMGLNAZ02, LLC, a Delaware
limited liability company), as ground lessee, record notice of which was given
pursuant to the Notice of Ground Lease Agreement dated August 1, 2006 and
recorded on August 1, 2006 as instrument number 06-1026804 in the official
records of Maricopa County, Arizona;

 

(b)          the Amended and Restated Ground Lease Agreement dated August 1,
2016 (as amended, the “Arrowhead II Ground Lease”), between VHS of Arrowhead,
Inc., a Delaware corporation d/b/a Arrowhead Community Hospital and Medical
Center (the “Arrowhead II Lessor”), as ground lessor, and AMPII, L.L.C., an
Arizona limited liability company (predecessor to ARHC AMGLNAZ01, LLC, a
Delaware limited liability company), as ground lessee, record notice of which
was given pursuant to the Assignment of Ground Lease Agreement recorded July 14,
2006 as instrument number 20060944206 in the official records of Maricopa
County, Arizona; and/or

 

(c)          the Ground Lease dated April 27, 2011 (as amended, the “Presence
Ground Lease”), between 24 North New Lennox, LLC, an Illinois limited liability
company (the “Presence Lessor”), as ground lessor, and New Lenox Investors,
LLLP, a Florida limited liability limited partnership (predecessor to ARHC
PHNLXIL01, LLC, a Delaware limited liability company), as ground lessee, record
notice of which was given pursuant to the Memorandum of Ground Lease dated April
27, 2011 and recorded April 28, 2011 as document number R2011041270 in the
official records of Will County, Illinois.

 

 10 

 

 

“Ground Lease Property” means the real and personal property demised to Borrower
pursuant to a Ground Lease.

 

“Ground Lessor” means, individually or collectively, as the context requires,
the Arrowhead I Lessor, the Arrowhead II Lessor and/or the Presence Lessor.

 

“Ground Rent” shall mean any rent, additional rent or other charge payable by
Borrower under any Ground Lease.

 

“Ground Rent Reserve Account” shall have the meaning set forth in Section 7.7.1
hereof.

 

“Ground Rent Reserve Fund” shall have the meaning set forth in Section 7.7.1
hereof.

 

“Ground Rent Reserve Monthly Deposit” shall have the meaning set forth in
Section 7.7.1 hereof.

 

“Guarantor” means Healthcare Trust Operating Partnership, L.P., a Delaware
limited partnership.

 

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

 

“Hazardous Substances” means any and all substances (whether solid, liquid or
gas) defined, listed, or otherwise classified as pollutants, hazardous wastes,
hazardous substances, hazardous materials, extremely hazardous wastes, or words
of similar regulatory effect under any Environmental Laws, including petroleum
and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables,
explosives, toxic mold or microbial matter and mycotoxins, but excluding
substances of kinds and in amounts ordinarily and customarily used or stored in
similar properties for the purpose of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws.

 

“Immediate Family Member” has the meaning set forth in Section 5.2.10(f).

 

“Improvements” means, individually or collectively (as the context requires),
the “Improvements” as defined in each applicable Security Instrument.

 

“Indebtedness” of a Person, at a particular date, means the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including amounts for borrowed money and indebtedness in the form of mezzanine
debt or preferred equity); (b) obligations evidenced by bonds, debentures,
notes, or other similar instruments; (c) obligations for the deferred purchase
price of property or services (including trade obligations); (d) obligations
under letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (g) obligations secured by any
Liens, whether or not the obligations have been assumed (other than the
Permitted Encumbrances).

 

 11 

 

 

“Indemnified Liabilities” has the meaning set forth in Section 10.13(b) hereof.

 

“Indemnified Parties” means Lender, any Affiliate of Lender that has filed any
registration statement relating to the Securitization or has acted as the
sponsor or depositor in connection with the Securitization, any Affiliate of
Lender that acts as an underwriter, placement agent or initial purchaser of
Securities issued in the Securitization, any other co-underwriters, co placement
agents or co initial purchasers of Securities issued in the Securitization, and
each of their respective officers, directors, partners, employees,
representatives, agents and Affiliates and each Person or entity who Controls
any such Person within the meaning of Section 15 of the Securities Act of 1933
as amended or Section 20 of the Security Exchange Act of 1934 as amended, any
Person who is or will have been involved in the origination of the Loan, any
Person who is or will have been involved in the servicing of the Loan secured
hereby, any Person in whose name the encumbrance created by the Security
Instrument is or will have been recorded, and including any successors by
merger, consolidation or acquisition of all or a substantial portion of Lender’s
assets and business).

 

“Independent Director” means a natural Person who (a) is not at the time of
initial appointment, or at any time while serving in such capacity, and is not,
and has never been, and shall not while serving as Independent Director be: (i)
a stockholder, director (with the exception of serving as the Independent
Director of Borrower), officer, employee, partner, member (other than a “special
member” or “springing member”), manager, attorney or counsel of Borrower, equity
owners of Borrower or Guarantor or any Affiliate of Borrower or Guarantor; (ii)
a customer, supplier or other person who derives any of its purchases or
revenues from its activities with Borrower or Guarantor, equity owners of
Borrower or Guarantor or any Affiliate of Borrower or Guarantor; (iii) a Person
Controlling or under common Control with any such stockholder, director,
officer, employee, partner, member, manager, attorney, counsel, equity owner,
customer, supplier or other Person; or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, member, manager,
attorney, counsel, equity owner, customer, supplier or other Person and (b) has
(i) prior experience as an independent director or independent manager for a
corporation, a trust or limited liability company whose charter documents
required the unanimous consent of all independent directors or independent
managers thereof before such corporation, trust or limited liability company
could consent to the institution of bankruptcy or insolvency proceedings against
it or could file a petition seeking relief under any applicable federal or state
law relating to bankruptcy and (ii) at least three years of employment
experience with one or more nationally-recognized companies that provides, inter
alia, professional independent directors or independent managers in the ordinary
course of their respective business to issuers of securitization or structured
finance instruments, agreements or securities or lenders originating commercial
real estate loans for inclusion in securitization or structured finance
instruments, agreements or securities (a “Professional Independent Director”)
and is at all times during his or her service as an Independent Director of
Borrower an employee of such a company or companies. A natural Person who
satisfies the foregoing definition except for being (or having been) the
independent director or independent manager of a “special purpose entity”
affiliated with Borrower (provided such affiliate does not or did not own a
direct or indirect equity interest in an Borrower) shall not be disqualified
from serving as an Independent Director, provided that such natural Person
satisfies all other criteria set forth above and that the fees such individual
earns from serving as independent director or independent manager of affiliates
of Borrower or in any given year constitute in the aggregate less than five
percent (5%) of such individual’s annual income for that year. A natural Person
who satisfies the foregoing definition other than subparagraph (a)(ii) shall not
be disqualified from serving as an Independent Director of Borrower if such
individual is a Professional Independent Director and such individual complies
with the requirements of the previous sentence.

 

 12 

 

 

“Individual Property” shall mean (a) the Ground Lease Property and (b) each
parcel of real property, the Improvements thereon and all personal property now
or hereafter owned by a Borrower and encumbered by the applicable Security
Instrument, together with all rights pertaining to such property and
Improvements, as more particularly described in the granting clauses of the
applicable Security Instrument and referred to therein as the “Property.” Such
parcels of individual real property are listed below, along with their
respective Borrower owners:

 

ARHC HDLANCA01, LLC

High Desert Medical Group MOB, 43839 N. 15th Street, West Lancaster, CA 93534

 

ARHC NHCANGA01, LLC

Northside Hospital MOB, 320 Hospital Road, Canton, GA 30114

 

ARHC FMMUNIN03, LLC

761 Building, 761 45th Street, Munster, IN 46321

 

ARHC AMGLNAZ02, LLC

Arrowhead Medical Plaza I, 6525 West Sack Drive, Glendale, AZ 85308

 

ARHC AMGLNAZ01, LLC

Arrowhead Medical Plaza II, 18700 North 64th Drive, Glendale, AZ 85308

 

ARHC BMLKWC001, LLC

Belmar Medical Building, 8015 W. Alameda Avenue, Lakewood, CO 80226

 

ARHC ECMCYNC01, LLC

East Coast Square North, 4252 Arendell Street, Morehead City, NC 28557

 

ARHC ECCPTNC01, LLC

East Coast Square West, 1165 Cedar Point Boulevard, Cedar Point, NC 28584

 

ARHC LPELKCA01, LLC

Laguna Professional Center, 9390-9394 Big Horn Boulevard, Elk Grove, CA 95758

 

ARHC MMTCTTX01, LLC

Mainland Medical Arts Pavilion, 7111 Medical Center Drive, Texas City, TX 77591

 

ARHC PRPEOAZ03, LLC

Medical Center III, 13260 North 94th Drive, Peoria, AZ 85381

 

 13 

 

 

ARHC WLWBYMN01, LLC

Woodlake Office Center, 2090 Woodwinds Drive, Woodbury, MN 55125

 

ARHA MRMRWGA01, LLC

Morrow Medical Center, 1000 Corporate Center Drive, Morrow, GA 30260

 

ARHC OLOLNIL01, LLC

Oak Lawn Medical Center, 10837 South Cicero Avenue, Oak Lawn, IL 60453

 

ARHC PPHRNTN01, LLC

Physicians Plaza of Roane County, 1855 Tanner Way, Harriman, TN 37748

 

ARHC PHNLXIL01, LLC

Presence Healing Arts Pavilion, 410 East Lincoln Highway, New Lenox, IL 60451

 

ARHC SMERIPA01, LLC

Sassafras Medical Building, 1910 Sassafras Street, Erie, PA 16502

 

ARHC SFSTOGA01, LLC

Stockbridge Family Medical, 3579 Highway 138 West, Stockbridge, GA 30281

 

ARHC VCSTOGA01, LLC

Village Center Parkway, 200 Village Center Parkway, Stockbridge, GA 30281

 

ARHC AHPLYWI01, LLC

Aurora Healthcare Center, 2600 Kiley Way, Plymouth, WI 53073

 

“Initial Interest Payment Per Diem” has the meaning set forth in the Loan Terms
Table of the Note.

 

“Insolvency Opinion” means that certain non-consolidation opinion letter dated
the date hereof delivered by Duane Morris LLP in connection with the Loan.

 

“Institutional Controls” means any legal or physical restrictions or limitations
on the use of, or access to, the Property to eliminate or minimize potential
exposures to any Hazardous Substance, to prevent activities that could
reasonably be expected to interfere with the effectiveness of any Remediation,
or to ensure maintenance of a level of risk to human health or the environment,
including physical modifications to the Property such as slurry walls, capping,
hydraulic controls for ground water, restrictive covenants, environmental
protection easements, or property use limitations.

 

“Insurance Premiums” has the meaning set forth in Section 6.1(b) hereof.

 

“Insurance Proceeds” has the meaning set forth in Section 6.4(b) hereof.

 

“Interest Rate” means, as the context may require, for Note A-1 or Note A-2, the
“Interest Rate” specified in the Loan Terms Table of such Note.

 

“Land” means, individually or collectively (as the context requires), the “Land”
as defined in each applicable Security Instrument.

 

 14 

 

 

“Lease” means, with the exception of each Ground Lease, any lease, sublease or
subsublease, letting, license, concession or other agreement (whether written or
oral and whether now or hereafter in effect), in each case to which Borrower is
a party, 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 by or on
behalf of Borrower, and (a) every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and (b)
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.

 

“Legal Requirements” means, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities related to 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, and all
permits, licenses and authorizations and regulations relating thereto.

 

“Lender” has the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.

 

“Lien” means, any mortgage, deed of trust, deed to secure debt, indemnity deed
of trust, lien, pledge, hypothecation, assignment, security interest, or any
other encumbrance, charge or transfer of, on or affecting Borrower, the
Property, any portion thereof or any interest therein, 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.

 

“Liquid Assets” shall mean, to the extent owned individually, free of all
security interests, liens, pledges, charges or any other encumbrance, assets in
the form of cash, cash equivalents, obligations of (or fully guaranteed as to
principal and interest by) the United States or any agency or instrumentality
thereof (provided the full faith and credit of the United States supports such
obligation or guarantee), certificates of deposit (with a maturity of two (2)
years or less) issued by a commercial bank having net assets of not less than
$500 million, marketable securities listed and traded on a recognized stock
exchange or traded over the counter and listed in the National Association of
Securities Dealers Automatic Quotations, or liquid debt instruments that have a
readily ascertainable value and are regularly traded in a recognized financial
market.

 

“Liquid Assets Threshold” means Liquid Assets having a market value of at least
$5,000,000.00.

 

“Loan” means the loan in the Original Principal Amount made by Lender to
Borrower pursuant to this Agreement.

 

“Loan Documents” means, collectively, this Agreement, the Note, the Security
Instrument, the Environmental Indemnity, the Assignment of Management Agreement,
the Guaranty, the Clearing Account Agreement, the Cash Management Agreement, and
all other documents executed or delivered by Borrower or Guarantor in connection
with the Loan.

 

 15 

 

 

“Loan to Value Ratio” shall mean, as of the date of its calculation, the ratio
of (i) the sum of the outstanding principal amount of the Loan as of the date of
such calculation to (ii) the fair market value of all applicable Individual
Properties, as determined, in Lender’s reasonable discretion, by any
commercially reasonable method permitted to a REMIC Trust.

 

“Management Agreement” means individually or collectively (as the context may
require), each management agreement entered into by and between Borrower and
Manager, pursuant to which Manager is to provide management and other services
with respect to the Property or any portion thereof, or, if the context
requires, a Qualified Manager who is managing the Property in accordance with
the terms and provisions of this Agreement pursuant to a Replacement Management
Agreement.

 

“Manager” means with respect to each Individual Property, the Person associated
therewith as set forth on Schedule V hereof, or, if the context requires, a
Qualified Manager who is managing the Property or any portion thereof in
accordance with the terms and provisions of this Agreement pursuant to a
Replacement Management Agreement.

 

“Manager Trigger Event” means the date 60 days following the occurrence of a
Bankruptcy Action of a Manager if Borrower has not replaced such Manager with a
Qualified Manager under a Replacement Management Agreement within such 60-day
period.

 

“Material Action” means to consolidate or merge Borrower with or into any
Person, or sell all or substantially all of the assets of Borrower, or to
institute proceedings to have Borrower be adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against
Borrower or file a petition seeking, or consent to, reorganization or relief
with respect to Borrower under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Borrower or a substantial
part of its property, or make any assignment for the benefit of creditors of
Borrower, or admit in writing Borrower’s inability to pay its debts generally as
they become due (unless otherwise required by Legal Requirements), or take
action in furtherance of any such action (unless otherwise required by Legal
Requirements), or, to the fullest extent permitted by law, dissolve or liquidate
Borrower.

 

“Maturity Date” means May 1, 2028, or such other date on which the final payment
of principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.

 

“Maximum Legal Rate” has the meaning set forth in Section 7 of the Note.

 

“Monthly Debt Service Payment Amount” has the meaning, individually and
collectively, as the context may require, set forth in Note A-1 and/or Note A-2.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Munster Release Parcel” means the approximately 1,200.5 square feet portion
(located at the corner of 45th Street and Calumet Avenue) of the Individual
Property located at 761 45th Street, Munster, IN 46321, that is the subject of a
pending condemnation action (Cause No. 45D10706P100064, Lake Circuit Superior
Court) by the Town of Munster, as disclosed in writing by Borrower to Lender in
connection with the closing of the Loan.

 

 16 

 

 

“Net Cash Flow” means, with respect to the Property for any period, the amount
obtained by subtracting Operating Expenses and Capital Expenditures for such
period from Gross Income from Operations for such period.

 

“Net Operating Income” means the amount obtained by subtracting Operating
Expenses from Gross Income from Operations.

 

“Net Proceeds” has the meaning set forth in Section 6.4(b) hereof.

 

“Net Proceeds Deficiency” has the meaning set forth in Section 6.4(b)(vi)
hereof.

 

“Net Worth” shall mean, as of a given date, as to any Person, (i) such Person’s
total assets (exclusive of the Property) as of such date, less (ii) such
Person’s total liabilities as of such date (exclusive of the Debt), determined
in accordance with GAAP.

 

“Net Worth Threshold” means a Net Worth of at least $100,000,000.00.

 

“Non-Discretionary Expenses” means any non-discretionary expense required for
the Property, including, without limitation, any expense which, in Borrower’s
good faith judgment is necessary to (a) comply with any of the material
obligations of the Borrower as landlord under any Lease, (b) comply with any
material agreements, encumbrances or other instruments affecting the Property
with respect to which the failure to comply could reasonably be expected to have
a material adverse effect on Borrower or the Property, (c) comply with any other
material obligations of Borrower under material agreements to which Borrower is
a party (including, without limitation, under any Management Agreement) with
respect to which the failure to comply could reasonably be expected to have a
material adverse effect on Borrower or the Property, (d) pay Taxes, rent under
any Ground Lease or Emergency Expenses, (e) maintain insurance for the Property
and Borrower as required under Section 6.1, or (f) pay utility bills for the
Property as and when due and payable.

 

“Note” means individually and collectively, as the context may require, Note A-1
and/or Note A-2.

 

“Note A-1” means that certain Promissory Note A-1, dated the date hereof, in the
principal amount of $77,155,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“Note A-2” means that certain Promissory Note A-2, dated the date hereof, in the
principal amount of $41,545,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced or otherwise modified from time to time.

 

“OFAC” has the meaning set forth in Section 10.25 hereof.

 

 17 

 

 

“Officer’s Certificate” means a certificate delivered to Lender by Borrower
which is signed by an authorized officer of Borrower or the general partner,
managing member or sole member of Borrower, as applicable.

 

“Operating Expenses” means the total of all expenditures, computed in accordance
with GAAP, of whatever kind relating to the operation, maintenance and
management of the Property that are incurred on a regular monthly or other
periodic basis, including, ground rent, utilities, ordinary repairs and
maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments as approved by
Lender in its reasonable discretion, and other similar costs, but excluding
depreciation and other non-cash charges, Debt Service, Capital Expenditures and
contributions to the Reserve Funds.

 

“Original Principal Amount” means $118,700,000.00.

 

“Other Charges” means all ground rents (other than any Ground Rent), 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 or any part thereof, now or hereafter levied or assessed
or imposed against the Property or any part thereof.

 

“Other Obligations” has the meaning as set forth in the Security Instrument.

 

“Outstanding Principal Balance” or “OPB” means the portion of the Original
Principal Amount that remains outstanding from time to time.

 

“Partial Release” shall have the meaning set forth in Section 2.6.2 hereof.

 

“Partial Release Notice Date” shall have the meaning set forth in Section 2.6.2
hereof.

 

“Payment Date” means the first (1st) day of each calendar month during the term
of the Loan.

 

“Permitted Encumbrances” means, with respect to each Individual Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the
applicable Title Insurance Policy, (c) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent or being contested in
accordance with the Loan Document, (d) mechanic’s or materialmen’s liens, if any
being contested in good faith and by appropriate proceedings in accordance with
the Loan Documents, (e) rights of existing and future tenants pursuant to Leases
entered into in accordance with this Agreement, (f) liens securing assessments
or charges payable to a property owner association or similar entity, which
assessments are not yet due or delinquent, (g) liens relating to equipment
financing which are incurred in the ordinary course of business in connection
with the ownership of the Property in an amount not to exceed $1,000,000.00,
provided, however, that Borrower shall not enter into any equipment financing
arrangement with respect to any equipment that is necessary and material to the
operating of any of the Property, (h) bankers’ liens, rights of setoff and other
similar liens existing solely with respect to cash and other investments on
deposit in one or more accounts maintained by or on behalf of Borrower, in each
case granted in the ordinary course of business in favor of the bank or banks
with which such accounts are maintained, solely securing amounts owing to such
bank with respect to cash management and operating account arrangements, and (i)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender’s reasonable discretion, which Permitted Encumbrances,
individually or in the aggregate, do not materially interfere with the value,
current use or operation of the Property or the security intended to be provided
by the Security Instrument or with the current ability of the Property to
generate Net Cash Flow sufficient to service the Loan or Borrower’s ability to
pay its obligations under the Loan Documents when they become due.

 

 18 

 

 

“Permitted Investments” means any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, including those
issued by Servicer, the trustee under any Securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment and meeting one of the appropriate standards
set forth below:

 

(i)          obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including obligations of: the U.S. Treasury (all direct
or fully guaranteed obligations), the Farmers Home Administration (certificates
of beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI financing),
the Small Business Administration (guaranteed participation certificates and
guaranteed pool certificates), the U.S. Department of Housing and Urban
Development (local authority bonds) and the Washington Metropolitan Area Transit
Authority (guaranteed transit bonds); provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have
an “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(ii)         Federal Housing Administration debentures;

 

(iii)        obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

 19 

 

 

(iv)        federal funds, unsecured certificates of deposit, time deposits,
bankers’ acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are rated
in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;

 

(v)         fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers’ acceptances issued by,
any bank or trust company, savings and loan association or savings bank, the
short term obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

(vi)        debt obligations with maturities of not more than 365 days and at
all times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (B) if rated by S&P, must not have
an “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

 

 20 

 

 

(vii)       commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

 

(viii)      units of taxable money market funds, which funds are regulated
investment companies, seek to maintain a constant net asset value per share and
invest solely in obligations backed by the full faith and credit of the United
States, which funds have the highest rating available from each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds; and

 

(ix)         any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) each Rating
Agency, as evidenced by a written confirmation that the designation of such
security, obligation or investment as a Permitted Investment will not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities by such Rating
Agency;

 

provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.

 

“Permitted Par Prepayment Date” means February 2, 2028.

 

“Permitted Transfer” means any of the following: (a) any transfer, directly as a
result of the death of a natural person, of stock, membership interests,
partnership interests or other ownership interests previously held by the
decedent in question to the Person or Persons lawfully entitled thereto, (b) any
transfer, directly as a result of the legal incapacity of a natural person, of
stock, membership interests, partnership interests or other ownership interests
previously held by such natural person to the Person or Persons lawfully
entitled thereto, (c) any transfer of stock or membership interests in any
publicly-held corporation or other publicly-held entity (in each case) which is
listed on the New York Stock Exchange, the NASDAQ Global Select Market or
another nationally-recognized stock exchange, (d) the offer, sale, listing,
transfer or issuance of securities of the REIT provided that such securities are
listed on the New York Stock Exchange, the NASDAQ Global Select Market or
another nationally recognized stock exchange (e) so long as the same does not
result in a change of Control of the REIT, the offer, sale, listing, transfer or
issuance of securities of the REIT provided that such securities are sold in the
ordinary course of business and in accordance with all applicable legal
requirements to retail investors in a manner consistent with previous offerings
and sales conducted by the REIT to date, or (f) a Qualified Equityholder
Transfer.

 

 21 

 

 

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal,
state, county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

 

“Personal Property” means, individually or collectively (as the context
requires), the “Personal Property” as defined in each applicable Security
Instrument.

 

“Policies” has the meaning specified in Section 6.1(b) hereof.

 

“Policy” has the meaning specified in Section 6.1(b) hereof.

 

“Prepayment Date” has the meaning specified in Section 9(b) of the Note.

 

“Prohibited Entity/Ownership Structure” means any direct or indirect ownership
of either the Property or Borrower by (a) a statutory trust organized under 12
Del.C. § 3801 et seq., or any successor statute thereto, or under any similar
other state of federal law, (b) any one or more Persons as tenants in common or
any similar ownership structure, or (c) any one or more Persons as a result of
any Crowdfunding provided that the foregoing shall not apply to non-Controlling
shareholders of the REIT.

 

“Property” means, individually or collectively (as the context requires), each
Individual Property which is subject to the terms hereof and of the other Loan
Documents.

 

“Provided Information” means any and all financial and other information
provided at any time prepared by, or on behalf of, Borrower, Guarantor or
Manager.

 

“Prudent Lender Standard” shall, with respect to any matter, be deemed to have
been met if the matter in question (i) prior to a Securitization, is acceptable
to Lender in its reasonable discretion and (ii) after a Securitization, (A) if
permitted by the applicable legal requirements relating to any REMIC Trust
(including, without limitation, those relating to the continued treatment of the
Loan (or the applicable portion thereof and/or interest therein) as a “qualified
mortgage” held by such REMIC Trust), the continued qualification of such REMIC
Trust as such, the non-imposition of any tax on such REMIC Trust (including,
without limitation, taxes on “prohibited transactions” and “contributions”) and
any other REMIC Requirements, would be acceptable to Lender in its reasonable
discretion or (B) if the Lender discretion in the foregoing subsection (A) is
not permitted under such applicable REMIC Requirements, would be acceptable to a
prudent lender of commercial mortgage loans exercising its reasonable
discretion.

 

 22 

 

 

“Qualified Equityholder” means (i) a bank, savings and loan association,
investment bank, insurance company, trust company, commercial credit
corporation, pension plan, pension fund or pension advisory firm, mutual fund,
real estate investment trust, government entity or plan, real estate company,
investment fund or an institution substantially similar to any of the foregoing,
provided in each case under this clause (i) that such Person (x) has total
assets (in name or under management) in excess of $250,000,000 and (except with
respect to a pension advisory firm or similar fiduciary) capital/statutory
surplus or shareholder’s equity in excess of $50,000,000 (in both cases,
exclusive of the Property), and (y) is regularly engaged in the business of
owning and operating comparable properties and or (ii) any other Person
reasonably approved by Lender. Additionally, for a Qualified Equityholder under
either clause (i) or (ii) above, Lender must receive a credit check and
bankruptcy, litigation, judgment lien and other comparable searches which must
be reasonably acceptable to Lender, including that (A) such Qualified
Equityholder has not been the subject of any bankruptcy proceedings, voluntary
or involuntary, made an assignment for the benefit of creditors or taken
advantage of any insolvency act, or any act for the benefit of debtors within
the previous seven (7) years, (B) such Qualified Equityholder has not been, and
is not controlled by any party which has ever been, convicted of a capital
offense or fraud, embezzlement or other financial crime felony, and has no
litigation or regulatory action pending or threatened in writing against it
which would reasonably be expected to result in a material adverse effect on
such Person, and (C) such Qualified Equityholder has never been, and is not
affiliated with any person which has been, indicted or convicted for a Patriot
Act offense and is not on any anti-terrorism list of the United States of
America.

 

“Qualified Equityholder Transfer” has the meaning set forth in Section 5.2.10(h)
hereof.

 

“Qualified Manager” means either (a) Manager; or (b) in the reasonable judgment
of Lender, a reputable and experienced management organization (which may be an
Affiliate of Borrower) possessing experience in managing properties similar in
size, scope, use and value as the Property, provided, that, if required by
Lender, Borrower shall have obtained (i) prior written confirmation from the
applicable Rating Agencies that management of the Property by such entity will
not cause a downgrade, withdrawal or qualification of the then current ratings
of the Securities or any class thereof and (ii) if such entity is an Affiliate
of Borrower, an Additional Insolvency Opinion.

 

“Qualified Replacement Guarantor” shall mean a Person who (a) has its principal
address and place business in the United States, (b)(i) has a tangible Net Worth
of not less than $100,000,000.00 and (ii) Liquid Assets of not less than
$5,000,000.00, (c) is a Qualified Equityholder or is twenty-five percent (25%)
owned and Controlled by a Qualified Equityholder, and (d) for which Lender has
received a credit check and bankruptcy, litigation, judgment lien and other
comparable searches which must be reasonably acceptable to Lender, including
that (A) such Person has not been the subject of any bankruptcy proceedings,
voluntary or involuntary, made an assignment for the benefit of creditors or
taken advantage of any insolvency act, or any act for the benefit of debtors
within the previous seven (7) years, (B) such Person has not been, and is not
controlled by any party which has ever been, convicted of a capital offense or
fraud, embezzlement or other financial crime felony, and has no material
litigation or regulatory action pending or threatened in writing against it, and
(C) such Person has never been, and is not affiliated with any person which has
been, indicted or convicted for a Patriot Act offense and is not on any
anti-terrorism list of the United States of America.

 

 23 

 

 

“Rating Agencies” means whichever of S&P, Moody’s, Fitch, and Morningstar Credit
Ratings, LLC which has been approved by Lender and designated by Lender to
assign a rating to the Securities, or any other nationally recognized
statistical rating agency which has been approved by Lender and designated by
Lender to assign a rating to the Securities.

 

“Related Entities” has the meaning set forth in Section 5.2.10(e)(v) hereof.

 

“Release” means any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.

 

“Release Amount” shall have the meaning set forth in Section 2.6.2 hereof.

 

“Released Property” shall have the meaning set forth in Section 2.6.2 hereof.

 

“Remediation” means any response, remedial, removal, or corrective action, any
activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any
Hazardous Substance, any actions to prevent, cure or mitigate any Release of any
Hazardous Substance, any action to comply with any Environmental Laws or with
any permits issued pursuant thereto, any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or other
analysis, or evaluation relating to any Hazardous Substances, in each case, to
the extent required under Environmental Law.

 

“REIT” means Healthcare Trust, Inc., Maryland corporation.

 

“REMIC Requirements” shall mean any applicable legal requirements relating to
any REMIC Trust (including, without limitation, those relating to the continued
treatment of the Loan (or the applicable portion thereof or interest therein) as
a “qualified mortgage” held by such REMIC Trust, the continued qualification of
such REMIC Trust as such under the Code, the non-imposition of any tax on such
REMIC Trust under the Code (including, without limitation, taxes on “prohibited
transactions” and “contributions”) and any other constraints, rules or other
regulations or requirements relating to the servicing, modification or other
similar matters with respect to the Loan (or any portion thereof or interest
therein) that may now or hereafter exist under applicable legal requirements
(including, without limitation under the Code)).

 

“REMIC Trust” means a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note or a portion thereof.

 

“Rents” means, all rents (including percentage rents), rent equivalents, moneys
payable as damages or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income, receivables,
receipts, revenues, payments (including payments in connection with the exercise
of any purchase option or termination rights), deposits (including security,
utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, all other amounts payable as rent under any Lease or other
agreement relating to the Property, including charges for electricity, oil, gas,
water, steam, heat, ventilation, air-conditioning and any other energy,
telecommunication, telephone, utility or similar items or time use charges, HVAC
equipment charges, sprinkler charges, escalation charges, license fees,
maintenance fees, charges for Taxes, operating expenses or other reimbursables
payable to Borrower (or to the Manager for the account of Borrower) under any
Lease, and other consideration of whatever form or nature received by or paid to
or for the account of or benefit of Borrower or its agents or employees from any
and all sources arising from or attributable to the Property.

 

 24 

 

 

“Replacement Management Agreement” means, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and
substance as the Management Agreement, or (ii) a management agreement with a
Qualified Manager, which management agreement shall be reasonably acceptable to
Lender in form and substance, provided, however, with respect to either
subclause (i) or (ii) above, that without Lender’s prior consent, in its sole
discretion, the management fee for such Qualified Manager shall not exceed the
fee provided for in the Management Agreement in effect as of the closing of the
Loan, and provided, further, with respect to subclause (ii) above, Lender, at
its option, may require that Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that such management agreement
will not cause a downgrade, withdrawal or qualification of the then current
rating of the Securities or any class thereof and (b) an assignment of
management agreement and subordination of management fees substantially in the
form delivered to Lender in connection with the origination of the Loan (or of
such other form and substance reasonably acceptable to Lender), executed and
delivered to Lender by Borrower and such Qualified Manager at Borrower’s
expense.

 

“Replacement Reserve Account” has the meaning set forth in Section 7.3.1 hereof.

 

“Replacement Reserve Fund” has the meaning set forth in Section 7.3.1 hereof.

 

“Replacement Reserve Monthly Deposit” has the meaning set forth in Section 7.3.1
hereof.

 

“Replacements” has the meaning set forth in Section 7.3.1 hereof.

 

“Required Repair Account” has the meaning set forth in Section 7.1.1 hereof.

 

“Required Repair Fund” has the meaning set forth in Section 7.1.1 hereof.

 

“Required Repairs” has the meaning set forth in Section 7.1.1 hereof.

 

“Reserve Funds” means, collectively, the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund, the Ground Rent Reserve
Fund, the Rollover Reserve Fund, the CarolinaEast Reserve Fund, the Excess Cash
Flow Reserve Fund and any other escrow fund established by the Loan Documents.

 

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

 

“Restricted Party” means collectively, (a) Borrower, any Guarantor, and any
Affiliated Manager and (b) any shareholder, partner, member, non-member manager,
or any direct or indirect legal or beneficial owner of Borrower, any Guarantor,
any Affiliated Manager or any non-member manager.

 

 25 

 

 

“Rollover Reserve Account” has the meaning set forth in Section 7.4.1 hereof.

 

“Rollover Reserve Cap” has the meaning set forth in Section 7.4.1 hereof.

 

“Rollover Reserve Fund” has the meaning set forth in Section 7.4.1 hereof.

 

“Rollover Reserve Monthly Deposit” has the meaning set forth in Section 7.4.1
hereof.

 

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

 

“Sale or Pledge” means a voluntary or involuntary sale, conveyance, assignment,
transfer, encumbrance, pledge, grant of option or other transfer or disposal of
a legal or beneficial interest, whether direct or indirect.

 

“Securities” has the meaning set forth in Section 9.1.1 hereof.

 

“Securitization” has the meaning set forth in Section 9.1.1 hereof.

 

“Security Agreement” has the meaning set forth in Section 2.5.1 hereof.

 

“Security Instrument” and “Security Instruments” means individually or
collectively, as the context requires, each first priority Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, Leasehold
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing, Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Filing, Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing, Deed to Secure Debt, Assignment of Leases and Rents,
Security Agreement and Fixture Filing or similar document dated the date hereof,
executed and delivered by Borrower to Lender as security for the Loan and
encumbering the Property (or any portion thereof), as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Self-Managed Properties” means the Individual Properties located at High Desert
Medical Group MOB, 43839 N. 15th Street West Lancaster CA 93534, Northside
Hospital MOB, 320 Hospital Road Canton GA 30114, Aurora Healthcare Center 2600
Kiley Way, Plymouth WI 53073 and Sassafras Medical Building, 1910 Sassafras
Street Erie PA 16502, each of which is self-managed by the related Borrower.

