Exhibit 10.1
 

LOAN AGREEMENT

 

Dated as of

 

September 12, 2019

 

Between

 

ARG CMGLTWY001, LLC,

ARG SSFSRIN001, LLC,

ARG EQWBGPA001, LLC,

ARG HCCLHGA001, LLC,

ARG UPDBNMI001, LLC,

ARG CDNCNOH001, LLC,

ARG MT2PKSLB001, LLC,

ARG HRTFTGA001, LLC,

ARC FELKCLA001, LLC,

ARG EHBIRAL001, LLC,

ARC ATSNTTX001, LLC and

ARC SLSTCCA001, LLC

 

collectively, as Borrower

 

and

 

KEYBANK NATIONAL ASSOCIATION,

 

as Lender

 

 

 

Loan No. 10202952

 

 

 

 

TABLE OF CONTENTS

  

  Page     ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION  1 Section 1.1   
Definitions  1 Section 1.2    Principles of Construction  40        ARTICLE II -
GENERAL TERMS  42 Section 2.1    Loan Commitment; Disbursement to Borrower  42
2.1.1    Agreement to Lend and Borrow  42 2.1.2    Single Disbursement to
Borrower  42 2.1.3    The Note, Security Instrument and Loan Documents  42
2.1.4    Use of Proceeds  42 Section 2.2    Interest Rate  42 2.2.1    Interest
Rate  42 2.2.2    Interest Calculation  42 2.2.3    Default Rate  42 2.2.4   
Usury Savings  43 Section 2.3    Loan Payment  43 Section 2.4    Prepayments  43
Section 2.5    Intentionally Omitted  43 Section 2.6    Release of Property  43
2.6.1    Release of Property  43 2.6.2    Partial Release  44 2.6.2    Partial
Release  44 Section 2.7    Clearing Account/Cash Management  49 2.7.1   
Clearing Account  49 2.7.2    Cash Management Account  51 2.7.3    Payments
Received under the Cash Management Agreement  52        ARTICLE III -
INTENTIONALLY OMITTED  52      ARTICLE IV - REPRESENTATIONS AND WARRANTIES  52
Section 4.1    Borrower Representations  52 4.1.1    Organization  52 4.1.2  
Proceedings  52 4.1.3    No Conflicts  52 4.1.4    Litigation  53 4.1.5   
Agreements  53 4.1.6    Title  53 4.1.7    Solvency  53 4.1.8    Full and
Accurate Disclosure  54 4.1.9    No Plan Assets  54 4.1.10    Compliance  54
4.1.11    Financial Information  55 4.1.12    Condemnation  55 4.1.13    Federal
Reserve Regulations  55

 

 

 

 

4.1.14    Utilities and Public Access  55 4.1.15    Not a Foreign Person  56
4.1.16    Separate Lots  56 4.1.17    Assessments  56 4.1.18    Enforceability
 56 4.1.19    No Prior Assignment  56 4.1.20    Insurance  56 4.1.21    Use of
Property  56 4.1.22    Certificate of Occupancy; Licenses  56 4.1.23    Flood
Zone  56 4.1.24    Physical Condition  57 4.1.25    Boundaries  57 4.1.26   
Leases  57 4.1.27    Survey  58 4.1.28    Inventory  58 4.1.29    Filing and
Recording Taxes  58 4.1.30    Special Purpose Entity/Separateness/No Prohibited
Entity/Ownership Structure  58 4.1.31    Management Agreement  59 4.1.32   
Illegal Activity  59 4.1.33    Intentionally Omitted  59 4.1.34    Investment
Company Act  59 4.1.35    Embargoed Person; Patriot Act and Similar Acts  59
4.1.36    Principal Place of Business; State of Organization  60 4.1.37   
Environmental Representations and Warranties  60 4.1.38    Cash Management
Account  61 Section 4.2    Survival of Representations  61 Section 4.2   
Lender:  No Plan Assets  61        ARTICLE V - BORROWER COVENANTS  61 Section
5.1    Affirmative Covenants  61 5.1.1    Existence; Compliance with Legal
Requirements  62 5.1.2    Taxes and Other Charges  63 5.1.3    Litigation  63
5.1.4    Access to Property  63 5.1.5    Notice of Material Adverse Change  64
5.1.6    Cooperate in Legal Proceedings  64 5.1.7    Perform Loan Documents  64
5.1.8    Award and Insurance Benefits  64 5.1.9    Further Assurances  64
5.1.10    Principal Place of Business, State of Organization  65 5.1.11   
Financial Reporting  65 5.1.12    Business and Operations  68 5.1.13    Title to
the Property  68 5.1.14    Costs of Enforcement  69 5.1.15    Estoppel Statement
 69 5.1.16    Loan Proceeds  70

 

ii

 

 

5.1.17    Intentionally Omitted  70 5.1.18    Intentionally Omitted  70
5.1.19    Environmental Covenants  70 5.1.20    Leasing Matters  73 5.1.21   
Alterations  74 5.1.22    Operation of Property  76 5.1.23    Embargoed Person;
Compliance with Patriot Act and Similar Acts  77 5.1.24    Ground Lease  78
5.1.24    Ground Lease  78 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  86 Section 6.1    Insurance  86 Section 6.2    Casualty  86
Section 6.3    Condemnation  86 Section 6.4    Restoration  91        ARTICLE
VII - RESERVE FUNDS  96 Section 7.1    Required Repairs  96 7.1.1    Deposits
 96 7.1.2    Release of Required Repair Funds  96 Section 7.2    Tax and
Insurance Escrow Fund  97 7.2.1    Deposits  97 7.2.2    Deposits for Certain
Taxes Suspended  97 Section 7.3    Replacements and Replacement Reserve  98
7.3.1    Replacement Reserve Fund  98 7.3.2    Disbursements from Replacement
Reserve Account  98 7.3.3    Performance of Replacements  99 7.3.4    Failure to
Make Replacements  100 7.3.5    Balance in the Replacement Reserve Account  100
Section 7.4    Rollover Reserve  101 7.4.1    Deposits to Rollover Reserve Fund
 101 7.4.2    Disbursements from Rollover Reserve Account  102 Section 7.5  
 Excess Cash Flow Reserve Fund  103 7.5.1    Deposits to Excess Cash Flow
Reserve Fund  103 7.5.2    Release of Excess Cash Flow Reserve Funds  103
Section 7.6    Reserve Funds, Generally  103 Section 7.7    Major Tenant
Rollover Reserve  104

 

iii

 

 

7.7.1    Deposits to Major Tenant Rollover Reserve Fund  104 7.7.2    Withdrawal
of Major Tenant Rollover Reserve Fund  104 Section 7.7    Ground Rent Reserve
Funds  104        ARTICLE VIII - DEFAULTS  104 Section 8.1    Event of Default
 104 Section 8.2    Remedies  107 Section 8.3    Remedies Cumulative; Waivers
 109        ARTICLE IX - SPECIAL PROVISIONS  109 Section 9.1    Securitization
 109 9.1.1    Sale of Notes and Securitization  109 9.1.2    Securitization
Costs  111 Section 9.2    Right To Release Information  111 Section 9.3   
Exculpation  111 Section 9.4    Matters Concerning Manager  114 Section 9.5   
Servicer  114 Section 9.6    Lender/Servicer Loan Administration  115       
ARTICLE X - MISCELLANEOUS  115 Section 10.1    Survival  115 Section 10.2   
Intentionally Omitted  115 Section 10.3    Governing Law  115 Section 10.4   
Modification, Waiver in Writing  117 Section 10.5    Delay Not a Waiver  117
Section 10.6    Notices  117 Section 10.7    Trial by Jury  118 Section 10.8   
Headings  118 Section 10.9    Severability  118 Section 10.10    Preferences
 119 Section 10.11    Waiver of Notice  119 Section 10.12    Remedies of
Borrower  119 Section 10.13    Expenses; Indemnity  119 Section 10.14   
Schedules Incorporated  120 Section 10.15    Offsets, Counterclaims and Defenses
 120 Section 10.16    No Joint Venture or Partnership; No Third Party
.Beneficiaries  121 Section 10.17    Publicity  121 Section 10.18    Waiver of
Marshalling of Assets  121 Section 10.19    Waiver of Counterclaim  122 Section
10.20    Conflict; Construction of Documents; Reliance  122 Section 10.21   
Brokers and Financial Advisors  122 Section 10.22    Prior Agreements  122
Section 10.23    Liability  122 Section 10.24    Intentionally Omitted  123
Section 10.25    OFAC  123 Section 10.26    Duplicate Originals; Counterparts
 123 Section 10.27    Confidentiality  123        ARTICLE XI – LOCAL LAW
PROVISIONS  125

 

iv

 

 

Section 11.1    Inconsistencies  125 Section 11.2    Pennsylvania Law Provisions
 125 Section 11.3    Texas Law Provisions  125 Section 11.4    Wyoming Law
Provisions  126 Section 11.5    Indiana Law Provisions  126 Section 11.6   
Colorado Law Provisions  126 Section 11.7    Georgia Law Provisions  126
Section 11.9    Michigan Law Provisions  126 Section 11.11    Ohio Law
Provisions  127 Section 11.12    Louisiana Law Provisions  128 Section 11.13   
Alabama Law Provisions  128 Section 11.14    California Law Provisions  129

 

v

 

 

SCHEDULES

 

Schedule I  –  Rent Roll         Schedule II  –  Required Repairs - Deadlines
for Completion         Schedule III  –  Organizational Chart of Borrowers      
  Schedule IV  –  Individual Properties and Allocated Loan Amounts        
Schedule V  –  Intentionally Omitted         Schedule VI  –  Tenant Direction
Letter Form         Schedule VII  –  Form of Disbursement Certification and
Schedule         Schedule VIII  –  Letter to City of San Antonio Development
Services Regarding       Completion of AT&T Sprinkler Installation Work

 

vi

 

 

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT is made as of September 12, 2019 (this “Agreement”), between
KEYBANK NATIONAL ASSOCIATION, a national banking association, having an address
at 11501 Outlook, Suite 300, Overland Park, Kansas 66211 (“Lender”), and ARG
CMGLTWY001, LLC, ARG SSFSRIN001, LLC, ARG EQWBGPA001, LLC, ARG HCCLHGA001, LLC,
ARG UPDBNMI001, LLC, ARG CDNCNOH001, LLC, ARG MT2PKSLB001, LLC, ARG HRTFTGA001,
LLC, ARC FELKCLA001, LLC, ARG EHBIRAL001, LLC, ARC ATSNTTX001, LLC and ARC
SLSTCCA001, 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.

 

“Advisor Party” shall mean Global Net Lease Advisors, LLC, a Delaware limited
liability company, or any direct or indirect owner of Global Net Lease Advisors,
LLC under common Control with Global Net Lease Advisors, LLC.

 

“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.

 

1

 

 

“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.

 

“Anti-Corruption Laws” means any laws, rules and regulations of any of any
Governmental Authority applicable to Borrower, Guarantor or any of their direct
or indirect members, partners or owners concerning bribery or corruption,
including the United States Foreign Corrupt Properties Act of 1997 (15 U.S.C.§8
78d Jan/et seq.).

 

“Anti-Money Laundering Laws” means any laws, rules and regulations of any
Governmental Authority applicable from time to time to Borrower, Guarantor or
any of their direct or indirect partners, members or owners related to money
laundering or terrorist financing.

 

“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.

 

“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

 

 

“AT&T O&M Program” has the meaning set forth in Section 5.1.19 hereof.

 

“Availability Threshold” means $1,000,000.00.

 

“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 that is not discharged, stayed or dismissed within ninety (90)
days; (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).

