Exhibit 10.16
 
FIXED RATE TERM LOAN AGREEMENT
 
between
 
MISSION WEST PROPERTIES, L.P. and
MISSION WEST PROPERTIES, L.P. I

each, an “Individual Borrower” and collectively, as “Borrower”
 
and
 
HARTFORD LIFE INSURANCE COMPANY and
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
 
collectively, as “Lender”
 
August 4, 2010
 
Hartford Loan No. BHM0J5QN8
 

 
 

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TABLE OF CONTENTS
 
                                                                                                                  Page

ARTICLE 1.
CERTAIN DEFINITIONS 
1

 
 
Section 1.1.
Certain Definitions 
1

 
 
Section 1.2.
General Construction 
12

 
 
Section 1.3.
Lender’s Discretion 
13

 
 
Section 1.4.
Knowledge of Borrower Parties 
13

 
ARTICLE 2.
LOAN TERMS 
14

 
 
Section 2.1.
The Loan 
14

 
 
Section 2.2.
Interest Rate; Late Charge 
15

 
 
Section 2.3.
Terms of Payment; Maturity Date 
15

 
 
Section 2.4.
Prepayment 
16

 
ARTICLE 3.
INSURANCE, CONDEMNATION, AND IMPOUNDS 
18

 
 
Section 3.1.
Insurance 
18

 
 
Section 3.2.
Use and Application of Insurance Proceeds 
22

 
 
Section 3.3.
Condemnation Awards 
28

 
 
Section 3.4.
Impounds 
29

 
ARTICLE 4.
LEASING MATTERS 
30

 
 
Section 4.1.
Representations and Warranties 
30

 
 
Section 4.2.
Lender’s Lease Approval Rights 
31

 
 
Section 4.3.
Covenants 
31

 
 
Section 4.4.
Tenant Estoppels 
32

 
 
Section 4.5.
Conflict with Assignment of Leases and Rents 
32

 
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES 
32

 
 
Section 5.1.
Organization and Power 
32

 
 
Section 5.2.
Validity of Loan Documents 
32

 
 
Section 5.3.
Liabilities; Litigation 
32

 
 
Section 5.4.
Taxes and Assessments 
33

 
 
Section 5.5.
Other Agreements; Defaults 
33

 
 
Section 5.6.
Compliance with Legal Requirements 
33

 
 
Section 5.7.
Location of Borrower 
34

 
 
Section 5.8.
ERISA 
34

 
 
ii

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TABLE OF CONTENTS
(continued)
                                                                                                                  Page
 
 
Section 5.9.
Margin Stock 
34

 
 
Section 5.10.
Tax Filings 
34

 
 
Section 5.11.
Solvency 
34

 
 
Section 5.12.
Full and Accurate Disclosure 
34

 
 
Section 5.13.
Property Conditions 
35

 
 
Section 5.14.
Terrorism and Anti-Money Laundering 
35

 
 
Section 5.15.
Financing Transaction 
35

 
 
Section 5.16.
Personal Property 
35

 
 
Section 5.17.
Additional Real Property 
35

 
 
Section 5.18.
Material Agreements 
35

 
ARTICLE 6.
FINANCIAL REPORTING; AUDITS 
36

 
 
Section 6.1.
Financial Statements 
36

 
 
Section 6.2.
Accounting Principles 
37

 
ARTICLE 7.
COVENANTS 
37

 
 
Section 7.1.
Due on Sale and Encumbrance; Transfers of Interests 
37

 
 
Section 7.2.
Taxes; Charges 
41

 
 
Section 7.3.
Alterations and Renovations 
42

 
 
Section 7.4.
Operation; Maintenance 
42

 
 
Section 7.5.
Taxes on Security 
43

 
 
Section 7.6.
Compliance with Loan Documents; Further
Assurances                                                                                                                                                                                                                                                                                                                                                                                                                                                  
43

 
 
Section 7.7.
Estoppel Certificates 
44

 
 
Section 7.8.
Notice of Certain Events 
44

 
 
Section 7.9.
Indemnification 
44

 
 
Section 7.10.
Property Management 
44

 
 
Section 7.11.
Material Agreements 
46

 
 
Section 7.12.
Intentionally Omitted 
46

 
 
Section 7.13.
ERISA 
46

 
 
Section 7.14.
Appraisal 
46

 
 
Section 7.15.
Release of Collateral 
46

 
 