 

“Severed Loan Documents” has the meaning set forth in Section 8.2(c) hereof.

 

“Servicer” has the meaning set forth in Section 9.5 hereof.

 

“Special Purpose Entity” means a corporation, limited partnership or limited
liability company that, since the date of its formation and at all times on and
after the date thereof, has complied with and shall at all times comply with the
following requirements unless it has received either prior consent to do
otherwise from Lender or a permitted administrative agent thereof, or, while the
Loan is securitized, if reasonably required by Lender, confirmation from each of
the applicable Rating Agencies that such noncompliance would not result in the
requalification, withdrawal, or downgrade of the ratings of any Securities or
any class thereof:

 

 26 

 

 

(i) is and shall be organized solely for the purpose of acquiring, developing,
owning, holding, selling, leasing, transferring, exchanging, managing and
operating the Property, entering into and performing its obligations under the
Loan Documents with 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;

 

(ii) has not engaged and shall not engage in any business unrelated to the
acquisition, development, ownership, holding, sale, lease, transfer, exchange,
management or operation of the Property;

 

(iii) has not owned and shall not own any real property other than the Property;

 

(iv) does not have, shall not have and at no time had any assets other than the
Property and personal property necessary or incidental to its ownership and
operation of the Property;

 

(v) has not engaged in, sought, consented to or permitted and shall not engage
in, seek, consent to or permit (A) any dissolution, winding up, liquidation,
consolidation or merger, or (B) any sale or other transfer of all or
substantially all of its assets or any sale of assets outside the ordinary
course of its business, except as permitted by the Loan Documents;

 

(vi) shall not cause, consent to or permit any amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation, operating agreement or other formation document or
organizational document (as applicable) with respect to the matters set forth in
this definition;

 

(vii) intentionally omitted;

 

(viii) intentionally omitted;

 

(ix) if such entity is a limited liability company (other than a limited
liability company meeting all of the requirements applicable to a single-member
limited liability company set forth in this definition of “Special Purpose
Entity” whether or not it has one or more members), has and shall have at least
one (1) member that is a Special Purpose Entity, that is a corporation, that
directly owns at least one percent (1.0%) of the equity of the limited liability
company; and that has at least two (2) Independent Directors;

 

 27 

 

 

(x) if such entity is a single-member limited liability company, (A) is and
shall be a Delaware limited liability company, (B) has and shall have at least
two (2) Independent Directors serving as managers of such company, (C) shall not
take any Material Action with respect to itself and shall not cause or permit
the members or managers of such entity to take any Material Action with respect
to itself unless two (2) Independent Directors then serving as managers of the
company shall have participated consented in writing to such action, and (D) has
and shall have either (1) a member which owns no economic interest in the
company, has signed the company’s limited liability company agreement and has no
obligation to make capital contributions to the company, or (2) two natural
persons or one entity that is not a member of the company, that has signed its
limited liability company agreement and that, under the terms of such limited
liability company agreement becomes a member of the company immediately prior to
the withdrawal or dissolution of the last remaining member of the company;

 

(xi) has not and shall not (and, if such entity is (a) a limited liability
company, has and shall have a limited liability agreement or an operating
agreement, as applicable, (b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of incorporation or articles
that, in each case, provide that such entity shall not) (1) dissolve, merge,
liquidate, consolidate; (2) sell all or substantially all of its assets;
(3) amend its organizational documents with respect to the matters set forth in
this definition without the consent of Lender; or (4) without the affirmative
vote of two (2) Independent Directors of itself: (A) file or consent in writing
to the filing of any bankruptcy, insolvency or reorganization case or
proceeding, institute any proceedings under any applicable insolvency law or
otherwise seek relief under any laws relating to the relief from debts or the
protection of debtors generally, file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings; (B) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the entity or a substantial portion of its
property; (C) make an assignment for the benefit of the creditors of the entity;
or (D) take any action in furtherance of any of the foregoing;

 

(xii) has at all times been and intends at all times to remain solvent and has
paid and intends to pay its debts and liabilities (including, a fairly-allocated
portion of any personnel and overhead expenses that it shares with any
Affiliate) from its assets as the same shall become due, and 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 provided that the foregoing shall in no event
obligate any direct or indirect owner of Borrower or any other Person to
contribute equity into Borrower;

 

(xiii) holds itself out as a legal entity, separate and apart from any other
person or entity, has not failed and shall not fail to correct any known
misunderstanding regarding the separate identity of such entity and has not
identified and shall not identify itself as a division of any other Person;

 

(xiv) has maintained and shall maintain its bank accounts (if any), books of
account, books and records separate from those of any other Person and, to the
extent that it is required to file tax returns under applicable law, has filed
and shall file its own tax returns, except to the extent that it is required by
law to file consolidated tax returns and, if it is a corporation, has not filed
and shall not file a consolidated federal income tax return with any other
corporation, except to the extent that it is required by law to file
consolidated tax returns;

 

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(xv) has maintained and shall maintain its own records, books, resolutions and
agreements;

 

(xvi) has not commingled and shall not commingle its funds or assets with those
of any other Person and has not participated and shall not participate in any
cash management system with any other Person, excepting, however, (a) any cash
management system entered into in connection with any mortgage loan encumbering
the Property or any part thereof prior to the date hereof, which prior cash
management systems, if any, have been terminated, and (b) the cash management
system required by Lender in connection with the Loan;

 

(xvii) has held and shall hold its assets in its own name;

 

(xviii) has conducted and shall conduct its business in its name or in a name
franchised or licensed to it by an entity other than an Affiliate of itself or
of Borrower, except for business conducted on behalf of itself by another Person
under a business management services agreement that is on
commercially-reasonable terms, so long as the manager, or equivalent thereof,
under such business management services agreement holds itself out as an agent
of Borrower;

 

(xix) (A) has maintained and shall maintain its financial statements, accounting
records and other entity documents separate from those of any other Person; (B)
has shown and shall show, in its financial statements, its asset and liabilities
separate and apart from those of any other Person; and (C) has not permitted and
shall not permit its assets to be listed as assets on the financial statement of
any of its Affiliates except as required by GAAP; provided, however, that any
such consolidated financial statement contains a note indicating that the
Special Purpose Entity’s separate assets and credit are not available to pay the
debts of such Affiliate and that the Special Purpose Entity’s liabilities do not
constitute obligations of the consolidated entity;

 

(xx) has paid and intends to pay its own liabilities and expenses, including the
salaries of its own employees, out of its own funds and assets provided that the
foregoing shall in no event obligate any direct or indirect owner of Borrower or
any other Person to contribute equity into Borrower, and has maintained and
shall maintain a sufficient number of employees in light of its contemplated
business operations;

 

(xxi) has observed and shall observe all partnership, corporate or limited
liability company formalities, as applicable;

 

(xxii) has not incurred any Indebtedness other than (i) acquisition financing
with respect to the Property; construction financing with respect to the
Improvements and certain off-site improvements required by municipal and other
authorities as conditions to the construction of the Improvements; and first
mortgage financings secured by the Property; and Indebtedness pursuant to
letters of credit, guaranties, interest rate protection agreements and other
similar instruments executed and delivered in connection with such financings,
(ii) unsecured trade payables and operational debt not evidenced by a note,
(iii) Indebtedness incurred in the financing of equipment and other personal
property used on the Property and (iv) a loan from Lender to Guarantor, with
respect to which certain of the Individual Borrowers were guarantors and
indemnitors, and with respect to which such Individual Borrower have been
released;

 

 29 

 

 

(xxiii) shall have no Indebtedness other than (i) the Loan, (ii) liabilities
incurred in the ordinary course of business relating to the ownership and
operation of the Property and the routine administration of Borrower, in amounts
not to exceed 2% of the amount of the Loan which liabilities, are not evidenced
by a note and are paid no later than 30 days after the date they are due, and
which amounts are normal and reasonable under the circumstances, and (iii) such
other liabilities that are permitted pursuant to this Agreement, provided that
the foregoing items (i) - (iii) shall in no event obligate any direct or
indirect owner of Borrower or any other Person to contribute equity into
Borrower, and provided further, that “Indebtedness” shall not include any
liability for Taxes or Other Charges or Insurance Premiums;

 

(xxiv) has not assumed, guaranteed or become obligated and shall not assume or
guarantee or become obligated for the debts of any other Person, has not held
out and shall not hold out its credit as being available to satisfy the
obligations of any other Person or has not pledged and shall not pledge its
assets for the benefit of any other Person, in each case except as permitted
pursuant to this Agreement;

 

(xxv) has not acquired and shall not acquire obligations or securities of its
partners, members or shareholders or any other owner or Affiliate;

 

(xxvi) has allocated and shall allocate fairly and reasonably any overhead
expenses that are shared with any of its Affiliates, constituents, or owners, or
any guarantors of any of their respective obligations, or any Affiliate of any
of the foregoing, including paying for shared office space and for services
performed by any employee of an Affiliate;

 

(xxvii)   has maintained and used and shall maintain and use separate
stationery, invoices and checks bearing its name and not bearing the name of any
other entity unless such entity is clearly designated as being the Special
Purpose Entity’s agent;

 

(xxviii) has not pledged and shall not pledge its assets to or for the benefit
of any other Person other than with respect to loans secured by the Property and
no such pledge remains outstanding except to Lender to secure the Loan;

 

(xxix) has held itself out and identified itself and shall hold itself out and
identify itself as a separate and distinct entity under its own name or in a
name franchised or licensed to it by an entity other than an Affiliate of
Borrower and not as a division or part of any other Person;

 

(xxx) has maintained and shall maintain its assets in such a manner that it
shall not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;

 

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(xxxi) has not made and shall not make loans to any Person and has not held and
shall not hold evidence of indebtedness issued by any other Person or entity
(other than cash and investment-grade securities and letters of credit held as
security deposits issued by an entity that is not an Affiliate of or subject to
common ownership with such entity);

 

(xxxii)     intentionally omitted;

 

(xxxiii) other than capital contributions and distributions permitted under the
terms of its organizational documents, has not entered into or been a party to,
and shall not enter into or be a party to, any transaction with any of its
partners, members, shareholders or Affiliates except in the ordinary course of
its business and on terms which are commercially reasonable terms comparable to
those of an arm’s-length transaction with an unrelated third party;

 

(xxxiv)      has not had and shall not have any obligation to, and has not
indemnified and shall not indemnify its partners, officers, directors or
members, as the case may be, in each case unless such an obligation or
indemnification is fully subordinated to the Debt and shall not constitute a
claim against it if its cash flow is insufficient to pay the Debt;

 

(xxxv)      if such entity is a corporation, has considered and shall consider
the interests of its creditors in connection with all corporate actions;

 

(xxxvi) has not had and shall not have any of its obligations guaranteed by any
Affiliate except as provided by the Loan Documents;

 

(xxxvii) has not formed, acquired or held and shall not form, acquire or hold
any subsidiary;

 

(xxxviii) has complied and shall comply in all material respects with all of the
terms and provisions contained in its organizational documents;

 

(xxxix) has conducted and shall conduct its business so that each of the
assumptions made about it and each of the facts stated about it in the
Insolvency Opinion are true; and

 

(xl) has not permitted and shall not permit any Affiliate (other than an
Affiliated Manager) or constituent party independent access to its bank
accounts.

 

“State” means, the applicable State or Commonwealth in which the applicable
Individual Property is located.

 

“Substitute Property” has the meaning set forth in Section 2.6.3 hereof.

 

“Substitution” has the meaning set forth in Section 2.6.3 hereof.

 

“Substitution Release Property” has the meaning set forth in Section 2.6.3
hereof.

 

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“Survey” means, individually or collectively (as the context requires), each
survey of each Individual Property prepared by a surveyor licensed in the State
and reasonably satisfactory to Lender and the company or companies issuing the
Title Insurance Policy, and containing a certification of such surveyor
reasonably satisfactory to Lender.

 

“Tax and Insurance Escrow Fund” has the meaning set forth in Section 7.2 hereof.

 

“Taxes” means 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.

 

“Tenant” means the lessee of all or a portion of the Property under a Lease.

 

“Tenant Direction Letter” means an instruction letter to Tenants substantially
in the form attached hereto as Schedule VI.

 

“Threshold Amount” has the meaning set forth in Section 5.1.21 hereof.

 

“TILC Obligations” has the meaning set forth in Section 7.4.1 hereof.

 

“Title Insurance Policy” means each mortgagee title insurance policy issued with
respect to each Individual Property and insuring the lien of each applicable
Security Instrument.

 

“Transfer” has the meaning set forth in Section 5.2.10(b) hereof.

 

“Transferee” has the meaning set forth in Section 5.2.10(e) hereof.

 

“Transferee’s Principals” means collectively, (A) Transferee’s managing members,
general partners or principal shareholders and (B) such other members, partners
or shareholders which directly or indirectly shall own a fifty-one percent (51%)
or greater economic and voting interest in Transferee.

 

“U.S. Obligations” means nonredeemable, nonprepayable, noncallable securities
evidencing an obligation to timely pay principal and/or interest in a full and
timely manner that constitute “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended, and are (a)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged, or (b) to the extent acceptable to the Rating
Agencies, other “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, as amended.

 

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect in the State in which applicable Individual Property is located.

 

Section 1.2           Principles of Construction. The following rules of
construction shall be applicable for all purposes of this Agreement and all
documents or instruments supplemental hereto, unless the context otherwise
clearly requires:

 

(a)          any pronoun used herein shall be deemed to cover all genders, and
words importing the singular number shall mean and include the plural number,
and vice versa;

 

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(b)          the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or”;

 

(c)          an Event of Default shall “continue” or be “continuing” until such
Event of Default has been waived in writing by Lender;

 

(d)          no inference in favor of or against any party shall be drawn from
the fact that such party has drafted any portion hereof or any other Loan
Document;

 

(e)          the cover page (if any) of, all recitals set forth in, and all
Exhibits to, any Loan Document are hereby incorporated therein;

 

(f)          References herein to “the Property or any portion thereof” and
words of similar import shall be deemed to refer, as applicable, to any portion
of the Property taken as a whole (including any Individual Property) and any
portion of any Individual Property;

 

(g)          all references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified;

 

(h)          all uses of the words “include,” “including” and similar terms
shall be construed as if followed by the phrase “without being limited to”
unless the context shall indicate otherwise;

 

(i)          unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in any Loan Document shall
refer to such Loan Document as a whole and not to any particular provision of
such Loan Document;

 

(j)          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;

 

(k)          all captions to the Sections in any Loan Document are used for
convenience and reference only and in no way define, limit or describe the scope
or intent of, or in any way affect, such Loan Document;

 

(l)          the words “to Borrower’s knowledge,” “to the knowledge of
Borrower,” “to Borrower’s best knowledge,” “to the best knowledge of Borrower”
and words of similar meaning shall mean to the actual knowledge of Sean Leahy
and Russ Winget (provided that such persons shall not have any personal
liability with respect to any matter related to the Loan) as of the date of
making of the representation or warranty in question, or persons holding the
same or equivalent positions with the Borrower or the Guarantor if such persons
are no longer employed by the Borrower or Guarantor as of the date of making of
the representation or warranty in question;

 

(m)          the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or”; and

 

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(n)          Wherever Lender’s judgment, consent, approval or discretion is
required under any Loan Document for any matter or thing or Lender shall have an
option, election, or right of determination or any other power to decide any
matter relating to the terms and conditions of such Loan Document, including any
right to determine that something is satisfactory or not (“Decision Power”),
such Decision Power shall be exercised in the sole and absolute discretion of
Lender unless otherwise expressly stated. Such Decision Power and each other
power granted to Lender may be exercised by Lender or by any authorized agent of
Lender (including any servicer and/or attorney-in-fact), and Borrower hereby
expressly agrees to recognize the exercise of such Decision Power by such
authorized agent. Without limiting the generality of the foregoing, any
authorized agent of Lender (including any servicer and/or attorney-in-fact) is
hereby specifically authorized to remove a trustee under any applicable Security
Instrument and select and appoint a successor trustee with respect to such
Security Instrument.

 

ARTICLE II - GENERAL TERMS

 

Section 2.1           Loan Commitment; Disbursement to Borrower.

 

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

 

2.1.2           Single Disbursement to Borrower. Borrower may request and
receive only one (1) borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
Borrower acknowledges and agrees that the Loan has been fully funded as of the
Closing Date.

 

2.1.3           The Note, Security Instrument and Loan Documents. The Loan shall
be evidenced by the Note and secured by the Security Instruments and the other
Loan Documents.

 

2.1.4           Use of Proceeds. Borrower shall use the proceeds of the Loan to
(a) acquire the Property or repay and discharge any existing loans relating to
the Property, (b) pay all past due basic carrying costs, if any, with respect to
the Property, (c) make deposits into the Reserve Funds on the Closing Date in
the amounts provided herein, (d) pay costs and expenses incurred in connection
with the closing of the Loan, as approved by Lender, (e) fund any working
capital requirements of the Property and (f) distribute the balance, if any, to
Borrower.

 

Section 2.2           Interest Rate.

 

2.2.1           Interest Rate. Interest on the Outstanding Principal Balance of
the Loan shall accrue at the Interest Rate or as otherwise set forth in this
Agreement or in the Note from (and including) the Closing Date to but excluding
the Maturity Date.

 

2.2.2           Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the relevant Accrual Period by (b) a daily rate based on the
Interest Rate and a three hundred sixty (360) day year by (c) the outstanding
principal balance of the Loan. Borrower acknowledges that the calculation method
for interest described herein results in a higher effective interest rate than
the numeric Interest Rate and Borrower hereby agrees to this calculation method.

 

 34 

 

 

2.2.3           Default Rate. Upon the occurrence of an Event of Default
(including the failure of Borrower to make full payment on the Maturity Date),
Lender shall be entitled to receive and Borrower shall pay interest on the
Outstanding Principal Balance at the Default Rate. Interest shall accrue and be
payable at the Default Rate from the occurrence of an Event of Default until all
Events of Default have been waived in writing by Lender in its discretion. Such
accrued interest shall be added to the Outstanding Principal Balance, and
interest shall accrue thereon at the Default Rate until fully paid. Such accrued
interest shall be secured by the Security Instrument and other Loan Documents.
Borrower agrees that Lender’s right to collect interest at the Default Rate is
given for the purpose of compensating Lender at reasonable amounts for Lender’s
added costs and expenses that occur as a result of Borrower’s default and that
are difficult to predict in amount, such as increased general overhead,
concentration of management resources on problem loans, and increased cost of
funds. Lender and Borrower agree that Lender’s collection of interest at the
Default Rate is not a fine or penalty, but is intended to be and shall be deemed
to be reasonable compensation to Lender for increased costs and expenses that
Lender will incur if there occurs an Event of Default hereunder. Collection of
interest at the Default Rate shall not be construed as an agreement or privilege
to extend the Maturity Date or to limit or impair any rights and remedies of
Lender under any Loan Documents. If judgment is entered on the Note, interest
shall continue to accrue post-judgment at the greater of (a) the Default Rate or
(b) the applicable statutory judgment rate.

 

2.2.4           Usury Savings. This Agreement, the Note and the other Loan
Documents are subject to the express condition that at no time shall Borrower be
obligated or 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 of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.

 

Section 2.3           Loan Payment. Payments of principal, interest, and Late
Charges (as defined in the Note) shall be made as provided in the Note.

 

Section 2.4           Prepayments. Except as otherwise provided in Section 9 of
the Note, Borrower shall not have the right to prepay the Loan in whole or in
part prior to the Maturity Date.

 

Section 2.5           Intentionally Omitted.

 

 35 

 

 

Section 2.6           Release of Property. Except as set forth in this Section
2.6, no repayment, prepayment of all or any portion of the Loan shall cause,
give rise to a right to require, or otherwise result in, the release of the Lien
of the Security Instrument on the Property.

 

2.6.1     Release of Property. (a) If Borrower has the right to and has elected
to prepay in full the Loan in accordance with this Agreement and the Note, upon
satisfaction of the requirements of Section 2.4 and Section 9 of the Note, as
applicable, and this Section 2.6, each applicable Individual Property shall be
released from the Lien of the applicable Security Instrument.

 

(b)          In connection with the release of each applicable Security
Instrument, Borrower shall submit to Lender, not less than fifteen (15) days
prior to the Prepayment Date, a release of Lien (and related Loan Documents) for
each Individual Property for execution by Lender. Each such release shall be in
a form appropriate in the jurisdiction in which the applicable Individual
Property is located and that would be satisfactory to a prudent lender and
contains standard provisions, if any, protecting the rights of the releasing
lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer’s Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement. Borrower shall reimburse Lender and
Servicer for any reasonable out-of-pocket costs and expenses Lender and Servicer
incur arising from such release (including reasonable out-of-pocket attorneys’
fees and expenses) and Borrower shall pay, in connection with such release, (i)
all recording charges, filing fees, taxes or other reasonable expenses payable
in connection therewith, and (ii) to any Servicer, a processing fee in an amount
determined by Lender or Servicer in its reasonable discretion provided such
processing fee shall be in an amount that is regularly and customarily charged
by loan servicers with respect to the release of a Security Instrument.

 

(c)          If, in connection with a payment in full of the Loan, Borrower
advises Lender that it desires Lender to assign the Loan Documents to a Person
designated by Borrower (the “Full Assignee Lender”), then Lender shall cooperate
in all reasonable respects with Borrower to assign and deliver originals of the
Loan Documents to the Full Assignee Lender or as directed by Borrower, including
(i) an allonge with respect to the Note, (ii) executed  assignments of the
recorded Loan Documents, and (iii) such other instruments of conveyance,
assignment, termination, severance and release (including appropriate UCC-3
termination statements and terminations of rent direction notices to Tenants and
other third parties), all in recordable form as may reasonably be requested by
Borrower to evidence such assignment; provided, however, that such assignment
shall be made without representation, warranty or covenant by Lender (other than
that Lender is the lawful owner of the Loan Documents, and Lender has the power
to assign the same and the outstanding principal balance thereof).

 

2.6.2      Partial Release. Provided no Event of Default shall have occurred and
be continuing, Borrower shall have the right at any time after June 1, 2020, and
prior to the Maturity Date to obtain the release (the “Partial Release”) of any
one or more of the Individual Properties (individually and collectively, as the
context requires, the “Released Property”) from the lien of the applicable
Security Instrument thereon (and related Loan Documents) and the release of
Borrower’s obligations under the Loan Documents with respect to such Released
Property (other than those expressly stated to survive), upon the satisfaction
of each of the following conditions precedent:

 

 36 

 

 

(a)          Borrower shall provide Lender with thirty (30) days (or a shorter
period of time if permitted by Lender in its sole discretion) prior written
notice of the proposed Partial Release (the date of Lender’s receipt of such
notice shall be referred to herein as a “Partial Release Notice Date”).

 

(b)          Any and all sums due and payable to Lender under the Loan Documents
on each of the Partial Release Notice Date and the date of consummation of the
Partial Release, shall be fully paid and no Event of Default (other than an
Event of Default which applies only to the Released Property) shall be
continuing as of the Partial Release Notice Date or the date of consummation of
the Partial Release.

 

(c)          Borrower shall have paid or reimbursed Lender for all out-of-pocket
expenses reasonably incurred by Lender in connection with the Partial Release
(including without limitation, reasonable out-of-pocket attorneys’ fees,
appraisal fees, recording costs and trustee’s fees).

 

(d)          Borrower shall submit to Lender, not less than ten (10) days prior
to the date of such Partial Release, a release of lien (and related Loan
Documents) for the Released Property for execution by Lender. Such release shall
be in a form appropriate in each jurisdiction in which the Released Property is
located and shall contain standard provisions, if any, protecting the rights of
Lender. In addition, Borrower shall provide all other documentation as may
reasonably be required to satisfy the Prudent Lender Standard in connection with
such release, together with an Officer’s Certificate certifying that such
documentation (i) is in compliance with all applicable Legal Requirements, and
(ii) will effect such release in accordance with the terms of this Agreement.

 

(e)          The future uses of the Released Property may not violate any
exclusivity or other provision in any Lease pertaining to any Individual
Property not being released nor any covenant, restriction, condition or other
title matter then encumbering the Property.

 

(f)          Intentionally omitted.

 

(g)          If required under the operative documents with respect to any
Securitization, Lender shall have received evidence in writing from any
applicable Rating Agency to the effect that the proposed Partial Release will
not result in a qualification, reduction, downgrade or withdrawal of any rating
initially assigned or to be assigned in such Securitization, or a waiver from
any such rating agency stating that it has declined to review the Partial
Release.

 

(h)          The Partial Release shall be permitted under REMIC Requirements in
effect as of the consummation of the Partial Release, and, if reasonably
required by Lender to confirm the same, Borrower shall (i) deliver to Lender
opinions of counsel satisfying the Prudent Lender Standard and acceptable the
Rating Agencies (issued by counsel satisfying the Prudent Lender Standard and
acceptable to the Rating Agencies) (1) stating that the Partial Release will not
cause (A) the Loan to cease to be a “qualified mortgage” within the meaning of
Section 860G of the Code, either under the provisions of Treasury Regulation
Sections 1.860G-2(a)(8) or 1.860G-2(b) (as such regulations may be amended or
superseded from time to time) or under any other provision of the Code or
otherwise, and (B) the failure of any REMIC Trust or any other entity that holds
the Note to maintain its tax status and (2) with respect to such other matters
as may be required by Lender and (ii) pay all of Lender’s reasonable
out-of-pocket costs and expenses and the costs and expenses of the Rating
Agencies in connection with the Partial Release, including, without limitation,
reasonable out-of-pocket costs counsel fees.

 

 37 

 

 

(i)          As of the date of consummation of the Partial Release, after giving
effect to the release of the lien of the Security Instrument(s) encumbering the
Released Property, the Debt Service Coverage Ratio with respect to the remaining
Individual Properties (based upon the trailing twelve (12) month period) shall
be equal to or greater than the greater of (i) the Debt Service Coverage Ratio
as of the Closing Date and (ii) the Debt Service Coverage Ratio immediately
prior to the consummation of the Partial Release.

 

(j)          As of the date of consummation of the Partial Release, after giving
effect to the release of the lien of the Security Instrument(s) encumbering the
Released Property, the Debt Yield with respect to the remaining Individual
Properties (based upon the trailing twelve (12) month period) shall be no less
than the greater of (i) the Debt Yield as of the Closing Date or (ii) the Debt
Yield immediately prior to the consummation of the Partial Release.

 

(k)          Borrower shall (i) partially prepay the Debt in accordance with
Section 9 of the Note in an amount equal to 115% (120% if the Released Property
is being transferred to a Borrower Affiliate) of the Allocated Loan Amount for
the Released Property (the “Release Amount”), (ii) unless such prepayment is
tendered on a Payment Date, pay to Lender an amount equal to the interest that
would have accrued on the amount being prepaid for the full Accrual Period had
the prepayment not been made and (iii) pay to Lender the Prepayment
Consideration (as defined in the Note) to the extent that such prepayment occurs
at any time other than on or after the Permitted Par Prepayment Date. Any
portion of the Release Amount applied to the principal amount of the Debt shall
be applied first, to reduce the Allocated Loan Amount attributable to the
Released Property to zero and second, pro rata to reduce the Allocated Loan
Amounts of each of the other remaining Individual Properties. Notwithstanding
the foregoing, in the event that Lender has applied the Net Proceeds from a
Casualty or Condemnation of an Individual Property to the repayment of the Debt
and a Partial Release of such Individual Property is thereafter completed, (1)
the Release Amount for such Individual Property shall be reduced by the amount
of such Net Proceeds so applied, and (2) no Prepayment Consideration or similar
sum shall be due in connection therewith.

 

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(l)          If, in connection with a Partial Release, Borrower advises Lender
that it desires Lender to assign the applicable Security Instrument and other
Loan Documents (collectively, the “Assigned Loan Documents”) encumbering the
Released Properties that are the subject of a Partial Release (collectively, the
“Assigned Properties”) to a Person designated by Borrower (the “Partial Assignee
Lender”), then Lender shall (a) cooperate in all reasonable respects with
Borrower (i) to split and sever each Promissory Note constituting the Note into
two Notes, with one such Note (each, a “Remaining Note”) continuing to evidence
the portion of the Loan secured by the Individual Properties that are not
Assigned Properties (collectively, the “Remaining Properties”), and the other
such Note (each, an “Assigned Note") securing the portion of the Loan to be
secured by the Assigned Properties, and (ii) to assign the Assigned Note and the
Assigned Loan Documents to the Partial Assignee Lender, with assignments of the
recorded Assigned Loan Documents in recordable form and otherwise in form and
substance reasonably acceptable to Lender and the Partial Assignee Lender, (b)
deliver to the Partial Assignee Lender or as directed by Borrower the originally
executed Assigned Note, (c) execute and deliver to the Partial Assignee Lender
or as directed by Borrower, (i) an allonge with respect to the Assigned Note,
(ii) executed  assignments of the recorded Assigned Loan Documents (and the
original applicable Assigned Loan Documents or a certified copy of record to the
assignee thereof), and (iii) such other instruments of conveyance, assignment,
termination, severance and release (including appropriate UCC-3 termination
statements and terminations of rent direction notices to Tenants and other third
parties), all in recordable form as may reasonably be requested by Borrower to
evidence such assignment; provided, however, that such assignment shall be made
without representation, warranty or covenant by Lender (other than that Lender
is the lawful owner of such Assigned Note and the Assigned Loan Documents, and
Lender has the power to assign the same and the outstanding principal balance
thereof). In connection with any assignment effected in accordance with this
paragraph, Borrower shall deliver the following: (I) New York enforceability and
entity authority opinion letters, reasonably required by Lender, (II)
organizational documents of Borrower, Guarantor and any entities executing
documents on behalf of Borrower or Guarantor, as reasonably required by Lender,
and (III) such other documents and agreements as may be reasonable required by
Lender.

 

Notwithstanding anything to the contrary contained in this Section 2.6.2, the
parties hereto hereby acknowledge and agree that after the Securitization of the
Loan (or any portion thereof or interest therein), with respect to any Lender
approval or similar discretionary rights over any matters contained in this
Section 2.6.2, such rights shall be construed such that Lender shall only be
permitted to withhold its consent or approval with respect to any such matters
if the same fails to meet the Prudent Lender Standard.