 

“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; (d) a DSCR Trigger
Event; (e) a Major Tenant Trigger Event; or (f) a Lease Rollover 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/Tenant Cure – Letter of Credit, and each
subsequent increase, if any, thereto, all 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);

 

(c)           if the Cash Sweep Event is caused by a Manager Trigger Event, the
date that Borrower replaces such Manager with a Qualified Manager under a
Replacement Management Agreement;

 

(d)           if the Cash Sweep is caused by the occurrence of a Major Tenant
Trigger Event, Borrower’s completion of the applicable Major Tenant Cure Event;
or

 

(e)           if the Cash Sweep is caused by the occurrence of a Lease Rollover
Trigger Event, Borrower’s completion of the applicable Lease Rollover Cure
Event.

 

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 (but not sales of securities by REIT in the ordinary
course), 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.

 

5

 

 

“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 property management fees incurred in connection with the operation of the
Property, or (ii) amounts paid to the Reserve Funds, less (A) property
management fees equal to the greater of (1) assumed property management fees of
3% of Gross Income from Operations and (2) the actual property management fees
incurred, and (B) annual Replacement Reserve Fund contributions equal to $0.20
per square foot of gross leasable area at the Property, and (C) annual Rollover
Reserve Fund contributions equal to $0.71 per square foot of gross leasable area
at the Property; and

 

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

 

“Debt Service Coverage Ratio as of the Closing Date” means 2.65 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 9.82%.

 

“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 similar offering document, in each case, in connection with a
Securitization.

 

“DSCR Cure” means the achievement of a Debt Service Coverage Ratio of 2.00 to
1.00 or greater for two (2) consecutive quarters based upon the trailing three
(3) month period immediately preceding the date of determination.

 

“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 at least 2.00
to 1.00 for the trailing three (3) month period immediately preceding the date
of determination.

 

6

 

 

“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 1.85 to 1.00.

 

“DSCR/Tenant 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 initially equal to the aggregate
amount of funds that would have been Excess Cash Flow for the trailing three (3)
month period immediately preceding the date of the DSCR Trigger Event, Major
Tenant Trigger Event or Lease Rollover Trigger Event, as applicable (but up to
any applicable capped amount). The required face amount of the DSCR/Tenant Cure
– Letter of Credit shall be recalculated and increased (but never decreased)
every three (3) month period thereafter by an amount equal to the aggregate
amount of funds that would have been Excess Cash Flow for the trailing three (3)
month period immediately preceding such recalculation date. For the avoidance of
doubt, if all then existing DSCR Trigger Events, Major Tenant Trigger Events or
Lease Rollover Trigger Events, as applicable, have been cured by Borrower, in
the event a separate DSCR Trigger Event, Major Tenant Trigger Event or Lease
Rollover Trigger Event, as applicable (but up to any applicable capped amount),
occurs at any time following such cure, any future Letter of Credit shall be
calculated pursuant to the preceding sentence without regard for any
calculations made with respect to any prior Letter of Credit. Borrower shall
cause the DSCR/Tenant Cure – Letter of Credit to be reissued or amended within
ten (10) days following each such recalculation to reflect the increased amount
thereof. Such DSCR/Tenant Cure – Letter of Credit shall be 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
Letter of Credit. The DSCR/Tenant 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/Tenant Cure – Letter of Credit then held by Lender hereunder, Borrower
shall deposit with Lender a replacement DSCR/Tenant 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/Tenant 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/Tenant 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/Tenant 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/Tenant Cure – Letter of Credit, and that
Borrower shall look solely to the transferee with respect to all matters
relating to the DSCR/Tenant Cure – Letter of Credit. In the event that all then
existing DSCR Trigger Events, Major Tenant Trigger Events or Lease Rollover
Trigger Events, as applicable, have been cured, other than by Lender holding the
DSCR/Tenant Cure – Letter of Credit, during a period wherein Lender is in
possession of the DSCR/Tenant Cure – Letter of Credit, Lender will promptly
return the DSCR/Tenant Cure – Letter of Credit to Borrower within five (5)
Business Days following Lender’s acceptance of Borrower’s cure.

 

7

 

 

“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.

 

“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 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.

 

8

 

 

“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; and the Endangered Species 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.

 

“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.

 

“EQT O&M Program” has the meaning set forth in Section 5.1.19 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 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.

 

9

 

 

“Governmental Authority” means any court, board, agency, department, committee,
commission, central bank, office or authority of any nature whatsoever
(including any political subdivision or instrumentality thereof) for any
governmental or quasi-governmental unit (whether federal, state, commonwealth,
county, district, municipal, city, parish, provincial or otherwise) (whether of
the government of the United States or any other nation) now or hereafter in
existence (including any supra-national bodies such as the European Union or the
European Central Bank and any intergovernmental organizations such as the United
Nations), in each case, which has jurisdiction over Borrower or the applicable
Individual Property.

 

“Government Lists” means (i) the Specially Designated Nationals and Blocked
Persons Lists maintained by the Office of Foreign Assets Control (“OFAC”),
(ii) any other list of terrorists, terrorist organizations or narcotics
traffickers maintained pursuant to any of the Rules and Regulations of OFAC that
Lender notified Borrowers in writing is now included in “Government Lists”,
(iii) any similar lists maintained by the United States Department of State, the
United States Department of Commerce, the United Nations, the European Union,
any European Union member state, the United Kingdom or any other Governmental
Authority or (iv) any similar lists maintained pursuant to any Executive Order
of the President of the United States of America that Lender notified Borrowers
in writing is now included in “Government Lists”.

 

“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
rent (provided that the amount of any offsets or credits due any such Tenant
shall not be included as Rent unless Borrower has deposited with Lender a
reserve equal to the amount of all such 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 (unless Borrower has deposited with Lender a letter of credit or a
reserve equal to the amount of all rent that would have been payable during such
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.

 

“Guarantor” means Global Net Lease Operating Partnership, L.P., a Delaware
limited partnership.

 

10

 

 

“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).

 

“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).

 

11

 

 

“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 a 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.

 

“Individual Property” shall mean 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.” The location of each Individual Property and the
Borrower that owns each Individual Property are identified on Schedule IV.

 

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

 

12

 

 

“Insolvency Opinion” means that certain non-consolidation opinion letter dated
the date hereof delivered by Bogal & Kahn 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, Note A-2, Note
A-3, Note A-4, Note A-5, Note A-6, Note A-7 or Note A-8, 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.

 

“Lease” means 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.

 

“Lease Rollover Cure Event” means the earliest to occur of the following:

 

(A)         the date that Borrower has provided reasonably acceptable evidence
to Lender that one or more Tenants has renewed the term of its Lease pursuant to
the terms set forth therein such that, during the Lease Rollover Trigger Event
Loan Year to which the Lease Rollover Trigger Event relates, all Leases that are
scheduled to expire by the terms of such Leases (without giving effect to any
renewal or extension options unless such options have been validly and
irrevocably exercised pursuant to the terms of the applicable Lease) then
constitute or represent, in the aggregate, (i) twenty percent (20%) or less of
the total net rentable area of all Individual Properties and (ii) twenty percent
(20%) or less of the total annual Rents from all Individual Properties,

 

13

 

 

(B)          the date that Borrower has entered into one or more replacement
Leases, in each case with a Tenant or Tenants acceptable to Lender in its
reasonable discretion, and upon such terms and conditions (including, without
limitation, rental rate and term) as are acceptable to Lender in its reasonable
discretion such that, during the Lease Rollover Trigger Event Loan Year to which
the Lease Rollover Trigger Event relates, all Leases that are scheduled to
expire by the terms of such Leases (without giving effect to any renewal or
extension options unless such options have been validly and irrevocably
exercised pursuant to the terms of the applicable Lease) then constitute or
represent, in the aggregate, (i) twenty percent (20%) or less of the total net
rentable area of all Individual Properties and (ii) twenty percent (20%) or less
of the total annual Rents from all Individual Properties and, with respect to
each such replacement Lease (i) the applicable replacement Tenant or Tenants are
in occupancy, are obligated to pay full contractual rent without right of offset
or free rent credit (unless Borrower has deposited with Lender a reserve equal
to the amount of all such offsets or credits), (ii) all tenant improvements to
be completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender,

 

(C)          the date that the Rollover Reserve Funds in the Rollover Reserve
Account are equal to the Rollover Reserve Cap,

 

(D)         the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (D) and reinstate the Cash Sweep Event which was previously cured
hereby, or

 

(E)          the date there has been a DSCR Cure.

 

“Lease Rollover Trigger Event” means the last day of the Loan Year immediately
preceding any Loan Year (a “Lease Rollover Trigger Event Loan Year”) during
which one or more Leases are scheduled to expire by the terms of such Leases
(without giving effect to any renewal or extension options unless such options
have been validly and irrevocably exercised pursuant to the terms of the
applicable Lease), which Leases constitute or represent, in the aggregate,
either (i) more than twenty percent (20%) of the total net rentable area of all
Individual Properties or (ii) more than twenty percent (20%) of the total annual
Rents from all Individual Properties.

 

“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.

 

14

 

 

“Lender” has the meaning set forth in the introductory paragraph hereto,
together with its permitted 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, liquid debt instruments that have a
readily ascertainable value and are regularly traded in a recognized financial
market, or immediately available funds under a credit facility.

 

“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.

 

“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.

 

“Loan Year” means each twelve (12) month period during the term of the Loan
commencing on September 1st and ending on August 31st of the following calendar
year.

 

“Major Tenant” means, individually or collectively, as the context requires,
Specialty Laboratories, Inc., a California corporation (“Quest”), AT&T Services,
Inc., a Delaware corporation (“AT&T”), and Encompass Health Corporation, a
Delaware corporation (“Encompass”), any successor or assign of any such entity
as tenant under its Major Tenant Lease, or any subsequent Tenant under any
replacement of the applicable Major Tenant Lease.

 

“Major Tenant - Approved Sublease” means one or more subleases of all or a
portion of a Major Tenant Premises which sublease or subleases shall (i) be
between the applicable Major Tenant and a Major Tenant - Approved Sublessee,
(ii) have been approved by Lender in its reasonable discretion, and (iii) be
upon such terms and conditions (including, without limitation, rental rate and
term) as are acceptable to Lender in its reasonable discretion.

 

15

 

 

“Major Tenant - Approved Sublessee” means a sublessee in connection with a Major
Tenant - Approved Sublease approved by Lender in its reasonable discretion.

 

“Major Tenant Cure Event” means:

 

(i)             if the Cash Sweep Period is caused by a Major Tenant Trigger
Event – Bankruptcy where the Bankruptcy Action relates to a Major Tenant, no
Event of Default has occurred and is continuing and no event that would trigger
another Cash Sweep Period has occurred and is continuing, the earliest to occur
of the following:

 

(A)         the date which is thirty (30) days after the date that the
applicable Major Tenant has affirmed its Major Tenant Lease, is no longer the
subject of a bankruptcy or similar proceeding, is in occupancy and paying full
contractual unabated post-petition rent without right of offset or free rent
credit (unless Borrower has deposited with Lender a reserve equal to the amount
of all such offset or credit), and has delivered to Lender a tenant estoppel
reasonably acceptable to Lender,

 

(B)         the date that Borrower has entered into one or more replacement
Leases for all or a substantial portion (as reasonably determined by Lender) of
the applicable Major Tenant Premises, in each case with a Tenant or Tenants
acceptable to Lender in its reasonable discretion, and upon such terms and
conditions (including, without limitation, rental rate and term) as are
acceptable to Lender in its reasonable discretion, and (i) such replacement
Tenant or Tenants are in occupancy, are obligated to pay full contractual rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), and have
made their first monthly rental payment, (ii) all tenant improvements to be
completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender,

 

(C)          the date that the applicable Major Tenant Rollover Reserve Funds in
the Major Tenant Rollover Reserve Account is equal to the then applicable Major
Tenant Rollover Reserve Cap,

 

(D)         the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (D) and reinstate the Cash Sweep Event which was previously cured
hereby; or

 

(E)          the date there has been a DSCR Cure;

 

16

 

 