Section 7.16.
Substitution of Collateral 
48

 
 
iii

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TABLE OF CONTENTS
(continued)
                                                                                                                 Page
 
ARTICLE 8.
EVENTS OF DEFAULT 
50

 
 
Section 8.1.
Defaults 
51

 
 
Section 8.2.
Remedies 
54

 
 
Section 8.3.
Lender’s Right to Perform the Obligations 
55

 
ARTICLE 9.
MISCELLANEOUS 
55

 
 
Section 9.1.
Notices 
55

 
 
Section 9.2.
Amendments and Waivers 
56

 
 
Section 9.3.
Limitation on Interest 
56

 
 
Section 9.4.
Invalid Provisions 
56

 
 
Section 9.5.
Payment and Reimbursement of Expenses 
57

 
 
Section 9.6.
Approvals; Third Parties; Conditions 
57

 
 
Section 9.7.
Lender Not in Control; No Partnership 
58

 
 
Section 9.8.
Time of the Essence 
58

 
 
Section 9.9.
Successors and Assigns 
58

 
 
Section 9.10.
Servicing, Transfers, Assignments and Participations 
58

 
 
Section 9.11.
Replacement Documents 
59

 
 
Section 9.12.
Renewal, Extension or Rearrangement 
60

 
 
Section 9.13.
Waivers 
60

 
 
Section 9.14.
Cumulative Rights 
60

 
 
Section 9.15.
Exhibits and Schedules 
60

 
 
Section 9.16.
Titles of Articles, Sections and Subsections 
60

 
 
Section 9.17.
Promotional Material 
60

 
 
Section 9.18.
Survival 
60

 
 
Section 9.19.
Governing Law 
60

 
 
Section 9.20.
Entire Agreement 
61

 
 
Section 9.21.
Counterparts 
61

 
 
Section 9.22.
Obligations of Borrower, Joint and Several 
61

 
 
Section 9.23.
WAIVER OF PUNITIVE OR CONSEQUENTIAL DAMAGES 
61

 
 
Section 9.24.
WAIVER OF JURY TRIAL 
61

 
 
iv

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TABLE OF CONTENTS
(continued)
                                                                                                                
Page
 
ARTICLE 10.
LIMITATIONS ON LIABILITY 
61

 
 
Section 10.1.
Limitation on Liability 
61

 

 
v 

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LIST OF EXHIBITS AND SCHEDULES
 
Exhibit A-1 through A-5         -           Legal Description of each Property
 
Exhibit B                -           Closing Statement
 
Schedule 1                                                -           Allocated
Loan Amounts
 
Schedule 4.1                                             -           Rent Roll
 
Schedule 5.16                                           -           Personal
Property
 
Schedule 5.18                                           -           List of
Material Agreements
 

 
 
  vi
 

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Hartford Loan No. BHM0J5QN8
 
FIXED RATE TERM LOAN AGREEMENT
 
 
This FIXED RATE TERM LOAN AGREEMENT (this “Agreement”) is entered into as of
August 4, 2010 by and among MISSION WEST PROPERTIES, L.P. and MISSION WEST
PROPERTIES, L.P. I, each a Delaware limited partnership (each an “Individual
Borrower” and collectively, “Borrower”), and HARTFORD LIFE INSURANCE COMPANY and
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, each a Connecticut corporation
(together with their respective successors and assigns, collectively, “Lender”).
 
RECITALS:
 
 
WHEREAS, Borrower desires to obtain the Loan (as defined herein) from Lender;
and
 
 
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the conditions and terms of this Agreement and the other Loan
Documents,
 
 
NOW, THEREFORE, in consideration of the covenants set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree, represent and warrant
as follows:
 
 
ARTICLE 1.    
 

 
CERTAIN DEFINITIONS
 
Section 1.1. Certain Definitions.  As used herein, the following terms have the
meanings indicated:
 
“Affiliate” means, as to any Person, any other Person that directly or
indirectly (through one or more intermediaries) controls, is controlled by or is
under common control with the specified Person.  For purposes of this
definition, “Control” shall be deemed to exist if a Person possesses, directly
or indirectly, the power to direct or cause the direction of the management and
decision making policies of such other Person, whether through ownership of
voting securities, by contract, or otherwise.
 
“Allocated Loan Amount” means, for any Property, the Allocated Loan Amount set
forth on Schedule 1.
 