 

2.6.3      Property Substitution. Provided no Event of Default shall have
occurred and be continuing, at any time after May 1, 2019, and prior to the
Maturity Date, Borrower may elect to cause Lender to release any one or more of
the Individual Properties (individually and collectively, as the context
requires, the “Substitution Release Property”) from the lien of the applicable
Security Instrument, provided that simultaneously with such release, Borrower
shall encumber one or more parcels of real property (individually and
collectively, as the context requires, the “Substitute Property”) as a
substitute for the Substitution Release Property (each such permitted release
and encumbrance, a “Substitution”), all subject to the satisfaction of each of
the following conditions precedent:

 

(a)          Borrower shall provide Lender with forty-five (45) days (or a
shorter period of time if permitted by Lender in its sole discretion) prior
written notice of the proposed Substitution;

 

(b)          Any and all sums due and payable to Lender under the Loan Documents
on the date of consummation of the Substitution shall be fully paid and no Event
of Default (other than an Event of Default which applies only to the
Substitution Release Property) shall be continuing as of the date of
consummation of the Substitution;

 

(c)          Intentionally omitted;

 

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(d)          Lender shall have received current Appraisals of the Substitute
Property and the Substitution Release Property prepared within ninety (90) days
prior to the date of consummation of the Substitution showing an appraised value
for the Substitute Property equal to or greater than the appraised value of the
Substitution Release Property as of the date of such Appraisals;

 

(e)          Lender shall have received a physical condition report with respect
to the Substitute Property or such other evidence, which shall be in such form,
as would typically be required under the Prudent Lender Standard, prepared
within ninety (90) days prior to the date of consummation of the Substitution,
which physical conditions report shall not recommend any immediate repairs with
respect to the Substitute Property and shall show that the Substitute Property
is in good condition and repair and free of damage or waste, and is in a
physical condition at least equal to that of the Substitution Release Property
immediately prior to the date of consummation of the Substitution or Borrower
shall have delivered to Lender an amount equal to 115% of the cost of completing
any recommended work (which sum Lender shall disburse to Borrower to complete
such work) and agrees to complete such work within such time as required by
Lender in its reasonable discretion;

 

(f)          Borrower shall have delivered to Lender evidence reasonably
satisfactory to Lender that the Substitute Property: (I) is substantially
similar or better in use and quality to the Substitution Release Property as and
(II) is in all material respects in compliance with all applicable law
(including, without limitation, zoning, subdivision, use and building laws);

 

(g)          Borrower shall have delivered to Lender, and Lender shall have
approved in its reasonable discretion, lease(s) with respect to the Substitute
Property, together with an estoppel agreement and/or subordination,
non-disturbance and attornment agreement, as may be reasonably required in
accordance with the Prudent Lender Standard in form and substance substantially
similar to the estoppel certificate and the subordination, nondisturbance and
attornment agreements received by Lender in connection with the closing of the
Loan with such reasonable changes as may be requested by the applicable tenants;

 

(h)          Borrower shall have delivered to Lender copies of all current
service contracts with respect to the Substitute Property;

 

(i)          Lender shall have received a Phase I environmental report, prepared
by a company reasonably satisfactory to Lender, and reasonably satisfactory in
form and substance to Lender in accordance with the Prudent Lender Standard,
dated not more than one hundred twenty (120) days prior to the date of
consummation of the Substitution and, if and to the extent recommended under the
Phase I, a Phase II environmental report reasonably acceptable to Lender in
accordance with the Prudent Lender Standard, which concludes that the Substitute
Property does not contain any Hazardous Substances in violation of Environmental
Law and is not subject to any significant risk of contamination in violation of
Environmental Law from any off site Hazardous Substances;

 

 40 

 

 

(j)          Borrower shall have executed, acknowledged and delivered to Lender
(I) a Security Instrument, an Assignment of Leases and Rents and UCC-1 Financing
Statements with respect to the Substitute Property, together with a letter from
Borrower countersigned by a title insurance company acknowledging receipt of
such Security Instrument, Assignment of Leases and Rents and UCC-1 Financing
Statement and agreeing to record or file, as applicable, such Security
Instrument, Assignment of Leases and Rents and the UCC-1 Financing Statement in
the applicable recording office of the county in which the Substitute Property
is located, and to file a UCC-1 Financing Statement in the office of the
Secretary of State (or other central filing office) of the state in which the
applicable Borrower is formed, so as to effectively create upon such recording
and filing a valid and enforceable first priority lien upon the Substitute
Property, in favor of Lender (or such other trustee as may be desired under
local law), subject only to the Permitted Encumbrances, (II) an Environmental
Indemnity with respect to the Substitute Property from Borrower, (III) a
ratification by any Guarantor of its obligations under the Loan Documents, and
(IV) such other additions to, or modifications or amendments of, the Loan
Documents Lender reasonably deems necessary due to the Substitution. The
Security Instrument, Assignment of Leases and Rents, UCC-1 Financing Statements
and Environmental Indemnity shall be the same in form and substance as the
counterparts of such documents executed and delivered with respect to the
Substitution Release Property subject to modifications reflecting only the
Substitute Property as the Individual Property and such modifications reflecting
the laws of the state in which the Substitute Property is located. The Security
Instrument encumbering the Substitute Property shall secure all amounts then
outstanding under the Note, provided that in the event that the jurisdiction in
which the Substitute Property is located imposes a mortgage recording,
intangibles or similar tax and does not permit the allocation of indebtedness
for the purpose of determining the amount of such tax payable, the principal
amount secured by such Security Instrument shall be equal to one hundred
twenty-five percent (125%) of the Allocated Loan Amount for the Substitute
Property. The percentage of the Loan allocated to the Substitute Property (such
amount being hereinafter referred to as the “Substitute Allocated Loan Amount”)
shall equal the Allocated Loan Amount of the Substitution Release Property;

 

(k)          Lender shall have received (I) to the extent available at
commercially reasonable cost and to the extent the Loan continues to be secured
by more than one (1) Property, any “tie-in” or similar endorsement, together
with a “first loss” endorsement, to each Title Insurance Policy insuring the
lien of the existing Security Instruments as of the date of consummation of the
Substitution with respect to the Title Insurance Policy insuring the lien of the
Security Instrument with respect to the Substitute Property and (II) a Title
Insurance Policy (or a marked, signed and re-dated commitment to issue such
Title Insurance Policy) insuring the lien of the Security Instrument encumbering
the Substitute Property, issued by the title company that issued the Title
Insurance Policies insuring the lien of the existing Security Instruments and
dated as of the date of consummation of the Substitution, with reinsurance and
direct access agreements that replace such agreements issued in connection with
the Title Insurance Policy, if any, insuring the lien of the Security Instrument
encumbering the Substitution Release Property. The Title Insurance Policy issued
with respect to the Substitute Property shall (1) to the extent that the Loan
continues to be secured by more than one (1) Property, either provide coverage
in the amount of the Substitute Allocated Loan Amount if the “tie-in” or similar
endorsement described above is available at commercially reasonable cost or, if
such endorsement is not available, in an amount equal to one hundred twenty-five
percent (125%) of the Substitute Allocated Loan Amount, (2) insure Lender that
the relevant Security Instrument creates a valid first lien on the Substitute
Property encumbered thereby, free and clear of all exceptions from coverage
other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (3) contain such
endorsements and affirmative coverages as are then available and are contained
in the Title Insurance Policies insuring the liens of the existing Security
Instruments to the extent available at a commercially reasonable cost, and such
other endorsements or affirmative coverage that a prudent institutional mortgage
lender would reasonably require, and (4) name Lender and its successors and
assigns as the insured. Lender also shall have received copies of paid receipts
or other evidence showing that all premiums in respect of such endorsements and
Title Insurance Policies have been paid;

 

 41 

 

 

(l)          Lender shall have received a current survey for the Substitute
Property, certified to the title company and Lender and its successors and
assigns, in the same form and having the same content as the certification of
the survey of the Substitution Release Property or as otherwise acceptable to
Lender in its reasonable discretion (taking into account the extent any such
content is not then customary in the state in which the Substitute Property is
located) prepared by a professional land surveyor licensed in the state in which
the Substitute Property is located. Such survey shall reflect the same legal
description contained in the Title Insurance Policy relating to such Substitute
Property and shall include, among other things, a metes and bounds description
of the real property comprising part of such Substitute Property (unless such
real property has been designated by lot number on a recorded plat). The
surveyor’s seal shall be affixed to each survey and each survey shall certify
whether or not the surveyed property is located in a “one-hundred-year flood
hazard area”;

 

(m)          Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance required under
this Agreement have been satisfied with respect to the Substitute Property and
evidence of the payment of all Insurance Premiums payable for the existing
policy period;

 

(n)          The Person transferring the Substitute Property to Borrower shall
be solvent and shall be making such transfer on an arm’s length basis and for
fair consideration, and Borrower and such Person shall deliver certifications
and evidence to such effect and such other certifications as Lender shall
reasonably require to assure itself that the Substitution does not constitute a
fraudulent conveyance on the part of any Person (assuming such Person was not
solvent at the time of the Substitution);

 

(o)          In the event the Substitution Release Property is subject to a
Management Agreement along with one or more additional Properties, Lender shall
have received a certified copy of an amendment to the Management Agreement
reflecting the deletion of the Substitution Release Property and, if the
Substitute Property will be managed by the same Manager thereunder, the addition
of the Substitute Property as a property managed pursuant thereto and Manager
shall have executed and delivered to Lender an amendment to the Assignment of
Management Agreement reflecting such amendment to the Management Agreement. In
the event that the Substitution Release Property is subject to a Management
Agreement relating only to such Substitution Release Property, Lender shall have
received a certified copy of a new Management Agreement for the Substitute
Property on substantially the same financial terms as the Management Agreement
for the Substitution Release Property and the Manager thereunder shall have
executed and delivered to Lender an Assignment of Management Agreement with
respect to such new Management Agreement on substantially the same terms as used
in connection with the Substitution Release Property or such other terms as
would be acceptable in accordance with the Prudent Lender Standard;

 

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(p)          The entity which shall be the owner of the Substitute Property
following the Substitution shall join in the Loan as a “Borrower” and shall
satisfy all of the requirements of a Borrower under the Loan Documents
(including, without limitation, being a Special Purpose Entity), and Lender
shall have received and approved copies of the organizational documents of such
new Borrower, all certified to be true, correct and complete;

 

(q)          Lender shall have received opinions of counsel satisfying the
Prudent Lender Standard and acceptable the Rating Agencies (issued by counsel
satisfying the Prudent Lender Standard and acceptable to the Rating Agencies)
(I) stating that the Loan Documents delivered with respect to the Substitute
Property are valid and enforceable in accordance with their terms, subject to
the laws applicable to creditors’ rights and equitable principles, that Borrower
is qualified to do business and in good standing under the laws of the
jurisdiction where the Substitute Property is located and including such other
opinions as Lender requires which are consistent with the opinions obtained in
connection with the closing of the Loan, and (II) stating that the Loan
Documents delivered with respect to the Substitution were, among other things,
duly authorized, executed and delivered and that the execution and delivery of
such Loan Documents and the performance by Borrower of its obligations
thereunder will not to the actual knowledge of the person delivering such
opinion, cause a breach of, or a default under, any indenture, mortgage, deed of
trust, management agreement, lease, judgment, decree or order to which Borrower
is a party or to which it or its properties are bound and including such other
opinions as Lender reasonably requires which are consistent with the opinions
obtained in connection with the closing of the Loan;

 

(r)          The Substitution shall be permitted under REMIC Requirements in
effect as of the consummation of the Substitution, and, if reasonably required
by Lender to confirm the same, Borrower shall (i) deliver to Lender opinions of
counsel satisfying the Prudent Lender Standard and acceptable the Rating
Agencies (issued by counsel satisfying the Prudent Lender Standard and
acceptable to the Rating Agencies) (1) stating that the Substitution will not
cause (A) the Loan to cease to be a “qualified mortgage” within the meaning of
Section 860G of the Code, either under the provisions of Treasury Regulation
Sections 1.860G-2(a)(8) or 1.860G-2(b) (as such regulations may be amended or
superseded from time to time) or under any other provision of the Code or
otherwise, and (B) the failure of any REMIC Trust or any other entity that holds
the Note to maintain its tax status and (2) with respect to such other matters
as may be required by Lender and (ii) pay all of Lender’s reasonable
out-of-pocket costs and expenses and the costs and expenses of the Rating
Agencies in connection with the Substitution, including, without limitation,
reasonable out-of-pocket costs counsel fees;

 

(s)          Borrower shall have acquired fee simple title to the Substitution
Property, or a leasehold interest in the Substitution Property pursuant to a
ground lease with terms that are generally financeable in connection with a loan
that is involved in a Securitization;

 

(t)          Lender shall have received evidence in writing from any applicable
Rating Agency to the effect that the proposed Substitution will not result in a
qualification, reduction, downgrade or withdrawal of any rating initially
assigned or to be assigned in such Securitization, or a waiver from any such
rating agency stating that it has declined to review the Substitution;

 

 43 

 

 

(u)          The Substitution shall be permitted under REMIC Requirements in
effect as of the date of consummation of the Substitution;

 

(v)         As of the date of consummation of the Substitution, the Debt Service
Coverage Ratio (based upon the trailing twelve (12) month period)with respect to
the Individual Properties securing the Loan (including the Substitute Property
and excluding the Substitution Release Property) shall be equal to greater than
the Debt Service Coverage Ratio (based upon the trailing twelve (12) month
period) with respect to the Individual Properties securing the Loan immediately
prior to the consummation of the Substitution;

 

(w)          The Allocated Loan Amount of the Substitution Release Property,
together with the Allocated Loan Amounts of the Substitution Release Property
involved in any prior completed Substitutions does not exceed thirty percent
(30%) of the Original Principal Amount as of the closing date of the Loan;

 

(x)          Unless otherwise agreed to by Lender, no more than four (4)
Substitutions will be permitted, it being agreed that a Substitution involving
multiple properties shall be deemed one (1) Substitution; and

 

(y)          Lender shall have received such other approvals, opinions,
documents and information in connection with the Substitution as reasonably
requested by Lender.

 

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, if the Loan is included in a REMIC Trust and immediately after the
Substitution the ratio of the unpaid principal balance of the Loan to the value
of the remaining Property (taking into account only the real property and
excluding personal property and going concern value, if any) is greater than
125% (such value to be determined, in Lender’s sole discretion, by any
commercially reasonable method permitted to a REMIC Trust), the Outstanding
Principal Balance must be paid down by a “qualified amount" under Internal
Revenue Service Revenue Procedure 2010-30 (as the same may be modified,
supplemented, superseded or amended from time to time), unless Lender receives
an opinion of counsel (in form and substance, and from counsel, each acceptable
to Lender) that if such amount is not paid, the applicable Securitization will
not fail to maintain its status as a REMIC Trust as a result of the related
release of such portion of the Lien of the Security Instrument. Any such
prepayment shall be deemed a voluntary prepayment and shall be subject to
Section 2.5 hereof.

 

Notwithstanding anything to the contrary contained in this Section 2.6.3, the
parties hereto hereby acknowledge and agree that after the Securitization of the
Loan (or any portion thereof or interest therein), with respect to any Lender
approval or similar discretionary rights over any matters contained in this
Section 2.6.3, such rights shall be construed such that Lender shall only be
permitted to withhold its consent or approval with respect to any such matters
if the same fails to meet the Prudent Lender Standard.

 

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2.6.4      Partial Release – Munster Release Parcel. In connection with a
settlement of the pending condemnation action with respect to the Munster
Release Parcel materially in accordance with the information provided by
Borrower to Lender in connection with the closing of the Loan, Lender agrees
that it shall execute and deliver to Borrower the release of the Munster Release
Parcel described in this section within ten (10) Business Days after the date of
Lender’s receipt of Borrower’s written request for such release so long as (a)
the front page of the request package to Lender is marked, in not less than
fourteen (14) point bold face type, underlined and using all capital letters, as
follows: “LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT
OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER”, and (b) such request package also contains the requested release,
which satisfies the requirements of the second sentence of Section 2.6.1(b)
hereof, of the Munster Release Parcel from the lien of the applicable Security
Instrument (and related Loan Documents), together with executed copies of all
documents Borrower is obligated to deliver to the applicable Governmental
Authority in connection with such settlement. Borrower shall reimburse Lender
for any reasonable out-of-pocket costs and expenses Lender incurs arising from
such release (including reasonable out-of-pocket attorneys’ fees and expenses)
and Borrower shall pay all recording charges, filing fees, taxes or other
expenses payable in connection with such release.

 

Section 2.7           Clearing Account/Cash Management.

 

2.7.1      Clearing Account. (a) During the term of the Loan, Borrower shall
establish and maintain an Eligible Account (the “Clearing Account”) with
Clearing Bank for the benefit of Lender, which Clearing Account shall be under
the sole dominion and control of Lender. The Clearing Account shall be entitled
in the name of Borrower for the benefit of Lender. Borrower hereby grants to
Lender a first-priority security interest in the Clearing Account and all
deposits at any time contained therein and the proceeds thereof and shall take
all actions necessary to maintain in favor of Lender a perfected first priority
security interest in the Clearing Account, including filing UCC-1 Financing
Statements and continuations thereof. Lender and Servicer shall have the sole
right to make withdrawals from the Clearing Account. All costs and expenses for
establishing and maintaining the Clearing Account shall be paid by Borrower. All
monies on deposit in the Clearing Account shall be deemed additional security
for the Debt. The Clearing Account Agreement and Clearing Account shall remain
in effect until the Loan has been repaid in full.

 

(b)          Borrower shall, or shall cause Manager to, (i) within ten (10) days
of the Closing Date with respect to Leases in existence on the date hereof and
(ii) simultaneously with the execution of any Lease entered into after the date
hereof, deliver Tenant Direction Letters to all Tenants to deliver all Rents
payable under their respective Leases directly to the Clearing Account. Without
the prior written consent of Lender, neither Borrower nor Manager shall
(i) terminate, amend, revoke or modify any Tenant Direction Letter in any manner
or (ii) direct or cause any Tenant to pay any amount in any manner other than as
provided in the Tenant Direction Letter. Borrower shall, and shall cause Manager
to, deposit all amounts received by Borrower or Manager constituting Rents into
the Clearing Account within one (1) Business Day after receipt thereof. Until so
deposited, all Rents received by Borrower or Manager shall be held in trust for
the benefit of Lender and shall not be commingled with any other funds or
property of Borrower or Manager.

 

(c)          Borrower shall obtain from Clearing Bank its agreement to transfer
on each Business Day all amounts on deposit in the Clearing Account at the
direction of Borrower unless a Cash Sweep Period is in effect, in which case
such funds shall be transferred to the Cash Management Account.

 

 45 

 

 

(d)          Upon the occurrence of an Event of Default or any Bankruptcy Action
of Borrower, Lender may, in addition to any and all other rights and remedies
available to Lender, apply any sums then present in the Clearing Account to the
payment of the Debt in any order in its discretion.

 

(e)          The Clearing Account shall not be commingled with other monies held
by Borrower, Manager or Clearing Bank.

 

(f)          Borrower shall not further pledge, assign or grant any security
interest in the Clearing Account or the monies deposited therein or permit any
lien or encumbrance to attach thereto, or any levy to be made thereon, or any
UCC-1 Financing Statements, except those naming Lender as the secured party, to
be filed with respect thereto.

 

(g)          Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, and demands, and actual
out-of-pocket liabilities, losses, damages (excluding, in all events,
consequential, punitive, special, exemplary and indirect damages), obligations
and costs and expenses (including litigation costs and reasonable out-of-pocket
attorneys’ fees and expenses) arising from or in any way connected with the
Clearing Account or the Clearing Account Agreement (unless arising from the
gross negligence, fraud or willful misconduct of Lender) or the performance of
the obligations for which the Clearing Account was established.

 

(h)          Upon (i) Clearing Bank ceasing to be an Eligible Institution,
(ii) the Clearing Account ceasing to be an Eligible Account, (iii) any
resignation by Clearing Bank or termination of the Clearing Account Agreement by
Clearing Bank or Lender or (iv) the occurrence and continuance of an Event of
Default, Borrower shall, within fifteen (15) days of Lender’s written request,
(A) terminate the existing Clearing Account Agreement, (B) appoint a new
Clearing Bank (which such Clearing Bank shall (I) be an Eligible Institution,
(II) other than during the continuance of an Event of Default, be selected by
Borrower and approved by Lender and (III) during the continuance of an Event of
Default, be selected by Lender), (C) cause such Clearing Bank to open a new
Clearing Account (which such account shall be an Eligible Account) and enter
into a new Clearing Account Agreement with Lender on substantially the same
terms and conditions as the previous Clearing Account Agreement and (D) send any
notices required pursuant to the terms hereof relating to such new Clearing
Account Agreement and Clearing Account and new Tenant Direction Letters.
Borrower constitutes and appoints Lender its true and lawful attorney-in-fact
with full power of substitution to complete or undertake any action required of
Borrower under this Section 2.7.1 in the name of Borrower in the event Borrower
fails to do the same. Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked.

 

 46 

 

 

2.7.2     Cash Management Account. (a) Upon the occurrence of a Cash Sweep
Event, a segregated Eligible Account (the “Cash Management Account”) shall be
established and maintained with Agent in Borrower’s name for the benefit of
Lender, which Cash Management Account shall be under the sole dominion and
control of Lender. Borrower hereby grants to Lender a first priority security
interest in the Cash Management Account and all deposits at any time contained
therein and the proceeds thereof and shall take all actions necessary to
maintain in favor of Lender a perfected first priority security interest in the
Cash Management Account, including filing UCC-1 Financing Statements and
continuations thereof. Lender and Servicer shall have the sole right to make
withdrawals from the Cash Management Account and all reasonable costs and
expenses for establishing and maintaining the Cash Management Account shall be
paid by Borrower.

 

(b)          The insufficiency of funds on deposit in the Cash Management
Account shall not relieve Borrower from the obligation to make any payments, as
and when due pursuant to this Agreement and the other Loan Documents, and such
obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.

 

(c)          All funds on deposit in the Cash Management Account during the
continuance of an Event of Default or any Bankruptcy Action of Borrower may be
applied by Lender in such order and priority as Lender shall determine.

 

(d)          Borrower hereby agrees that Lender may, at no cost or expense of
Borrower, modify the Cash Management Agreement for the sole purpose of
establishing additional sub-accounts in connection with any payments otherwise
required under this Agreement and the other Loan Documents and Lender shall
provide notice thereof to Borrower.

 

2.7.3     Payments Received under the Cash Management Agreement. Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing,
Borrower’s obligations with respect to the payment of the Monthly Debt Service
Payment Amount and amounts required to be deposited into the Reserve Funds, if
any, shall be deemed satisfied to the extent sufficient amounts are deposited in
the Cash Management Account to satisfy such obligations pursuant to this
Agreement on the dates each such payment is required, regardless of whether any
of such amounts are so applied by Lender.

 

ARTICLE III – INTENTIONALLY OMITTED

 

ARTICLE IV - REPRESENTATIONS AND WARRANTIES

 

Section 4.1           Borrower Representations. Borrower represents and warrants
as of the date hereof that:

 

4.1.1     Organization. Each Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own the
applicable Individual Property and to transact the businesses in which it is now
engaged. Borrower is duly qualified to do business and is in good standing in
the jurisdiction in which the applicable Individual Property is located and each
other jurisdiction where it is required to be so qualified in connection with
its businesses and operations. Borrower possesses all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to entitle it to own
the applicable Individual Property 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 applicable Individual Property. The direct and indirect
ownership interests in Borrower are as set forth on the organizational chart
attached hereto as Schedule III, and the direct and indirect ownership interests
in Borrower or the Property do not include any Prohibited Entity/Ownership
Structure.

 

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4.1.2     Proceedings. Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents. This Agreement and such other Loan Documents have been duly executed
and delivered by or on behalf of Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, except as such enforcement may be limited by (i)
bankruptcy, insolvency, fraudulent transfer, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally, and (ii) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

 

4.1.3     No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, management agreement or other
agreement or instrument to which Borrower is a party or by which any of the
Property or Borrower’s assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or any of
Borrower’s properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any court or any such
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents has been obtained and is
in full force and effect.

 

4.1.4     Litigation. There are no actions, suits or proceedings at law or in
equity, arbitrations, or governmental investigations by or before any
Governmental Authority or other agency now pending, filed, or, to Borrower’s
knowledge, threatened against or affecting Borrower, Guarantor or the Property
or any portion thereof, which would reasonably be expected to materially
adversely affect (a) title to the Property or any portion thereof (excepting the
Munster Release Parcel); (b) the validity or enforceability of the Security
Instruments (excepting with respect to the Munster Release Parcel); (c)
Borrower’s ability to perform under the Loan; (d) Guarantor’s ability to perform
under the Guaranty; (e) the use, operation or value of the Property or any
portion thereof; (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; or (h) the current
principal use of the Property or any portion thereof. Lender acknowledges the
existence of the pending condemnation action with respect to the Munster Release
Parcel, and Borrower acknowledges that such condemnation action does not affect
its representations made in items (a)-(h) above.

 

4.1.5     Agreements. Borrower is not a party to any agreement or instrument or
subject to any restriction which would reasonably be expected to materially and
adversely affect Borrower or the Property (or any portion thereof), or
Borrower’s business, properties or assets, operations or condition, financial or
otherwise. 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 agreement or instrument to which it is a party or by
which Borrower or the Property (or any portion thereof) is bound. Borrower has
no material financial obligation 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 (or any portion thereof) is otherwise bound,
other than (a) obligations incurred in the ordinary course of the operation of
the Property as permitted pursuant to clause (xxiii) of the definition of
“Special Purpose Entity” set forth in Section 1.1 hereof and (b) obligations
under the Loan Documents.

 

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4.1.6      Title. Borrower has a insurable leasehold estate in and to each
Ground Lease Property, insurable fee simple title to the real property
comprising part of the Property and good title to the balance of the Property,
free and clear of all Liens whatsoever except the Permitted Encumbrances, such
other Liens as may be expressly permitted pursuant to the Loan Documents and the
Liens created by the Loan Documents. The Permitted Encumbrances in the aggregate
do not materially and adversely affect the value, operation or use of the
Property (or any portion thereof) as currently used or Borrower’s ability to
repay the Loan. Each Security Instrument, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (a) a
valid, perfected first priority lien on the applicable Individual Property,
subject only to Permitted Encumbrances and the Liens created by the Loan
Documents and (b) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents.

 

4.1.7      Solvency. Borrower has (a) not entered into this transaction or
executed the Note, this Agreement or any other Loan Documents with the actual
intent to hinder, delay or defraud any creditor and (b) received reasonably
equivalent value in exchange for its obligations under such 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 will,
immediately following the making of the Loan, 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 debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt 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 obligations of Borrower). No
petition in bankruptcy has been filed against Borrower or any Person Controlling
Borrower in the last seven (7) years, and neither Borrower nor any Person
Controlling Borrower in the last seven (7) years 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 Persons Controlling Borrower
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 property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it or such
constituent Persons.

 

 49 

 

 

4.1.8      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, would reasonably be
expected to adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower (provided that the foregoing is
meant to relate specifically to Borrower and the Property and not, by way of
example only, to the economy of the United States or the location of the
Property or the medical profession).

 

4.1.9     No Plan Assets. Borrower does not sponsor, is not obligated to
contribute to, and is not itself an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code,
and 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, as
modified by Section 3(42) of ERISA. In addition, (a) Borrower is not a
“governmental plan” within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to any state or other statute ,
regulation or other restriction regulating investments of, or fiduciary
obligations with respect to, governmental plans within the meaning of Section
3(32) of ERISA which is similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code which, as of the date hereof, prohibit or otherwise
restrict the transactions contemplated by this Agreement, including the exercise
by Lender of any of its rights under the Loan Documents.

 

4.1.10   Compliance. Except as disclosed in the separate zoning report for each
Individual Property delivered to Lender in connection with the closing of the
Loan, Borrower and each Individual Property and the use thereof comply in all
material respects with all applicable Legal Requirements, including building and
zoning ordinances and codes. Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority. There
has not been committed by Borrower or, to Borrower’s knowledge, any other Person
in occupancy of or involved with the operation or use of the Property any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against the Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan
Documents. Except as disclosed in the separate property condition report for
each Individual Property delivered to Lender in connection with the closing of
the Loan, the Improvements at each Individual Property were in material
compliance with applicable law on the Closing Date.

 

4.1.11   Financial Information. 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 (a) except for financial data with respect to dates
prior to the date Borrower acquired title to the applicable Individual Property,
accurately represent the financial condition of Borrower and the Property, as
applicable, as of the date of such reports, and (b) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with GAAP throughout the periods covered, except as disclosed
therein. Except for Permitted Encumbrances, 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 material adverse
effect on the Property (or any portion thereof) or the current operation
thereof, except as referred to or reflected in said financial statements. Since
the date of such financial statements, there has been no material adverse change
in the financial condition, operations or business of Borrower from that set
forth in said financial statements.

 

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4.1.12   Condemnation. Except (i) as disclosed in the separate zoning report for
each Individual Property delivered to Lender in connection with the closing of
the Loan and (ii) with respect to the pending condemnation action of the Munster
Release Parcel, no Condemnation or other similar proceeding has been commenced
or, to Borrower’s knowledge, is threatened with respect to all or any portion of
the Property or for the relocation of roadways providing access to any
Individual Property.

 

4.1.13   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.

 

4.1.14   Utilities and Public Access. Each Individual Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the applicable Individual Property for its
intended uses. All public utilities necessary or convenient to the full use and
enjoyment of each Individual Property are located either in the public right of
way abutting the applicable Individual Property (which are connected so as to
serve the applicable Individual Property without passing over other property) or
in recorded easements serving and appurtenant to the applicable Individual
Property. All roads necessary for the use of each Individual Property for its
current purposes have been completed and dedicated to public use and accepted by
all Governmental Authorities.

 

4.1.15   Not a Foreign Person. Borrower is not a “foreign person” within the
meaning of §1445(f)(3) of the Code.

 

4.1.16   Separate Lots. Each Individual Property is comprised of one (1) or more
parcels which constitute a separate tax lot or lots and does not constitute a
portion of any other tax lot not a part of the applicable Individual Property.

 

4.1.17   Assessments. There are no pending or, to Borrower’s knowledge, proposed
special or other assessments for public improvements or otherwise affecting the
Property of any portion thereof, nor are there any contemplated improvements to
the Property (or any portion thereof) that would reasonably be expected to
result in such special or other assessments.

 

4.1.18   Enforceability. The Loan Documents are enforceable by Lender (or any
subsequent holder thereof) in accordance with their respective terms, subject to
principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’ obligations. The
Loan Documents are not subject to any right of rescission, set off, counterclaim
or defense by Borrower 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, render the Loan Documents unenforceable (subject to principles
of equity and bankruptcy, insolvency and other laws generally affecting
creditors’ rights and the enforcement of debtors’ obligations), and neither
Borrower nor Guarantor has asserted any right of rescission, set off,
counterclaim or defense with respect thereto.

 

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4.1.19   No Prior Assignment. There are no prior assignments of the Leases or
any portion of the Rents due and payable or to become due and payable which are
presently outstanding.

 

4.1.20   Insurance. No claims have been made or are currently pending,
outstanding or otherwise remain unsatisfied with respect to the Properties under
any of the Policies, and neither Borrower nor any other Person, has done, by act
or omission, anything which would impair the coverage of any of the Policies.

 

4.1.21   Use of Property. Each Individual Property is used exclusively for
medical office purposes and other appurtenant and related uses.

 

4.1.22   Certificate of Occupancy; Licenses. All certifications, permits,
franchises, licenses, consents, authorizations, and approvals, including,
certificates of completion and occupancy permits, required for the legal use,
occupancy and operation of each Individual Property have been obtained and are
in full force and effect. The use being made of each Individual Property is in
conformity with the certificate of occupancy issued for the applicable
Individual Property.

 

4.1.23   Flood Zone. None of the Improvements on the Property (or any portion
thereof) are located in an area as identified by the Federal Emergency
Management Agency as an area having special flood hazards, or, if so located,
the flood insurance required pursuant to Section 6.1(a) is in full force and
effect with respect to the applicable Individual Property.

 

4.1.24   Physical Condition. Except as disclosed in the separate property
condition report for each Individual Property delivered to Lender in connection
with the closing of the Loan, each Individual 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, is in good condition, order and repair in
all material respects; there exists no structural or other material defects or
damages in the Property (or any portion thereof), 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.

 

4.1.25   Boundaries. All of the improvements which were included in determining
the appraised value of the Property (or any portion thereof) lie wholly within
the boundaries and building restriction lines of the applicable Individual
Property, and no improvements on adjoining properties encroach upon the Property
or any portion thereof, and no easements or other encumbrances upon the Property
(or any portion thereof) encroach upon any of the Improvements, so as to affect
the value or marketability of the Property (or any portion thereof) except those
which are insured against by the applicable Title Insurance Policy.

 

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4.1.26   Leases. The Property is not subject to any leases other than the Leases
described in the rent roll attached hereto as Schedule I and made a part hereof,
which rent roll is true, complete and accurate in all respects as of the Closing
Date. Borrower is the owner and lessor of landlord’s interest in the Leases. No
Person has any possessory interest in the Property (or any portion thereof) or
right to occupy the same except under and pursuant to the provisions of the
Leases. The current Leases are in full force and effect and, except as set forth
on the rent roll attached hereto as Schedule I or in any tenant estoppel
certificate delivered to Lender or in the document entitled Aged Delinquencies
dated 3/26/2018 delivered to Lender, 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. Except as set forth in
any tenant estoppel certificate delivered to Lender, or as otherwise disclosed
to Lender in the Lease or by Borrower, no Rent has been paid more than one (1)
month in advance of its due date. All security deposits are held by Borrower in
accordance with applicable law. Except as set forth in any tenant estoppel
certificate delivered to Lender, or as otherwise disclosed to Lender in the
Lease or by Borrower, all work to be performed by Borrower under each Lease has
been performed as required and has been accepted by the applicable Tenant, and
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. There has been no prior sale, transfer
or assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is outstanding. To Borrower’s knowledge, no Tenant listed on
Schedule I has assigned its Lease or except as set forth in any tenant estoppel
certificate delivered to Lender, or as otherwise disclosed to Lender in the
Lease or by Borrower, sublet all or any portion of the premises demised thereby,
no such Tenant holds its leased premises under assignment. Except as disclosed
to Lender or as set forth in the Leases, 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. Except
as disclosed to Lender or as set forth in the Leases, no Tenant under any Lease
has any right or option for additional space in the Improvements.

 

4.1.27   Survey. To Borrower’s knowledge, each Survey for each Individual
Property delivered to Lender in connection with this Agreement does not fail to
reflect any material matter affecting the applicable Individual Property or the
title thereto. Lender acknowledges its awareness of the matters disclosed to it
in the materials provided by Borrower to Lender in connection with the pending
condemnation action of the Munster Release Parcel.

 

4.1.28   Inventory. Borrower is the owner of all of the Equipment, Fixtures and
Personal Property (as such terms are defined in the Security Instrument) located
on or at the Property and shall not lease any Equipment, Fixtures or Personal
Property other than as permitted hereunder. All of the Equipment, Fixtures and
Personal Property are sufficient to operate the Property in the manner required
hereunder and in the manner in which it is currently operated.

 

4.1.29   Filing and Recording Taxes. All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements have been paid. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including the Security
Instrument, have been paid.

 

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4.1.30   Special Purpose Entity/Separateness/No Prohibited Entity/Ownership
Structure. (a) Until the Debt has been paid in full, Borrower hereby represents,
warrants and covenants that (i) Borrower is, shall be and shall continue to be a
Special Purpose Entity, (ii) no direct ownership interests in Borrower or the
Property shall include any Prohibited Entity/Ownership Structure, and (iii)
Guarantor has implemented procedures to confirm that no direct or indirect
ownership interests in Guarantor shall include any Prohibited Entity/Ownership
Structure.

 

(b)          The representations, warranties and covenants set forth in Section
4.1.30(a) and Section 4.1.30(c) shall survive for so long as any amount remains
payable to Lender under this Agreement or any other Loan Document.

 

(c)          Borrower hereby represents and warrants to Lender that:

 

1.          Borrower is and always has been duly formed and validly existing in
the state in which it was formed and in any other jurisdictions where it is
qualified to do business;

 

2.          Borrower has no judgments or liens of any nature against it except
for tax liens, liens created by any of the Loan Documents and liens encumbering
the Property that will be satisfied with the proceeds of the Loan;

 

3.          Borrower is in compliance with all laws, regulations and orders
applicable to Borrower and has received all permits necessary for Borrower to
operate and for which a failure to possess would materially and adversely affect
the condition, financial or otherwise, of Borrower;

 

4.          Borrower is not aware of any pending or threatened litigation
involving Borrower that, if adversely determined, would reasonably be expected
to materially adversely affect the condition (financial or otherwise) of
Borrower, or the condition or ownership of the property owned by Borrower;

 

5.          Borrower is not involved in any dispute with any taxing authority
other than customary tax certiorari proceedings;

 

6.          Borrower has paid or has caused to be paid all real estate taxes
that are due and payable with respect to the Property unless otherwise being
contested pursuant to the Loan Documents;

 

(d)          Borrower covenants that in connection with any Additional
Insolvency Opinion delivered in connection with this Agreement it shall provide
an updated certification regarding compliance with the facts and assumptions
made therein.