(ii)            if the Cash Sweep Period is caused by a Major Tenant Trigger
Event – Bankruptcy where the Bankruptcy Action relates to a Major Tenant Parent
Company, no Event of Default has occurred and is continuing and no event that
would trigger another Cash Sweep Period has occurred and is continuing, the
earliest to occur of the following,

 

(A)         the date which is thirty (30) days after the date that the
applicable Major Tenant Parent Company is no longer the subject of a bankruptcy
or similar proceeding, and the applicable Major Tenant has affirmed its Major
Tenant Lease, is in occupancy and paying full contractual unabated rent without
right of offset or free rent credit (unless Borrower has deposited with Lender a
reserve equal to the amount of all such offset or credit), and has delivered to
Lender a tenant estoppel acceptable to Lender,

 

(B)         the date that Borrower has entered into one or more replacement
Leases for all or a substantial portion (as reasonably determined by Lender) of
the applicable Major Tenant Premises, in each case with a Tenant or Tenants
acceptable to Lender in its reasonable discretion, and upon such terms and
conditions (including, without limitation, rental rate and term) as are
acceptable to Lender in its reasonable discretion, and (i) such replacement
Tenant or Tenants are in occupancy, are obligated to pay full contractual rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), and have
made their first monthly rental payment, (ii) all tenant improvements to be
completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender,

 

(C)          the date that the applicable Major Tenant Rollover Reserve Funds in
the Major Tenant Rollover Reserve Account is equal to the then applicable Major
Tenant Rollover Reserve Cap;

 

(D)         the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (D) and reinstate the Cash Sweep Event which was previously cured
hereby; or

 

(E)          the date there has been a DSCR Cure;

 

17

 

 

(iii)          if the Cash Sweep Event is caused by a Major Tenant Trigger Event
- Vacation, no Event of Default has occurred and is continuing and no event that
would trigger another Cash Sweep Period has occurred and is continuing, the
earliest to occur of the following:

 

(A)         the date which is thirty (30) days after the date that the
applicable Major Tenant has resumed operations at its Major Tenant Premises, is
in occupancy thereof and open for business paying full contractual unabated rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), has made its
next due monthly rental payment, and has delivered to Lender a tenant estoppel
reasonably acceptable to Lender,

 

(B)         the date that Borrower has entered into one or more replacement
Leases for all or a substantial portion (as reasonably determined by Lender) of
the applicable Major Tenant Premises, in each case with a Tenant or Tenants
acceptable to Lender in its reasonable discretion, and upon such terms and
conditions (including, without limitation, rental rate and term) as are
acceptable to Lender in its reasonable discretion, and (i) such replacement
Tenant or Tenants are in occupancy, are obligated to pay full contractual rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), and have
made their first monthly rental payment, (ii) all tenant improvements to be
completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender,

 

(C)          the date that Lender has received one or more fully executed Major
Tenant - Approved Subleases for the portion of the applicable Major Tenant
Premises not then occupied by the applicable Major Tenant pursuant to (A) above,
and (i) all such Major Tenant - Approved Sublessees (a) are in occupancy of
their entire net leasable area of the applicable Major Tenant Premises, are
obligated to pay full contractual rent without right of offset or free rent
credit (unless Borrower has deposited with Lender a reserve equal to the amount
of all such offset or free rent credit), and have made their first monthly
rental payment, (ii) all tenant improvements with respect to all applicable
Major Tenant - Approved Subleases have been completed in accordance with the
terms hereof, (iii) all leasing commissions and any other tenant reimbursement
obligations incurred by Borrower and/or Major Tenant with respect to all such
Major Tenant - Approved Subleases which are then due and payable have been paid,
(iv) all such Major Tenant - Approved Sublessees have delivered to Lender a
tenant estoppel acceptable to Lender, and (v) Major Tenant shall remain fully
liable for all of the obligations under the Major Tenant Lease;

 

18

 

 

(D)          the date that the applicable Major Tenant Rollover Reserve Funds in
the Major Tenant Rollover Reserve Account is equal to then applicable Major
Tenant Rollover Reserve Cap;

 

(E)          the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (E) and reinstate the Cash Sweep Event which was previously cured
hereby; or

 

(F)          the date there has been a DSCR Cure;

 

(iv)           if the Cash Sweep Event is caused by a Major Tenant Trigger Event
– Lease Default and no event that would trigger another Cash Sweep Period has
occurred and is continuing, the earliest to occur of the following:

 

(A)         the date which is thirty (30) days after the date that each
applicable Major Tenant has fully cured all applicable defaults by such Major
Tenant under its Major Tenant Lease,

 

(B)          the date that the applicable Major Tenant Rollover Reserve Funds in
the Major Tenant Rollover Reserve Account is equal to the then applicable Major
Tenant Rollover Reserve Cap,

 

(C)         the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (C) and reinstate the Cash Sweep Event which was previously cured
hereby,

 

(D)          the date that Borrower has entered into one or more replacement
Leases for all or a substantial portion (as reasonably determined by Lender) of
the applicable Major Tenant Premises, in each case with a Tenant or Tenants
acceptable to Lender in its reasonable discretion, and upon such terms and
conditions (including, without limitation, rental rate and term) as are
acceptable to Lender in its reasonable discretion, and (i) such replacement
Tenant or Tenants are in occupancy, are obligated to pay full contractual rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), and have
made their first monthly rental payment, (ii) all tenant improvements to be
completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender, or

 

(E)          the date there has been a DSCR Cure; and

 

19

 

 

(v)           if the Cash Sweep Event is caused by a Major Tenant Trigger Event
- Lease Expiration, the date upon which Borrower completes the applicable Major
Tenant Lease Expiration Trigger Event Cure.

 

“Major Tenant Lease” means, individually or collectively, as the context
requires, the:

 

(i)             Lease between Lexington Lion Clarita L.P., a Delaware limited
partnership (predecessor to ARC SLSTCCA001, LLC), as landlord, and Specialty
Laboratories, Inc., a California corporation, as tenant, dated March 18, 2004,
with respect to the Individual Property located at 27027 Tourney Road, Santa
Clarita, California 91355, as amended, modified, renewed and/or restated (the
“Quest Lease”), or, if applicable, replaced in connection with any replacement
of such Major Tenant Lease,

 

(ii)            Lease Agreement between ARC ATSNTTX001, LLC, as landlord, and
AT&T Services, Inc., a Delaware corporation, as tenant, dated July 18, 2014,
with respect to the Individual Property located at 1010 N. St. Mary’s Street,
San Antonio, Texas 78215, as amended, modified, renewed and/or restated (the
“AT&T Lease”), or, if applicable, replaced in connection with any replacement of
such Major Tenant Lease, and

 

(iii)           Build to Suit Lease Agreement between CR HQ, LLC, a Delaware
limited liability company (predecessor to ARG EHBIRAL001, LLC), as landlord and
Encompass Health Corporation (formerly known as HealthSouth Corporation), a
Delaware corporation, as tenant, dated February 25, 2016, with respect to the
Individual Property located at 9001 Liberty Parkway, Birmingham, Alabama 35242,
as amended, modified, renewed and/or restated, or, if applicable, replaced in
connection with any replacement of such Major Tenant Lease.

 

“Major Tenant Lease Expiration Trigger Event Cure” means, provided that no event
that would trigger another Cash Sweep Period has occurred and is continuing, the
earliest to occur of the following:

 

(A)         the date that Borrower has provided acceptable evidence to Lender
that the applicable Major Tenant has renewed the term of its Major Tenant Lease
pursuant to the terms set forth therein, or

 

(B)         the date that Borrower has entered into one or more replacement
Leases for all or a substantial portion (as reasonably determined by Lender) of
the entire applicable Major Tenant Premises, in each case with a Tenant or
Tenants acceptable to Lender in its reasonable discretion, and upon such terms
and conditions (including, without limitation, rental rate and term) as are
acceptable to Lender in its reasonable discretion, and (i) such replacement
Tenant or Tenants are in occupancy, are obligated to pay full contractual rent
without right of offset or free rent credit (unless Borrower has deposited with
Lender a reserve equal to the amount of all such offset or credit), and have
made their first monthly rental payment, (ii) all tenant improvements to be
completed by Borrower with respect to each such replacement Lease have been
completed in accordance with the terms hereof, (iii) all leasing commissions and
any other tenant reimbursement obligations incurred by Borrower with respect to
each such replacement Lease which are then due and payable have been paid, and
(iv) such replacement Tenant or Tenants have delivered to Lender a tenant
estoppel reasonably acceptable to Lender,

 

20

 

 

(C)         the date that the applicable Major Tenant Rollover Reserve Funds in
the Major Tenant Rollover Reserve Account is equal to the then applicable Major
Tenant Rollover Reserve Cap;

 

(D)         the date that Borrower has delivered to Lender the DSCR/Tenant Cure
– Letter of Credit; provided, however, that any subsequent failure to deliver
any required reissuance of or amendment to the DSCR/Tenant Cure – Letter of
Credit when and as required by the definition of DSCR/Tenant Cure – Letter of
Credit set forth herein shall immediately void a Cash Sweep Event Cure pursuant
to this Item (D) and reinstate the Cash Sweep Event which was previously cured
hereby; or

 

(E)          the date there has been a DSCR Cure.

 

“Major Tenant Parent Company” means, individually or collectively, any Person
that Controls any Major Tenant.

 

“Major Tenant Premises” means the portion of the Property demised to a Major
Tenant pursuant to its Major Tenant Lease.

 

“Major Tenant Rollover Reserve Account” has the meaning set forth in Section
7.7.1 hereof.

 

“Major Tenant Rollover Reserve Cap” means that the Major Tenant Rollover Reserve
Account contains (a) $9,000,000.00 if a Major Tenant Trigger Event related to
Quest then exists, (b) $7,500,000.00 if a Major Tenant Trigger Event related to
AT&T then exists, (c) $7,150,000.00 if a Major Tenant Trigger Event related to
Encompass then exists, and (d) if Major Tenant Trigger Events related to more
than one of Quest, AT&T or Encompass then exist, an amount equal to the sum of
each applicable amount set forth in the preceding clauses (a), (b) and (c) for
each Major Tenant to which each of such Major Tenant Trigger Events relates.

 

“Major Tenant Rollover Reserve Fund” has the meaning set forth in Section 7.7.1
hereof.

 

“Major Tenant Trigger Event” means the occurrence of a (a) Major Tenant Trigger
Event – Bankruptcy, (b) Major Tenant Trigger Event – Vacation, (c) Major Tenant
Trigger Event – Lease Default, or (d) Major Tenant Trigger Event - Lease
Expiration.

 

21

 

 

“Major Tenant Trigger Event - Bankruptcy” means any Bankruptcy Action of a Major
Tenant or the applicable Major Tenant Parent Company.

 

“Major Tenant Trigger Event - Lease Expiration” means, unless, prior to such
date Borrower has satisfied the requirements of a Major Tenant Lease Expiration
Trigger Event Cure with respect to the applicable Major Tenant Lease, the
earlier to occur of (a) the date of any early termination or cancellation of a
Major Tenant Lease or (b) the earlier to occur of the date (i) that is nine (9)
months prior to the then applicable expiration date of the applicable Major
Tenant Lease (or any renewal or replacement thereof) or (ii) on which notice for
extension is due under the applicable Major Tenant Lease.

 

“Major Tenant Trigger Event – Lease Default” means the continuation of any
default by a Major Tenant under its Major Tenant Lease beyond any applicable
notice and cure period provided for therein.

 

“Major Tenant Trigger Event - Vacation” means the earlier to occur of (a) the
date that a Major Tenant gives an official written notice that it intends to
cease business operations at its Major Tenant Premises, i.e. to “go dark”, or
vacate or abandon such Major Tenant Premises or (b) the date that a Major
Tenant, for five (5) consecutive Business Days (except for temporary closures
for repairs, restoration, rehabilitation or customary force majeure events),
vacates, abandons or surrenders substantially all of its Major Tenant Premises
or ceases to conduct its normal business operations thereon (including without
limitation, utilizing substantially less than all of its Major Tenant Premises
utilized as of the closing of the Loan), or otherwise “goes dark” at its Major
Tenant Premises.

 

“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 (x) in the case of the Individual Properties owned or leased by
ARG CMGLTWY001, LLC, ARG EQWBGPA001, LLC, ARG HCCLHGA001, LLC, ARG UPDBNMI001,
LLC, ARG CDNCNOH001, LLC, ARG MT2PKSLB001, LLC, ARG HRTFTGA001, LLC, ARC
FELKCLA001, LLC, ARG EHBIRAL001, LLC, ARC ATSNTTX001, LLC and ARC SLSTCCA001,
LLC, Global Net Lease Properties, LLC, a Delaware limited liability company, (y)
in the case of the Individual Property owned by ARG SSFSRIN001, LLC, Cushman &
Wakefield U.S., Inc., or (z) 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 (a) for an Affiliated Manager, the date of the
occurrence of a Bankruptcy Action of such Manager, and (b) for a Manager that is
not an Affiliate of Borrower, (i) the date of the occurrence of a Bankruptcy
Action of such unaffiliated Manager pursuant to item (b) of the definition of
Bankruptcy Action herein, or (ii) for any other Bankruptcy Action of such
unaffiliated Manager, the date which is sixty (60) days after the occurrence of
such Bankruptcy Action of such Manager unless such Manager is replaced by
Borrower with a Qualified Manager pursuant to a Replacement Management Agreement
within a sixty (60) day period.

 

22

 

 

“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 October 1, 2029, 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.

 

“Metal Tech O&M Program” has the meaning set forth in Section 5.1.19 hereof.

 

“Monthly Debt Service Payment Amount” has the meaning, individually and
collectively, as the context may require, set forth in Note A-1, Note A-2, Note
A-3, Note A-4, Note A-5, Note A-6, Note A-7 and/or Note A-8.

 

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

 

“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.

 

23

 

 

“New Parent Entity” means any entity that is formed after the date hereof, in
accordance with the terms and provisions of the Loan Documents, and which is (i)
wholly owned (directly or indirectly) by REIT and which wholly owns (directly or
indirectly) Guarantor or (ii) wholly owned (directly or indirectly) by Guarantor
and which wholly owns (directly or indirectly) each Borrower.

 

“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 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, Note A-2, Note A-3, Note A-4, Note A-5, Note A-6, Note A-7 and Note A-8.

 

“Note A-1” means that certain Promissory Note A-1, dated the date hereof, in the
principal amount of $60,000,000.00, 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 $50,000,000.00, 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-3” means that certain Promissory Note A-3, dated the date hereof, in the
principal amount of $50,000,000.00, 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-4” means that certain Promissory Note A-4, dated the date hereof, in the
principal amount of $11,000,000.00, 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-5” means that certain Promissory Note A-5, dated the date hereof, in the
principal amount of $10,000,000.00, 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-6” means that certain Promissory Note A-6, dated the date hereof, in the
principal amount of $10,000,000.00, 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-7” means that certain Promissory Note A-7, dated the date hereof, in the
principal amount of $8,000,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

24

 

 

“Note A-8” means that certain Promissory Note A-8, dated the date hereof, in the
principal amount of $5,000,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“O&M Program” has the meaning set forth in Section 5.1.19 hereof.

 

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

 

“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, property 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 $204,000,000.00.

 

“Other Charges” means all ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining the Property 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.

 

“PACE Financing” means any assessment, bond, loan, financing, or other debt
incurred pursuant to “property assessed clean energy,” “special energy financing
district,” or similar provisions of applicable Legal Requirements.

 

“PACE Lien” means a Lien securing PACE Financing.

 

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

 

25

 

 

 

“Patriot Act Offense” means any violation of the criminal laws of any
Governmental Authority, or that would be a criminal violation if committed
within the jurisdiction of the United States of America, any of the several
states or any Governmental Authority, relating to terrorism or the laundering of
monetary instruments, including any offense under (a) the criminal laws against
terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy
Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, or
the (e) Patriot Act. “Patriot Act Offense” also includes the crimes of
conspiracy to commit, or aiding and abetting another to commit, a Patriot Act
Offense.

 

“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 (but expressly excluding any PACE Lien), (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.

 

“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;

 

26

 

 

(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;

 

(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;

 

27

 

 

(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;

 

(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

 

28

 

 

(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” has the meaning specified in the Loan Terms
Table of the Note.

 

“Permitted Transfer” means any of the following: (a) any transfer by devise, or
descent or operation of law, upon 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, trading, pledge or issuance of securities of REIT or
any other corporation or real estate investment trust provided that such
securities are listed on the New York Stock Exchange, the NASDAQ Global Select
Market or another nationally recognized stock exchange, (e) intentionally
omitted, or (f) a Qualified Equityholder Transfer.

 

“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 (i)
non-Controlling shareholders of the REIT, and (ii) Controlling shareholders of
the REIT so long as with respect to this clause (ii) the same does not result in
a change of control of the REIT.

 

29

 

 

“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.

 

“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.

 

30

 

 

“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) if the new manager is not an Affiliate
of Borrower, 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) has (i) 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
which would reasonably be expected to have a material adverse effect on such
Person, 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.

 

“Quest Property” means the Individual Property located at 27027 Tourney Road,
Santa Clarita, California 91355 and owned by ARC SLSTCCA001, LLC.

 

“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.

 

31

 

 

“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 Global Net Lease, 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,
disbursements from any Reserve Funds 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, 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 (including any escalations, adjustments or other variations in
such 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.

 

“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.

 

32

 

 

“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 Rollover Reserve Fund,
the Major Tenant Rollover 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, (i) Borrower, Guarantor and any
Affiliated Manager, or (ii) any shareholder, partner, member, or any other
direct or indirect legal or beneficial owner of Borrower or Guarantor; provided,
however, that no Advisor Party shall be a Restricted Party so long as such
Advisor Party does not have Control of Borrower or Guarantor.

 

“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 Letter of Credit” 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, including, without
limitation, any division of any assets and liabilities of a limited liability
company amongst one or more new or existing entities pursuant to any applicable
law including, without limitation and if applicable, Section 18-217 of the
Delaware Limited Liability Company Act.

 

33

 

 

“Sanctions” means any economic or financial sanctions or trade embargoes (or
similar measures) imposed, administered or enforced from time to time by (a) the
United States of America (including the Office of Foreign Assets Control of the
U.S. Department of the Treasury or the U.S. Department of State), (b) the United
Nations Security Council, (c) the European Union or any member state thereof, or
(d) Her Majesty’s Treasury of the United Kingdom.

 

“Sanctioned Person” means any Person that is a designated target of any
Sanctions or otherwise a subject of any Sanctions, including as a result of
being (a) owned or controlled directly or indirectly by any Persons (or Person)
that are designated targets of any Sanctions, or (b) organized or operating
under the laws of, or a citizen or resident of, any country that is subject to
any Sanctions.

 

“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 Instrument” and “Security Instruments” means individually or
collectively, as the context requires, each first priority (i) Mortgage, (ii)
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
(iii) Mortgage, Pledge of Leases and Rents and Security Agreement, (iv) Open-End
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
(v) Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, (vi) Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, (vii) Leasehold Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing or (viii) similar
document, each 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.

 

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

 

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

 

(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;

 

34

 

 

(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 any limited liability company division
(pursuant to a plan of division or otherwise) 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 (including any limited liability company
division pursuant to a plan of division or otherwise), 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, including, without limitation, any of the foregoing that would
result in a division of any of its assets and liabilities amongst one or more
new or existing entities pursuant to any applicable law including, without
limitation and if applicable, Section 18-217 of the Delaware Limited Liability
Company Act;

 

(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;

 

(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;

 

35

 

 

(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 or consolidate, or divide any of its assets and
liabilities amongst one or more new or existing entities pursuant to any
applicable law including, without limitation and if applicable, Section 18-217
of the Delaware Limited Liability Company Act; (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)         except as otherwise provided in the Loan Documents with respect to
co-Borrowers, 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)        except as otherwise provided in the Loan Documents with respect to
co-Borrowers, 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, and
(iii) Indebtedness incurred in the financing of equipment and other personal
property used on the Property;

 

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(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.

 

“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.

 

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“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, but specifically excluding any PACE Lien.

 

“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.

 

“UP Central Leasing O&M Program” has the meaning set forth in Section 5.1.19
hereof.

 

“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;

 

(b)           intentionally omitted;

 

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(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 Christopher
Masterson (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)           intentionally omitted; and

 

(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.

 

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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.

 

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.

 

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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.

 

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.

 

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(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 November 1,
2021, 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:

 

(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”);

 

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(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 the Rating Agencies 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 reasonably 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;

 

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(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.
Notwithstanding the foregoing, the Release Amount shall be an amount equal to
105% of the Allocated Loan Amount for the Released Property if, with respect to
the Released Property, as of each of the Partial Release Notice Date and the
date of consummation of the Partial Release, (i) the sole Tenant at such
Released Property is the subject of a Bankruptcy Action, (ii) the sole Tenant at
such Released Property has ceased business operations or otherwise “gone dark”
at all or substantially all of its demised premises at the Released Property or
has given written notice to Borrower that it intends to cease to conduct its
business operations or otherwise “go dark” at all or substantially all of its
demised premises at the Released Property, (iii) a default (beyond any
applicable notice and cure period) by the sole Tenant at such Released Property
is then continuing under its applicable Lease or (iv) a DSCR Trigger Event has
occurred and Lender determines that the Debt Service Coverage Ratio, based on
the trailing three (3) month period immediately preceding the date of such
determination and calculated excluding the Released Property, is equal to or
greater 1.85 to 1.00; provided, however, that the aggregate amount of the
Allocated Loan Amounts for all Individual Properties that may be released
pursuant to, and at the Release Amount set forth in, this sentence may not
exceed an amount equal to $40,800,000.00 and if any Partial Release pursuant to
this sentence would cause such amount to be exceeded, then the Release Amount
shall be as set forth in clause (i) of the first sentence of this Section
2.6.2(k). 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; and

 

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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       Partial Release of Unimproved Land. In the event that Borrower shall
receive from the Tenant under the Quest Lease (“Quest”) an “Expansion Notice”
(as defined in the Quest Lease) pursuant to Article 27 of the Quest Lease
requesting that Borrower construct a new building on Parcel 1 or Parcel 2 (each
as defined in the Quest Lease) or any combination of Parcel 1 and Parcel 2 (the
“Outparcel Expansion”), then Borrower shall, within five (5) Business Days of
its receipt of such Expansion Notice, provide written notice to Lender of its
receipt of such Expansion Notice, together with a copy of such Expansion Notice
and all other information delivered by Quest to Borrower with the Expansion
Notice related to such Expansion Notice. Within sixty (60) days of its receipt
of such Expansion Notice or as soon thereafter as may be reasonably practical in
the exercise of due diligence (and in all events prior to either (i) the
commencement of any construction in connection with any Expansion (as defined in
the Quest Lease) or (ii) the execution by Borrower or any Affiliate of Borrower
of any written agreement for the construction of all or any portion of the
Outparcel Expansion), Borrower shall (and Lender shall permit Borrower to) take
such actions as may be reasonably necessary to cause Parcel 1 and/or Parcel 2,
as applicable (the “Released Land”) to be released from the lien of the Security
Instrument and all other Loan Documents (the “Quest Partial Release”), which
actions shall include, without limitation, the following:

 

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(a)           Borrower shall provide evidence and documentation reasonably
satisfactory to Lender (which shall include, without limitation, a zoning
report, title endorsements (in accordance with clause (e) below) and a survey of
the Released Land and the Remaining Land) (i) that the Released Land has been
separately subdivided or otherwise lawfully “split” from that part of the Quest
Property which shall remain encumbered by the lien of the Security Instrument
(“Remaining Land”) and that the Released Land and Remaining Land will be each
assessed as a separate tax parcel with respect to all property taxes and
assessments, (ii) of the grant of a security interest for the benefit of Lender
in any easements for the benefit of the Remaining Land created as a part of the
Quest Partial Release, (iii) that following the Quest Partial Release, the
Remaining Land will comply with all state and local land use and zoning laws
(including minimum lot size, minimum parking requirements, setback requirements,
lot coverage ratios, frontage, subdivision, site plan approval and access to a
public rights of way), (iv) that following the Quest Partial Release, the
Remaining Land has access to a dedicated and physically open street and water,
gas, electric, telephone, storm sewer and sanitary sewer services either over,
under or upon public rights of way directly adjacent to the Remaining Land or
over, under or upon an easement (not terminable by the grantor thereof or by
such grantor’s heirs, personal representatives, successor or assigns) for the
benefit of said Remaining Land that connects to public rights of way, (v) that
all required notices have been given and consents obtained in connection with
the proposed Quest Partial Release, including the consent of any Guarantor, and
(vi) that expenses for the operation and maintenance of the Released Land and
the Remaining Land are segregated from each other or any costs associated with
common elements between Released Land and the Remaining are allocated between
Borrower and the owner of the Released Land pursuant to a written agreement that
is reasonably acceptable to Lender.