 

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(e)          Borrower covenants and agrees that Borrower shall provide Lender
with thirty (30) days’ prior written notice prior to the removal of an
Independent Director of any of Borrower.

 

4.1.31   Management Agreement. The Management Agreement is in full force and
effect and there is no default beyond applicable notice and grace periods by
Borrower, or to Borrower’s knowledge, Manager. The Management Agreement was
entered into on commercially reasonable terms.

 

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

 

4.1.33   Intentionally Omitted.

 

4.1.34   Investment Company Act. Borrower is not (a) an “investment company” or
a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (b) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 2005, as amended; or (c) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

 

4.1.35   Embargoed Person. As of the date hereof and 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 and Guarantor constitute property of, or are beneficially owned,
directly or, to Borrower’s knowledge, indirectly, by any Embargoed Person; (b)
to Borrower’s knowledge, no Embargoed Person has 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), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of Borrower or Guarantor, as applicable, have been derived
from any unlawful activity with the result that the investment in Borrower or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law.

 

4.1.36   Principal Place of Business; State of Organization. Borrower’s
principal place of business as of the date hereof is the address set forth in
the introductory paragraph of this Agreement. Borrower’s state of organization
is as set forth in the introductory paragraph of this Agreement.

 

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4.1.37   Environmental Representations and Warranties. Except as otherwise
disclosed by each Phase I environmental report (or Phase II environmental
report, if required) delivered to Lender in connection with the origination of
the Loan (such report is referred to below as the “Environmental Report”), (a)
to Borrower’s knowledge, there are no Hazardous Substances or underground
storage tanks in, on, or under any Individual Property and no Hazardous
Substances have been handled, manufactured, generated, stored, processed, or
disposed of on or released or discharged from any Individual Property, in each
case, except those that are (i) in material compliance with Environmental Laws
and with permits issued pursuant thereto (to the extent such permits are
required under Environmental Law), or (ii) de-minimis amounts necessary to
operate the Property for the purposes set forth in this Agreement and which are
otherwise permitted under and used in material compliance with Environmental
Law; (b) to Borrower’s knowledge, there are no past, present or threatened
Releases of Hazardous Substances, which would require the same to be reported to
Governmental Authorities or otherwise remediated, in, on, under or from any
Individual Property which have not been remediated in accordance with
Environmental Law or otherwise addressed in a manner so that no violation of
Environmental Law exists in connection therewith; (c) to Borrower’s knowledge,
there is no threat of any Release of Hazardous Substances migrating to any
Individual Property in violation of Environmental Law; (d) to Borrower’s
knowledge, there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with the Property which
has not been remediated in accordance with Environmental Law or otherwise
addressed in a manner so that no violation of Environmental Law exists in
connection therewith; (e) Borrower does not know of, and has not received, any
written notice or other written communication from any Governmental Authority
relating to Hazardous Substances or the Remediation thereof, in connection with
any Individual Property, of alleged liability of any Person pursuant to any
Environmental Law, in connection with any Individual Property, or any actual or
potential administrative or judicial proceedings in connection with any of the
foregoing, in each case, which have not been remediated in accordance with
Environmental Law or otherwise addressed in a manner so that no violation of
Environmental Law exists in connection therewith; and (f) there are no
Institutional Controls on or affecting any Individual Property.

 

4.1.38   Cash Management Account. Borrower hereby represents and warrants to
Lender that:

 

(a)          This Agreement, together with the other Loan Documents, create a
valid and continuing security interest (as defined in the Uniform Commercial
Code) in the Clearing Account and Cash Management Account in favor of Lender,
which security interest is prior to all other Liens, other than Permitted
Encumbrances, and is enforceable as such against creditors of and purchasers
from Borrower. Other than in connection with the Loan Documents and except for
Permitted Encumbrances, Borrower has not sold, pledged, transferred or otherwise
conveyed the Clearing Account or Cash Management Account;

 

(b)          Each of the Clearing Account and Cash Management Account
constitutes a “deposit account” or “securities account” within the meaning of
the Uniform Commercial Code;

 

(c)          Pursuant and subject to the terms hereof and the other applicable
Loan Documents, the Clearing Bank and Agent have agreed to comply with all
instructions originated by Lender, without further consent by Borrower,
directing disposition of the Clearing Account and Cash Management Account and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities;

 

(d)          The Clearing Account and Cash Management Account are not in the
name of any Person other than Borrower, as pledgor, or Lender, as pledgee.
Borrower has not consented to the Clearing Bank and Agent complying with
instructions with respect to the Clearing Account and Cash Management Account
from any Person other than Lender; and

 

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(e)          The Property is not subject to any cash management system (other
than pursuant to the Loan Documents), and any and all existing tenant
instruction letters issued in connection with any previous financing have been
duly terminated prior to the date hereof.

 

4.1.39    Ground Leases. With respect to each Ground Lease and each Ground Lease
Property:

 

(a)          such Ground Lease is in full force and effect and unmodified and
Borrower has good and valid title to the related Ground Lease Property;

 

(b)          all rents (including any additional rents and other charges)
payable under such Ground Lease have been paid to the extent such rents were due
and payable prior to the date hereof; and

 

(c)          to Borrower’s knowledge, no default or an event of default exists
under the provisions of such Ground Lease or in the performance of any of the
terms, covenants, conditions or warranties thereof on the part of the ground
lessee or, to Borrower’s knowledge, the related Ground Lessor to be observed and
performed.

 

Section 4.2           Survival of Representations. Borrower agrees that all of
the representations and warranties of Borrower set forth in Section 4.1 hereof
and elsewhere in this Agreement and in the other Loan Documents shall survive
for so long as any amount remains owing to Lender under this Agreement or any of
the other Loan Documents by Borrower. All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.

 

Section 4.3           Lender: No Plan Assets. Lender is not itself an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA
or Section 4975 of the Code, and none of the assets of Lender constitutes or
will constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. The provisions
of this Section 4.3 shall remain in effect for the term of the Loan and apply to
any purchaser or other transferee of the Loan.

 

ARTICLE V - BORROWER COVENANTS

 

Section 5.1           Affirmative Covenants. From the date hereof and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Security Instrument
encumbering the Property (and all related obligations) in accordance with the
terms of this Agreement and the other Loan Documents, Borrower hereby covenants
and agrees with Lender that:

 

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5.1.1     Existence; Compliance with Legal Requirements. Each Borrower 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, authorizations, and
franchises and comply in all material respects with all Legal Requirements
applicable to it and the Property, including all regulations, building and
zoning codes and certificates of occupancy. Borrower has never, and shall not in
the future, commit, and Borrower shall exercise commercially reasonable efforts
to ensure that no other Person in occupancy of or involved with the operation or
use of the Property shall 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 each
Individual 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 Loan Documents. Borrower shall keep each Individual 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. Borrower shall give prompt notice to Lender of
the receipt by Borrower of any notice related to a violation of any Legal
Requirements and of the commencement of any proceedings or investigations which
relate to compliance with Legal Requirements if such violation would reasonably
be expected to have a material adverse effect on Borrower or any of the
Property. After prior written notice to Lender, Borrower, at Borrower’s own
expense, may contest by appropriate legal proceeding promptly initiated and
conducted in good faith and with due diligence, the validity of any Legal
Requirement, the applicability of any Legal Requirement to Borrower or any
Individual Property or any alleged violation of any Legal Requirement, provided
that (i) no Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) neither the
applicable Individual Property nor any part thereof or interest therein will be
in imminent danger of being sold, forfeited, terminated, cancelled or lost; (iv)
Borrower shall promptly upon final determination thereof comply with any such
Legal Requirement determined to be valid or applicable or cure any violation of
any Legal Requirement; (v) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower or the applicable Individual
Property; and (vi) Borrower shall furnish such security as may be required in
the proceeding, or as may be reasonably requested by Lender, to insure
compliance with such Legal Requirement, together with all interest and penalties
payable in connection therewith. Lender may apply any such security, as
necessary to cause compliance with such Legal Requirement at any time when, in
the reasonable judgment of Lender, the validity, applicability or violation of
such Legal Requirement is finally established or the applicable Individual
Property (or any part thereof or interest therein) shall be in imminent danger
of being sold, forfeited, terminated, cancelled or lost.

 

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5.1.2     Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof as the same become due and payable; provided, however,
Borrower’s obligation to directly pay Taxes shall be suspended for so long as
Borrower complies with the terms and provisions of Section 7.2 hereof. Borrower
shall deliver to Lender receipts for payment or other evidence satisfactory to
Lender that the Taxes and Other Charges have been so paid or are not then
delinquent prior to the date on which the Taxes or Other Charges would otherwise
be delinquent if not paid (provided, however, Borrower is not required to
furnish such receipts for payment of Taxes and Other Charges if such Taxes and
Other Charges have been paid by Lender pursuant to Section 7.2 hereof). Borrower
shall furnish to Lender receipts for the payment of the Taxes and Other Charges
prior to the date the same shall become delinquent (provided, however, Borrower
is not required to furnish such receipts for payment of Taxes if such Taxes have
been paid by Lender pursuant to Section 7.2 hereof). Borrower shall not suffer
and shall promptly cause to be paid and discharged any Lien or charge whatsoever
which may be or become a Lien or charge against any Individual Property, and
shall promptly pay for all utility services provided to the Property. After
prior written notice to Lender, Borrower, at Borrower’s own expense, may contest
by appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in whole or in
part of any Taxes or Other Charges, provided that (i) no Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (iii) neither the applicable Individual Property nor any part
thereof or interest therein will be in imminent danger of being sold, forfeited,
terminated, cancelled 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 such
contested Taxes or Other Charges from the applicable Individual Property; (vi)
Borrower shall have set aside adequate reserves for the payment of the Taxes,
together with all interest and penalties thereon, unless Borrower has paid the
contested Taxes under protest; and (vii) Borrower shall have furnished the
security as is required in the proceeding, or, if Borrower shall have not
previously paid all of the contested Taxes under protest or furnished the
security required pursuant to clause (vii)(A), as may be reasonably requested by
Lender to insure the payment of any contested Taxes, together with all interest
and penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the
reasonable judgment of Lender, the entitlement of such claimant is established
or the applicable Individual Property (or part thereof or interest therein)
shall be in imminent danger of being sold, forfeited, terminated, cancelled or
lost or there shall be any imminent danger of the Lien of the Security
Instrument being primed by any related Lien.

 

5.1.3     Litigation. Borrower shall give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened in writing against
Borrower or Guarantor which would reasonably be expected to materially adversely
affect Borrower’s or Guarantor’s condition (financial or otherwise) or business
or the Property (or any portion thereof).

 

5.1.4     Access to Property. Subject to the rights of tenants, Borrower shall
permit agents, representatives and employees of Lender to inspect the Property
or any part thereof at reasonable hours upon reasonable advance notice.

 

5.1.5     Notice of Material Adverse Change. Borrower shall promptly advise
Lender of any material adverse change in Borrower’s or Guarantor’s condition,
financial or otherwise of which Borrower has knowledge; provided, however, that
this Section 5.1.5 shall not apply so long as the REIT remains subject to filing
periodic reports with the United States Securities and Exchange Commission
(i.e., Forms 10-K, 10Q and 8-K) and the REIT remains in Control of Borrower.

 

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5.1.6     Cooperate in Legal Proceedings. Borrower shall cooperate with Lender
with respect to any proceedings before any court, board or other Governmental
Authority which would reasonably be expected to materially and adversely 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.

 

5.1.7     Perform Loan Documents. Borrower shall observe, perform and satisfy
all the terms, provisions, covenants and conditions of, and shall pay when due
all costs, fees and expenses to the extent required under the Loan Documents
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 written consent of Lender.

 

5.1.8      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 (or any portion thereof),
and Lender shall be reimbursed for any reasonable out-of-pocket expenses
incurred in connection therewith (including reasonable out-of-pocket attorneys’
fees and disbursements, and 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) out of such Insurance Proceeds.

 

5.1.9      Further Assurances. Borrower shall, at Borrower’s sole cost and
expense:

 

(a)          permit Lender to inspect at Borrower’s offices 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 in Borrower’s possession or readily available to it at no material
out-of-pocket cost (subject, however, with respect to those which are by their
nature confidential or subject to a privilege of confidentiality, to Lender’s
delivery of a confidentiality agreement acceptable to Lender in it’s reasonable
discretion) 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,
to evidence, preserve or protect the collateral at any time securing or intended
to secure the obligations of Borrower under the Loan Documents, 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 provided that Borrower’s rights are
not reduced or obligations increased.

 

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5.1.10   Principal Place of Business, State of Organization. Borrower shall not
cause or permit any change to be made in its name, identity (including its trade
name or names), place of organization or formation (as set forth in Section
4.1.36 hereof) or Borrower’s corporate or partnership or other structure unless
Borrower shall have first notified Lender in writing of such change at least
thirty (30) days prior to the effective date of such change, and shall have
first taken all action required by Lender for the purpose of perfecting or
protecting the lien and security interests of Lender pursuant to this Agreement,
and the other Loan Documents and, in the case of a change in Borrower’s
structure, without first obtaining the prior written consent of Lender, which
consent may be given or denied in Lender’s reasonable discretion. Upon Lender’s
request, Borrower shall, at Borrower’s sole cost and expense, execute and
deliver additional security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender’s security interest in the
Property (or any portion thereof) as a result of such change of principal place
of business or place of organization. Borrower’s principal place of business and
chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
or recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) and will continue to be the address of
Borrower set forth at the introductory paragraph of this Agreement (unless
Borrower notifies Lender in writing at least thirty (30) days prior to the date
of such change). Borrower shall promptly notify Lender of any change in its
organizational identification number. If Borrower does not now have an
organizational identification number and later obtains one, Borrower promptly
shall notify Lender of such organizational identification number.

 

5.1.11   Financial Reporting. (a) Borrower shall keep and maintain or shall
cause to be kept and maintained on a Fiscal Year basis, in accordance with the
requirements for a Special Purpose Entity set forth herein and GAAP (or such
other accounting basis reasonably acceptable to Lender), proper and accurate
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation of each
Individual Property. Lender shall have the right from time to time at all times
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or any other Person maintaining
such books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. During the continuance of an Event of Default, Borrower
shall pay any costs and expenses incurred by Lender to examine Borrower’s
accounting records with respect to each Individual Property, as Lender shall
reasonably determine to be necessary or appropriate in the protection of
Lender’s interest.

 

(b)          Commencing in 2019 (for the fiscal year ending December 31, 2018),
Borrower shall furnish to Lender annually, within one-hundred (100) days
following the end of each Fiscal Year of Borrower, a complete copy of Borrower’s
annual financial statements certified by the chief financial officer of
Healthcare Trust, Inc., prepared in accordance with GAAP (or such other
accounting basis acceptable to Lender) covering each Individual Property for
such Fiscal Year and containing statements of profit and loss for Borrower and
each Individual Property, an annual rent roll and a balance sheet for Borrower.
If Borrower consists of more than one entity, said financial statements shall be
in the form of an annual combined balance sheet of the Borrower entities (and no
other entities), together with the related combined statements of operations,
members’ capital and cash flows, including a combining balance sheet and
statement of income for the Individual Properties on a combined basis. Such
statements shall set forth the financial condition and the results of operations
for each Individual Property for such Fiscal Year, and shall include amounts
representing annual net operating income, Net Cash Flow, gross income, and
operating expenses. Borrower shall cause Healthcare Trust, Inc. to furnish to
Lender annually, within one hundred (100) days following the end of each Fiscal
Year of Healthcare Trust, Inc., independent certified public accountant audited
financial statements (10-K).

 

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(c)          Commencing with the end of the first calendar quarter of 2018 (for
the items required below related to the first calendar quarter of 2018),
Borrower shall furnish, or cause to be furnished, to Lender on or before fifty
(50) days after the end of each calendar quarter the following items,
accompanied by an Officer’s Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and each Individual Property (subject to
normal year-end adjustments) as applicable, all prepared in accordance with GAAP
(or such other accounting basis acceptable to Lender): (i) a rent roll for the
subject quarter; (ii) quarterly and year-to-date operating statements (including
Capital Expenditures) prepared for each calendar quarter, noting net operating
income, gross income, and operating expenses (not including any contributions to
the Replacement Reserve Fund and the Required Repair Fund), and other
information necessary and sufficient to fairly represent the financial position
and results of operation of each Individual Property during such calendar
quarter, and containing a comparison of budgeted income and expenses and the
actual income and expenses; (iii) a balance sheet for Borrower; and (iv) a
calculation reflecting the annual Debt Service Coverage Ratio for the
immediately preceding three (3), six (6), and twelve (12) month periods as of
the last day of such quarter (to the extent the Loan has been outstanding for
such periods). Any time that independent certified public accountant audited
versions of any of the items described in items (i)-(iv) immediately above are
available, Borrower shall promptly provide the same to Lender.

 

(d)          Until the earlier of Securitization or twelve (12) months after the
date of this Agreement, Borrower shall furnish, or cause to be furnished, to
Lender on or before twenty (20) days after the end of each calendar month, all
of the following items with respect to the previous calendar month, accompanied
by an Officer’s Certificate stating that such items are true, correct, accurate,
and complete and fairly present the financial condition and results of the
operations of Borrower and each Individual Property (subject to normal year-end
adjustments) as applicable: (A) a rent roll for the subject month; (B) monthly
operating statement(s) of each Individual Property; and (C) year-to-date
operating statement(s) of each Individual Property.

 

(e)          Intentionally omitted.

 

(f)          Upon request, Borrower and its affiliates shall furnish to Lender
(but not more frequently than quarterly):

 

(i)          a property management report for each Individual Property, showing
the number of inquiries made and/or rental applications received from tenants or
prospective tenants and deposits received from tenants and any other information
requested by Lender, in reasonable detail and certified by Borrower to be true
and complete; and

 

(ii)         an accounting of all security deposits held in connection with any
Lease of any part of the Property, including the name and identification number
of the accounts in which such security deposits are held, the name and address
of the financial institutions in which such security deposits are held and the
name of the person to contact at such financial institution, along with any
authority or release necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.

 

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(g)          For the partial year period commencing on the date hereof, and for
each Fiscal Year thereafter, Borrower shall submit to Lender a draft Annual
Budget prior to the commencement of such period or Fiscal Year in form
reasonably satisfactory to Lender. If a Cash Sweep Period exists, the Annual
Budget shall be subject to Lender’s written approval (each such Annual Budget,
an “Approved Annual Budget”), not to be unreasonably withheld, delayed or
conditioned. If Lender objects to a proposed Annual Budget submitted by
Borrower, Lender shall advise Borrower of such objections within fifteen (15)
days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise such Annual
Budget and resubmit the same to Lender. Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise the same in accordance with the
process described in this subsection until Lender approves the Annual Budget.
Until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and
Other Charges and other Non-Discretionary Expenses. Notwithstanding anything to
the contrary contained herein, to the extent Lender’s prior approval is required
for an Annual Budget as set forth in this Section 5.1.11(g), Lender shall have
ten (10) Business Days from receipt of written request (which such written
request shall include a copy of the proposed Annual Budget and such other
information as is necessary for Lender’s review of such Annual Budget), to
approve or disapprove such matter, provided that the front page of any such
request to Lender is marked, in not less than fourteen (14) point bold face
type, underlined and using all capital letters, as follows: “LENDER’S RESPONSE
IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO
THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER.” In the event
additional information is reasonably requested by Lender within such ten (10)
Business Day period, Lender shall have five (5) Business Days from receipt of
all additional requested information in which to approve or disapprove such the
applicable matter, notwithstanding the date of the original request. In the
event that Lender fails to respond to the applicable matter in question within
such time frames as set forth above, Lender’s failure to respond shall
constitute Lender’s deemed approval of the proposed Annual Budget.

 

(h)          If Borrower must incur an extraordinary operating expense or
capital expense 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, which may be given or denied in Lender’s reasonable
discretion.

 

(i)          Borrower shall furnish to Lender, within ten (10) Business Days
after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Property (or
any portion thereof) and the financial affairs of Borrower as may be reasonably
requested by Lender.

 

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(j)          Borrower shall furnish to Lender, within ten (10) Business Days
after Lender’s request (or as soon thereafter as may be reasonably possible),
financial information from any Tenant designated by Lender (to the extent such
financial information is required to be provided under the applicable Lease and
same is received by Borrower after request therefor).

 

(k)          Borrower shall cause Guarantor to furnish to Lender annually,
within one-hundred (100) days following the end of each Fiscal Year of
Guarantor: (i) if such Guarantor is an entity, financial statements audited by
an independent certified public accountant, which shall include an annual
balance sheet and profit and loss statement of Guarantor, in the form reasonably
required by Lender, it being acknowledged that the form delivered to Lender in
connection with the origination of the Loan is acceptable or (ii) if such
Guarantor is an individual, a signed personal financial statement in a form
reasonably satisfactory to Lender. Notwithstanding the foregoing, the delivery
of the 10-K of Healthcare Trust, Inc. will satisfy the foregoing.

 

(l)          Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) on a
diskette, or (iii) if requested by Lender and within the capabilities of
Borrower’s data systems without change or modification thereto, in electronic
form and prepared using Microsoft Word for Windows files (which files may be
prepared using a spreadsheet program and saved as word processing files).
Borrower agrees that Lender may disclose information regarding the Property and
Borrower that is provided to Lender pursuant to this Section 5.1.11 in
connection with the Securitization to such parties requesting such information
in connection with such Securitization.

 

5.1.12   Business and Operations. Borrower shall 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 each Individual
Property. Borrower shall qualify to do business and shall remain in good
standing in the jurisdiction in which each Individual Property is located and
the jurisdiction of its formation. Borrower shall at all times during the term
of the Loan, continue to own all of Equipment, Fixtures and Personal Property
which are necessary to operate each Individual Property in the manner required
hereunder and in the manner in which it is currently operated.

 

5.1.13   Title to the Property. Borrower shall warrant and defend (a) the title
to each Individual Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Lien of the Security Instrument on each Individual Property,
subject only to Liens permitted hereunder (including Permitted Encumbrances), in
each case against the claims of all Persons whomsoever. Borrower shall reimburse
Lender for any actual losses, reasonable costs, damages (exclusive, in all
events, of consequential, punitive, special, exemplary and indirect damages) or
reasonable expenses (including reasonable out-of-pocket attorneys’ fees and
expenses) incurred by Lender if an interest in the Property (or any part
thereof), other than as permitted hereunder, is claimed by another Person.

 

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5.1.14   Costs of Enforcement. In the event (a) that the Security Instrument
encumbering the Property (or any portion thereof) is foreclosed in whole or in
part or that the Security Instrument is put into the hands of an attorney for
collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage
encumbering the Property (or any portion thereof) prior to or subsequent to the
Security Instrument in which proceeding Lender is made a party, or (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, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all costs of
collection and defense, including reasonable out-of-pocket attorneys’ fees and
expenses, 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.

 

5.1.15   Estoppel Statement. (a) After request by Lender, Borrower shall within
ten (10) days furnish Lender or any proposed assignee of the Loan with a
statement, duly acknowledged and certified, setting forth (i) the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the Interest Rate of the Note, (iv) the terms of payment and Maturity
Date, (v) the date the most recent Monthly Debt Service Payment Amount was paid,
(vi) that, except as provided in such statement, to Borrower’s knowledge there
are no Events of Default under this Agreement or any of the other Loan
Documents, (vii) that the Loan Documents are valid, legal and binding
obligations (subject to creditor’s rights and general principals of equity) and
have not been modified or if modified, giving particulars of such modification,
(viii) whether, to Borrower’s knowledge, any offsets or defenses exist against
the obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (ix) that all Leases are in full force and effect and
(provided the applicable Individual Property is not a residential multifamily
property) have not been modified (or if modified, setting forth all
modifications), (x) the date to which the Rents thereunder have been paid
pursuant to the Leases, (xi) whether or not, to the knowledge of Borrower, any
of the lessees under the Leases are in default under the Leases, and, if any of
the lessees are in default, setting forth the specific nature of all such
defaults, (xii) the amount of security deposits held by Borrower under each
Lease and that such amounts are consistent with the amounts required under each
Lease, and (xiii) as to any other matters reasonably requested by Lender and
reasonably related to the Leases, the obligations secured hereby, the Property
(or any portion thereof) or the Security Instrument.

 

(b)          After request by Borrower, Lender shall within ten (10) days
furnish Borrower or any proposed assignee of the Loan with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate
of the Note, (iv) the terms of payment and Maturity Date, (v) the date the most
recent Monthly Debt Service Payment Amount was paid, and (vi) that, except as
provided in such statement, to Lender’s knowledge there are no Events of Default
under this Agreement or any of the other Loan Documents.

 

(c)          Borrower shall use commercially reasonable efforts to deliver to
Lender upon request, tenant estoppel certificates from each commercial Tenant
leasing space at the Property in form and substance reasonably satisfactory to
Lender provided that Borrower shall not be required to deliver such certificates
more frequently than two (2) times in any calendar year.

 

5.1.16   Loan Proceeds. Borrower shall use the proceeds of the Loan received by
it on the Closing Date only for the purposes set forth in Section 2.1.4 hereof.

 

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5.1.17   Intentionally Omitted.

 

5.1.18   Reserved.

 

5.1.19   Environmental Covenants. (a) Borrower covenants and agrees that: (i)
all uses and operations on or of the Property (or any portion thereof), by
Borrower shall be in material compliance with all Environmental Laws and permits
issued pursuant thereto and Borrower shall use commercially reasonable efforts
to cause all uses and operations on or of the Property by any other Person to be
in material compliance with all Environmental Laws and permits issued pursuant
thereto; (ii) there shall be no Releases of Hazardous Substances in, on, under
or from any Individual Property in violation of Environmental Law; (iii) there
shall be no Hazardous Substances in, on, or under any Individual Property,
except those that are (A) in material compliance with all Environmental Laws and
with permits issued pursuant thereto (to the extent such permits are required by
Environmental Law), or (B) de-minimis amounts necessary to operate the
applicable Individual Property for the purposes set forth in this Agreement and
which are otherwise permitted under and used in compliance with Environmental
Law; (iv) Borrower shall keep the Property free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person (the “Environmental Liens”); (v)
Borrower shall, at its sole cost and expense, cooperate in all activities
required pursuant to subsection (b) below, including providing all relevant
information and making knowledgeable persons available for interviews;
(vi) intentionally omitted; (vii) Borrower shall, at its sole cost and expense,
comply with all reasonable written requests of Lender made if Lender has a
reasonable basis to believe that an environmental hazard in violation of
Environmental Law exists on any Individual Property in order to: (A) reasonably
effectuate Remediation of any environmental condition (including a Release of a
Hazardous Substance) in, on, under or from any Individual Property in violation
of Environmental Law; (B) comply with any Environmental Law; (C) comply with any
directive from any Governmental Authority with jurisdiction with respect to the
environmental condition of the Property; provided, however, that nothing herein
shall preclude Borrower from the right to defend against or challenge, using all
legal means, the imposition of any governmental directives or requirements or
the imposition of any liability by any Governmental Authority or other Person;
and (D) take any other reasonable action necessary or appropriate for protection
of human health or the environment with respect to the Property, to the extent
required pursuant to Environmental Law; (viii) Borrower shall not do any act,
and Borrower shall use commercially reasonable efforts to cause all Tenant or
other user of the Property to not do any act, in connection with the Property
that materially increases the harm to human health or the environment, poses an
unreasonable risk of harm to any Person from a Release of any Hazardous
Substances on, at, under, or from the Property (or any portion thereof), impairs
or is reasonably likely to impair the value of the Property (or any portion
thereof) due to the presence of Hazardous Substances, is contrary to any
requirement of any insurer, constitutes a public or private nuisance, or
violates any covenant, condition, agreement or easement applicable to the
environmental condition of the Property (or any portion thereof); (ix) after
obtaining knowledge thereof, Borrower shall promptly notify Lender in writing of
(A) any presence or Releases or threatened Releases of Hazardous Substances in,
on, under, from or migrating onto any Individual Property which would require
the same to be reported to Governmental Authorities or otherwise remediated; (B)
any material non-compliance with any Environmental Laws related in any way to
any Individual Property; (C) any actual or potential Environmental Lien on any
Individual Property; (D) any required Remediation of environmental conditions
relating to any Individual Property; and (E) any written notice or other written
communication of which Borrower becomes aware from any source whatsoever
(including a Governmental Authority) relating in any way to the release or
potential release of Hazardous Substances on, at, under or from any Individual
Property or the Remediation thereof, likely to result in liability of any Person
in connection with any Individual Property pursuant to any Environmental Law,
other environmental conditions in connection with any Individual Property, or
any actual or potential administrative or judicial proceedings in connection
therewith; (x) Borrower shall not install, use, generate, manufacture, store,
treat, release or dispose of, nor permit the installation, use, generation,
storage, treatment, release or disposal of, any Hazardous Substances (except
de-minimis amounts necessary to operate the Property (or any portion thereof)
for the purposes set forth in this Agreement and which are otherwise permitted
under and used in compliance with Environmental Law) on, under or about the
Property (or any portion thereof); (xi) Borrower shall not make any change in
the use or condition of any Individual Property which (A) would reasonably be
expected to lead to the presence on, under or about the applicable Individual
Property of any Hazardous Substances which is not in accordance with any
applicable Environmental Law, or (B) would require, under any applicable
Environmental Law, notice be given to or approval be obtained from any
Governmental Authority in the event of a transfer of ownership or control of the
applicable Individual Property, in each case without the prior written consent
of Lender; (xii) Borrower shall not allow any Institutional Control to be
imposed on any Individual Property; and (xiii) Borrower shall take all acts
necessary to preserve its status, if applicable, as an “innocent landowner,”
“contiguous property owner,” or “prospective purchaser” as to the Property (or
any portion thereof) as those terms are defined in CERCLA; provided, however,
that this covenant does not limit or modify any of Borrower’s other duties or
obligations under this Agreement.

 

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(b)          If Lender has a reasonable basis to believe that an environmental
condition in violation of Environmental Law exists on any Individual Property,
upon reasonable written notice from Lender, Borrower shall, at Borrower’s
expense, promptly cause an engineer or consultant reasonably satisfactory to
Lender to conduct an environmental assessment or audit (the scope of which shall
be determined in Lender’s reasonable discretion) and take any samples of soil,
groundwater or other water, air, or building materials or any other invasive
testing at such Individual Property as reasonably requested by Lender and
promptly deliver the results of any such assessment, audit, sampling or other
testing; provided, however, if such results are not delivered to Lender within a
reasonable period or if Lender has a reasonable basis to believe that an
environmental hazard exists on the Property that, in Lender’s reasonable
judgment, endangers the health of any Tenant or other occupant of the Property
or their guests or the general public or is reasonably likely to materially and
adversely affect the value of the applicable Individual Property, upon
reasonable written notice to Borrower, Lender and any other Person designated by
Lender, including any receiver, any representative of a Governmental Authority
with jurisdiction over the matter, and any environmental consultant, shall have
the right, subject to the rights of the occupants of the Individual Property,
but not the obligation, to enter upon the applicable Individual Property at all
reasonable times to assess the environmental hazard on the applicable Individual
Property, including conducting any environmental assessment or audit (the scope
of which shall be determined in Lender’s reasonable discretion) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing, in each case, to the extent reasonably
determined to be warranted in connection with such suspected environmental
hazard. Borrower shall cooperate with and provide Lender and any such Person
designated by Lender with access to the applicable Individual Property. Unless
an Event of Default exists, Borrower shall not be required to perform an
environmental site assessment or audit hereunder with respect to any Individual
Property more often than once per twelve (12) month period.

 

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(c)          Intentionally Omitted.

 

(d)          Intentionally Omitted.

 

(e)          Borrower shall promptly perform all necessary remedial work in
response to the presence of any Hazardous Substances on any Individual Property
in violation of any Environmental Laws, or any claims or requirements made by
any Governmental Authority with jurisdiction regarding the environmental
condition of such Individual Property; provided, however, that nothing herein
shall preclude Borrower from the right to defend against or challenge using all
lawful means, the imposition of any governmental directives or requirements or
the imposition of any liability by any governmental entity or other Person. All
such work shall be conducted by licensed and reputable contractors pursuant to
written plans approved by the agency or authority in question (if applicable),
under proper permits and licenses (if applicable) with such insurance coverage
as is customarily maintained by prudent property owners in similar situations.
If the cost of the work exceeds $500,000, then Lender shall have the right of
prior approval over the environmental contractor and plans, which shall not be
unreasonably withheld or delayed. All costs and expenses of the remedial work
shall be promptly paid by Borrower. In the event Borrower fails to undertake the
remedial work, or fails to complete the same within a reasonable time period
after the same is undertaken, and if Lender is of the good faith opinion that
Lender’s security in the applicable Individual Property is jeopardized thereby,
then Lender shall have the right to undertake or complete the remedial work
itself. In such event all reasonable out-of-pocket costs of Lender in doing so,
including all reasonable out-of-pocket fees and expenses of environmental
consultants, engineers, attorneys, accountants and other professional advisors,
shall become a part of the Loan and shall be due and payable from Borrower upon
demand. Such amount shall be secured by the Loan Documents, and failure to pay
the same shall be an Event of Default under the Loan Documents. In the event any
Hazardous Substances are removed from the Property, either by Borrower or
Lender, the number assigned by the United States Environmental Protection Agency
to such Hazardous Substances shall be solely in the name of Borrower, and
Borrower shall have any and all liability for such removed Hazardous Substances.