 

(b)          Upon Lender’s or Borrower’s request, if the same is required for
the Remaining Land to be managed and operated in the same manner as prior to the
release of the Released Land or, if the same is required or desirable for the
construction or operation of the Released Land, Borrower shall cause to be
recorded a reciprocal easement agreement or declaration of reciprocal easements
providing reciprocal rights of parking, ingress, egress and other matters as may
be required by Lender or Borrower, between and across the Released Land and the
Remaining Land, such reciprocal easement agreement or declaration to be in form
and substance reasonably satisfactory to Lender and, in connection with which,
Lender agrees to subordinate its lien securing the Loan;

 

(c)           Borrower and Quest shall enter into an amendment of the Quest
Lease reasonably acceptable to Lender, which amendment shall, among other
things, modify the description of the premises demised thereunder to include
only the Remaining Land and the improvements thereon and remove any further
rights of expansion of such Tenant (or otherwise confirming that Quest has no
further rights of expansion) with respect to the Remaining Land and a separate
lease shall be entered into between Quest or its affiliate and the transferee of
the Released Land with respect to the Released Land;

 

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(d)          Borrower shall submit to Lender, not less than ten (10) days prior
to the date of such Quest Partial Release, a release of lien (and related Loan
Documents) for the Released Land for execution by Lender. Such release shall be
in a form appropriate in the jurisdiction in which the Released Land is located
and shall contain standard provisions, if any, protecting the rights of Lender;
and

 

(e)          Borrower shall deliver an endorsement to Lender’s title policy at
Borrower’s expense (not to exceed an amount equal to $1,500) insuring the
priority of the Security Instrument as a first lien (subject to Permitted
Encumbrances) on the Remaining Land (to be properly legally described) in
accordance with all the provisions of the title policy (and updating the title
policy with no additional title matters), together with an updated title search
indicating that the Remaining Land is free from all liens, claims and other
encumbrances not previously approved by Lender other than Permitted
Encumbrances.

 

Notwithstanding the provisions of this Section 2.6.3, if the Loan or any portion
thereof is included in a REMIC Trust and, immediately following a release
pursuant to this Section 2.6.3, the Loan to Value Ratio (such value to be
determined, in Lender’s reasonable discretion, by any commercially reasonable
method permitted to a REMIC Trust and which shall exclude the personal property
or going concern value, if any) is greater than 125%, Lender may, in its sole
discretion, require that either (i) the principal balance of the Loan must be
paid down by a “qualified amount” as that term is defined in IRS Revenue
Procedure 2010-30 or (ii) Borrower shall 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) stating that the Quest 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. Except as may be required pursuant to the immediately
preceding sentence, Borrower shall not be required to make any prepayment of the
Loan in connection with the Quest Partial Release; provided, however, that
Borrower agrees to pay or reimburse Lender for all out-of-pocket expenses
reasonably incurred by Lender in connection with the Quest Partial Release
(including reasonable out-of-pocket attorneys’ fees, title insurance costs and
recording costs).

 

Borrower covenants that it shall not commence construction on or with respect to
the Outparcel Expansion or enter into any covenant related thereto which is not
cancelable without penalty prior to the consummation of the Quest Partial
Release in accordance with this Section 2.6.3 and any such actions taken by
Borrower shall constitute an immediate Event of Default without any further
notice from Lender.

 

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.

 

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(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 two (2) Business Days 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.

 

(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.

 

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(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 reasonably 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.

 

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.

 

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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.

 

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.

 

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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 in writing 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;
(b) the validity or enforceability of the Security Instruments; (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.

 

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.

 

4.1.6       Title. Borrower has 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.

 

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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).

 

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)
assuming the counter party is not a governmental plan, 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.

 

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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.

 

4.1.12     Condemnation. Except as disclosed in the separate zoning report for
each Individual Property delivered to Lender in connection with the closing of
the Loan, 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.

 

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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, PACE Liens 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.

 

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 Affiliate of Borrower, has
done, by act or omission, anything which would impair the coverage of any of the
Policies, and to Borrower’s knowledge no 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
office, federal express distribution center, airport hangar and industrial
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.

 

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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
or are Permitted Encumbrances.

 

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 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.

 

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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.

 

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.

 

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 (in writing)
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;

 

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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.

 

(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; Patriot Act and Similar Acts. 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. No Borrower nor Guarantor
nor any partner or officer, director or employee of any Borrower or Guarantor
nor member of such partner nor any other owner of a direct or indirect interest
in any Borrower or Guarantor (1) is listed on any Government Lists, (2) is a
person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC or in any enabling legislation or other Presidential Executive Orders in
respect thereof, (3) has been previously indicted for or convicted of any felony
involving a crime or crimes of moral turpitude or for any Patriot Act Offense,
(4) has engaged in any activity or conduct that would breach any Anti-Corruption
Laws or Anti-Money Laundering Laws, (5) is currently under investigation by any
Governmental Authority for alleged criminal activity or (6) is a Sanctioned
Person. Each Borrower has instituted and maintains policies and procedures
designed to cause compliance with Anti-Corruption Laws and Anti-Money Laundering
Laws. No part of the proceeds of the Loan will be used, directly or indirectly,
in violation of Sanctions or for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
Notwithstanding the foregoing, the representations in this Section 4.1.35 with
respect to the direct or indirect owners of Borrower and Guarantor are limited
to Borrower’s knowledge solely as it applies to direct or indirect holders of
publicly traded shares in either (x) REIT or (y) any other holder of a direct or
indirect in Borrower or Guarantor, in each case, that constitute less than 20%
of the equity interests in such entity.

 

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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.

 

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.

 

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

 

(a)           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)           Intentionally omitted;

 

(c)            Intentionally omitted;

 

(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

 

(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.

 

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
until the earlier (a) acquisition of title to the Property(ies) by any Person
(other than Lender, its successors and assigns) as a result of a foreclosure
sale, or (b) 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 1 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 (A) as is required in the proceeding, or (B) 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.

 

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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.

 

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 2020 (for the fiscal year ending December 31, 2019),
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 REIT,
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 REIT to furnish to Lender annually, within one hundred (100) days
following the end of each of Fiscal year of REIT, independent certified public
accountant audited financial statements (10-K).

 

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(c)           Commencing with the end of the third calendar quarter of 2019 (for
the items required below related to the third calendar quarter of 2019),
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) 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 upon written request from Lender, Borrower shall
furnish, or cause to be furnished, to Lender on or before thirty (30) 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

 

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(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.

 

(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, while a Cash Sweep Period exists, 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 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.

 

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(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.

 

(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 the REIT 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 request such certificates
more frequently than two (2) times in any calendar year.

 

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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.

 

5.1.17     Intentionally Omitted.

 

5.1.18     Intentionally Omitted.

 

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)           Borrower hereby represents and warrants that Borrower has (i)
delivered to Lender a true and complete copy of (w) the Asbestos Containing
Materials Operations and Maintenance Program dated August 2, 2019 prepared by
Nova Group, GBC with respect to Individual Property located at 1010 N. St.
Mary’s Street, San Antonio, Texas 78215 and owned by ARC ATSNTTX001, LLC (the
“AT&T O&M Program”), (x) the Asbestos Containing Materials Operations and
Maintenance Program dated April 26, 2019 prepared by Nova Group, GBC with
respect to the Individual Property located at 4343 Wyoming Ave., Dearborn,
Michigan 48126 and owned by ARG UPDBNMI001, LLC (the “UP Central Leasing O&M
Program”), (y) the Asbestos Containing Materials Operations and Maintenance
Program dated May 13, 2019 prepared by Nova Group, GBC with respect to the
Individual Property located at 909 East State Road 54 Bloomfield, Indiana 47424
and owned by ARG MT2PKSLB001, LLC (the “Metal Tech O&M Program”), and (z) the
Asbestos Containing Materials Operations and Maintenance Program dated April 1,
2019 prepared by Nova Group, GBC with respect to the Individual Property located
at 317 E. Roy Furman Highway, Waynesburg, Pennsylvania 15370 and owned by ARG
EQWBGPA001, LLC (the “EQT O&M Program” and, together with the AT&T O&M Program,
the UP Central Leasing O&M Program and the Metal Tech O&M Program, collectively,
the “O&M Program”), and (ii) as of the date hereof complied in all respects with
the O&M Program. Borrower hereby covenants and agrees that, during the term of
the Loan, including any extension or renewal thereof, Borrower shall comply in
all respects with the terms and conditions of the O&M Program.

 

(d)          Borrower shall, no later than November 1, 2019, (i) conduct a
baseline environmental assessment (“BEA”) with respect to the Individual
Property located at 4343 Wyoming Ave., Dearborn, Michigan 48126 and owned by ARG
UPDBNMI001, LLC (the “UP Central Property”), in accordance with all requirements
of the Michigan Department of Environment Quality, Great Lakes, and Energy (the
“EGLE”), and submit such BEA to the EGLE, (ii) prepare a “due care plan” in
compliance with all requirements of the EGLE for the UP Central Property (“Due
Care Plan”) and (iii) provide evidence reasonably satisfactory to Lender of
Borrower’s satisfaction of each the foregoing requirements (which evidence may
include a date-stamped “received” version of the BEA evidencing submission of
the BEA to, and receipt of the BEA by, the EGLE), together with copies of the
BEA and Due Care Plan. In the event that the EGLE requires further actions or
controls following its receipt of the BEA (including by rejecting the BEA
submitted by Borrower), Borrower shall thereafter comply in a timely manner with
all actions required by the EGLE to obtain a “No Further Action Letter” or
similar closure letter from the EGLE, and promptly thereafter, deliver to Lender
evidence of Borrower’s compliance with the foregoing. Borrower shall at all
times maintain all engineering controls (including with respect to ground cover,
vapor mitigation, inspection and monitoring) and institutional controls
(including land use restrictions) required by the EGLE and the Due Care Plan and
otherwise comply with all requirements of the EGLE with respect to the
protection of human health and the environment. Within ten (10) Business Days of
receipt, Borrower shall provide to Lender the “Acknowledgement of Receipt of
BEA” letter or similar letter received from the EGLE evidencing the EGLE’s
acknowledgement of receipt of the BEA. In the event that Lender shall exercise
any of its right or remedies under the Loan Documents with respect to the UP
Central Property and, in connection therewith, shall conduct or submit a BEA to
the EGLE, Borrower shall pay all reasonable out-of-pocket costs and expenses
incurred by Lender in connection therewith.

 

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(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.

 

5.1.20     Leasing Matters. Any Leases with respect to the Property written
after the date hereof, for more than 18,000 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 in connection with
a unilateral right of a Tenant set forth in such Tenant’s Lease that does not
require Borrower’s approval, 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 18,000
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.

 

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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.