 

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5.1.20   Leasing Matters. Any Leases with respect to the Property written after
the date hereof, for more than 8,000 square feet shall be subject to the prior
written approval of Lender, which approval shall not be unreasonably withheld,
conditioned or delayed. Upon request, Borrower shall furnish Lender with
executed copies of all Leases not previously delivered to Lender. All renewals
of Leases and all proposed Leases shall provide for rental rates (to the extent
not already set forth in the Lease) comparable to existing local market rates.
All proposed Leases shall be on commercially reasonable terms. All Leases
executed after the date hereof shall provide that they are subordinate to the
Security Instrument and that the lessee agrees to attorn to Lender or any
purchaser at a sale by foreclosure or power of sale. Borrower (i) shall observe
and perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) shall enforce and may amend or terminate
the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner and in a manner not to impair the value of the Property (or any portion
thereof) involved except that no termination by Borrower or acceptance of
surrender by a Tenant of any Leases shall be permitted unless by reason of a
tenant default, in connection with a tenant relocation within the applicable
Individual Property, or re-tenanting of any portion of the applicable Individual
Property with respect to which the tenant has “gone dark” and then only in a
commercially reasonable manner to preserve and protect the Property (or any
portion thereof); provided, however, that no such termination or surrender of
any Lease covering more than 10,000 square feet will be permitted without the
prior written consent of Lender unless a material default thereunder exists and
the applicable Tenant has been provided all notice and cure rights required
under such Lease or by applicable law; (iii) shall not collect any of the rents
more than one (1) month in advance (other than security deposits); (iv) shall
not execute any other assignment of lessor’s interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of
the Loan Documents; and (vi) shall execute and deliver at the request of Lender
all such further assurances, confirmations and assignments in connection with
the Leases as Lender shall from time to time reasonably require. Notwithstanding
anything to the contrary contained herein, Borrower shall not enter into a lease
of all or substantially all of any Individual Property without Lender’s prior
written consent, not to be unreasonably withheld, delayed or conditioned.
Notwithstanding anything to the contrary contained herein, all new Leases and
all amendments, modifications, extensions, and renewals of existing Leases with
Tenants that are Affiliates of Borrower shall be subject to the prior written
consent of Lender. Lender agrees to enter into a subordination, non-disturbance
agreement with tenants with respect to any Lease in a form substantially similar
to the subordination, non-disturbance agreements entered into in connection with
the closing of the Loan.

 

Borrower has indicated that it is currently negotiating a lease with
CarolinaEast Medical Center, a North Carolina not-for-profit corporation (the
“CarolinaEast”), for a portion of the Individual Property located at 4252
Arendell St., Morehead City, NC 28557. So long as the final lease with
CarolinaEast is executed prior to October 31, 2018, Lender agrees that the
following economic terms included in any such lease will be deemed approved:
triple net lease for a minimum rent of $20.00 per square foot and for a term of
at least 10 years.

 

Notwithstanding anything to the contrary contained herein, to the extent
Lender’s prior approval is required for any leasing matters set forth in this
Section 5.1.20, Lender shall have ten (10) Business Days from receipt of written
request (which such written request shall include a copy of the proposed lease,
market information relating to leases comparable to the proposed lease,
financial information with respect to the proposed tenant to the extent in
Borrower’s possession and such other relevant materials and information used by
Borrower in connection with negotiation of the proposed Lease), to approve or
disapprove such matter, provided that the front page of any such request to
Lender is marked, in not less than fourteen (14) point bold face type,
underlined and using all capital letters, as follows: “LENDER’S RESPONSE IS
REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE
TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER.” In the event
additional information is reasonably requested by Lender within such ten (10)
Business Day period, Lender shall have three (3) Business Days from receipt of
all additional requested information in which to approve or disapprove such the
applicable matter, notwithstanding the date of the original request. In the
event that Lender fails to respond to the applicable matter in question within
such time frames as set forth above, Lender’s failure to respond shall
constitute Lender’s deemed approval of the particular approval request.

 

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5.1.21   Alterations.

 

(a)          Borrower shall obtain Lender’s prior written consent to any
alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower’s financial condition, the value of any Individual
Property or the applicable Individual Property’s Net Operating Income.
Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower’s financial condition, the value of any Individual Property or the
applicable Individual Property’s Net Operating Income, provided that such
alterations are made in connection with (a) tenant improvement work performed
pursuant to the terms of any Lease executed on or before the date hereof, (b)
tenant improvement work performed pursuant to the terms and provisions of a
Lease and not adversely affecting any structural component of any Improvements,
any utility or HVAC system contained in any Improvements or the exterior of any
building constituting a part of any Improvements, (c) alterations performed in
connection with the Restoration of any Individual Property after the occurrence
of a Casualty or Condemnation in accordance with the terms and provisions of
this Agreement, (d) alterations required to comply with Legal Requirements, (e)
alterations the aggregate cost of which is $500,000 or less or (f) Required
Repairs. If the total unpaid amounts due and payable with respect to alterations
to the Improvements with respect to an Individual Property or any portion
thereof (other than such amounts to be paid or reimbursed by Tenants under the
Leases or paid with insurance or condemnation proceeds or reserves established
pursuant to the Loan Documents) shall at any time exceed $500,000.00 (the
“Threshold Amount”), 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: (A) cash, (B) U.S.
Obligations, (C) other securities having a rating reasonably acceptable to
Lender and that, at Lender’s option, the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned to any Securities or any class thereof in connection with any
Securitization or (D) a completion and performance bond or an irrevocable letter
of credit (payable on sight draft only) issued by a financial institution having
a rating by S&P of not less than “A-1+” if the term of such bond or letter of
credit is no longer than three (3) months or, if such term is in excess of three
(3) months, issued by a financial institution having a rating that is reasonably
acceptable to Lender and that, at Lender’s option, the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned to any Securities or class thereof in connection with
any Securitization. Such security shall be in an amount equal to the excess of
the total unpaid amounts with respect to alterations to the Improvements on the
Property (or any portion thereof) (other than such amounts to be paid or
reimbursed by Tenants under the Leases) over the Threshold Amount and Lender may
apply such security from time to time at the option of Lender to pay for such
alterations.

 

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(b)          Notwithstanding anything to the contrary in this Section 5.1.21 or
in any other provision of this Agreement or in any other Loan Document, provided
that no Event of Default is then continuing, Borrower may construct an addition
to the building located on the Individual Property related to the Arrowhead I
Ground Lease (the “Original Arrowhead I Property”) for the purposes of adding an
elevator (the “Approved Alterations”), subject to satisfying the following
conditions:

 

(i)          Borrower has provided to Lender, and Lender has approved: (A) the
plans and specifications for the Approved Alterations (the “Alteration Plans”),
and (B) a survey (the “Alteration Survey”) for any land on which the Approved
Alterations will occur that is located outside the Original Arrowhead I Property
(“Additional Arrowhead I Property”, and together with the Original Arrowhead I
Property, the “Expanded Arrowhead I Property”). Borrower shall notify Lender of
its intent to begin the Approved Alterations at least thirty (30) days prior to
the planned commencement of such alterations, and shall deliver to Lender,
together with such notice, (A) any material amendments to the Alteration Plans
or Alteration Survey, (B) if the aggregate cost of the Approved Alterations will
exceed $500,000.00, a construction budget detailing such costs (the “Alteration
Budget”), (C) any proposed amendment of the Arrowhead I Ground Lease to add
Additional Arrowhead I Property to the leased premises covered thereby
(“Arrowhead I Ground Lease Amendment”), and (D) any other documents in the
possession of or readily obtainable by Borrower at no material out-of-pocket
cost relating to changes in any lot, parcel or tract line required to complete
the Approved Alterations and the Arrowhead I Ground Lease Amendment (the
“Alteration Plans”);

 

(ii)         intentionally omitted;

 

(iii)        Borrower shall have obtained Lender’s prior written consent to the
Alteration Plans (not to be unreasonably withheld, delayed or conditioned) and
delivered evidence reasonably satisfactory to Lender indicating that Borrower
has sufficient funds available (without incurring any additional Indebtedness in
violation of this Agreement) to complete the Approved Alterations in a lien-free
workmanlike manner in accordance with the terms of this Agreement, and, if the
Alteration Budget indicates that such amount is materially in excess of the
Threshold Amount, the security required pursuant to Section 5.1.21(a)(A) through
(D) above;

 

(iv)        Lender shall have received an Officer’s Certificate stating that (A)
all permits, licenses and approvals then required for the Approved Alterations
have been obtained and are in full force and effect, (B) if and to the extent
that the issuance of any such permits, licenses or approvals is not then yet
required under applicable Legal Requirements, the same will be timely obtained
as may be necessary to comply with all applicable Legal Requirements and
Borrower shall promptly deliver copies of such items to Lender following
Borrower’s receipt thereof, (C) all of the work to be performed in connection
with such alterations shall be done (1) substantially in compliance with the
Alteration Plans delivered to Lender, (2) in full compliance with all applicable
Legal Requirements, (3) in full compliance with the terms and provisions of the
Loan Documents, and (4) in a good and workmanlike manner, and (D) Borrower will
complete the Approved Alterations in a manner that does not cause damage to,
interference with or interruption of the utilities, parking, or operation and
use of the Original Arrowhead I Property or any tenants;

 

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(v)         Borrower shall have delivered to Lender commercial property
insurance covering the Approved Alterations written in a so-called builder’s
risk completed value form; each in accordance with the requirements set forth in
Article VI herein;

 

(vi)        Borrower shall have delivered to Lender the executed general
construction contract between Borrower and the third-party contractor applicable
to the Alteration Plans;

 

(vii)       Borrower shall have delivered to Lender all applicable building
permits for the Approved Alterations and evidence reasonably satisfactory to
Lender that during the construction of and following the completion of the
Approved Alterations, the Expanded Arrowhead I Property will (A) not suffer any
loss of any parking or access to any public right of way or adjoining parcel,
and (B) be in compliance with all applicable reciprocal easement agreements (and
such construction and loss of parking at the Expanded Arrowhead I Property will
not violate any reciprocal easement agreements);

 

(viii)      intentionally omitted;

 

(ix)         (A) Borrower, Guarantor, and any tenant of Borrower with respect to
the Original Arrowhead I Property whose Lease is affected by the Approved
Alterations, as applicable, shall enter into any amendments of the Loan
Documents (including, if applicable, estoppel certificates) and (B) the ground
lessor under the Arrowhead I Ground Lease shall enter into any amendment of the
Ground Lease Estoppel delivered by it as of the closing of the Loan, in each
case as the items described in (A) and (B) above may be reasonably required by
Lender to add the Additional Arrowhead I Property and the Arrowhead I Ground
Lease Amendment to the coverage of the Loan Documents (collectively, the “Loan
Document Amendments”);

 

(x)          Borrower and Guarantor shall deliver to Lender in connection with
the Loan Document Amendments, New York, Arizona, Delaware authority and Maryland
authority opinion letters in substantially the same scope and form as those same
opinions delivered to Lender on the date of this Agreement;

 

(xi)         intentionally omitted; and

 

(xii)        Within thirty (30) days following completion of the Approved
Alterations, Borrower shall provide to Lender:

 

(A)         an Officer’s Certificate certifying that the construction and all
Approved Alterations have been completed in a good and workmanlike manner in
accordance with all applicable Legal Requirements and the terms and provisions
of the Loan Documents, and substantially in accordance with the Alteration Plans
approved by Lender;

 

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(B)         at Borrower’s cost, a new ALTA survey of the Property that includes
the completed Approved Alterations, and a down-date endorsement to the Title
Insurance Policy (or replacement policy) (1) confirming that no new mechanic’s
or other liens have been filed against the Expanded Arrowhead I Property, and
(2) covering the Expanded Arrowhead I Property, the Arrowhead I Ground Lease
Amendment, the Loan Document Amendments and any other matters reasonably
required by Lender;

 

(C)         a copy of the final certificate of occupancy, if required by
applicable Legal Requirements.

 

(xiii)       Notwithstanding anything to the contrary contained herein, to the
extent Lender’s prior approval is required for any matters set forth in this
Section 5.1.21, Lender shall have ten (10) Business Days from receipt of written
request (which such written request shall include all information reasonably
necessary for Lender to review, analze and approve or disapprove such matter,
provided that the front page of any such request to Lender is marked, in not
less than fourteen (14) point bold face type, underlined and using all capital
letters, as follows: “LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS
DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN
THE UNDERSIGNED AND LENDER.” In the event additional information is reasonably
requested by Lender within such ten (10) Business Day period, Lender shall have
three (3) Business Days from receipt of all additional requested information in
which to approve or disapprove such the applicable matter, notwithstanding the
date of the original request. In the event that Lender fails to respond to the
applicable matter in question within such time frames as set forth above,
Lender’s failure to respond shall constitute Lender’s deemed approval of the
particular approval request.

 

Borrower hereby indemnifies Lender for all reasonable out-of-pocket liabilities
arising out of, or in connection with, the Approved Alterations, excluding,
however, in all events, consequential, punitive, special, exemplary and indirect
damages. Borrower shall pay all actual out-of-pocket costs incurred by Lender in
connection with the Approved Alterations and the Loan Document Amendments,
including review or approval of any items described in this Section 5.1.21.
Borrower further agrees to continuously and diligently pursue completion of the
Approved Alterations once commenced.

 

5.1.22    Operation of Property. (a) Borrower shall cause each Individual
Property (excluding the Self-Managed Properties) to be operated, in all material
respects, in accordance with the applicable Management Agreement (or Replacement
Management Agreement) as applicable. If the applicable Management Agreement
expires or is terminated (without limiting any obligation of Borrower to obtain
Lender’s consent to any termination or modification of the Management Agreement
in accordance with the terms and provisions of this Agreement), Borrower shall
promptly enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable. Borrower shall manage the Self-Managed
Properties in a commercially reasonable manner.

 

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(b)          Borrower shall: (i) promptly perform or observe, in all material
respects, all of the covenants and agreements required to be performed and
observed by it under each Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (ii) promptly
notify Lender of any material default under each Management Agreement of which
it has knowledge; (iii) upon request of Lender, promptly deliver to Lender a
copy of each business plan and capital expenditures plan received by it under a
Management Agreement; and (iv) enforce the performance and observance of all of
the covenants and agreements required to be performed or observed by the
applicable Manager under the related Management Agreement, in a commercially
reasonable manner.

 

5.1.23   Embargoed Person. Borrower has instituted procedures to insure that 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 and Guarantor constitute property of, or are
beneficially owned, directly or indirectly, by any Embargoed Person; (b) no
Embargoed Person has 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), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower or
Guarantor, as applicable, have been derived from, or are the proceeds of, any
unlawful activity, including money laundering, terrorism or terrorism
activities, with the result that the investment in Borrower or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law, or may cause the Property to be subject to forfeiture or
seizure.

 

5.1.24   Ground Lease. (a) With respect to each Ground Lease, Borrower covenants
and agrees as follows: (i) to promptly and faithfully observe, perform and
comply with all the terms, covenants and provisions thereof on its part to be
observed, performed and complied with, at the times set forth therein, and to do
all things necessary to preserve unimpaired its rights thereunder; (ii) not to
do, permit, suffer or refrain from doing anything, as a result of which there
would reasonably be expected to be a default under any of the terms thereof;
(iii) not to terminate (pursuant to the terms thereof or otherwise), cancel,
surrender, modify, amend or in any way alter or permit the alteration of any of
the terms thereof and not to release the Ground Lessor under the Ground Lease
from any obligations imposed upon it thereby without the consent of Lender, not
to be unreasonably withheld, delayed or conditioned (provided that,
notwithstanding anything contained herein or in any other Loan Document,
Borrower may extend the term of any Ground Lease pursuant to the terms thereof
without obtaining the consent of Lender); (iv) not to assign the Ground Lease in
whole or in part nor sublet the premises demised under the Ground Lease in whole
except in accordance with the provisions of this Agreement; (v) to the extent
Borrower has actual knowledge of the same, to give Lender prompt written notice
of any default under the Ground Lease by Borrower that continues to exist beyond
any notice and cure period available to Borrower under the applicable Ground
Lease or the Ground Lessor, and to deliver to Lender copies of each notice of
default and all other material notices, communications, plans, specifications
and other similar instruments received or delivered by Borrower in connection
therewith within two (2) Business Days of Borrower’s receipt of the same; and
(vi) to furnish to Lender such information and evidence as Lender may reasonably
require concerning Borrower’s due observance, performance and compliance with
the terms, covenants and provisions thereof provided such evidence is in
Borrower’s possession or readily available at no material out-of-pocket cost to
Borrower.

 

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Notwithstanding anything to the contrary contained herein, to the extent
Lender’s prior approval is required for any matters set forth in this Section
5.1.24, Lender shall have ten (10) Business Days from receipt of written request
together with such other information as is necessary for Lender’s review of the
request, to approve or disapprove such matter, provided that the front page of
any such request to Lender is marked, in not less than fourteen (14) point bold
face type, underlined and using all capital letters, as follows: “LENDER’S
RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE
PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER.”
In the event additional information is reasonably requested by Lender within
such ten (10) Business Day period, Lender shall have five (5) Business Days from
receipt of all additional requested information in which to approve or
disapprove such the applicable matter, notwithstanding the date of the original
request. In the event that Lender fails to respond to the applicable matter in
question within such time frames as set forth above, Lender’s failure to respond
shall constitute Lender’s deemed approval of the particular approval request.

 

(b)          In the event of any (A) default by Borrower in the performance of
any part of its obligations under any Ground Lease that continues to exist
beyond any notice and cure period available to Borrower under the applicable
Ground Lease, including, without limitation, any default in the payment of rent,
additional rent and other charges and impositions made payable by the tenant
thereunder, or (B) receipt by Lender of any written notice from a Ground Lessor
of any default by Borrower under the related Ground Lease which notice starts
any cure period available to Lender under such Ground Lease to cure such
default, then, in each and every case under (A) or (B) above, Lender may, at its
option and without notice, cause such default or defaults to be remedied and
otherwise exercise any and all of the rights of Borrower thereunder in the name
of and on behalf of Borrower but no such action by Lender shall release Borrower
from any default under this Agreement. Borrower shall, on demand, reimburse
Lender for all advances made and expenses incurred by Lender in curing any such
default (including, without limitation, reasonable attorneys’ fees and
disbursements), together with interest thereon at the Default Rate from the date
that an advance is made or expense is incurred, to and including the date the
same is paid and such monies so expended by Lender with interest thereon shall
be secured by this Agreement.

 

(c)          If Borrower acquires the fee title or any other estate, title or
interest in any Ground Lease Property, or any part thereof, the lien of the
applicable Security Instrument shall attach to, cover and be a lien upon such
acquired estate, title or interest and same shall thereupon be and become a part
of the Property. Borrower agrees to execute all instruments and documents which
Lender may reasonably require to ratify, confirm and further evidence Lender’s
lien on the acquired estate, title or interest. Furthermore, Borrower hereby
appoints Lender its true and lawful attorney-in-fact to execute and deliver all
such instruments and documents in the name and on behalf of Borrower. This
power, being coupled with an interest, shall be irrevocable as long as the Debt
remains unpaid but may only be exercised if an Event of Default exists.

 

(d)          If any Ground Lease is canceled or terminated, and if Lender or its
nominee shall acquire an interest in any new lease or all or any part of the
related Ground Lease Property, Borrower shall have no right, title or interest
in or to the new lease or the leasehold estate created by such new lease.

 

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(e)          Borrower shall use commercially reasonable efforts at no material
out-of-pocket cost to Borrower, obtain and deliver to Lender from time to time
within ten (10) Business Days after written demand by Lender, an estoppel
certificate from any Ground Lessor setting forth, with respect to the related
Ground Lease (i) the name of the tenant thereunder, (ii) that the Ground Lease
has not been modified or, if it has been modified, the date of each modification
(together with copies of each such modification), (iii) the base rent and
additional rent and other charges payable under the Ground Lease, (iv) the date
to which all rental charges have been paid by the tenant under the Ground Lease,
and (v) whether there are any defaults or alleged defaults of the tenant under
the Ground Lease or if there are any events which have occurred which with
notice, the passage of time or both, would constitute a default under the Ground
Lease, and, if there are, setting forth the nature thereof in reasonable detail,
provided that, unless an Event of Default exists, Borrower shall not be required
to use commercially reasonable efforts to obtain such estoppel more than one (1)
time per year.

 

(f)          Notwithstanding anything to the contrary contained herein, this
Agreement shall not constitute an assignment of any Ground Lease within the
meaning of any provision thereof prohibiting its assignment and Lender shall
have no liability or obligation thereunder by reason of its acceptance of this
Agreement. Lender shall be liable for the obligations of the tenant arising
under any Ground Lease for only that period of time which Lender is in
possession of the related Ground Lease Property and has acquired, by foreclosure
or otherwise, and is holding all of Borrower’s right, title and interest
therein.

 

(g)          No release or forbearance of any of Borrower’s obligations under
any Ground Lease, pursuant to the Ground Lease or otherwise, shall release
Borrower from any of its obligations under this Agreement or the other Loan
Documents.

 

(h)          Borrower shall enforce the obligations of each Ground Lessor under
the applicable Ground Lease to the end that Borrower may enjoy all of the rights
granted to it under the Ground Lease, and will promptly notify Lender of any
default known to Borrower by the Ground Lessor in the performance or observance
of any of the terms, covenants and conditions of the Ground Lease. If, pursuant
to any Ground Lease, the related Ground Lessor shall deliver to Lender a copy of
any notice of default given to Borrower, as lessee under such Ground Lease, and
which notice starts any cure period available to Lender under such Ground Lease
to cure such default, such notice shall constitute full authority and protection
to Lender for any action taken or omitted to be taken by Lender, in good faith
and in reliance thereon.

 

(i)          Borrower shall give Lender prompt notice of the commencement of any
arbitration or appraisal proceeding under and pursuant to the provisions of any
Ground Lease. Lender shall have the right to intervene and participate in any
such proceeding and Borrower shall confer with Lender and its attorneys and
experts and cooperate with them to the extent that Lender deems reasonably
necessary for the protection of Lender.

 

(j)          Upon the request of Lender, Borrower will exercise all rights of
arbitration conferred upon it by any Ground Lease. If at any time such
proceeding shall be continuing, a default by Borrower beyond any applicable cure
period in the performance or observance of any covenant, condition or other
requirement of any Ground Lease or of this Agreement, on the part of Borrower to
be performed or observed shall have occurred and be continuing, Lender shall
have, and is hereby granted, the sole and exclusive right to designate and
appoint on behalf of Borrower, the arbitrator or arbitrators, or appraiser, in
such proceeding.

 

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(k)          With respect to any Ground Lease requiring the periodic payment of
any rent, Borrower shall deliver to Lender reasonably satisfactory proof of
payment thereof within thirty (30) days following Lender’s request therefore.

 

(l)          Borrower hereby unconditionally and irrevocably assigns to Lender
(i) any right which Borrower has pursuant of the terms of any Ground Lease to
renew and/or extend the term thereof; provided, however, that Lender shall only
exercise such right during the continuance of an existing Event of Default or in
the event Lender reasonably determines that such exercise is necessary to
protect its interest in the related Ground Lease Property; (ii) any right which
Borrower has pursuant to the terms of any Ground Lease to cancel or terminate
the Ground Lease; provided, however, that Lender shall only exercise such right
after a foreclosure or its acceptance of a deed-in-lieu of foreclosure; and
(iii) any option or right that Borrower has pursuant to any Ground Lease to
purchase any or all of the premises demised thereunder.

 

(m)          In the event that it is claimed by any Governmental Authority that
any tax or governmental charge or imposition is due, unpaid or payable by
Borrower upon or in connection with any Ground Lease, Borrower shall promptly
either (i) pay such tax, charge or imposition when due and deliver to Lender
reasonably satisfactory proof of payment thereof or (ii) contest such tax in
accordance with the applicable provisions of the Loan Documents. If liability
for such tax is asserted against Lender, Lender will give to Borrower prompt
notice of such claim, and Borrower, upon complying with the provisions of the
Loan Documents shall have full right and authority to contest such claim of
taxability.

 

(n)          Notwithstanding anything to the contrary contained in this
Agreement with respect to any Ground Lease:

 

(i)          If any Ground Lease is terminated for any reason in the event of
the rejection or disaffirmance of the Ground Lease by the related Ground Lessor
pursuant to the Bankruptcy Code, or any other law affecting creditor’s rights,
(i) Borrower, promptly after obtaining notice thereof, shall give notice thereof
to Lender, (ii) Borrower, without the prior written consent of Lender, shall not
elect to treat such Ground Lease as terminated pursuant to Section 365(h) of the
Bankruptcy Code or any comparable federal or state statute or law, and any
election by Borrower made without such consent shall be void, and (iii) the
terms, covenants and conditions of this Loan Agreement and the Loan Documents
hereby extends to and covers Borrower’s possessory rights under Section 365(h)
of the Bankruptcy Code and to any claim for damages due to the rejection of such
Ground Lease or other termination of such Ground Lease. In addition, Borrower
hereby assigns irrevocably to Lender Borrower’s rights to treat any Ground Lease
as terminated pursuant to Section 365(h) of the Bankruptcy Code and to offset
rents under any Ground Lease in the event any case, proceeding or other action
is commenced by or against the related Ground Lessor under the Bankruptcy Code
or any comparable federal or state statute or law. Without Lender’s prior
written consent, Borrower shall not seek to offset, pursuant to Subsection
365(h) of the Bankruptcy Code, against the rent reserved in any Ground Lease,
the amount of any damages caused by the nonperformance by the related Ground
Lessor of any of its obligations under such Ground Lease after the rejection by
such Ground Lessor of such Ground Lease under the Bankruptcy Code.

 

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(ii)         As security for the Debt, Borrower unconditionally assigns,
transfers and sets over to Lender all of Borrower’s (a) right to reject any
Ground Lease under Section 365 of the Bankruptcy Code or any comparable federal
or state statute or law with respect to any case, proceeding or other action
commenced by or against Borrower under the Bankruptcy Code or comparable federal
or state statute or law, (b) right to seek an extension of the 60-day period
within which Borrower must assume or reject any Ground Lease under Section 365
of the Bankruptcy Code or any comparable federal or state statue or law with
respect to any case, proceeding or other action commenced by or against Borrower
under the Bankruptcy Code or comparable federal or state statute or law ,and (c)
claims and rights to the payment of damages arising from any rejection by any
Ground Lessor of any Ground Lease under the Bankruptcy Code. Lender shall have
the right to proceed in the name of Borrower in respect of any claim, suit,
action or proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute any proofs of claim,
complaints, motions, applications, notices and other documents in any case in
respect of the related Ground Lessor under the Bankruptcy Code. This assignment
constitutes a present, irrevocable and unconditional assignment of the foregoing
claims, rights and remedies and shall continue in effect until all of the Debt
shall have been satisfied and discharged in full. Any amounts received by Lender
or Borrower as damages arising out of the rejection of any Ground Lease as
aforesaid shall be applied to all reasonable out-of-pocket costs and expenses of
Lender (including, without limitation, reasonable out-of-pocket attorneys’ fees
and costs) incurred in connection with the exercise of any of its rights or
remedies in accordance with the applicable provisions of this Agreement. If the
foregoing assignment is not effective under applicable law and Borrower shall
desire to so reject any Ground Lease, at Lender’s request, Borrower shall assign
its interest in such Ground Lease to Lender in lieu of rejecting such Ground
Lease, upon receipt by Borrower of notice from Lender of such request together
with Lender’s agreement to cure any existing defaults of Borrower under such
Ground Lease.

 

(iii)        If any action, proceeding, motion or notice shall be commenced or
filed in respect of any Ground Lessor or all or any part of the related Ground
Lease Property in connection with any case under the Bankruptcy Code, Lender and
Borrower shall cooperatively conduct and control any such litigation with
counsel agreed upon between Borrower and Lender in connection with such
litigation. Borrower shall, upon demand, pay to Lender all reasonable
out-of-pocket costs and expenses (including reasonable out-of-pocket attorneys’
fees and costs) actually paid or actually incurred by Lender in connection with
the cooperative prosecution or conduct of any such proceedings. All such costs
and expenses shall be deemed to be secured by the Loan Documents.

 

(iv)        Borrower shall promptly, after obtaining knowledge of such filing,
notify Lender orally of any filing by or against any Ground Lessor of a petition
under the Bankruptcy Code. Borrower shall thereafter promptly give written
notice of such filing to Lender, setting forth any information available to
Borrower as to the date of such filing, the court in which such petition was
filed, and the relief sought in such filing. Borrower shall promptly deliver to
Lender any and all notices, summonses, pleadings, applications and other
documents received by Borrower in connection with any such petition and any
proceedings relating to such petition.

 

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Section 5.2           Negative Covenants. From the date hereof until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Security Instrument and any other
collateral in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it shall not do,
directly or indirectly, any of the following:

 

5.2.1     Operation of Property. (a) Borrower shall not, without Lender’s prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned): (i) surrender, terminate, cancel, amend or modify the Management
Agreement; provided, that Borrower may, without Lender’s consent, terminate the
Management Agreement and replace the Manager so long as the replacement manager
is a Qualified Manager pursuant to a Replacement Management Agreement; (ii)
increase or consent to the increase of the amount of any management fee under
any Management Agreement with respect to any Individual Property so that such
management fee would be in excess of the underwritten management fee for such
Property set forth on Schedule V hereof, or (iii) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under, the Management Agreement in any material respect.

 

(b)          Following the occurrence and during the continuance of an Event of
Default, Borrower shall not exercise any rights, make any decisions, grant any
approvals or otherwise take any action under the Management Agreement without
the prior written consent of Lender, which consent may be granted, conditioned
or withheld in Lender’s discretion.

 

(c)         If under applicable zoning provisions the use of all or any portion
of the Property is or shall become a nonconforming use, Borrower shall not cause
or permit the nonconforming use or Improvement to be discontinued or abandoned
without the express written consent of Lender.

 

5.2.2     Liens. Borrower shall not create, incur, assume or suffer to exist any
Lien on any portion of the Property or permit any such action to be taken,
except for Permitted Encumbrances.

 

5.2.3     Dissolution. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of each Individual Property, (c) transfer, lease or sell, in one transaction or
any combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents or
its qualification and good standing in any jurisdiction in each case, without
obtaining the prior written consent of Lender, not to be unreasonably withheld,
delayed or conditioned.

 

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5.2.4     Change In Business. Borrower shall not enter into any line of business
other than the ownership and operation of each Individual Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business. Nothing contained in this Section 5.2.4 is intended to
expand the rights of Borrower contained in Section 5.2.10(d) hereof.

 

5.2.5     Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than 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.

 

5.2.6     Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could reasonably be expected to
result in such use becoming a nonconforming use under any zoning ordinance or
any other applicable land use law, rule or regulation, without the prior written
consent of Lender.

 

5.2.7     No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from the applicable Individual Property, and (b)
which constitutes real property with any portion of the applicable Individual
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such real property
portion of the Individual Property.

 

5.2.8     Intentionally Omitted.

 

5.2.9     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 ERISA, to the extent that no portion of
the assets used by Lender in connection with the transaction contemplated under
this Agreement and the other Loan Documents constitutes “plan assets” of one or
more Plans within the meaning of 29 C.F.R. §2510.3-101, as modified by Section
3(42) of ERISA.

 

(b)          Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its discretion, that (A) Borrower is not and
does not maintain an “employee benefit plan” as defined in Section 3(3) 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 any state
statute regulating investment of, or 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);

 

(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); or

 

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(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).

 

5.2.10   Transfers. (a) Borrower acknowledges that Lender has examined and
relied on the experience of Borrower and its stockholders, general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower’s ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Borrower acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.

 

(b)          Without the prior written consent of Lender, not to be unreasonably
withheld, delayed or conditioned, and except to the extent otherwise set forth
in this Section 5.2.10, Borrower shall not, and shall not permit any Restricted
Party to do any of the following (collectively, a “Transfer”): (i) sell, convey,
mortgage, grant, bargain, encumber, pledge, assign, grant options with respect
to, or otherwise transfer or dispose of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) the Property or any part thereof or any legal or
beneficial interest therein or any interest of Borrower in the Loan or (ii)
permit a Sale or Pledge of an interest in any Restricted Party, other than (A)
pursuant to Leases of space in the Improvements to Tenants in accordance with
the provisions of Section 5.1.20 and (B) Permitted Transfers.

 

(c)          A Transfer shall 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 leasing all or a substantial part
of any Individual Property for other than 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 a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation’s stock or the creation or
issuance of new stock; (iv) if a Restricted Party is a limited or general
partnership or joint venture, any merger or consolidation or the change,
removal, resignation or addition of a general partner or the Sale or Pledge of
the partnership interest of any general partner or any profits or proceeds
relating to such partnership interest, or the Sale or Pledge of limited
partnership interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or nonmember manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of nonmanaging membership interests or the
creation or issuance of new nonmanaging membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of the managing agent (including an Affiliated Manager) other
than in accordance with Section 5.1.22 hereof.

 

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(d)          Notwithstanding the provisions of this Section 5.2.10, Lender’s
consent shall not be required in connection with one or a series of Transfers,
of not more than forty-nine percent (49%) of the direct or indirect ownership
interests in a Borrower; provided, however, no such Transfer shall result in the
change of Control in a Borrower, and as a condition to each such Transfer of
more than ten percent (10%) of the direct or indirect ownership interests in a
Borrower, Lender shall receive not less than thirty (30) days prior written
notice of such proposed Transfer. If after giving effect to any such Transfer,
more than forty-nine percent (49%) of the direct or indirect ownership interests
in a Borrower are owned by any Person and its Affiliates that owned less than
forty-nine percent (49%) of the aggregate direct or indirect ownership interests
in a Borrower as of the Closing Date, Borrower shall, no less than thirty (30)
days prior to the effective date of any such Transfer, deliver to Lender an
Additional Insolvency Opinion reasonably acceptable to Lender and the Rating
Agencies. Borrower shall pay any and all reasonable out-of-pocket costs and
expenses incurred in connection with such Transfers (including Lender’s counsel
fees and disbursements and any fees and expenses of the Rating Agencies).