 

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 (any of the following,
“Acceptable Security”): (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 the provisions of Section 5.1.21(a) Borrower
agrees that in the event that Borrower shall receive from Quest an “Expansion
Notice” (as defined in the Quest Lease) pursuant to Article 27 of the Quest
Lease requesting that Borrower expand the building located on the Quest Property
by constructing an addition to or other contiguous expansion of the existing
building located on the Quest Property (the “Quest Expansion”), then Borrower
shall, within five (5) Business Days of its receipt of such Expansion Notice,
provide written notice to Lender of its receipt of such Expansion Notice,
together with a copy of such Expansion Notice and all other information
delivered by Quest to Borrower with the Expansion Notice. Following its receipt
of an Expansion Notice relating to a Quest Expansion (but not an Outparcel
Expansion), Borrower shall not, without the prior written consent of Lender in
its reasonable discretion, (i) make an election under the Quest Lease or
otherwise agree (in writing or otherwise) to either (x) construct the Quest
Expansion (either by or on behalf of Borrower) or (y) not to proceed to
construct the Quest Expansion or (ii) advise Quest of Borrower’s approval or
disapproval of plans and specifications for the Quest Expansion or any
construction contract for the Quest Expansion or provide any proposal for an
increase in fixed rent under the Quest Lease. Either Borrower (if the Quest
Expansion is being completed by or on behalf of Borrower, including by an
Affiliate of Borrower) or Quest (if the Quest Expansion is being completed by or
on behalf of such Tenant) shall, prior to the commencement of construction of
all or any part of the Quest Expansion, deliver to Lender any of the following:
(A) as security for the performance of, and the payment of all amounts to be
incurred in connection with, the Quest Expansion and as additional security for
Borrower’s obligations under the Loan Documents, Acceptable Security; (B) a
completion guaranty, in form and substance reasonably acceptable to Lender, from
Guarantor guaranteeing full payment and performance of all of the work
contemplated by the Quest Expansion; or (C) provided that Quest Diagnostics
Incorporated (x) then remains as the guarantor of all of the Tenant’s payment
and performance obligations under the Quest Lease and (y) then has a senior
unsecured debt rating of at least “BBB” by S&P and the equivalent of such rating
by each other Rating Agency that has issued such a rating, a completion
guaranty, in form and substance reasonably acceptable to Lender, from Quest
Diagnostics Incorporated guaranteeing full payment and performance of all of the
work contemplated by the Quest Expansion. Any such Acceptable Security delivered
to Lender shall be in an amount equal to the total cost to complete the Quest
Expansion, as reasonably estimated by Lender, and, in the event that Borrower or
Quest fails to pay any sums due in connection with the Quest Expansion (subject
to the right to contest such sums), Lender may apply such Acceptable Security
from time to time at the option of Lender to pay for the costs of the Quest
Expansion. If Borrower has provided Acceptable Security in accordance with this
Section 5.1.21(b) and at any time prior to completion of the Quest Expansion, in
Lender’s reasonable judgment, the cost of completing all remaining work
contemplated by the Quest Expansion that remains unpaid at the time in question
exceeds the aggregate balance of such Acceptable Security held by Lender
pursuant to this Section 5.1.21(b), then Borrower shall, within ten (10)
Business Days’ after receipt of written notice from Lender of such deficiency,
deposit with Lender additional Acceptable Security in the amount of such
deficiency. If the Quest Expansion shall be completed by or on behalf of
Borrower pursuant to the Quest Lease, then Borrower agrees that all work to be
performed and all obligations (other than any direct obligation of Borrower to
(A) Quest under the Quest Lease and (B) Borrower’s Construction Affiliate (as
hereinafter defined)) to be incurred (including all construction and other
agreements entered into) in connection therewith shall be performed and incurred
by an Affiliate of Borrower (“Borrower’s Construction Affiliate”) that is not a
Borrower hereunder. If the Quest Expansion shall be completed by or on behalf of
Quest pursuant to the Quest Lease, then Lender shall not unreasonably withhold,
condition or delay its consent to a ground lease between Borrower, as landlord,
and Quest, as tenant, with respect to the land upon which the Quest Expansion
shall be located. All plans and specifications required in connection with the
Quest Expansion and the schedule for the projected progress of the completion of
the Quest Expansion shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by Lender
(the “Construction Consultant”), in each event acting in a reasonable manner.
The identity of the contractors, subcontractors and materialmen engaged in the
Quest Expansion, as well as the contracts under which they have been engaged,
shall be subject to prior review and approval by Lender and the Construction
Consultant, in each event acting in a reasonable manner. Prior to the
commencement of the Quest Expansion, Lender shall have received a copy of any
license, permit or other approval by or from any Governmental Authority required
in connection with the Quest Expansion and evidence that the same are in full
force and effect. From time to time during the performance of the Quest
Expansion, Borrower shall deliver to Lender such evidence (including, but not
limited to, architectural, engineering or environmental reports) as Lender shall
reasonably request that all work that has theretofore been completed has been
completed in a good and workmanlike manner and in accordance with all Legal
Requirements, the plans and specifications approved by Lender and this Agreement
and that all costs and expenses that are then due and payable in connection with
the Quest Expansion have been paid for (which evidence shall include invoices
and lien waivers from the general contractor). Lender or its Construction
Consultant shall have the right from time to time (but not more frequently than
once per month) to verify the performance of the Quest Expansion (by an
inspection conducted at Borrower’s expense (not to exceed $10,000 per month).
All reasonable out-of-pocket costs and expenses incurred by Lender in connection
with the Quest Expansion, including reasonable out-of-pocket counsel fees and
disbursements and the Construction Consultant’s fees, shall be paid by Borrower.

 

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Notwithstanding anything to the contrary contained herein, whenever Lender’s
approval or consent is required pursuant to the provisions of this Section
5.1.21(b) or Section 2.6.3, Lender shall respond within fifteen (15) days after
Lender’s receipt of Borrower’s written request for such approval or consent.
Such request shall contain a legend clearly marked in not less than fourteen
(14) point bold face type, underlined, in all capital letters stating “FIRST
NOTICE: LENDER’S RESPONSE IS REQUIRED WITHIN FIFTEEN (15) DAYS OF RECEIPT OF
THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED
AND LENDER. FAILURE TO RESPOND TO THIS REQUEST WITHIN FIFTEEN (15) DAYS MAY
RESULT IN THE REQUEST BEING DEEMED APPROVED”. If Lender fails to respond to such
request within fifteen (15) days, and Borrower sends a second request containing
a legend clearly marked in not less than fourteen (14) point bold face type,
underlined, in all capital letters stating “SECOND AND FINAL NOTICE: LENDER’S
RESPONSE IS REQUIRED WITHIN FIVE (5) DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO
THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER. IF YOU FAIL TO
PROVIDE A SUBSTANTIVE RESPONSE (E.G., APPROVAL, DENIAL OR REQUEST FOR
CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR APPROVAL IN WRITING
WITHIN FIVE (5) DAYS, YOUR APPROVAL SHALL BE DEEMED GRANTED”, Lender shall be
deemed to have approved or consented to the matter in question if Lender fails
to respond to such second written request before the expiration of such five (5)
day period.

 

5.1.22     Operation of Property. (a) Borrower shall cause each Individual
Property 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.

 

(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.

 

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5.1.23     Embargoed Person; Compliance with Patriot Act and Similar Acts. (a)
Borrower has instituted procedures to insure that at all times throughout the
term of the Loan, including after giving effect to any Transfers of direct or
indirect interests in Borrower permitted pursuant to the Loan Documents
(excluding, however, any direct or indirect holder of publicly traded shares in
either (x) REIT or (y) any other holder of a direct or indirect in Borrower or
Guarantor, in each case, that owns less than a 20% interest in such entity), (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.

 

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

 

(c)           At all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents, no
Borrower nor Guarantor nor any partner in any Borrower or Guarantor nor member
of any such partner nor any other owner of a direct or indirect interest in any
Borrower or Guarantor (excluding, however, any direct or indirect holder of
publicly traded shares in either (x) REIT or (y) any other holder of a direct or
indirect in Borrower or Guarantor, in each case, that owns less than a 20%
interest in such entity) (i) shall be listed on any Government Lists, (ii) shall
be a person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC or in any enabling legislation or other Presidential Executive Orders in
respect thereof, (iii) shall have been previously indicted for or convicted of
any felony involving a crime or crimes of moral turpitude or for any Patriot Act
Offense or (iv) shall be under investigation by any Governmental Authority for
alleged criminal activity.

 

(d)           At all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents,
(i) none of the funds or other assets of any Borrower or Guarantor, any partner
in any Borrower or Guarantor, any member of any such partner or any other owner
of a direct or indirect interest in any Borrower or Guarantor (excluding,
however, any direct or indirect holder of publicly traded shares in either (x)
REIT or (y) any other holder of a direct or indirect in Borrower or Guarantor,
in each case, that owns less than a 20% interest in such entity) shall
constitute property of, or shall be beneficially owned, directly or indirectly,
by any Person that is subject to Sanctions, (ii) none of any Borrower or
Guarantor, any partner in any Borrower or Guarantor, any member of any such
partner or any other owner of a direct or indirect interest in any Borrower or
Guarantor (excluding, however, any direct or indirect holder of publicly traded
shares in either (x) REIT or (y) any other holder of a direct or indirect in
Borrower or Guarantor, in each case, that owns less than a 20% interest in such
entity) shall be a Sanctioned Person, (iii) no Sanctioned Person shall have any
interest of any nature whatsoever in any Borrower or Guarantor, any partner in
any Borrower or Guarantor, any member of any such partner or any other owner of
a direct or indirect interest in any Borrower or Guarantor (excluding, however,
any direct or indirect holder of publicly traded shares in either (x) REIT or
(y) any other holder of a direct or indirect in Borrower or Guarantor, in each
case, that owns less than a 20% interest in such entity) with the result that
the investment in any Borrower or Guarantor, any partner in any Borrower or
Guarantor, any member of any such partner or any other owner of a direct or
indirect interest in any Borrower or Guarantor would be prohibited by law or the
Loan would be in violation of law, and (iv) none of the funds of any Borrower or
Guarantor, any partner in any Borrower or Guarantor, any member of any such
partner or any other owner of a direct or indirect interest in any Borrower or
Guarantor (excluding, however, any direct or indirect holder of publicly traded
shares in either (x) REIT or (y) any other holder of a direct or indirect in
Borrower or Guarantor, in each case, that owns less than a 20% interest in such
entity) shall be derived from any unlawful activity with the result that the
investment in Borrower or Guarantor, any partner in any Borrower or Guarantor,
any member of any such partner or any other owner of a direct or indirect
interest in any Borrower or Guarantor would be prohibited by law or the Loan
would be in violation of law.

 

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(e)       No portion of the proceeds of the Loan will be used by Borrower or
Guarantor (i) in violation of Anti-Corruption Laws or Anti-Money Laundering
Laws, or (ii) for any payment, promise to pay, or authorization of any payment
(or giving of anything of value) to any governmental official or employee,
political party, official of a political party, candidate for political office
or anyone else acting in an official capacity, in order to obtain, retain or
direct business, or obtain any improper advantage, in violation of
Anti-Corruption Laws.