 

(e)          No Transfer of the Property (or any portion thereof) and assumption
of the Loan shall occur during the period that is ninety (90) days following the
date hereof. Without limiting Lender’s discretion to approve or disapprove any
request for a waiver of the prohibition against Transfers, Lender specifically
reserves the right to condition its consent to any waiver of a prohibited
Transfer upon satisfaction of the following minimum conditions:

 

(i)          Borrower shall pay Lender a transfer fee equal to: (A) one half of
one percent (0.5%) of the outstanding principal balance of the Loan at the time
of such Transfer for the first such Transfer; and (B) one percent (1%) of the
outstanding principal balance of the Loan at the time of such Transfer for each
subsequent Transfer;

 

(ii)         Borrower shall pay any and all reasonable out-of-pocket costs
incurred in connection with such Transfer (including Lender’s counsel fees and
disbursements and all recording fees, title insurance premiums and mortgage and
intangible taxes and the fees and expenses of the Rating Agencies pursuant to
clause (x) below);

 

(iii)        The proposed transferee (the “Transferee”) or Transferee’s
Principals must have demonstrated expertise in owning and operating properties
similar in location, size, class and operation to each Individual Property,
which expertise shall be reasonably determined by Lender;

 

(iv)        Transferee and Transferee’s Principals shall, as of the date of such
transfer, have an aggregate net worth and liquidity reasonably acceptable to
Lender;

 

(v)         Transferee, Transferee’s Principals and all other entities which may
be owned or Controlled directly or indirectly by Transferee’s Principals
(“Related Entities”) must not have been party to any bankruptcy proceedings,
voluntary or involuntary, made an assignment for the benefit of creditors or
taken advantage of any insolvency act, or any act for the benefit of debtors
within seven (7) years prior to the date of the proposed Transfer;

 

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(vi)        Transferee shall assume all of the obligations of Borrower under the
Loan Documents in a manner reasonably satisfactory to Lender in all respects,
including by entering into an assumption agreement in form and substance
reasonably satisfactory to Lender;

 

(vii)       There shall be no material litigation or regulatory action pending
or threatened against Transferee, Transferee’s Principals or Related Entities
which is not acceptable to Lender in its reasonable discretion;

 

(viii)      Transferee, Transferee’s Principals and Related Entities shall not
have defaulted under its or their obligations with respect to any other
Indebtedness in a manner which is not acceptable to Lender in its reasonable
discretion;

 

(ix)         Transferee and Transferee’s Principals must be able to satisfy all
the representations and covenants set forth in Sections 4.1.30, 4.1.35, 5.1.23
and 5.2.9 of this Agreement, no Event of Default shall otherwise occur as a
result of such Transfer, and Transferee and Transferee’s Principals shall
deliver (A) all organizational documentation reasonably requested by Lender,
which shall be reasonably satisfactory to Lender and (B) all certificates,
agreements, covenants and legal opinions reasonably required by Lender;

 

(x)          If required by Lender, Transferee shall be approved by the Rating
Agencies selected by Lender, which approval, if required by Lender, shall take
the form of a confirmation in writing from such Rating Agencies to the effect
that such Transfer will not result in a requalification, reduction, downgrade or
withdrawal of the ratings in effect immediately prior to such assumption or
transfer for the Securities or any class thereof issued in connection with a
Securitization which are then outstanding;

 

(xi)         Prior to any release of Guarantor, one (1) or more substitute
guarantors reasonably acceptable to Lender shall have assumed all of the
liabilities and obligations of Guarantor under the Guaranty and Environmental
Indemnity executed by Guarantor or execute a replacement guaranty and
environmental indemnity reasonably satisfactory to Lender.

 

(xii)        Borrower shall deliver, at its sole cost and expense, an
endorsement to each Title Insurance Policy, as modified by the assumption
agreement, as a valid first lien on each Individual Property and naming the
Transferee as owner of each Individual Property, which endorsement shall insure
that, as of the date of the recording of the assumption agreement, each
Individual Property shall not be subject to any additional exceptions or liens
other than those contained in the Title Policies issued on the date hereof and
the Permitted Encumbrances;

 

(xiii)       Each Individual Property shall be managed by Qualified Manager
pursuant to a Replacement Management Agreement; and

 

(xiv)      Borrower or Transferee, at its sole cost and expense, shall deliver
to Lender an Additional Insolvency Opinion reflecting such Transfer satisfactory
in form and substance to Lender.

 

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(f)          Notwithstanding any provision in this Section 5.2.10 to the
contrary, limited partnership or membership interests, as applicable, in
Borrower may be transferred without Lender’s consent and without application of
the fee set forth in Section 5.2.10(e)(i): (i) among limited partners or
members, as applicable, of Borrower who are limited partners or members, as
applicable, of Borrower as of the date of this Agreement (each a “Current
Owner”), and (ii) to immediate family members (which shall be limited to a
spouse, parent, child and grandchild (each, an “Immediate Family Member”)), of
any Current Owner or to trusts formed for the benefit of Immediate Family
Members of such Current Owner for bona fide estate planning purposes (each, an
“Additional Permitted Transfer”), provided each of the following conditions is
satisfied: (A) no Event of Default has occurred and no event has occurred that
with notice or the passage of time, or both, would constitute an Event of
Default; (B) Lender has received Borrower’s notice of the Additional Permitted
Transfer no less than 30 days prior to the commencement of such transfer; (C) no
Guarantor shall be released from any guaranty or indemnity agreement by virtue
of the Additional Permitted Transfer; (D) Borrower shall be responsible for the
costs and expenses of documenting the Additional Permitted Transfer; (E)
Borrower shall reimburse Lender for all actual costs and expenses incurred by
Lender in connection with the Additional Permitted Transfer, whether or not
consummated; (F) once the Additional Permitted Transfer is complete, the persons
with Control of Borrower and management of the Property are the same persons who
have such Control and management rights immediately prior to the Additional
Permitted Transfer; (G) Borrower shall furnish Lender copies of any
documentation executed in connection with the Additional Permitted Transfer
promptly after execution thereof; (H) Borrower shall have delivered satisfactory
evidence to Lender that, following the Additional Permitted Transfer, Borrower
shall continue to comply with the provisions of Section 4.1.30 hereof; and (I)
upon Lender’s request, delivery of an Additional Insolvency Opinion acceptable
to Lender.

 

(h)          A Transfer (a “Qualified Equityholder Transfer”) of direct or
indirect ownership interests in Borrower to a Qualified Equityholder resulting
in a change in Control of Borrower may occur at any time and from time-to-time
without Lender’s consent, so long as the following conditions are satisfied: (i)
Following the consummation of such Qualified Equityholder Transfer, such
Qualified Equityholder shall Control of Borrower, (ii) a Qualified Replacement
Guarantor shall deliver to Lender a replacement guaranty and a replacement
environmental indemnity agreement each in form and substance substantially
identical to the Guaranty and Environmental Indemnity executed by Guarantor as
of the closing of the Loan; (iii) such Qualified Replacement Guarantor shall
have furnished to Lender all appropriate documentation evidencing such Person’s
organization and good standing, and the qualification of the signers to execute
the applicable documents on its behalf, which documentation shall include
certified copies of all relevant documents relating to the organization and
formation of such Qualified Replacement Guarantor and of the entities, if any,
which are partners or members of the Qualified Replacement Guarantor; (iv)
Lender must receive at least thirty (30) days prior written notice thereof; (v)
Borrower shall furnish to Lender an Additional Insolvency Opinion and such other
legal opinions reasonably required by Lender; (vi) Borrower shall furnish one or
more Officer’s Certificates representing and warranting that, following such
Qualified Equityholder Transfer, each Borrower continues to comply with the
provisions of Section 4.1.30 hereof; (vii) Borrower shall pay to Lender,
concurrently with the closing of such Qualified Equityholder Transfer all
reasonable out-of-pocket costs and expenses, including reasonable out-of-pocket
attorneys’ fees, incurred by Lender in connection therewith, and (viii) Borrower
shall furnish Lender copies of any documentation executed in connection with the
Qualified Equityholder Transfer promptly after execution thereof.

 

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(i)          Without Lender’s prior written consent thereto, in its sole
discretion, any Transfer or Permitted Transfer resulting in any direct or
indirect ownership interests in Borrower or the Property being held in any
Prohibited Entity/Ownership Structure is prohibited, even if the same would be
otherwise allowed pursuant to this Section 5.2.10, the definition of a Permitted
Transfer or any other provision of any Loan Document.

 

Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower’s Transfer without Lender’s consent.
This provision shall apply to every Transfer regardless of whether voluntary or
not, or whether or not Lender has consented to any previous Transfer.

 

ARTICLE VI - INSURANCE; CASUALTY; CONDEMNATION

 

Section 6.1           Insurance. (a) Each Borrower shall obtain and maintain, or
cause to be maintained, insurance for each Borrower and each Individual Property
providing at least the following coverages:

 

(i)          comprehensive all risk “special form” insurance including loss
caused by any type of windstorm, windstorm related perils, “named storms,” or
hail on the Improvements and the Personal Property, including contingent
liability from Operation of Building Laws, Demolition Costs and Increased Cost
of Construction Endorsements, (A) in an amount equal to one hundred percent
(100%) of the “Full Replacement Cost,” which for purposes of this Agreement
means actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation; (B)
containing an agreed amount endorsement with respect to the Improvements and
Personal Property waiving all co-insurance provisions or to be written on a no
co-insurance form; (C) providing for no deductible in excess of 5% of Net Cash
Flow of the applicable Individual Property for all such insurance coverage;
provided however with respect to windstorm and earthquake coverage, providing
for a deductible satisfactory to Lender in its reasonable discretion which for
clarity includes 5% of the total insured value of each Individual Property; and
(D) if any of the Improvements or the use of the applicable Individual Property
shall at any time constitute legal non-conforming structures or uses, coverage
for loss due to operation of law in an amount equal to the full Replacement Cost
for coverage A, undamaged portion, and fifteen percent (15%) each for coverage B
for demolition costs and coverage C for increased costs of construction. In
addition, Borrower shall obtain: (y) if any material portion of the Improvements
is currently or at any time in the future located in a federally designated
“special flood hazard area,” flood hazard insurance in an amount equal to the
maximum amount of such insurance available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended, plus excess flood coverage
in an amount equal to the “probable maximum loss” for the Improvements, as
determined by an engineer reasonably satisfactory to Lender, or such greater
amount as Lender shall reasonably require, and (z) earthquake insurance in
amounts and in form and substance reasonably satisfactory to Lender (but in any
event, in an amount not less than 150% of the “probable maximum loss”) in the
event the applicable Individual Property is located in an area with a high
degree of seismic activity and the “probable maximum loss” for the Improvements,
as determined by an engineer reasonably satisfactory to Lender, is 20% or
greater (based on a 475-year return period, an exposure period of 50 years and a
10% probability of exceedance), 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);

 

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(ii)         business income or rental loss insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the insurance provided
for in subsection (i) above; (C) in an amount equal to one hundred percent
(100%) of the projected gross revenues from the operation of the applicable
Individual Property (as reduced to reflect expenses not incurred during a period
of Restoration) for a period of (1) not less than twelve (12) months from the
date of casualty or loss if the amount of the Loan is less than $35,000,000, or
(2) not less than eighteen (18) months from the date of casualty or loss if the
amount of the Loan is $35,000,000 or more; and (D) if the amount of the Loan is
$50,000,000 or more, 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 180 days from the date that the applicable Individual 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. The
amount of such business income or rental loss 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 revenues from the applicable
Individual Property for the succeeding twelve (12) month period. Notwithstanding
the provisions of Section 2.7.1 hereof, all proceeds payable to Lender pursuant
to this subsection shall be held by Lender as additional reserves hereunder
pursuant to Section 7.6 hereof and, in the event that the proceeds of such
business income or rental loss insurance are paid in a lump sum in advance, in
the absence of an Event of Default, Lender shall disburse a portion thereof
(calculated based upon aggregate amount of such proceeds divided by the number
of Payment Dates occurring during the time period reasonably determined by
Lender to be required to restore the damage caused by the related casualty) on
each Payment Date to the Clearing Account; provided, however, that nothing
herein contained shall be deemed to relieve Borrower of its obligations to pay
the obligations secured by the Loan Documents on the respective dates of payment
provided for in this Agreement and the other Loan Documents except to the extent
such amounts are actually paid out of the proceeds of such business income
insurance;

 

(iii)        at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
applicable Individual Property coverage form does not otherwise apply, (A)
owner’s contingent or protective liability insurance, otherwise known as Owner
Contractor’s Protective Liability, 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 applicable
Individual Property and (4) with an agreed amount endorsement waiving
co-insurance provisions;

 

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(iv)        comprehensive boiler and machinery insurance, if steam boilers,
other pressure-fixed vessels, large air conditioning systems, elevators or other
large machinery are in operation, in amounts as shall be reasonably required by
Lender on terms consistent with the commercial property insurance policy
required under subsection (i) above;

 

(v)         commercial general liability insurance against claims for personal
injury, bodily injury, death, contractual damage or property damage occurring
upon, in or about the applicable Individual Property, such insurance (A) to be
on the so-called “occurrence” form with a combined limit of not less than
$2,000,000.00 in the aggregate and $1,000,000.00 per occurrence; (B) to continue
at not less than the aforesaid limit until required to be changed by Lender in
writing 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 written
contracts and (5) contractual liability covering the indemnities contained in
Article 9 of the Security Instrument to the extent the same is available;

 

(vi)        automobile liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence of
$1,000,000.00;

 

(vii)       if Borrower has any employees, worker’s compensation and employee’s
liability subject to the worker’s compensation laws of the applicable state;

 

(viii)      umbrella and excess liability insurance in an amount not less than:
(A) $5,000,000.00 per occurrence if the amount of the Loan is less than
$35,000,000, or (B) $25,000,000.00 per occurrence, if the amount of the Loan is
$35,000,000 or more, on terms consistent with the commercial general liability
insurance policy required under subsection (v) above, including supplemental
coverage for employer liability, if applicable, and automobile liability, which
umbrella liability coverage shall apply in excess of the automobile liability
coverage in clause (vi) above;

 

(ix)         the insurance required under this Section 6.1(a) above shall cover
perils of terrorism and acts of terrorism and Borrower shall maintain insurance
for loss resulting from perils and 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 and the Terrorism Risk Insurance Program
Reauthorization Act of 2015, or its subsequent extensions or reauthorizations,
or replacement act), on terms (including amounts) consistent with those required
under Sections 6.1(a) above at all times during the term of the Loan; provided,
however, Borrower shall not be required to spend on terrorism insurance coverage
more than two (2) times the amount of the Insurance Premiums that are payable in
respect of the property and rental loss and/or business income insurance
required hereunder (without giving effect to the cost of terrorism components of
such property and rental loss and/or business income insurance) on the date of
this Agreement, and if the cost of terrorism insurance exceeds such amount,
Borrower shall purchase the maximum amount of terrorism insurance available with
funds equal to such amount; and

 

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(x)          upon sixty (60) days written notice, such other reasonable
insurance, including sinkhole or land subsidence 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
property similar to the applicable Individual Property located in or around the
region in which the Property is located.

 

(b)          All insurance provided for in Section 6.1(a) hereof, shall be
obtained under valid and enforceable policies (collectively, the “Policies” or
in the singular, the “Policy”), and shall be subject to the reasonable approval
of Lender as to insurance companies, amounts, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and responsible
insurance companies approved to do business in the State and having a rating of
(A) if the amount of the Loan is $35,000,000 or more, “A:VIII” or better in the
current Best’s Insurance Reports and a claims paying ability rating of “A-” or
better by S&P, and “A3” or better by Moody’s, if rated by Moody’s, or (B) if the
amount of the Loan is less than $35,000,000, “A-:VIII” or better in the current
Best’s Insurance Reports and a claims paying ability rating of “A-” or better by
S&P, and “A3” or better by Moody’s, if rated by Moody’s. Notwithstanding the
foregoing, any required earthquake insurance must satisfy the requirements of
subsection (A) hereof regardless of the amount of the Loan. The Policies
described in Section 6.1 hereof (other than those strictly limited to liability
protection) shall designate Lender as loss payee. Not less than ten (10) days
prior to the expiration dates of the Policies theretofore furnished to Lender,
certificates of insurance evidencing the Policies accompanied by evidence
reasonably satisfactory to Lender of payment of the premiums due thereunder (the
“Insurance Premiums”), shall be delivered by Borrower to Lender.

 

(c)          Any blanket insurance Policy shall provide the same protection as
would a separate Policy insuring only the applicable Individual Property in
compliance with the provisions of Section 6.1(a) hereof. Lender may determine
(including at the request of Borrower), in its reasonable discretion, the amount
of such coverage that is sufficient in light of the other risks and properties
insured under the blanket policy based on a review of the relevant schedule of
locations limited to the minimum details required and based on zip code, county
or radial distance, including property values.

 

(d)          All Policies provided for or contemplated by Section 6.1(a) hereof,
except for the Policy referenced in Section 6.1(a)(vii) of this Agreement, shall
name Borrower as the insured and Lender as the additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery,
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.

 

(e)          All Policies shall contain clauses or endorsements to the effect
that:

 

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(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 (A) for nonpayment of a premium
without at least ten (10) days written notice to Lender and any other party
named therein as an additional insured, and (B) for any reason other than
nonpayment of a premium without at least thirty (30) days written notice to
Lender and any other party named therein as an additional insured;

 

(iii)        intentionally omitted; and

 

(iv)        Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder.

 

(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 to take such action as Lender deems reasonably necessary to protect
its interest in the applicable Individual Property, including the obtaining of
such insurance coverage as Lender in its reasonable discretion deems appropriate
after three (3) Business Days’ notice to Borrower if prior to the date upon
which any such coverage will lapse or at any time Lender reasonably deems
necessary (regardless of prior notice to Borrower) to avoid the lapse of any
such coverage. All premiums incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and, until paid, shall be secured by the Security
Instrument and shall bear interest at the Default Rate.

 

Section 6.2           Casualty. If any Individual Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower shall give prompt written notice of such damage to Lender and shall
promptly commence or cause to be commenced and diligently prosecute the
completion of the Restoration of the applicable Individual Property pursuant to
Section 6.4 hereof as nearly as possible to the condition the applicable
Individual Property was in immediately prior to such Casualty, with such
alterations as may be reasonably approved by Lender and otherwise in accordance
with Section 6.4 hereof. Borrower shall pay or cause to be paid 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 the final settlement, which approval
shall not be unreasonably withheld or delayed) with respect to any Casualty in
which the Net Proceeds or the costs of completing the Restoration are equal to
or greater than the Availability Threshold and Borrower shall deliver to Lender
all instruments reasonably required by Lender to permit such participation.

 

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Section 6.3           Condemnation. Borrower shall promptly give Lender notice
of the commencement of any proceeding for the Condemnation of any Individual
Property (or any portion thereof) 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 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 any portion of any
Individual Property is taken by a condemning authority, Borrower shall promptly
commence and diligently prosecute the Restoration of the Property pursuant to
Section 6.4 hereof and otherwise comply with the provisions of Section 6.4
hereof. If the applicable Individual 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. Notwithstanding the foregoing provisions of this Section 6.3, and
Section 6.4 hereof, if the Loan or any portion thereof is included in a REMIC
Trust and, immediately following a release of any portion of the Lien of the
Security Instrument in connection with a Condemnation (but taking into account
any proposed Restoration on the remaining portion of the Property), the Loan to
Value Ratio is greater than 125% (such value to be determined, in Lender’s sole
discretion, by any commercially reasonable method permitted to a REMIC Trust
and, if the Property is a hospitality property, determination of such value
shall exclude personal property and going concern value, if any), the principal
balance of the Loan must be paid down in an amount sufficient to satisfy the
REMIC Requirements, unless the Lender receives an opinion of counsel that if
such amount is not paid, the Securitization will not fail to maintain its status
as a REMIC Trust and that the REMIC Trust will not be subject to tax as a result
of the related release of such portion of the Lien of the Security Instrument.
In connection with the foregoing, the Net Proceeds shall not be available for
Restoration and shall be used to pay down the principal balance of the Loan to
the extent set forth above.

 

Section 6.4           Restoration. The following provisions shall apply in
connection with the Restoration of any Individual Property:

 

(a)          If the Net Proceeds shall be less than the Availability Threshold
and the costs of completing the Restoration shall be less than the Availability
Threshold, the Net Proceeds shall be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Section 6.4(b)(i)
hereof 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.

 

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(b)          If the Net Proceeds are equal to or greater than the Availability
Threshold or the costs of completing the Restoration are equal to or greater
than the Availability Threshold, and provided that such Restoration is permitted
under applicable Legal Requirements even though the Property is legally
nonconforming or nonconforming, Lender shall make the Net Proceeds available for
the Restoration in accordance with the provisions of this Section 6.4. The term
“Net Proceeds” for purposes of this Section 6.4 means: (i) the net amount of all
insurance proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv), (ix)
(excluding in the case of such item (ix), any such insurance proceeds payable to
third parties for liability or tort claims) and (x) as a result of such damage
or destruction, after deduction of its reasonable out-of-pocket costs and
expenses (including reasonable out-of-pocket counsel fees), if any, in
collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award,
after deduction of its reasonable out-of-pocket costs and expenses (including
reasonable out-of-pocket 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 provided that each of 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
thirty-five percent (35%) of the total floor area of the Improvements on the
applicable Individual 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 fifteen percent (15%) of the land constituting
the applicable Individual Property is taken, and such land is located along the
perimeter or periphery of the applicable Individual Property, and no portion of
the Improvements is located on such land;

 

(C)         Borrower and/or Tenant, as applicable under the respective Lease,
shall make all necessary repairs and restorations thereto (utilizing the Net
Proceeds and any applicable Net Proceeds Deficiency), and (1) Leases demising in
the aggregate a percentage amount equal to or greater than the Rentable Space
Percentage of the total rentable space in the applicable Individual 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, notwithstanding the occurrence of any such Casualty or
Condemnation, (2) Lender is satisfied in its reasonable judgment that the net
operating income for the Individual Property will be equal to or greater than
that which exists prior to the Casualty or Condemnation, as applicable, prior to
the expiration of the insurance coverage referred to in Section 6.1(a)(ii), or
(3) the Debt Service Coverage Ratio is reasonably expected to be 1.55:1.0 or
greater after the Restoration. The term “Rentable Space Percentage” means (1) in
the event the Net Proceeds are Insurance Proceeds, a percentage amount equal to
eighty percent (80%) and (2) in the event the Net Proceeds are Condemnation
Proceeds, a percentage amount equal to eighty percent (80%);

 

(D)         Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than ninety (90) days after such Casualty or
Condemnation, whichever the case may be, occurs and shall diligently pursue the
same to satisfactory completion (for the purposes of this clause the filing of
an application for a building permit in accordance with all Legal Requirements
shall be deemed to be commencement of the Restoration provided Borrower
diligently pursues obtaining such permit and promptly commences the physical
Restoration following the issuance of the building permit);

 

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(E)         Lender shall be satisfied that any operating deficits, including all
scheduled Monthly Debt Service Payment Amounts, 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 6.1(a)(ii) hereof,
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) six (6) months prior to the Maturity
Date, (2) the earliest date required for such completion under the terms of any
Lease or Ground Lease related to the Individual Property which suffered the
Casualty or Condemnation, (3) such time as may be required under all applicable
Legal Requirements in order to repair and restore the applicable Individual
Property to the condition it was in immediately prior to such Casualty or to as
nearly as possible the condition it was in immediately prior to such
Condemnation, as applicable, or (4) the expiration of the insurance coverage
referred to in Section 6.1(a)(ii) hereof;

 

(G)         the Restoration is permitted under all applicable Legal Requirements
and 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 applicable Individual Property or the Improvements;

 

(J)         Intentionally Omitted;

 

(K)         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 subject to
Lender’s approval; and

 

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

 

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(ii)         The Net Proceeds shall be held by Lender in an Eligible Account
and, until disbursed in accordance with the provisions of this Section 6.4(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 reasonably 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
applicable Individual Property which have not either been fully bonded to the
reasonable satisfaction of Lender and discharged of record or in the alternative
fully insured to the reasonable satisfaction of Lender by the title company
issuing the applicable Title Insurance Policy.

 

(iii)        All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance, not to be
unreasonably withheld, delayed or conditioned, in all respects by Lender and by
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 prior review and approval by Lender and the
Casualty Consultant, not to be unreasonably withheld, delayed or conditioned.
All costs and expenses incurred by Lender in connection with making the Net
Proceeds available for the Restoration including reasonable counsel fees and
disbursements and the Casualty Consultant’s fees, 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, minus the Casualty Retainage. The term “Casualty Retainage”
means 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 until the Restoration is
fifty percent (50%) complete and five percent (5%) thereafter. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 6.4(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 6.4(b) and that all approvals
necessary for the re-occupancy and use of the Property have been obtained from
all appropriate governmental and quasi-governmental authorities, and Lender
receives evidence reasonably 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 shall 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 the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, 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 Lender receives evidence reasonably
acceptable to Lender evidencing that the applicable Title Insurance Policy
continues to insure the priority of the lien of the applicable Security
Instrument over any mechanic’s or materialmen’s lien related to the Restoration.
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.

 

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(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 reasonable 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 before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender 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 6.4(b) shall constitute additional security for the Debt and Other
Obligations under the Loan Documents.

 

(vii)       Provided no continuing Event of Default shall then exist, after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 6.4(b), and the receipt by
Lender of evidence satisfactory to Lender in its reasonable discretion that all
costs incurred in connection with the Restoration have been paid in full, the
excess, if any, of the Net Proceeds (and the remaining balance, if any, of the
Net Proceeds Deficiency) deposited with Lender shall be (1) if a Cash Sweep
Period then exists, deposited in the Cash Management Account to be disbursed in
accordance with this Agreement, and (2) if no Cash Sweep Period then exists,
disbursed to Borrower.

 

(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 6.4(b)(vii) hereof may be retained and applied by Lender toward the
payment of the Debt in accordance with Section 9(b) of the Note, whether or not
then due and payable in such order, priority and proportions as Lender in its
reasonable 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 reasonable discretion.

 

(d)          In the event of foreclosure of the Security Instrument, or other
transfer of title to the Property (or any portion thereof) 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.

 

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(e)          Notwithstanding anything contained herein or in any other Loan
Document, if Lender applies any Net Proceeds to the repayment of the Debt and
such Net Proceeds are not sufficient to obtain the release of the Individual
Property subject to the Casualty or Condemnation, Borrower may, in its sole
discretion, repay a portion of the Loan in an amount equal to the difference
between the applicable Release Amount and the Net Proceeds applied to repay the
Loan, and satisfy all of the other conditions for Partial Release contained in
Section 2.6.2 of this Agreement, Lender shall release the lien of the Security
Instrument from the applicable Individual Property, and no Prepayment
Consideration or similar sum shall be due in connection therewith.

 

(f)          Notwithstanding anything contained herein or in any other Loan
Document, to the extent any Casualty or Condemnation impacts an Individual
Property that is subject to a Ground Lease, the application of any Net Proceeds
shall be governed by the terms of such Ground Lease, as amended by the terms of
any ground lease estoppel relating thereto.

 

(g)          Notwithstanding anything contained herein or in any other Loan
Document, if the applicable Legal Requirements (including the opportunity to
seek a variance or special use permit) do not permit the Restoration of the
Property to its condition that existed prior to the applicable Casualty or
Condemnation due to any legally nonconforming parking conditions at the
Property, Lender shall make the Net Proceeds available for the Restoration of
the Property in accordance with all applicable Legal Requirements so long as
Borrower provides reasonable evidence that following such Restoration, the
requirements contained either in (i) Section 6.1(b)(i)(C)(1) and Section
6.1(b)(i)(C)(2), or in (ii) Section 6.1(b)(i)(C)(3) above shall be satisfied. In
the event that Borrower does not provide such reasonable evidence, all Net
Proceeds shall be retained and applied by Lender toward the payment of the Debt
in accordance with Section 9(b) of the Note (no Prepayment Consideration or
similar sum shall be due in connection therewith), and Borrower shall complete a
Partial Release of such affected Individual Property in accordance with Section
2.6.2 of this Agreement, provided, however, that the amount of any such applied
the Net Proceeds shall be deducted from the applicable Release Amount for such
Partial Release and further that no Prepayment Consideration or similar sum
shall be due in connection therewith.

 

ARTICLE VII - RESERVE FUNDS

 

Section 7.1           Required Repairs.

 

7.1.1      Deposits. Borrower shall perform the repairs at the Property, as more
particularly set forth on Schedule II hereto (such repairs hereinafter referred
to as “Required Repairs”). Borrower shall complete the Required Repairs on or
before the required deadline for each repair as set forth on Schedule II, each
as extended as a result of force majeure. Upon the occurrence of such an Event
of Default, Lender, at its option, may withdraw all Required Repair Funds from
the Required Repair Account and Lender may apply such funds either to completion
of the Required Repairs at the Property or toward payment of the Debt in such
order, proportion and priority as Lender may determine in its discretion.
Lender’s right to withdraw and apply Required Repair Funds shall be in addition
to all other rights and remedies provided to Lender under this Agreement and the
other Loan Documents. On the Closing Date, Borrower shall deposit with Lender
the amount for the Property set forth on such Schedule II hereto to perform the
Required Repairs for the Property. Amounts so deposited with Lender shall be
held by Lender in accordance with Section 7.6 hereof. Amounts so deposited shall
hereinafter be referred to as Borrower’s “Required Repair Fund” and the account
in which such amounts are held shall hereinafter be referred to as Borrower’s
“Required Repair Account.”

 

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7.1.2      Release of Required Repair Funds. Lender shall disburse to Borrower
the Required Repair Funds from the Required Repair Account from time to time
upon satisfaction by Borrower of each of the following conditions: (a) Borrower
shall submit a written request for payment to Lender at least twenty (20) days
prior to the date on which Borrower requests such payment be made and specifies
the Required Repairs to be paid, (b) 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, (c) Lender shall have received an Officers’
Certificate (i) stating that all Required Repairs to be funded by the requested
disbursement have been completed in good and workmanlike manner and in
accordance with all applicable federal, state and local laws, rules and
regulations, such certificate to be accompanied by a copy of any license, permit
or other approval by any Governmental Authority required to commence or complete
the Required Repairs, (ii) identifying each Person that supplied materials or
labor in connection with the Required Repairs to be funded by the requested
disbursement, and (iii) stating that each such Person has been paid in full or
will be paid in full upon such disbursement, and (d) if the requested
disbursement is for a sum in excess of $50,000 for any applicable Individual
Property, at Lender’s option, a title search for the applicable Individual
Property indicating that the applicable Individual Property is free from all
liens, claims and other encumbrances not previously approved by Lender, and (e)
in the event the title search described in item (d) is not required by Lender,
such other evidence Lender shall have received such other evidence as Lender
shall reasonably request that the Required Repairs 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 make disbursements
from the Required Repair Account with respect to the Property (i) more than once
a month and (ii) unless such requested disbursement is in an amount greater than
$5,000.00 (or a lesser amount if the total amount in the Required Repair Account
is less than $5,000.00 in which case only one disbursement of the amount
remaining in the account shall be made) and such disbursement shall be made only
upon satisfaction of each condition contained in this Section 7.1.2.

 

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Section 7.2           Tax and Insurance Escrow Fund. Borrower shall pay to
Lender (a) on the Closing Date an initial deposit and (b) on each Payment Date
thereafter (i) one-twelfth (1/12) of the Taxes and Other Charges that Lender
reasonably estimates will be payable during the next ensuing twelve (12) months
in order to accumulate with Lender sufficient funds to pay all such Taxes and
Other Charges at least thirty (30) days prior to their respective due dates (but
taking into consideration and not including such calculation any taxes that are
directly payable and actually paid by Tenants under Leases), and (ii)
one-twelfth (1/12) 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 with Lender sufficient funds to pay
all such Insurance Premiums at least thirty (30) days prior to the expiration of
the Policies (said amounts in (a) and (b) above hereinafter called the “Tax and
Insurance Escrow Fund”). Notwithstanding the foregoing, so long as Borrower
maintains blanket policies of insurance in accordance with Section 6.1 hereof,
the provisions of this Section 7.2 with regard to Insurance Premiums shall not
be applicable, until and unless Lender elects to apply such provisions following
(i) the issuance by any insurer or its agent of any notice of cancellation,
termination, or lapse of any insurance coverage required under Section 6.1
hereof, (ii) any cancellation, termination, or lapse of any insurance coverage
required under Section 6.1 hereof whether or not any notice is issued, (iii)
Lender having not received from Borrower evidence of insurance coverages as
required by and in accordance with the terms of Section 6.1 hereof, or (iv) the
occurrence of any Event of Default. Lender shall apply the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Section 5.1.2 hereof and under the Security Instrument. In
making any payment relating to the Tax and Insurance Escrow Fund, Lender may do
so according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums), 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 and Insurance Escrow
Fund shall exceed the amounts due for Taxes, Other Charges and Insurance
Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax and Insurance Escrow Fund. If at any time Lender reasonably
determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes, Other Charges and, if Borrower is required to deposit
sums in the Tax and Insurance Escrow Fund with respect to Insurance Premium,
Insurance Premiums by the dates set forth in (a) and (b) above, Lender shall
notify Borrower in writing of such determination and Borrower shall increase its
monthly payments to Lender by the amount that Lender reasonably estimates is
sufficient to make up the deficiency at least thirty (30) days prior to the due
date of the Taxes and Other Charges or, if applicable, thirty (30) days prior to
expiration of the Policies, as the case may be. Notwithstanding the foregoing,
in the event a completed Partial Release or Substitution, upon Borrower’s
written request, Lender shall recalculate the monthly deposit required pursuant
to (b) above taking into account the Individual Properties securing the Loan
following such completed Partial Release or Substitution and the Taxes and Other
Charges that Lender reasonably estimates will be payable during the next ensuing
twelve (12) months with respect to such Individual Properties.

 

Section 7.3           Replacements and Replacement Reserve.

 

7.3.1     Replacement Reserve Fund. Borrower shall pay to Lender on each Payment
Date thereafter during the existence of a Cash Sweep Period, an amount equal to
$0.25 multiplied by the then existing aggregate gross leasable area of the
Property, divided by 12 (the “Replacement Reserve Monthly Deposit”), which
amounts are reasonably estimated by Lender in its reasonable discretion to be
due for replacements and repairs required to be made to any Individual Property
during the calendar year (collectively, the “Replacements”). In the event of a
Partial Release or Substitution, the Replacement Reserve Monthly Deposit shall
be reduced or increased to be an amount equal to $0.25 multiplied by the total
number of square feet of the Improvements located at the Individual Properties
that are subject to the Loan following the completion of such Partial Release or
Substitution, divided by twelve. Amounts so deposited shall hereinafter be
referred to as Borrower’s “Replacement Reserve Fund” and the account in which
such amounts are held shall hereinafter be referred to as Borrower’s
“Replacement Reserve Account.”

 

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7.3.2     Disbursements from Replacement Reserve Account. Lender shall make
disbursements from the Replacement Reserve Account to pay Borrower only for the
costs of the Replacements. Lender shall not be obligated to make disbursements
from the Replacement Reserve Account to reimburse Borrower for the costs of
routine maintenance to the Property, replacements of inventory or for costs
which are to be reimbursed from Rollover Reserve Fund or Required Repair Fund.
Lender shall disburse Replacement Reserve Funds from the Replacement Reserve
Account from time to time upon satisfaction by Borrower of each of the following
conditions: (a) Borrower shall submit a written request for payment to Lender at
least twenty (20) days prior to the date on which Borrower requests such payment
be made, (b) 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, (c)
Lender shall have received a Disbursement Certification and Schedule for the
requested disbursement: (i) stating the aggregate requested amount to be
disbursed and that the items to be funded by the requested disbursement are
Replacements, (ii) providing a general description of such Replacements, (iii)
including a schedule of each contractor, subcontractor, materialman and/or
person to be paid (or for which Borrower is to be reimbursed for amounts
previously paid by it), providing a description of the Replacements for which
the disbursement is requested, including, as applicable the quantity and price
of each item, the costs of all materials used and all labor or other services
payable in connection with such Replacements, and related invoice numbers, (iv)
stating that such contractors, subcontractors, materialmen and/or persons have
been paid, or will be paid with the proceeds of the requested disbursement, the
amounts then due and payable to such Person in connection with the specified
goods, work or services provided thereby, and that Borrower has obtained lien
waivers from each such contractor, subcontractor, materialman and/or person with
respect to such specified goods, work or services or will obtain such waivers
concurrently with payment, (v) stating that all Replacements (or the relevant
portions thereof) to be funded by the requested disbursement have been completed
in a good and workmanlike manner and in accordance with all applicable Legal
Requirements, have not been the subject of a previous disbursement, and that all
outstanding payables with respect thereto (other than those to be paid from the
requested disbursement) have been paid in full, and (vi) stating that all
previous disbursements of Replacement Reserve Funds have been used to pay the
Replacements identified in the Disbursement Certification and Schedule provided
in connection with such previous disbursements, and (d) with respect to any
requested disbursement in excess of $250,000.00: (i) copies of appropriate lien
waivers, conditional lien waivers or other evidence of payment reasonably
satisfactory to Lender with respect to any contractor, subcontractor and/or
materialman whose proposed payment (or Borrower reimbursement, if applicable) is
in excess of $250,000.00, (ii) if required by Lender, a title search for the
applicable Individual Property indicating that such Individual Property is free
from all Liens, claims and other encumbrances not previously approved by Lender
(other than Permitted Encumbrances), (iii) in the event the title endorsement
described in item (ii) is not required by Lender, such other evidence as Lender
shall request to demonstrate that the Replacements to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement (other than any retention amount which is not a part of such
disbursement request), and (iv) Lender may require an inspection of the
applicable Individual Property, at Borrower’s expense, by an appropriate
independent qualified professional selected by Lender prior to making such
disbursement in order to verify completion of the Replacements for which
reimbursement is sought. Lender shall not be required to make disbursements from
the Replacement Reserve Account (i) more than once a month and (ii) unless such
requested disbursement is in an amount greater than $5,000.00 (or a lesser
amount if the total amount in the Replacement Reserve Account is less than
$5,000.00), in which case only one disbursement of the amount remaining in the
account shall be made) and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.3.2.

 

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7.3.3     Performance of Replacements. (a) Borrower shall make Replacements when
required in order to keep each Individual Property in condition and repair
consistent with other comparable properties in the same market segment in the
metropolitan area in which the applicable Individual Property is located, and to
keep each Individual Property or any portion thereof from deteriorating.
Borrower shall complete all Replacements in a good and workmanlike manner as
soon as practicable following the commencement of making each such Replacement.

 

(b)          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, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.

 

7.3.4     Failure to Make Replacements. (a) Upon the occurrence of an Event of
Default, Lender may use the Replacement Reserve Fund (or any portion thereof)
for any purpose, including completion of the Replacements as provided in Section
7.3.3, or for any other repair or replacement to the Property or toward payment
of the Debt in such order, proportion and priority as Lender may determine in
its discretion. Lender’s right to withdraw and apply the Replacement Reserve
Fund shall be in addition to all other rights and remedies provided to Lender
under this Agreement and the other Loan Documents.

 

(b)          Nothing in this Agreement shall obligate Lender to apply all or any
portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.

 

7.3.5     Balance in the Replacement Reserve Account. The insufficiency of any
balance in the Replacement Reserve Account shall not relieve Borrower from its
obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.

 

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Section 7.4           Rollover Reserve.

 

7.4.1     Deposits to Rollover Reserve Fund. Borrower shall pay to Lender (a) on
the Closing Date an initial deposit of $2,750,000.00 and (b) on each Payment
Date thereafter during the existence of a Cash Sweep Period, an amount equal to
$1.50 multiplied by the then existing aggregate gross leasable area of the
Property, divided by 12 (the “Rollover Reserve Monthly Deposit”), which amounts
shall be deposited with and held by Lender for tenant improvement and leasing
commission obligations incurred following the date hereof in connection with
Leases entered into in accordance with the terms hereof (the “TILC
Obligations”). In the event of a Partial Release or Substitution, the Rollover
Reserve Monthly Deposit shall be reduced or increased to be an amount equal to
$1.50 multiplied by the total number of square feet of the Improvements located
at the Individual Properties that are subject to the Loan following the
completion of such Partial Release or Substitution, divided by twelve. Amounts
so deposited shall hereinafter be referred to as the “Rollover Reserve Fund” and
the account to which such amounts are held shall hereinafter be referred to as
the “Rollover Reserve Account.” Borrower shall also pay to Lender, for deposit
into the Rollover Reserve Account, all fees and other payments made to Borrower
in connection with or relating to the rejection, buy-out, termination, surrender
or cancellation of any Lease (collectively, “Lease Termination Payments”).
Notwithstanding the aforementioned, deposits to the Rollover Reserve Fund
following the initial deposit specified above shall not cause the aggregate
amount of the Rollover Reserve Fund to exceed $2,000,000.00 in the aggregate
(the “Rollover Reserve Cap”) on any Payment Date (after giving effect to the
payment of the Rollover Reserve Monthly Deposit and any Lease Termination
Payments) and accordingly, to the extent a Rollover Reserve Monthly Deposit or a
deposit of a Lease Termination Payment would result in the aggregate amount of
Rollover Reserve Funds in the Rollover Reserve Account exceeding the Rollover
Reserve Cap, such Rollover Reserve Monthly Deposit or Lease Termination Payment
deposit shall be decreased by an amount equal to such excess. Any interest
earned on funds on deposit in the Rollover Reserve Account shall be added to and
become a part of the Rollover Reserve Fund.

 

7.4.2     Disbursements from Rollover Reserve Account. Lender shall make
disbursements from the Rollover Reserve Account to pay Borrower only for the
costs of TILC Obligations. Lender shall disburse Rollover Reserve Funds from the
Rollover Reserve Account from time to time upon satisfaction by Borrower of each
of the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least twenty (20) days prior to the date on which Borrower
requests such payment be made and specifies the TILC Obligations to be paid, (b)
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, (c) Lender shall
have received a Disbursement Certification and Schedule for the requested
disbursement: (i) stating the aggregate requested amount to be disbursed and
that the items to be funded by the requested disbursement are TILC Obligations,
(ii) providing a general description of such TILC Obligations, (iii) including a
schedule of each contractor, subcontractor, materialman and/or person to be paid
(or for which Borrower is to be reimbursed for amounts previously paid by it),
providing a description of the TILC Obligations for which the disbursement is
requested, including, as applicable, the costs of all materials used and all
labor or other services payable in connection with such Replacements, and
related invoice numbers, (iv) stating that such contractors, subcontractors,
materialmen and/or persons have been paid, or will be paid with the proceeds of
the requested disbursement, the amounts then due and payable to such Person in
connection with the specified goods, work or services provided thereby, and that
Borrower has obtained, to the extent applicable, lien waivers from each such
contractor, subcontractor, materialman and/or person with respect to such
specified goods, work or services or will obtain such waivers concurrently with
payment, (v) stating that all TILC Obligations (or the relevant portions
thereof) to be funded by the requested disbursement have been completed in a
good and workmanlike manner and in accordance with all applicable Legal
Requirements, have not been the subject of a previous disbursement, and that all
outstanding payables with respect thereto (other than those to be paid from the
requested disbursement) have been paid in full, and (vi) stating that all
previous disbursements of Rollover Reserve Funds have been used to pay the TILC
Obligations identified in the Disbursement Certification and Schedule provided
in connection with such previous disbursements, and (d) with respect to any
requested disbursement in excess of $250,000.00: (i) if applicable, copies of
appropriate lien waivers, conditional lien waivers or other evidence of payment
reasonably satisfactory to Lender with respect to any contractor, subcontractor
and/or materialman whose proposed payment (or Borrower reimbursement, if
applicable) is in excess of $250,000.00, (ii) if reasonably required by Lender,
a title search for the applicable Property indicating that such Property is free
from all Liens, claims and other encumbrances not previously approved by Lender
(other than Permitted Encumbrances), (iii) in the event the title endorsement
described in item (ii) is not required by Lender, such other evidence as Lender
shall reasonably request to demonstrate that the TILC Obligations to be funded
by the requested disbursement have been completed and are paid for or will be
paid upon such disbursement (other than any retention amount which is not a part
of such disbursement request), and (iv) Lender may require an inspection of the
Property, at Borrower’s expense, by an appropriate independent qualified
professional selected by Lender prior to making such disbursement in order to
verify completion of the TILC Obligations for which reimbursement is sought.
Lender shall not be required to make disbursements from the Rollover Reserve
Account with respect to the Property (i) more than once a month and (ii) unless
such requested disbursement is in an amount greater than $5,000.00 (or a lesser
amount if the total amount in the Rollover Reserve Account is less than
$5,000.00 in which case only one disbursement of the amount remaining in the
account shall be made) and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.4.2.

 

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Section 7.5           Excess Cash Flow Reserve Fund.

 

7.5.1     Deposits to Excess Cash Flow Reserve Account. During a Cash Sweep
Period caused by a DSCR Trigger Event or Manager Trigger Event, Borrower shall
deposit with Lender all Excess Cash Flow in the Cash Management Account, which
shall be held by Lender as additional security for the Loan and amounts so held
shall be hereinafter referred to as the “Excess Cash Flow Reserve Fund” and the
account to which such amounts are held shall hereinafter be referred to as the
“Excess Cash Flow Reserve Account.” Notwithstanding the aforementioned or the
provisions of any other Loan Document, for Cash Sweep Periods existing solely as
a result of a Manager Trigger Event, the aggregate amount of the Excess Cash
Flow Reserve Fund shall not exceed on any Payment Date an amount equal to $10.00
per square foot multiplied by the aggregate net rentable area of all Individual
Properties being managed by any Manager that is the subject of a Bankruptcy
Action (the “Excess Cash Flow Cap”). Accordingly, to the extent any deposit to
the Excess Cash Flow Reserve Fund during the existence of a Cash Sweep Period
resulting solely from a Manager Trigger Event would result in the aggregate
amount of Excess Cash Flow Reserve Funds in the Excess Cash Flow Reserve Account
exceeding the then applicable Excess Cash Flow Reserve Cap, such deposit shall
be decreased by an amount equal to such excess.

 

7.5.2     Release of Excess Cash Flow Reserve Funds. Upon the occurrence of a
Cash Sweep Event Cure, so long as no Event of Default or other uncured Cash
Sweep Event then exists, all Excess Cash Flow Reserve Funds shall be disbursed
to Borrower in accordance with the Cash Management Agreement. Additionally, so
long as no Event of Default or other uncured Cash Sweep Event (other than any
remaining uncured Manager Trigger Events) then exists, upon the occurrence of a
Cash Sweep Event Cure with respect to a Manager Trigger Event, any funds in the
Excess Cash Flow Reserve Account in excess of the Excess Cash Flow Cap that
would be in effect after its recalculation using only the square footage of the
net rentable area of Individual Properties being managed by any Manager that is
still the subject of a Bankruptcy Action shall be disbursed to Borrower in
accordance with the Cash Management Agreement. Any Excess Cash Flow Reserve
Funds remaining after the Debt has been paid in full shall be paid to Borrower.

 

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Section 7.6           Reserve Funds, Generally. (a) Borrower grants to Lender a
first-priority perfected security interest in each of the Reserve Funds and any
and all monies now or hereafter deposited in each Reserve Fund as additional
security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds shall constitute additional security for the Debt.

 

(b)          Upon the occurrence of an Event of Default, Lender may, in addition
to any and all other rights and remedies available to Lender, apply any sums
then present in any or all of the Reserve Funds to the payment of the Debt in
any order in its discretion.

 

(c)          The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender. The Reserve Funds shall be held in
an Eligible Account in Permitted Investments as directed by Lender or Lender’s
Servicer. Unless expressly provided for in this Article VII, all interest on a
Reserve Fund shall not be added to or become a part thereof and shall be the
sole property of and shall be paid to Lender. Borrower shall be responsible for
payment of any federal, state or local income or other tax applicable to the
interest earned on the Reserve Funds credited or paid to Borrower.

 

(d)          Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.

 

(e)          Lender and Servicer shall not be liable for any loss sustained on
the investment of any funds constituting the Reserve Funds. Borrower shall
indemnify Lender and Servicer and hold Lender and Servicer harmless from and
against any and all actions, suits, claims and demands and actual out-of-pocket
liabilities, losses, damages (excluding, in all events, consequential, punitive,
special, exemplary and indirect damages), obligations and costs and expenses
(including litigation costs and reasonable out-of-pocket attorneys’ fees and
expenses) arising from or in any way connected with the Reserve Funds or the
performance of the obligations for which the Reserve Funds were established.
Borrower shall assign to Lender all rights and claims Borrower may have against
all persons or entities supplying labor, materials or other services which are
to be paid from or secured by the Reserve Funds; provided, however, that Lender
may not pursue any such right or claim unless an Event of Default has occurred
and remains uncured.

 

(f)          The required monthly deposits into the Reserve Funds and the
Monthly Debt Service Payment Amount, shall be added together and shall be paid
as an aggregate sum by Borrower to Lender.

 

(g)          Any amount remaining in the Reserve Funds after the Debt has been
paid in full shall be promptly returned to Borrower.

 

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Section 7.7 Ground Rent Reserve Fund.

 

7.7.1     Deposit to Ground Rent Reserve Fund. Borrower shall pay to Lender (a)
on the Closing Date an initial deposit and (b) on each Payment Date thereafter
an amount (the “Ground Rent Reserve Monthly Deposit”) equal to one-twelfth
(1/12) of the aggregate amount of any Ground Rent that Lender reasonably
estimates will be payable during the next ensuing twelve (12) months in order to
accumulate with Lender sufficient funds to pay all such Ground Rent at least
thirty (30) days prior to any applicable due date. Amounts so deposited shall
hereinafter be referred to as the “Ground Rent Reserve Fund” and the account to
which such amounts are held shall hereinafter be referred to as the “Ground Rent
Reserve Account.” If at any time Lender reasonably determines that the Ground
Rent Reserve Fund is not or will not be sufficient to pay any Ground Rents
payable by Borrower pursuant to all applicable Ground Leases by the dates any
such payment is due, Lender shall notify Borrower in writing of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender reasonably estimates is sufficient to make up the deficiency
at least thirty (30) days prior to the due date of such Ground Rents. In the
event a completed Partial Release or Substitution, upon Borrower’s written
request, Lender shall recalculate the monthly deposit required pursuant to (b)
above taking into account the Individual Properties securing the Loan following
such completed Partial Release or Substitution that are Ground Lease Properties.

 

7.7.2     Disbursements from Ground Rent Reserve Fund. Lender shall disburse
amounts from the Ground Rent Reserve Account necessary to pay, when due, any
Ground Rent required to be paid by Borrower to a Ground Lessor in accordance
with the provisions of the applicable Ground Lease. Notwithstanding the
foregoing, Lender may rely upon any bill, statement or estimate received from a
Ground Lessor in making any payment of Ground Rent from the Ground Rent Reserve
Fund.

 

Section 7.8           CarolinaEast Reserve Fund.

 

7.8.1     CarolinaEast Reserve Deposit. Borrower shall pay to Lender on the
Closing Date a deposit of $146,500.00, which amount shall be held by Lender as
additional security for the Loan. Amounts so held shall be hereinafter referred
to as the “CarolinaEast Reserve Fund” and the account to which such amounts are
held shall hereinafter be referred to as the “CarolinaEast Reserve Account.”

 

7.8.2     Release of CarolinaEast Reserve Funds. Provided no Event of Default or
uncured Cash Sweep Event then exists, Lender shall disburse the full amount of
the CarolinaEast Reserve Fund to Borrower upon Borrower providing Lender
evidence, in form and substance reasonably satisfactory to Lender, confirming
that CarolinaEast Medical Center, a North Carolina not-for-profit corporation
(“CarolinaEast”) has executed a triple net Lease for space at the Individual
Property located at 4252 Arendell St., Morehead City, NC 28557, leasing
approximately 17,578 rentable square feet, for a minimum rent of $20.00 per
square foot and for a term of at least 10 years, and has begun paying full,
unabated rent pursuant to such Lease. Notwithstanding the foregoing, in the
event such Lease provides for any period of free rent, in lieu of the above
described disbursement, Lender shall disburse on each Payment Date during such
free rent period an amount equal to the aggregate amount of the CarolinaEast
Reserve Fund as of the effective date of such Lease divided by the number of
Payment Dates occurring during such free rent period.

 

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ARTICLE VIII - DEFAULTS

 

Section 8.1           Event of Default. (a) Each of the following events shall
constitute an event of default hereunder (an “Event of Default”):

 

(i)          if Borrower fails to make full and punctual payment of: (A) any
Monthly Debt Service Payment Amount or any other amount payable on a monthly
basis (including, without limitation, any required monthly deposits to any
Reserves) under any Loan Document within five (5) days of the date on which such
payment was due, (B) the entire remaining Debt on the Maturity Date, or (C) any
other portion of the Debt (other than any payment described in Sections
8.1(a)(i)(A) or (B) above) within five (5) days after written notice by Lender
to Borrower that the same is due and payable;

 

(ii)         if any of the Taxes or Other Charges are not paid when the same are
due and payable, unless sufficient funds allocable to Taxes and Other Charges
have been escrowed with Lender in the Tax and Insurance Fund and Lender has
failed to pay such Taxes or Other Charges;

 

(iii)        if the Policies are not kept in full force and effect, or if
evidence of the Policies is not delivered to Lender upon request;

 

(iv)        if Borrower Transfers or otherwise encumbers any portion of the
Property without Lender’s prior written consent in violation of the provisions
of this Agreement and Article 6 of the Security Instrument;

 

(v)         if any representation or warranty made by Borrower herein or in any
other Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made; provided, however, that if such representation or warranty which was
false or misleading in any material respect is, by its nature, curable, and such
representation or warranty was not, to Borrower’s knowledge, false or misleading
in any material respect when made, then the same shall not constitute an Event
of Default unless Borrower has not cured the same within ten (10) Business Days
after receipt by Borrower of notice from Lender in writing of such breach;

 

(vi)        if Borrower shall make an assignment for the benefit of creditors;

 

(vii)       if (A) Borrower, Guarantor or any other guarantor or indemnitor
under any guarantee issued in connection with the Loan shall commence any case,
proceeding or other action (I) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (II) 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 the Borrower, Guarantor or any other guarantor or indemnitor
shall make a general assignment for the benefit of its creditors; or (B) there
shall be commenced against Borrower, Guarantor or any other guarantor or
indemnitor any case, proceeding or other action of a nature referred to in
clause (A) above that is not dismissed within ninety (90) days of filing; or
(C) there shall be commenced against the Borrower, Guarantor or any other
guarantor or indemnitor any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets that is not dismissed within ninety (90) days
of filing; or (D) the Borrower, Guarantor or any other guarantor or indemnitor
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (A), (B), or (C)
above; or (E) the Borrower, Guarantor or any other guarantor or indemnitor shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;

 

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(viii)      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;

 

(ix)         if Borrower breaches any covenant contained in Section 4.1.30 or
Section 5.1.24 hereof or any prohibition on Transfers contained in Section
5.2.10 hereof (unless such Transfer is otherwise permitted pursuant to the Loan
Documents), provided, however, any such breach or violation shall not be deemed
to be an Event of Default hereunder if (i) such breach or violation is
susceptible of cure and would not be reasonably likely to result in a material
adverse effect on Borrower, the Property, Lender or the Loan and (ii) within ten
(10) Business Days of the earlier of (1) notice of such breach or violation from
Lender or (2) the date Borrower becomes aware of such breach or violation,
Borrower cures such beach or violation and provides Lender with satisfactory
evidence of same, and provided further with respect to any Transfer which is in
the nature of an involuntary lien, no Event of Default shall exist if Borrower
is contesting such lien in accordance with the terms of this Agreement;

 

(x)          intentionally omitted;

 

(xi)         if any of the assumptions related to the Borrower being a Special
Purpose Entity contained in the Insolvency Opinion delivered to Lender in
connection with the Loan, or in any Additional Insolvency Opinion delivered
subsequent to the closing of the Loan, is or shall become untrue in any material
respect, provided, however, the foregoing shall not be deemed an Event of
Default hereunder if Borrower exercises commercially reasonable efforts to cure
the same within ten (10) Business Days of the earlier of (1) notice thereof from
Lender or (2) the date Borrower becomes aware thereof;

 

(xii)        if Borrower fails to exercise commercially reasonable efforts to
deliver any document or to take any other action Borrower is obligated to take
hereunder with respect to any Securitization for a period of ten (10) Business
Days after such notice by Lender;

 

(xiii)       if Borrower shall continue to be in Default under any of the terms,
covenants or conditions of Section 9.1 hereof, or fails to cooperate with Lender
in connection with a Securitization pursuant to the provisions of Section 9.1
hereof, for three (3) Business Days after notice to Borrower from Lender;

 

(xiv)      if Borrower shall continue to be in dDefault under any of the other
terms, covenants or conditions of this Agreement not specified in subsections
(i) to (xiii) above, for ten (10) days after notice to Borrower from Lender, in
the case of any Default which can be cured by the payment of a sum of money, or
for thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such nonmonetary Default is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such Default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (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 ninety (90) days;

 

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(xv)       intentionally omitted;

 

(xvi)      Borrower shall be in default under any other deed of trust, mortgage
or security agreement covering any part of the Property whether it be superior
or junior in priority to the Security Instrument (it not being implied by this
clause that any such encumbrance will be permitted); or

 

(xvii)     (A) If Guarantor fails at any time to comply with any of the
representations, warranties or covenants set forth in the Guaranty, or (B) if
Guarantor fails at any time to maintain the Net Worth Threshold or the Liquid
Assets Threshold.

 

(b)          Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter, 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, Lender
may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and the Property, including
declaring the Debt 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 any or all of the Property, including all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and Other 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 8.2           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 Debt 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 all or any part of the Property. Any such actions
taken by Lender shall be cumulative and concurrent and may be pursued
independently, singularly, successively, together or otherwise, at such time and
in such order as Lender may determine in its 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, Borrower agrees that if an Event of Default is continuing (i) Lender
is not 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 Security Instruments have been foreclosed, sold or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.

 

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(b)          With respect to Borrower and the Property, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender to resort
to any Individual Property for the satisfaction of any of the Debt in any
preference or priority to any other Individual Property, and Lender may seek
satisfaction out of all of the Properties, or any part thereof, in its
discretion in respect of the Debt. In addition, Lender shall have the right from
time to time to partially foreclose the Security Instruments in any manner and
for any amounts secured by the Security Instruments then due and payable as
determined by Lender in its 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 one or more of the Security Instruments to recover such delinquent
payments or (ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose one or more of
the Security Instruments to recover so much of the principal balance of the Loan
as Lender may accelerate and such other sums secured by one or more of the
Security Instruments as Lender may elect. Notwithstanding one or more partial
foreclosures, the Properties shall remain subject to the Security Instruments to
secure payment of sums secured by the Security Instruments and not previously
recovered.

 

(c)          If an Event of Default exists, Lender shall have the right 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 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) Business Days after notice has been given to Borrower by Lender
of Lender’s intent to exercise its rights under such power. Borrower shall be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents and
the Severed Loan Documents shall not contain any representations, warranties or
covenants not contained in the Loan Documents and any such representations and
warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date and no Severed Loan Documents shall increase in any
manner Borrower’s obligations, decrease Borrower’s rights or modify in a manner
adverse to Borrower any financial obligations of Borrower.

 

(d)          As used in this Section 8.2, a “foreclosure” shall include, without
limitation, any sale by power of sale.

 

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Section 8.3           Remedies Cumulative; Waivers. 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 singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s 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 IX - SPECIAL PROVISIONS

 

Section 9.1           Securitization.

 

9.1.1      Sale of Notes and Securitization. (a) Borrower acknowledges and
agrees that Lender may sell all or any portion of the Loan and the Loan
Documents, or issue one or more participations therein, or consummate one or
more private or public securitizations of rated single- or multi-class
securities (the “Securities”) secured by or evidencing ownership interests in
all or any portion of the Loan and the Loan Documents or a pool of assets that
include the Loan and the Loan Documents (such sales, participations or
securitizations, collectively, a “Securitization”).

 

(b)          At the request of Lender, and to the extent not already required to
be provided by or on behalf of Borrower under this Agreement, Borrower shall, at
no cost or expenses to Borrower, use reasonable efforts to provide information
not in the possession of Lender or which may be reasonably required by Lender or
take other actions reasonably required by Lender, in each case in order to
satisfy the market standards to which Lender customarily adheres or which may be
reasonably required by prospective investors or the Rating Agencies in
connection with any such Securitization. Lender shall have the right to provide
to prospective investors and the Rating Agencies any information in its
possession, including financial statements relating to Borrower, Guarantor, if
any, the Property and, if not subject to a confidentiality agreement, any Tenant
of the Improvements. Borrower acknowledges that certain information regarding
the Loan and the parties thereto and the Property may be included in a private
placement memorandum, prospectus or other disclosure documents. Borrower agrees
that each of Borrower, Guarantor and their respective officers and
representatives, shall, at no cost or expense to Borrower at Lender’s request,
cooperate with Lender’s efforts to arrange for a Securitization in accordance
with the market standards to which Lender customarily adheres and/or which may
be required by prospective investors or the Rating Agencies in connection with
any such Securitization, provided that Borrower shall not be required to
increase in any manner Borrower’s obligations, decrease Borrower’s rights or
modify in a manner adverse to Borrower any financial obligations of Borrower.
Borrower and Guarantor agree to review, at Lender’s request in connection with
the Securitization, the Disclosure Documents as such Disclosure Documents relate
to Borrower, Guarantor, the Property and the Loan, including, the sections
entitled “Risk Factors,” “Special Considerations,” “Description of the Security
Instrument,” “Description of the Mortgage Loan and Mortgaged Property,” “The
Manager,” “The Borrower,” and “Certain Legal Aspects of the Mortgage Loan,” and
shall confirm that the factual statements and representations contained in such
sections and such other information in the Disclosure Documents (to the extent
such information relates to, or is based on, or includes any information
regarding the Property, Borrower, Guarantor, Manager or the Loan) do 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 the light of the
circumstances under which they were made, not misleading.

 

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(c)          (i)          Borrower agrees to make upon Lender’s written request,
without limitation, all structural or other changes to the Loan (including
delivery of one or more new component notes to replace the original note or
modify the original note to reflect multiple components of the Loan and such new
notes or modified note may have different interest rates and amortization
schedules), modifications to any documents evidencing or securing the Loan,
creation of one or more mezzanine loans (including amending Borrower’s
organizational structure to provide for one or more mezzanine borrowers),
delivery of opinions of counsel acceptable to the Rating Agencies or potential
investors and addressing such matters as the Rating Agencies or potential
investors may require; provided, however, that in creating such new notes or
modified notes or mezzanine notes Borrower shall not be required to modify (A)
the initial weighted average interest rate payable under the Note (and the
weighted average interest rate shall only change in the event of an Event of
Default or the application of any Insurance Proceeds or Condemnation Proceeds to
the Debt), (B) the stated maturity of the Note, (C) the aggregate amortization
of principal of the Note, (D) any other material economic term of the Loan,
(E) decrease the time periods during which Borrower is permitted to perform its
obligations under the Loan Documents, or (F) any other term contained in the
Loan Documents, the effect of which would be to increase Borrower’s obligations
or decrease Borrower’s rights. In connection with the foregoing, Borrower
covenants and agrees to modify the Cash Management Agreement to reflect the
newly created components or mezzanine loans.

 

(ii)         Without limiting the foregoing, Borrower agrees that upon Lender’s
request that the respective original principal amounts of Note A-1 and Note A-2
be revised in connection with a Securitization (provided that such revisions
shall not change the aggregate principal balance of such Notes or modify any of
its terms set forth in clauses (c)(i)(A) – (F) above), Borrower shall complete
the following actions within five (5) Business Days following Lender’s written
request therefore:

 

(A)         Borrower shall execute and deliver a replacement for each of Note
A-1 and Note A-2 with such revised original principal amounts, such replacement
Notes to be in the forms executed and delivered as of the closing of the Loan,
and upon such execution and delivery, such replacement Notes shall be the Note
A-1 and Note A-2 defined herein; and

 

(B)         If requested by Lender, Borrower shall cause its respective counsel
to issue supplemental or replacement legal opinions in the form of such
counsel’s opinion delivered as of the closing of the Loan with respect to the
replacement Notes.

 

(d)          If requested by Lender, Borrower shall provide, at no additional
cost to Borrower, Lender, promptly upon request, with any financial statements,
or financial, statistical or operating information, as Lender reasonably shall
determine to be required pursuant to Regulation AB under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any amendment, modification or replacement thereto or other
legal requirements in connection with any private placement memorandum,
prospectus or other disclosure documents or any filing pursuant to the Exchange
Act in connection with the Securitization or as shall otherwise be reasonably
requested by Lender.

 

(e)          Borrower hereby appoints Lender its attorney-in-fact with full
power of substitution (which appointment shall be deemed to be coupled with an
interest and to be irrevocable until the Loan is paid and the Security
Instrument is discharged of record, with Borrower hereby ratifying all that its
said attorney shall do by virtue thereof) to execute and deliver all documents
and do all other acts and things necessary or desirable to effect any
Securitization authorized hereunder; provided, however, that unless an Event of
Default exists, Lender shall not execute or deliver any such documents or do any
such acts or things under such power.

 

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9.1.2           Securitization Costs. All reasonable third party costs and
expenses incurred by Borrower and Guarantor in connection with Borrower’s
compliance with this Section 9.1 (including the fees and expenses of the Rating
Agencies) shall be paid by Lender.

 

Section 9.2           Right To Release Information. Following the occurrence of
any Event of Default, Lender may forward to any broker, prospective purchaser of
any Individual Property or the Loan, or other person or entity all documents and
information which Lender now has or may hereafter acquire relating to the Debt,
Borrower, any Guarantor, any indemnitor, any Individual Property and any other
matter in connection with the Loan, whether furnished by Borrower, any
Guarantor, any indemnitor or otherwise, as Lender reasonably determines
necessary or desirable. Borrower irrevocably waives any and all rights it may
have to limit or prevent such disclosure, including any right of privacy or any
claims arising therefrom.

 

Section 9.3           Exculpation. (a) 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 Security
Instrument or the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower or any officer, director,
shareholder, partner, member, principal, employee of Borrower or any direct or
indirect owner of Borrower (provided that the foregoing shall not limit in any
manner, the liability of any Guarantor), 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 Security Instrument and the other Loan
Documents, or in the Property (or any portion thereof), the Rents, 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 Rents and in any other collateral
given to Lender, and Lender, by accepting the Note, this Agreement, the Security
Instrument and the other Loan Documents, agrees that it 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 Security Instrument or the other Loan Documents. The provisions
of this Section 9.3 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(ii) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Security Instrument; (iii)
affect the validity or enforceability of any guaranty, indemnity or similar
agreement or undertaking made in connection with the Loan or any of the rights
and remedies of Lender thereunder; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of any assignment of
leases contained in the Security Instrument and any other Loan Documents; or
(vi) constitute a prohibition against Lender to seek a deficiency judgment
against Borrower in order to fully realize the security granted by the Security
Instrument or to commence any other appropriate action or proceeding in order
for Lender to exercise its remedies against the Property (or any portion
thereof).