 

5.1.24     Intentionally Omitted.

 

5.1.25     Sprinkler Installation. Borrower shall use commercially reasonable
efforts to cause the Tenant under the AT&T Lease to perform and complete in a
good and workmanlike manner the installation of a sprinkler system (the “AT&T
Sprinkler Installation Work”) at the Individual Property located at 1010 N. St.
Mary’s Street, San Antonio, Texas 78215 and owned by ARC ATSNTTX001, LLC in
accordance with all Legal Requirements, including all laws and ordinances of the
City of San Antonio, Texas, and in accordance with, in within the time periods
(the “AT&T Sprinkler Installation Work Completion Deadlines”) set forth in, that
certain letter from AT&T to the City of San Antonio Development Services, a copy
of which is attached hereto as Schedule VIII. Borrower agrees to enforce, in a
commercially reasonable manner, the terms of the AT&T Lease, and exercise such
rights and remedies thereunder (other than termination of the AT&T Lease) as may
be reasonably necessary, in order to cause the Tenant under the AT&T Lease to
perform and complete the AT&T Sprinkler Installation Work in accordance herewith
and on or before the applicable AT&T Sprinkler Installation Work Completion
Deadlines. Borrower agrees to provide, at Lender’s request from time to time,
such information regarding the status of the performance and completion of the
AT&T Sprinkler Installation Work as Lender may reasonably request. Promptly
following each AT&T Sprinkler Installation Work Completion Deadline (or promptly
following the completion of all AT&T Sprinkler Installation Work to be completed
by each applicable AT&T Sprinkler Installation Work Completion Deadline),
Borrower shall deliver evidence of such completion reasonably satisfactory to
Lender.

 

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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 3%, 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, division or merger with or into any one or more
other business entities, (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. For purposes of compliance with this Section, Lender shall be
assumed to not be using ERISA “plan assets” in connection with the Loan.

 

(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);

 

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

 

(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 Section 2.6 or this Section 5.2.10, Borrower shall not nor shall any
Restricted Party 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 (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 to lease 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 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 Transfer of the
Property 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 reasonable 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, satisfy the Liquid Assets Threshold and Net Worth Threshold;

 

(v)           Transferee and 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 and Transferee’s Principals which is not
acceptable to Lender in its reasonable discretion;

 

(viii)       Transferee and Transferee’s Principals 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 each in form and substance substantially identical to
the Guaranty and Environmental Indemnity or in form otherwise reasonably
satisfactory to Lender, in all events with respect to liabilities arising from
and after the date of Transfer;

 

(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 and as otherwise reasonably
acceptable to Lender;

 

(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 or Guarantor who are limited partners or
members, as applicable, of Borrower or Guarantor as of the date of this
Agreement (each a “Current Owner”), and (ii) to immediate family members
(including without limitation, a spouse, parent, child (including step child)
and grandchild (including step grandchildren) (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 and without application of the fee set forth in Section
5.2.10(e)(i), so long as the following conditions are satisfied: (i) Following
the consummation of such Qualified Equityholder Transfer, such Qualified
Equityholder shall Control 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 with respect to liabilities arising from and after the date of
Transfer; (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 in form and substance substantially the same as
those opinions provided to Lender upon the closing of this Loan; (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)            Notwithstanding the provisions of this Section 5.2.10, Lender’s
consent shall not be required in connection with:

 

(a)           direct and/or indirect pledges, encumbrances, hypothecations and
grants of security interests of or in equity interests in Guarantor or any New
Parent Entity provided that any such pledge, encumbrance, hypothecation or grant
of a security interest is made to secure indebtedness of Guarantor or such New
Parent Entity, as applicable, and Guarantor or such other New Parent Entity, as
applicable, has substantial assets other than its direct or indirect interest in
the Properties and the repayment of such indebtedness is not specifically tied
to the cash flows of only the Properties; and

 

(b)           preferred equity investments in REIT, Guarantor or any New Parent
Entity, provided that REIT, Guarantor or such New Parent Entity, as applicable,
has substantial assets other than its direct or indirect interest in the
Properties;

 

and further provided, in each case, that any subsequent Transfer of any direct
or indirect ownership interests in a Borrower in connection with the exercise or
enforcement of any rights and remedies with respect to any transaction described
in clause (a) or (b) above (including, without limitation, (i) any acquisition
of all or any portion of any pledged equity interests by foreclosure in
accordance with applicable law or an assignment in lieu of foreclosure or (ii)
any acquisition of equity interests by the holder of a preferred equity
investment or the exercise of any rights of such holder to remove or replace any
managing member or nonmember manager of any Person in which a preferred equity
investment is made) shall not be permitted unless such Transfer of equity
interests is made to, and Borrower is thereafter Controlled by, a Qualified
Equityholder and all of the terms and conditions set forth in Section 5.2.10(h)
are satisfied or unless such Transfer is otherwise expressly permitted under
this Section 5.2.10.

 

(j)            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.

 

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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 the Full
Replacement Cost 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
(but in no event to exceed 5% of the Full Replacement Cost of the 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);

 

(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 not less than eighteen (18) months from the date
of casualty or loss; and (D) 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;

 

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(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;

 

(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;

 

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(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 (collectively referred to as “TRIPRA”),),
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, that
if TRIPRA or a similar or subsequent statute is not in effect, 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

 

(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 (but in no event
exceeding 5% of the Full Replacement Cost of the Property), 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: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.

 

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(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 and Property policies of Tenants obligated to insure Borrower’s
property, which will name Borrower as Loss Payee and Lender as Mortgagee and
Loss Payee, 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:

 

(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.

 

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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.

 

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 (without payment of Prepayment
Consideration) 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.

 

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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.

 

(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;

 

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(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 1.85:1.0 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
seventy five percent (75%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to seventy five percent (75%);

 

(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);

 

(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 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;

 

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(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.

 

(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.

 

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(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 is fifty percent (50%) complete and five
percent (5%) thereafter until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 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.

 

(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.

 

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(c)           All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 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.

 

(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)            Intentionally Omitted.

 

(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 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 6.4(b)(i)(C)(1) and Section 6.4(b)(i)(C)(2), or in (ii)
Section 6.4(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.

 

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ARTICLE VII - RESERVE FUNDS

 

Section 7.1            Required Repairs.

 

7.1.1       Deposits. Borrower shall perform or caused to be performed 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 or cause to be completed 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.”

 

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 either an Officers’
Certificate from Borrower or a certificate signed by an authorized officer of
the Tenant of the applicable Individual Property stating that all Required
Repairs to be funded by the requested disbursement have been completed and
stating that all such Required Repairs have been paid in full or will be paid in
full upon such disbursement. 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 with respect
to each item of Required Repairs.

 

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Section 7.2           Tax and Insurance Escrow Fund

 

7.2.1        Deposits. 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 Premiums, 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 of a completed Partial
Release, 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 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.

 

7.2.2       Deposits for Certain Taxes Suspended. (a) Notwithstanding the
provisions of Section 7.2.1 above, Borrower’s obligation to deposit into the Tax
and Insurance Escrow Fund the sums required to pay Taxes applicable to an
Individual Property is hereby suspended, provided that: (i) the Lease of the
applicable Tenant requires that such Tenant pay such Taxes directly, such Lease
remains in full force and effect and such Tenant pays all such Taxes prior to
the due date thereof; (ii) no Event of Default exists; (iii) Borrower shall
deliver to Lender copies of all bills for such Taxes within 30 days following
receipt of the same by Borrower; and (iv) Lender shall have received reasonably
satisfactory evidence that all such Taxes have been paid as and when required
pursuant to the terms and provisions of this Agreement.

 

(b)           If at any time any of the above conditions in Section 7.2.2(a)
shall be unfulfilled for a period of 30 days, or if Borrower requires any Tenant
to pay to Borrower monthly escrow payments for Taxes, then, immediately upon
notice from Lender, Borrower shall thereafter comply with all of the provisions
of Section 7.2.1 hereof (including, without limitation, the obligation to make
the specified deposits into the Tax and Insurance Escrow Fund required
thereunder).

 

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Section 7.3            Replacements and Replacement Reserve.

 

7.3.1       Replacement Reserve Fund. Borrower shall pay to Lender on each
Payment Date during the existence of a Cash Sweep Period, an amount equal to
$0.20 multiplied by the then existing aggregate net 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, the Replacement Reserve Monthly Deposit shall be reduced to be
an amount equal to $0.20 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, 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.”

 

7.3.2       Disbursements from Replacement Reserve Account. (a) 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 the Rollover Reserve Fund, the Major
Tenant Rollover Reserve Fund or the Required Repair Fund.

 

(b)           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) for
disbursements in excess of $250,000, 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 search
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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(c)            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 Replacement
Reserve Funds shall be promptly disbursed to Borrower. Any Replacement Reserve
Funds remaining after the Debt has been paid in full shall be promptly disbursed
to Borrower

 

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.

 

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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 on
each Payment Date during the existence of a Cash Sweep Period, an amount equal
to $1.00 multiplied by the then existing aggregate net 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”). Notwithstanding the foregoing, the Rollover Reserve Monthly
Deposit on each Payment Date after the occurrence of a Lease Rollover Trigger
Event until the completion of the applicable Lease Rollover Cure Event shall be
all Excess Cash Flow. In the event of a Partial Release, the Rollover Reserve
Monthly Deposit shall be reduced to be an amount equal to $1.00 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, 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”); excepting, however, any Lease
Termination Payments related to a Major Tenant Lease. Notwithstanding the
aforementioned, deposits to the Rollover Reserve Fund shall not cause the
aggregate amount of the Rollover Reserve Fund to exceed $6,000,000.00 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. In lieu of making the Rollover
Reserve Monthly Deposits as required hereunder, Borrower shall be allowed to
deposit with Lender an unconditional irrevocable letter of credit (the “Rollover
Reserve Letter of Credit”) in an amount initially equal to (a) if such Rollover
Reserve Letter of Credit is deposited with Lender prior to the third Payment
Date occurring during the existence of a Cash Sweep Period, $1.00 multiplied by
the then existing aggregate net leasable area of the Property, divided by 4, and
(b) if such Rollover Reserve Letter of Credit is deposited with Lender after the
third Payment Date occurring during the existence of a Cash Sweep Period, the
aggregate amount of all Rollover Reserve Funds then held by Lender (which
Rollover Reserve Funds will be disbursed to Borrower upon receipt of the
Rollover Reserve Letter of Credit). During the existence of a Cash Sweep Period,
on every third Payment Date occurring after the date the Rollover Reserve Letter
of Credit is deposited with Lender until the face amount of the Rollover Reserve
Letter of Credit is equal to the Rollover Reserve Cap, Borrower shall cause the
face amount of the Rollover Reserve Letter of Credit to be increased by an
amount equal to $1.00 multiplied by the then existing aggregate net leasable
area of the Property, divided by 4. In no event shall any such increase cause
the face amount of the Rollover Reserve Letter of Credit to be larger than the
Rollover Reserve Cap. Borrower shall cause the Rollover Reserve Letter of Credit
to be reissued or amended within ten (10) days following each such recalculation
to reflect the increased amount thereof. Such Rollover Reserve Letter of Credit
shall be 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 Rollover Reserve Letter of Credit. The Rollover
Reserve 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 therefor, 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 Rollover Reserve Letter of Credit then held by
Lender hereunder, Borrower shall deposit with Lender a replacement Rollover
Reserve 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 Rollover Reserve 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 Rollover Reserve Account. The Rollover Reserve 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 Rollover Reserve 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 Rollover Reserve Letter
of Credit, and that Borrower shall look solely to the transferee with respect to
all matters relating to the Rollover Reserve Letter of Credit. In the event that
all then existing Cash Sweep Events have been cured during a period wherein
Lender is in possession of the Rollover Reserve Letter of Credit, Lender will
promptly return the Rollover Reserve Letter of Credit to Borrower within five
(5) Business Days following Lender’s acceptance of Borrower’s cure.

 

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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; provided, however, that no disbursements for TILC
Obligations related to the Major Tenant Premises of any Major Tenant that is the
subject of a Major Tenant Trigger Event shall be made during any time that the
balance of Major Tenant Rollover Reserve Account is greater than zero. 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 TILC Obligations, 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) for disbursements in excess of
$250,000, 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 search 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 a Manager Trigger Event, Borrower shall
deposit or cause to be deposited 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.”

 

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 promptly shall be
disbursed to Borrower. Any Excess Cash Flow Reserve Funds remaining after the
Debt has been paid in full shall be promptly disbursed to Borrower.

 

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.

 

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(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.

 

Section 7.7           Major Tenant Rollover Reserve.

 

7.7.1       Deposits to Major Tenant Rollover Reserve Fund. During a Cash Sweep
Period caused by a Major Tenant Trigger Event, Borrower shall deposit or cause
to be deposited with Lender all Excess Cash Flow to the extent provided herein
and in the Cash Management Agreement, which amounts shall be held by Lender for
tenant improvement and leasing commission obligations incurred in connection
with the leasing of any or all of the Major Tenant Premises. Amounts so
deposited, and, if applicable, any amount so deposited resulting from a draw on
the DSCR/Tenant Cure – Letter of Credit, shall hereinafter be referred to as the
“Major Tenant Rollover Reserve Fund” and the account to which such amounts are
held shall hereinafter be referred to as the “Major Tenant Rollover Reserve
Account”. Borrower shall also pay to Lender, for deposit into the Major Tenant
Rollover Reserve Account, all Lease Termination Payments in connection with or
related to any Major Tenant Lease. Notwithstanding the aforementioned, deposits
to the Major Tenant Rollover Reserve Fund shall not cause the aggregate amount
of the Major Tenant Rollover Reserve Fund to exceed the then applicable Major
Tenant Rollover Reserve Cap on any Payment Date and accordingly, to the extent
any such required deposit would result in the aggregate amount of Major Tenant
Rollover Reserve Funds in the Major Tenant Rollover Reserve Account exceeding
the Major Tenant Rollover Reserve Cap, such deposit shall be decreased by an
amount equal to such excess.

 

7.7.2       Withdrawal of Major Tenant Rollover Reserve Fund. Provided no Event
of Default hereunder exists and is then continuing, Lender shall make
disbursements from the Major Tenant Rollover Reserve Fund for TILC Obligations
incurred by Borrower in connection with the leasing of any Major Tenant Premises
using the same disbursement requirements and procedures as set forth herein for
disbursements from the Rollover Reserve Fund. Additionally, so long as no Event
of Default or other uncured Cash Sweep Event then exists, upon the occurrence of
a Cash Sweep Event Cure with respect to all then existing Major Tenant Trigger
Events (but excepting a Cash Sweep Event Cure based upon the Major Tenant
Rollover Reserve Funds being equal to the Major Tenant Rollover Reserve Cap),
any funds in the Major Tenant Rollover Reserve Account shall be disbursed to
Borrower. Any Major Tenant Rollover Reserve Funds remaining after the Debt has
been paid in full shall be paid to Borrower.

 

Section 7.8            Intentionally Omitted.

 

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”):

 

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(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 (III)
seeking any division of any of its assets and liabilities amongst one or more
new or existing entities pursuant to any applicable law including, without
limitation and if applicable, Section 18-217 of the Delaware Limited Liability
Company Act; 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 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;

 

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(xiv)         if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement or the other Loan Documents 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;

 

(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 investors or prospective investors or the
Rating Agencies in connection with any such Securitization. Lender shall have
the right to provide to investors or 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, at no cost or expense to
Borrower, 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,
Note A-2, Note A-3, Note A-4, Note A-5, Note A-6, Note A-7 and Note A-8 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 therefor:

 

(A)          Borrower shall execute and deliver a replacement for each of Note
A-1, Note A-2, Note A-3, Note A-4, Note A-5, Note A-6, Note A-7 and Note A-8
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, Note A-2,
Note A-3, Note A-4, Note A-5, Note A-6, Note A-7 and Note A-8 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 cost or
expense 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.

 

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(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.

 

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, without limitation, the fees and expenses of the
Rating Agencies, attorneys’ fees, mortgage recording tax and title insurance
premiums) 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 by or on behalf of Borrower 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;

 

(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; or

 

(xvi)         the failure of the AT&T Sprinkler Installation Work to be
completed in accordance herewith on or before the applicable AT&T Sprinkler
Installation Work Completion Deadlines.

 

(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.

 

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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, Note A-3, Note A-4, Note A-5, Note A-6, Note A-7 and Note
A-8 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-2, Note A-3, Note A-4, Note A-5, Note A-6, Note
A-7 and Note A-8, 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.

 

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 (but
excluding the survival period set forth in Section 6 of the Environmental
Indemnity, which survival period only shall apply to liability under the
Environmental Indemnity). 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, AND (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.

 

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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.

 

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

 

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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: GNL
Counsel Facsimile No.: 816-753-1536

 

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.

 

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.

 

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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.

 

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.

 

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(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.

 

(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.

 

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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. All news releases, publicity or advertising by Lender or Servicer or
any of their respective Affiliates through any media intended to reach the
general public which refers to the Loan Documents or the financing evidenced by
the Loan Documents, to Borrower, Guarantor or any of their Affiliates shall be
subject to the prior written approval of Borrower in its reasonable discretion.

 

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.

 

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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.

 

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 or Borrower 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, each of Lender and
Borrower for itself and its Guarantor and each of their 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 Section
10.23 shall be binding upon and inure to the benefit of Borrower and Lender and
their respective successors and assigns forever.

 

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Section 10.24       Intentionally Omitted.

 

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.

 

Section 10.27      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 10.27 shall survive the repayment of the Loan and the termination of
this Agreement.

 

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Section 10.28       Joint and Several.

 

(a)           The parties executing this Agreement as “Borrower” acknowledge and
agree that such parties shall be referred to in this Agreement individually,
collectively, and interchangeably as “Borrower”. Unless specifically stated to
the contrary, the term “Borrower” as used in this Agreement, including, without
limitation, with respect to all representations, warranties and covenants, shall
include all parties comprising Borrower.

 

(b)           Each party comprising Borrower agrees that it is jointly and
severally liable for the prompt payment and performance of, all obligations
under this Agreement and all agreements under the Loan Documents (collectively,
the “Obligations”). Each party comprising Borrower waives all rights and
defenses arising out of an election of remedies by Lender, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for an obligation, has destroyed such party’s rights of subrogation and
reimbursement against any other Borrower by operation of Section 580d of the
California Code of Civil Procedure or otherwise. To the extent permitted by
applicable law, each party comprising Borrower further waives any right to a
fair value hearing under California Code of Civil Procedure Section 580a, or any
other similar law, to determine the size of any deficiency owing (for which such
party comprising Borrower would be liable hereunder) following a non-judicial
foreclosure sale. Without limiting the foregoing or anything else contained in
this Agreement, each party comprising Borrower waives all rights and defenses
that such party may have because the Loan is secured by real property. This
means, among other things:

 

(1)            that Lender may collect from such party without first foreclosing
on any real or personal property collateral pledged by any other Borrower; and

 

(2)            if Lender forecloses on any real property collateral pledged by
any other Borrower: (x) the amount of the Loan may be reduced only by the price
for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price; and (y) Lender may collect from
such party even if Lender, by foreclosing on the real property collateral, has
destroyed any right such party may have to collect from any other Borrower.

 

This paragraph is an unconditional and irrevocable waiver of any rights and
defenses that each party comprising Borrower may have because the Loan is
secured by real property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.

 

(c)            Each party comprising Borrower hereby agrees that it will not
enforce any of its rights of contribution or subrogation against any other party
comprising Borrower with respect to any liability incurred by it hereunder or
under any of the other Loan Documents, any payments made by it to Lender with
respect to any of the Obligations or any collateral security until such time as
all of the Obligations have been paid in full. Any claim which any party
comprising Borrower may have against any other party comprising Borrower with
respect to any payments to Lender are hereby expressly made subordinate and
junior in right of payment, including, without limitation as to any increases in
the Obligations arising under this Agreement, to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any party comprising Borrower, its debts or
its assets, whether voluntary or involuntary, all such Obligations shall be paid
in full in cash before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other Borrower.

 

124

 

 

(d)           Nothing contained in this Section shall limit the liability of any
party comprising Borrower to pay extensions of credit made directly or
indirectly to such party, Obligations relating to Letters of Credit issued to
support such party’s business, and all accrued interest, fees, expenses and
other related Obligations with respect thereto, for which such party shall be
primarily liable for all purposes hereunder.

 

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         Pennsylvania Law Provisions. The following provisions shall
apply to this Agreement to the extent that Pennsylvania law is deemed to govern
this Agreement, otherwise, the following shall be null and void.

 

(a)           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 11.3         Texas Law Provisions. The following provisions shall apply
to this Agreement to the extent that Texas law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

(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.

 

125

 

 

(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.

 

Section 11.4         Wyoming Law Provisions. The following provisions shall
apply to this Agreement to the extent that Wyoming law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

NONE.

 

Section 11.5         Indiana Law Provisions. The following provisions shall
apply to this Agreement to the extent that Indiana law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

(a)           If, pursuant to this Agreement, Borrower is liable to any Person
for payment of or reimbursement for attorneys fees, such fees shall include, but
not be limited to, reasonable, out-of-pocket 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.

 

(b)           For purposes of this Agreement, Borrower hereby expressly consents
to the appointment of a receiver, trustee, liquidator or conservator of the
Property.

 

Section 11.6          Intentionally Omitted.

 

Section 11.7         Georgia Law Provisions. The following provisions shall
apply to this Agreement to the extent that Georgia law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

(a)            This Agreement is made under Seal.

 

Section 11.8         Michigan Law Provisions. The following provisions shall
apply to this Agreement to the extent that Michigan law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

NONE.

 

Section 11.9         Ohio Law Provisions. The following provisions shall apply
to this Agreement to the extent that Ohio law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

NONE.

 

126

 

 

Section 11.10       Louisiana Law Provisions. The following provisions shall
apply to this Agreement to the extent that Louisiana law is deemed to govern
this Agreement, otherwise, the following shall be null and void.

 

NONE.

 

Section 11.11       Alabama Law Provisions. The following provisions shall apply
to this Agreement to the extent that Alabama law is deemed to govern this
Agreement, otherwise, the following shall be null and void.

 

NONE.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

127

 

 

Section 11.12      California Law Provisions. The following provisions shall
apply to this Agreement to the extent that California law is deemed to govern
this Agreement, otherwise, the following shall be null and void.

 

(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/ JT                          Borrower’s Initials

 

(c)           Without in any way limiting the generality of any provision of
this Agreement, to the full extent permitted by law, each party comprising
Borrower irrevocably and unconditionally waives any rights and benefits which
might otherwise be available to Borrower under California Civil Code Sections
2787 to 2855, inclusive, 2899 and/or 3433, and/or any successor sections.

 

 

 

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:       ARG CMGLTWY001, LLC,   ARG SSFSRIN001, LLC,   ARG EQWBGPA001,
LLC,   ARG HCCLHGA001, LLC,   ARG UPDBNMI001, LLC,   ARG CDNCNOH001, LLC,   ARG
MT2PKSLB001, LLC,   ARG HRTFTGA001, LLC,   ARC FELKCLA001, LLC,   ARG
EHBIRAL001, LLC,   ARC ATSNTTX001, LLC and   ARC SLSTCCA001, LLC,   each a
Delaware limited liability company

 

 

  By: /s/ James A. Tanaka     James A. Tanaka, 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/ Cynthia M. Milioto     Cynthia M. Milioto, Vice President

 

Signature Page to Loan Agreement

 

 

 

SCHEDULE I

 

(RENT ROLL)

   

 

 

SCHEDULE II

 

(REQUIRED REPAIRS - DEADLINES FOR COMPLETION)

 

 

 

SCHEDULE III

 

(ORGANIZATIONAL CHART OF BORROWERS)

 

   

 

 

SCHEDULE IV

 

(INDIVIDUAL PROPERTIES AND ALLOCATED LOAN AMOUNTS)

 

   

 

 

SCHEDULE V

 

INTENTIONALLY OMITTED

 

   

 

 

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. 10202952

 

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, other
Reserve] 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 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, other 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]

 

   

 

 

SCHEDULE VIII

 

(LETTER TO CITY OF SAN ANTONIO DEVELOPMENT SERVICES REGARDING COMPLETION OF AT&T
SPRINKLER INSTALLATION WORK)