 

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(b)          Nothing contained herein shall in any manner or way release, affect
or impair the right of Lender to recover from Borrower, and Borrower shall be
fully and personally liable and subject to legal action, for any actual
out-of-pocket loss, cost, expense, damage, claim or other obligation (including
reasonable out-of-pocket attorneys’ fees and expenses and other collection and
litigation expenses but in all events excluding consequential, punitive,
special, indirect and exemplary damages) incurred or suffered by Lender arising
out of or in connection with the following:

 

(i)          fraud or intentional misrepresentation by Borrower or Guarantor, or
any affiliate of the foregoing;

 

(ii)         the gross negligence or willful misconduct of Borrower or
Guarantor, or any affiliate of the foregoing;

 

(iii)        intentional material physical waste of the Property, provided,
however, that if Borrower does not have sufficient cash flow on a current basis
to prevent waste, any waste shall not be deemed intentional and Borrower shall
have no liability under this clause (iii);

 

(iv)        the removal or disposal of any portion of the Property in violation
of the terms of the Loan Documents;

 

(v)         the misappropriation or conversion by Borrower or Guarantor, or any
affiliate of the foregoing, of (A) any Insurance Proceeds paid by reason of any
loss, damage or destruction to the Property, (B) any Awards received in
connection with a Condemnation of all or a portion of the Property, (C) any
Rents or other Property income or collateral proceeds, or (D) any Rents paid
more than one month in advance (including security deposits);

 

(vi)        following the occurrence of an Event of Default, the failure to
either apply rents or other Property income, collected after such Event of
Default, to the ordinary, customary, and necessary expenses of operating the
Property or, upon demand, to deliver such rents or other Property income to
Lender;

 

(vii)       failure to maintain insurance or to pay taxes and assessments, or to
pay charges for labor or materials or other charges or judgments that can create
Liens on any portion of the Property (unless Lender is escrowing funds therefor
and fails to make such payments or has taken possession of the Property
following an Event of Default, has received all Rents from the Property
applicable to the period for which such insurance, taxes or other items are due,
and thereafter fails to make such payments), it being acknowledged that if
Borrower does not have sufficient cash flow on a current basis to maintain
insurance or to pay taxes and assessments or to pay charges for labor or
materials or other charges or judgments that create Liens on any portion of the
Property, Borrower shall have no liability under this clause (vii);

 

(viii)      any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender upon a
foreclosure of the Property or action in lieu thereof, except to the extent any
such security deposits were applied (A) in accordance with the terms and
conditions of any of the Leases prior to the occurrence of the Event of Default
that gave rise to such foreclosure or action in lieu thereof or (B) previously
delivered to Lender to be applied to repay the Loan;

 

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(ix)         any failure by Borrower to obtain Lender’s prior written consent
(to the extent such consent is required pursuant to the terms of the Loan
Documents) to any modification, amendment or terminations of any Lease;

 

(x)          any failure by Borrower to comply with any of the representations,
warranties or covenants set forth in Sections 4.1.37 or 5.1.19 hereof;

 

(xi)         any failure by Borrower to permit on-site inspections of the
Property in accordance with the terms and provisions of the Loan Documents;

 

(xii)        the failure of Borrower to appoint a new Manager at Lender’s
request, to the extent Borrower is expressly required to do so pursuant to this
Agreement;

 

(xiii)       any failure by Borrower to comply with any representation, warranty
or covenant set forth in Section 4.1.30 hereof that does not result, in whole or
in part, in the substantive consolidation of the assets and liabilities of
Borrower with those of any other Person or entity pursuant to the Bankruptcy
Code;

 

(xiv)      Borrower fails to obtain Lender’s prior written consent to any
Transfer to the extent required pursuant to the terms of the Loan Documents that
is not a Full Recourse Transfer; or

 

(xv)      Borrower fails to obtain Lender’s prior written consent, to the extent
required pursuant to the terms of the Loan Documents, to any Indebtedness or
voluntary Lien encumbering the Property that is not a Full Recourse Lien.

 

(c)          Notwithstanding anything to the contrary in this Agreement, the
Note or any of the other Loan Documents, Borrower shall be personally liable for
the Debt if (A) Borrower fails to obtain Lender’s prior written consent (to the
extent such consent is required pursuant to the terms of the Loan Documents) to
any Transfer (a “Full Recourse Transfer”) (1) that results in a change in
Control over Borrower or (2) of any of the Property by deed, bill of sale,
installment sales agreement, ground lease (excluding any lease to a Tenant in
the ordinary course of business) or any similar agreement; (B) Borrower fails to
obtain Lender’s prior written consent (to the extent such consent is required
pursuant to the terms of the Loan Documents) to any voluntary mortgage, deed of
trust, collateral assignment or similar voluntary lien or interest encumbering
all or a substantial portion of the Property (a “Full Recourse Lien”); (C)
Borrower shall at any time hereafter make an assignment for the benefit of its
creditors; (D) Borrower fails to comply with any representation, warranty or
covenant set forth in Section 4.1.30 hereof, which failure results in a
substantive consolidation of Borrower with another Person or entity pursuant to
the Bankruptcy Code; (E) Borrower admits, in writing or in any legal proceeding,
its insolvency or inability to pay its debts as they become due, provided that
neither Borrower nor Guarantor shall have liability under this clause (E) in
connection with the delivery of financial statements or any other filing
required to be delivered pursuant to a subpoena or any order entered in a
bankruptcy proceeding or required under applicable law in connection with any
such petition made by any Person which is not an Affiliate of Borrower; (F)
intentionally omitted; (G) Borrower files, or consents in writing to, a petition
for bankruptcy, insolvency, dissolution or liquidation under the Bankruptcy Code
or any other Federal or state bankruptcy or insolvency law, or there is a filing
of an involuntary petition against Borrower under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law in which Borrower or
Guarantor colludes with, or otherwise assists any party in connection with such
filing, or solicits or causes to be solicited petitioning creditors for any
involuntary petition against Borrower from any party (provided, however, that
the failure to defend such an involuntary petition where no meritorious defense
exists shall not be deemed “assisting” for purposes hereof).

 

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(d)          Nothing herein shall be deemed to constitute a waiver by Lender of
any right Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Code to file a claim for the full amount of the Debt
or to require that all collateral shall continue to secure all of the Debt.

 

Section 9.4           Matters Concerning Manager. If (a) an Event of Default
hereunder has occurred and remains uncured, (b) Manager shall become subject to
a Bankruptcy Action, or (c) a default by Manager occurs under the Management
Agreement, Borrower shall, at the request of Lender, terminate the Management
Agreement and replace the Manager with a Qualified Manager pursuant to a
Replacement Management Agreement.

 

Section 9.5           Servicer. At the option of Lender, the Loan may be
serviced by a master servicer, primary servicer, special servicer or trustee
(any such master servicer, primary servicer, special servicer, and trustee,
together with its agents, nominees or designees, are collectively referred to as
“Servicer”) selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to Servicer
pursuant to a pooling and servicing agreement, servicing agreement, special
servicing agreement or other agreement providing for the servicing of one or
more mortgage loans (collectively, the “Servicing Agreement”) between Lender and
Servicer. Borrower shall not be responsible for any set up fees or any other
initial costs relating to or arising under the Servicing Agreement, and Borrower
shall not be responsible for payment of the regular monthly master servicing fee
or trustee fee due to Servicer under the Servicing Agreement or any fees or
expenses required to be borne by, and not reimbursable to, Servicer.
Notwithstanding the foregoing, Borrower shall promptly reimburse Lender on
demand for the following costs and expenses payable by Lender to Servicer as a
result of the Loan becoming specially serviced as a result of an imminent,
actual or reasonably foreseeable default or breach with respect to the Loan, or
the occurrence of an Event of Default: (i) any liquidation fees that are due and
payable to Servicer under the Servicing Agreement in connection with the
exercise of any or all remedies permitted under this Agreement, (ii) any workout
fees and special servicing fees that are due and payable to Servicer under the
Servicing Agreement, which fees may be due and payable under the Servicing
Agreement on a periodic or continuing basis, and which may be payable to a
special servicer, in an amount as great as one percent of the outstanding
principal balance of the Loan, upon return of the Loan by the special servicer
to the master servicer, and (iii) the reasonable out-of-pocket costs of all
amounts owed to any third-party contractor in connection with the Servicer
obtaining any third-party report, including any property inspections or
appraisals of the Properties (or any updates to any existing inspection or
appraisal) that Servicer determines to obtain or may be required to obtain
(other than the cost of regular annual inspections required to be borne by
Servicer under the Servicing Agreement), provided that such fees shall in no
event exceed the fees charged to similarly situated borrowers.

 

Section 9.6           Lender/Servicer Loan Administration. From and after the
date hereof, the owner and holder of Note A-1 shall be deemed the agent of the
holder(s) of Note A-2 in connection with all matters related to the
administration, servicing and payment of the Loan, and such owner and holder of
Note A-1 shall be Borrower’s point of contact in connection with all such
matters. Notwithstanding the forgoing, following the transfer of Note A-1 to a
Securitization, the Servicer for such Securitization to which Note A-1 is
transferred shall be deemed the agent of the holder(s) of Note A-1 and Note A-2,
and such Servicer shall be Borrower’s point of contact in connection with all
matters related to the administration, servicing and payment of the Loan.

 

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ARTICLE X - MISCELLANEOUS

 

Section 10.1         Survival. 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 Debt is 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 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 10.2         Intentionally Omitted.

 

Section 10.3         Governing Law. (a)          LENDER HAS OFFICES IN THE STATE
OF NEW YORK AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK (“GOVERNING STATE”), WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN
AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

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(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
(“ACTION”) MAY AT LENDER’S OPTION BE INSTITUTED IN (AND IF ANY ACTION IS
ORIGINALLY BROUGHT IN ANOTHER VENUE, THE ACTION SHALL AT THE ELECTION OF LENDER
BE TRANSFERRED TO) ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF
NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
OR FORUM NON CONVENIENS OF ANY SUCH ACTION. IN THE EVENT THAT ANY BORROWER’S
PRINCIPAL OFFICE IS NOT LOCATED IN THE STATE OF NEW YORK AT ANY TIME IN THE
FUTURE, SUCH BORROWER (I) SHALL PROMPTLY DESIGNATE AND APPOINT AN AUTHORIZED
AGENT, REASONABLY ACCEPTABLE TO LENDER, TO ACCEPT AND ACKNOWLEDGE ON SUCH
BORROWER’S BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND IN SUCH CASE,
SUCH BORROWER AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON SUCH BORROWER IN ANY SUCH ACTION IN THE STATE OF NEW YORK, (II) SHALL GIVE
PROMPT NOTICE TO LENDER OF (A) THE NAME AND ADDRESS OF SUCH AGENT, (B) ANY
CHANGED ADDRESS THEREAFTER OF ITS AUTHORIZED AGENT HEREUNDER, (III) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (IV) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

Section 10.4         Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, 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 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 10.5         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 the Note or under any other Loan Document, or any other
instrument given as security therefor, 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, the Note 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, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.

 

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Section 10.6         Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (c) by telecopier
(with answer back acknowledged) and with a second copy to be sent to the
intended recipient by any other means permitted under this Section, addressed as
follows (or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section):

 

  If to Lender:

KeyBank National Association

    11501 Outlook, Suite 300     Overland Park, Kansas 66211     Facsimile No.:
877-379-1625     Attention: Loan Servicing         with a copy to: Dan Flanigan
    POLSINELLI     900 West 48th Place, Suite 900     Kansas City, Missouri
64112     Facsimile No.: 816-753-1536         If to a Borrower: 405 Park Avenue
    New York, New York 10022     Attention: HTI Counsel         with a copy to:
Proskauer Rose LLP     Eleven Times Square     New York, New York 10036    
Attention: David J. Weinberger, Esq.     Facsimile No.: 212-969-2900

 

A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day;
or in the case of telecopy, upon sender’s receipt of a machine-generated
confirmation of successful transmission after advice by telephone to recipient
that a telecopy notice is forthcoming.

 

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Section 10.7         Trial by Jury. TO THE FULLEST EXTENT NOW OR HEREAFTER
PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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. LENDER AND BORROWER ARE HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER BY BORROWER.

 

Section 10.8         Headings. The Article 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 10.9         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.

 

Section 10.10         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 10.11         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 10.12         Remedies of Borrower. If 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, Borrower agrees that neither Lender nor its agents shall be liable for
any monetary damages, and Borrower’s sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.

 

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Section 10.13         Expenses; Indemnity. (a) Borrower covenants and agrees to
pay or, if Borrower fails to pay, to reimburse, Lender upon receipt of written
notice from Lender for all reasonable out-of-pocket costs and expenses
(including reasonable out-of-pocket attorneys’ fees and expenses) incurred by
Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Borrower (including any opinions requested prior to
the Closing Date by Lender as to any legal matters arising under this Agreement
or the other Loan Documents with respect to the Property or any portion
thereof); (ii) Borrower’s ongoing performance of and compliance with Borrower’s
respective 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; (iii) Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iv) 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 Lender; (v)
securing Borrower’s compliance with any requests made pursuant to the provisions
of this Agreement; (vi) the filing and recording fees and expenses, title
insurance and fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating and perfecting
the Lien in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vii) 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 portion thereof), or any other
security given for the Loan; and (viii) 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 any portion thereof (including any
fees incurred by Servicer in connection with the transfer of the Loan to a
special servicer prior to a Default or Event of Default) 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; 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 gross negligence, illegal acts, fraud or willful misconduct of Lender. Any
cost and expenses due and payable to Lender may be paid from any amounts in the
Clearing Account or Cash Management Account, as applicable.

 

(b)          Borrower shall indemnify, defend and hold harmless the Indemnified
Parties from and against any and all other actual out-of-pocket liabilities,
obligations, losses, damages (excluding, in all events, consequential, punitive,
special, exemplary and indirect damages), penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable out-of-pocket fees and disbursements of counsel in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not an Indemnified Party shall be designated
a party thereto), that are imposed on, incurred by, or asserted against any
Indemnified Party 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, or (ii) the use or
intended use of the proceeds of the Loan (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have any obligation to
any Indemnified Party hereunder to the extent that such Indemnified Liabilities
arise from the gross negligence, illegal acts, fraud or willful misconduct of
such Indemnified Party. 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 the
Indemnified Parties.

 

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(c)          Borrower covenants and agrees to pay for or, if Borrower fails to
pay, to reimburse Lender for, any fees and expenses incurred by any Rating
Agency in connection with any Rating Agency review of the Loan, the Loan
Documents or any transaction contemplated thereby or any consent, approval,
waiver or confirmation obtained from such Rating Agency pursuant to the terms
and conditions of this Agreement or any other Loan Document that results from an
action or request of Borrower and Lender shall be entitled to require payment of
such fees and expenses as a condition precedent to the obtaining of any such
consent, approval, waiver or confirmation.

 

Section 10.14         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 10.15         Offsets, Counterclaims and Defenses. Any assignee of
Lender’s interest in and to this Agreement, the Note 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 10.16         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 (or any portion
thereof) other than that of mortgagee, beneficiary or lender.

 

(b)          This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower 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 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 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
discretion, Lender deems it advisable or desirable to do so.

 

Section 10.17         Publicity. All news releases, publicity or advertising by
Borrower or its Affiliates other than releases required by law 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, KeyBank National
Association or any of their Affiliates shall be subject to the prior written
approval of Lender and KeyBank National Association in their reasonable
discretion.

 

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Section 10.18         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 partners and
others with interests in Borrower, and of the Property, and agrees not to 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 (or any
portion thereof) for the collection of the Debt without any prior or different
resort for collection or of the right of Lender to the payment of the Debt out
of the net proceeds of the Property (or any portion thereof) in preference to
every other claimant whatsoever.

 

Section 10.19         Waiver of Counterclaim. 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.

 

Section 10.20         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 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.

 

Section 10.21         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 hereby agrees to indemnify, defend and hold Lender
harmless from and against any and all actual out-of-pocket claims, liabilities,
costs and expenses of any kind (including Lender’s reasonable out-of-pocket
attorneys’ fees and expenses) 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 10.21 shall survive the
expiration and termination of this Agreement and the payment of the Debt.

 

Section 10.22         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, between
Borrower and Lender are superseded by the terms of this Agreement and the other
Loan Documents.

 

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Section 10.23         Liability. If Borrower consists of more than one (1)
Person the obligations and liabilities of each Person shall be joint and
several. Under no circumstances whatsoever shall Lender have any liability for
punitive, special, consequential or incidental damages in connection with,
arising out of, or in any way related to or under this Loan Agreement or any
other Loan Document or in any way related to the transactions contemplated or
any relationship established by this Agreement or any other Loan Document or any
act, omission or event occurring in connection herewith or therewith, and, to
the extent not expressly prohibited by applicable laws, Borrower for itself and
its Guarantor and indemnitors waives all claims for punitive, special,
consequential or incidental damages. Lender shall have no duties or
responsibilities except those expressly set forth in this Agreement, the
Security Instrument and the other Loan Documents. Neither Lender nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted by them as such hereunder or in connection herewith, unless caused by
their gross negligence or willful misconduct. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns forever.

 

Section 10.24         Certain Additional Rights of Lender (VCOC). Solely to the
extent that Lender or any direct or indirect holder of an interest in the Loan
must qualify as a "venture capital operating company" (as defined in Department
of Labor Regulation 29 C.F.R. § 2510.3 101), Lender shall have the right to
consult with and advise Borrower regarding significant business activities and
business and financial developments of Borrower, provided that any such advice
or consultation or the result thereof shall be completely nonbinding on
Borrower.

 

Section 10.25         OFAC. Borrower hereby represents, warrants and covenants
that neither Borrower nor any Guarantor is (or will be) a person with whom
Lender is restricted from doing business under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United
States of America (including, those Persons named on OFAC’s Specially Designated
and Blocked Persons list) or under any statute, executive order (including, the
September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action and is not and shall not engage in any dealings or
transactions or otherwise be associated with such persons. In addition, Borrower
hereby covenants to provide Lender with any additional information that Lender
deems necessary from time to time in order to ensure compliance with all
applicable laws concerning money laundering and similar activities.

 

Section 10.26         Duplicate Originals; Counterparts. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterpart shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.

 

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Section 10.26         Confidentiality. Notwithstanding anything to the contrary
in this Agreement, Lender agrees that any reports, statements or other
information required to be delivered or provided under this Agreement or any of
the other Loan Documents and furnished at any time and from time to time by
Borrower or Guarantor (“Furnished Information”), which is provided to Lender by
or on behalf of Borrower or Guarantor, shall be kept confidential. Any Furnished
Information may also be disclosed to any Rating Agency, underwriter or
nationally recognized statistical rating organization (“NRSRO”); provided (i)
each Rating Agency or underwriter to which such information is disclosed has
executed its usual and customary confidentiality agreement and (ii) any NRSRO
desiring access to any secured website containing such information shall, as a
condition to its access to, have either furnished to the Securities and Exchange
Commission the certification required under Rule 17g-5(e) of the Exchange Act or
be required to agree to (or “click through”) such website’s confidentiality
provisions. Nothing herein shall preclude Lender from disclosing any Furnished
Information (A) as required by any applicable Legal Requirement, (B) which is
already publicly available as a result of disclosure by any other party, (C) in
response to any order of any court or other Governmental Authority, or (D) if
Lender is required to do so in connection with any litigation or similar
proceeding; provided that in the case of clause (A), (C) or (D), Lender shall
exercise reasonable efforts to give prior written notice of such requirement to
Borrower or Guarantor, as applicable, (to the extent it is lawful to do so) in
order to permit Borrower or Guarantor, as applicable, to, and shall reasonably
cooperate, provided such cooperation shall be at no cost or expense to Lender,
with Borrower or Guarantor, as applicable, in its efforts to, seek a protective
order). This Section 10.26 shall survive the repayment of the Loan and the
termination of this Agreement.

 

ARTICLE XI – LOCAL LAW PROVISIONS

 

Section 11.1         Inconsistencies. In the event of any inconsistencies
between the terms and conditions of this Article XI and the other provisions of
this Agreement, the terms and conditions of this Article XI shall control and be
binding.

 

Section 11.2 Arizona Law Provisions. The following provisions shall apply to
this Agreement to the extent that Arizona law is deemed to govern this
Agreement:

 

In the event and only in the event that the applicable law as to the enforcement
of this Agreement for usury purposes is held to be the law of the State of
Arizona, all loan origination, standby, commitment and other fees, including
attorneys’ fees and any commissions or fees paid or to be paid to brokers,
prepayment premiums, additional interest, charges, points, goods, things in
action or any other sums or things of value, including any compensating balance
requirements or other contractual obligations (collectively referred to as the
“Additional Sums”) paid or payable by Borrower, whether pursuant to the Note,
any other Loan Documents or otherwise with respect to the Debt, that under the
laws of the State of Arizona may be deemed to be interest with respect to the
Debt shall, for the purpose of any laws of the State of Arizona that may limit
the maximum amount of interest to be charged with respect to the Debt, be
payable by Borrower as, and shall be deemed to be, additional interest for such
purposes only, and Borrower agrees that the contracted for rate of interest
shall be the sum of the interest rate set forth in the Loan Terms Table of the
Note or the Default Rate (as defined in the Note), as applicable, plus the
interest rate resulting from the Additional Sums being considered as interest.

 

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Section 11.3          California Law Provisions. The following provisions shall
apply to this Agreement to the extent that California law is deemed to govern
this Agreement:

 

(a) The term “Environmental Laws” shall include Sections 25117, 25281, 25316 or
25501 of the California Health & Safety Code”.

 

(b) Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER 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 IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER.

 

/s/ MA

Borrower’s Initials

 

Section 11.4          Colorado Law Provisions. The following provisions shall be
deemed to apply to the extent that Colorado law is deemed to govern this
Agreement:

 

The term “Environmental Law” shall include C.R.S. § 8-20.5-101, et seq., the
Noise Control Act (42 U.S.C. § 4901, et seq.), the Uranium Mill Tailings
Radiation Control Act (42 U.S.C. § 7901, et. seq.), the Colorado Hazardous
Substance Act, the Colorado Hazardous Waste Siting Act, the Colorado Water
Quality Control Act, and the Colorado Air Quality Control Act.

 

Section 11.5          Illinois Law Provisions. The following provisions shall
apply to this Agreement to the extent that Illinois law is deemed to govern this
Agreement:

 

(a) The term “Environmental Law” shall include the Illinois Environmental
Protection Act, 415 ILCS 5/1 et. seq.

 

(b) Illinois Collateral Protection Act Notice Borrower is hereby notified
pursuant to 815 ILCS 180/1 et. seq. as follows:

 

Unless Borrower provides Lender with evidence of the insurance coverage required
by this Agreement, Lender may purchase insurance at Borrower’s expense to
protect Lender’s interest in the Property. This insurance may, but need not,
protect Borrower’s interest. The coverage that Lender purchases may not pay any
claim that Borrower makes or any claim that is made against Borrower in
connection with the Property. Borrower may later cancel any insurance purchased
by Lender, but only after providing Lender with evidence that Borrower has
obtained insurance as required by this Agreement. If Lender purchases insurance
for the Property, Borrower will be responsible for the cost of that insurance,
including interest and any other charges Lender may impose in connection with
the placement of the insurance, until the effective date of the cancellation or
expiration of the insurance. The cost of the insurance may be added to
Borrower’s total outstanding balance or obligation. The cost of insurance may be
more than the cost of insurance Borrower may be able to obtain on its own.

 

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Section 11.6         Indiana Law Provisions. The following provisions shall
apply to this Agreement to the extent that Indiana law is deemed to govern this
Agreement:

 

If, pursuant to this Agreement or any of the other Loan Documents, Borrower is
liable to any Person for payment of or reimbursement for attorneys fees, such
fees shall be deemed to include support staff costs, amounts expended in
litigation preparation, computerized research costs, telephone and facsimile
expenses, mileage costs, deposition related expenses, postage costs, photocopy
costs, process service fees and costs of videotapes.

 

Section 11.7          Pennsylvania Law Provisions. The following provisions
shall apply to this Agreement the extent that Pennsylvania law is deemed to
govern this Agreement:

 

POWERS OF ATTORNEY. BORROWER ACKNOWLEDGES AND AGREES (A) THAT ANY POWERS OF
ATTORNEY GRANTED HEREIN, AND ANY WARRANT OF ATTORNEY AUTHORIZING JUDGMENT BY
CONFESSION, ARE GIVEN IN CONNECTION WITH A COMMERCIAL TRANSACTION, (B) LENDER’S
EXERCISE OF ANY POWERS OF ATTORNEY AS PROVIDED FOR HEREIN WOULD BE IN ACCORDANCE
WITH BORROWER’S REASONABLE EXPECTATIONS, AND (C) LENDER DOES NOT AND SHALL NOT
HAVE ANY OF THE DUTIES TO BORROWER SET FORTH IN 20 PA. C.S.A. §5601.3.

 

Section 11.8          Tennessee Law Provisions. The following provisions shall
apply to this Agreement to the extent that Tennessee law is deemed to govern
this Agreement:

 

At no time is Borrower required to pay interest on the Loan or on any other
payment due hereunder or under any of the other Loan Documents (or to make any
other payment deemed by law or by a court of competent jurisdiction to be
interest) at a rate which would subject Lender either to civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to pay. If interest (or such other
amount deemed to be interest) paid or payable by Borrower is deemed to exceed
such maximum rate, then the amount to be paid immediately shall be reduced to
such maximum rate and thereafter computed at such maximum rate. All previous
payments in excess of such maximum rate shall be deemed to have been payments of
principal (in inverse order of maturity) and not on account of interest due
hereunder. For purposes of determining whether any applicable usury law has been
violated, all payments deemed by law or a court of competent jurisdiction to be
interest shall, to the extent permitted by applicable law, be deemed to be
amortized, prorated, allocated and spread over the full term of the Loan in such
manner so that interest is computed at a rate throughout the full term of the
Loan which does not exceed the maximum lawful rate of interest.

 

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Section 11.9 Texas Law Provisions. The following provisions shall apply to this
Agreement to the extent that Texas law is deemed to govern this Agreement:

 

(a) The term “Environmental Law” shall include the Texas Water Code §26.001 et
seq.; the Texas Health & Safety Code §361.001 et seq.; and the Texas Solid Waste
Disposal Act, Tex. Civ. Stat. Ann. art. 4477-7.

 

(b) It is the express intention of Borrower and Borrower hereby agrees that any
indemnity will apply to and fully protect each indemnified party even though any
claims, demands, liabilities, losses, damages, causes of action, judgments,
penalties, costs and expenses (including reasonable attorneys’ fees) then the
subject of indemnification may have been caused by, arise out of, or are
otherwise attributable to, directly or indirectly, the negligence (excluding
gross negligence) in whole or in part of such indemnified party and/or any other
party.

 

(c) Each use of the term “notice” in Section 8.1(b) shall be deemed to include
notice of acceleration and notice of intent to accelerate.

 

(d) Section 10.11(a) shall be deemed to cover notice of acceleration and notice
of intent to accelerate.

 

(e) THIS AGREEMENT AND THE OTHER DOCUMENTS EVIDENCING, SECURING OR PERTAINING TO
ALL OR ANY PORTION OF THE DEBT REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER
AND LENDER AS TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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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.

 

  BORROWER:       ARHC HDLANCA01, LLC,   ARHC NHCANGA01, LLC,   ARHC FMMUNIN03,
LLC,   ARHC BMLKWCO01, LLC,   ARHC ECMCYNC01, LLC,   ARHC ECCPTNC01, LLC,   ARHC
LPELKCA01, LLC,   ARHC MMTCTTX01, LLC,   ARHC MRMRWGA01, LLC,   ARHC OLOLNIL01,
LLC,   ARHC PPHRNTN01, LLC,   ARHC SMERIPA01, LLC,   ARHC AMGLNAZ02, LLC,   ARHC
PHNLXIL01, LLC,   ARHC AMGLNAZ01, LLC,   ARHC SFSTOGA01, LLC,   ARHC VCSTOGA01,
LLC,   ARHC WLWBYMN01, LLC,   ARHC AHPLYWI01, LLC and   ARHC PRPEOAZ03, LLC,  
each a Delaware limited liability company

 

  By: /s/ Michael Anderson     Name: Michael Anderson       Authorized Signatory
for each such Limited Liability Company  

 

Signature Page to Loan Agreement

 

 

 

 

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:       KEYBANK NATIONAL ASSOCIATION,  

a national banking association

      By: /s/ Mary Ann Gripka     Name: Mary Ann Gripka     Title: Vice
President

 

Signature Page to Loan Agreement

 

 

 

 

SCHEDULE I

 

(RENT ROLL)

 

 

 

 

 

SCHEDULE II

 

(REQUIRED REPAIRS - DEADLINES FOR COMPLETION)

 

 

 

 

 

SCHEDULE III

 

(ORGANIZATIONAL CHART OF BORROWERS)

 

U:\TopVin\2018\04 April\12 Apr\Shift III\Healthcare Trust, Inc. 8-K
(tv490978)\Draft\03-Production [tv490978_ex10-1img01.jpg]

 

 

 

 

SCHEDULE IV

 

ALLOCATED LOAN AMOUNTS

 

 

 

 

SCHEDULE V

 

PROPERTY MANAGERS AND UNDERWRITTEN MANAGEMENT FEES

 

 

 

 

 

SCHEDULE VI

 

FORM OF TENANT DIRECTION LETTER

 

[BORROWER LETTERHEAD]

 

__________, 20__

 

[Tenants under Leases]

 

Re:Lease dated ________ between _______________, as Landlord, and
__________________, as Tenant, concerning premises known as _____________

 

Gentlemen:

 

This letter shall constitute notice to you that the undersigned has granted a
lien and security interest in the captioned lease and all rents, additional rent
and all other monetary obligations to landlord thereunder (collectively, “Rent”)
in favor of KeyBank National Association, its successors and assigns, as lender
(“Lender”), to secure certain of the undersigned’s obligations to Lender. The
undersigned hereby irrevocably instructs and authorizes you to disregard any and
all previous notices sent to you in connection with Rent and hereafter to
deliver all Rent to the following address:

 

[Clearing Bank]

 

____________________

____________________

Account Name: “_________________________________” Clearing Account FBO KeyBank
National Association, successors and assigns

Account No.: __________________

Attention: _________________

ABA# _____________

 

The instructions set forth herein are irrevocable and are not subject to
modification in any manner, except that Lender, or any successor lender so
identified by Lender, may by written notice to you rescind the instructions
contained herein.

 

Sincerely,

 

[Borrower]

 

 

 

 

SCHEDULE VII

 

FORM OF DISBURSEMENT CERTIFICATION AND SCHEDULE

 

Loan No. _______________

 

Disbursement Certification and Schedule

 

____________________ (“Borrower”) does hereby certify and affirm the following
to _________________________ (“Lender”) to induce Lender to disburse (the
“Disbursement”) the aggregate sum of $______________________ from the [CHOOSE AS
APPLICABLE: Replacement Reserve Account, Rollover Reserve Account] pursuant to
the terms of the Loan Agreement (“Loan Agreement”) entered into between
____________________________ (“Borrower”) and KeyBank National Association
(predecessor to Lender) dated ____________________. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning set forth in the
Loan Agreement.

 

1.          The undersigned is the ______________ of Borrower, has actual
knowledge as to the matters herein set forth and makes this Certification
pursuant to Section _____ of the Loan Agreement.

 

2.          To Borrower’s knowledge, no Event of Default exists under any of the
Loan Documents.

 

3.          All of the statements, information, costs and amounts set forth
herein or on Exhibit A attached hereto are true and correct in every material
respect as of the date hereof. All of the Disbursement funds shall be used
solely for the purposes of paying the costs of the [CHOOSE AS APPLICABLE:
Replacements, TILC Obligations] specified herein, or for reimbursing Borrower
for such costs previously paid by Borrower.

 

4.          All [CHOOSE AS APPLICABLE: Replacements, TILC Obligations] to be
funded by the requested Disbursement have been completed in a good and
workmanlike manner and in accordance with all applicable Legal Requirements,
have not been the subject of a previous Disbursement, and that all outstanding
payables with respect thereto (other than those to be paid from the requested
Disbursement) have been paid in full.

 

5.          Attached hereto as Exhibit A is a schedule of each contractor,
subcontractor, materialman and/or person (each, a “Payee”) to be paid (or for
which Borrower is to be reimbursed for amounts previously paid by it to such
Payee) from the proceeds of the Disbursement, the aggregate amount then payable
to each such Payee, a description of the goods, work or services provided by
each such Payee and related invoice numbers to be paid from the Disbursement.

 

6.          Each Payee has been paid, or will be paid with the proceeds of the
Disbursement, the amounts then due and payable to such Payee in connection with
the goods, work or services specified on Exhibit A provided by each such Payee,
and Borrower has obtained lien waivers from each such Payee with respect to such
specified goods, work or services.

 

7.          Each previous disbursement of [CHOOSE AS APPLICABLE: Replacement
Reserve Funds, Rollover Reserve Funds] was used to pay the costs of the [CHOOSE
AS APPLICABLE: Replacements, TILC Obligations] identified in the Disbursement
Certification and Schedule provided in connection with such previous
disbursement.

 

Date: ________________________

 

[TO BE EXECUTED BY AN AUTHORIZED OFFICER, GENERAL PARTNER, MANAGING MEMBER OR
SOLE MEMBER OF BORROWER, AS APPLICABLE]

 

 

 

 

Exhibit A to Disbursement Certification and Schedule

 

[Attach a schedule of each applicable contractor, subcontractor, materialman
and/or person and with respect to each such contractor, subcontractor,
materialman and/or person, the aggregate amount then payable to each, a
description of the goods, work or services provided by each (for goods, provide
the quantity and price of each item, the costs of all materials used and all
labor or other services payable in connection with such goods) and related
invoice numbers to be paid from the Disbursement]