“Anti-Money Laundering Laws” means the USA Patriot Act of 2001, the Bank Secrecy
Act, as amended through the date hereof, Executive Order 13324 – Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism, together with all annexes thereto, as amended from
time to time, and other federal laws and regulations and executive orders
administered by the United States Department of the Treasury, Office of Foreign
Assets Control (“OFAC”) which prohibit, among other things, the engagement in
transactions with, and the provision of services to, certain foreign countries,
territories, entities
 
 
 
 

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and individuals (such individuals include specially designated nationals,
specially designated narcotics traffickers and other parties subject to OFAC
sanction and embargo programs), and such additional laws and programs
administered by OFAC which prohibit dealing with individuals or entities in
certain countries regardless of whether such individuals or entities appear on
any of the OFAC lists.
 
“Applicable Prepayment Fee” means a prepayment fee payable by Borrower to Lender
in an amount equal to:
 
(a) For any prepayment tendered (or deemed tendered) during the Lockout Period,
the Lockout Prepayment Fee;
 
(b) For any prepayment tendered (or deemed tendered) during the period from and
including the first Business Day following the expiration of the Lockout Period
through and including May 31, 2030, a prepayment fee equal to Standard Yield
Maintenance;
 
(c) For any prepayment tendered (or deemed tendered) during the period from and
including June 1, 2030 through and including the Scheduled Maturity Date, no
prepayment fee (including Standard Yield Maintenance) shall be payable in
connection with a prepayment.
 
“Application” means the Mortgage Loan Application dated June 15, 2010, submitted
by Carveout Indemnitor to Lender, as the same was modified (if at all) by the
Commitment (as defined in the Application).
 
“Assignment of Leases and Rents” means, collectively, each Assignment of Leases
and Rents, now or hereafter executed by any Borrower Party for the benefit of
Lender, which, collectively, convey to Lender an interest in the Leases and the
Rents, as more fully described therein.
 
“Assignment of Management Agreement” means, collectively, each Assignment of
Management Agreement and Subordination of Management Fees, now or hereafter
executed by any Borrower Party, and consented to by each Property Manager
thereto, for the benefit of Lender, which, collectively, convey to Lender an
interest in each Management Agreement as more fully described therein.
 
“Assignment of Property Documents” means, collectively, each Assignment of
Property Documents, now or hereafter executed by any Borrower Party for the
benefit of Lender, which, collectively, convey to Lender an interest in all
contracts, licenses, permits, agreements and warranties associated with the
ownership and operation of each Property, as more fully described therein.
 
“Assumption Fee” has the meaning ascribed to such term in Section 7.1(c).
 
“Assumption Request” has the meaning ascribed to such term in Section 7.1(c).
 
“Assumption Work Fee” has the meaning ascribed to such term in Section 7.1(c).
 
 
 
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“Authorized Representative” means, for any Person, an authorized executive
officer (which, for purposes of this Agreement, means a president, vice
president, secretary, treasurer, chief executive officer or chief operating
officer), member, manager or partner of such Person acting in a representative
(and not such Person’s individual) capacity, who is duly authorized by all
necessary action to bind Borrower contractually and whose responsibilities with
such Person require that he/she has knowledge relating to the subject matter of
the applicable certification or affidavit.
 
“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder.
 
“Borrower” shall have the meaning ascribed to such term in the preamble hereof.
 
“Borrower Party” or “Borrower Parties” means, individually and/or collectively,
Borrower, Carveout Indemnitor, any General Partner and their respective
Affiliates (including any Property Manager that is an Affiliate); provided,
however, that any Person who is an officer, director, shareholder, or employee
of Carveout Indemnitor or any General Partner shall be included as a Borrower
Party only to the extent that such Person is acting solely in such capacity as
an officer, director, shareholder, or employee.
 
“Business Day” means any day, other than a Saturday, Sunday, legal holiday or
any other day on which national banks in Hartford, Connecticut are authorized or
required by law to close for general banking business.
 
“Carveout Indemnitor” means Mission West Properties, Inc., a Maryland
corporation.
 
“Carveout Indemnity” means the Carveout Indemnity Agreement, dated as of the
Funding Date, and executed by Carveout Indemnitor to and for the benefit of
Lender.
 
“Casualty Consultant” has the meaning ascribed to such term in Section 3.2(e).
 
“Closing Affidavit” means the Closing Affidavit dated as of the Funding Date
executed by Borrower and Carveout Indemnitor to and for the benefit of Lender,
setting forth certain representations and warranties of Borrower and Carveout
Indemnitor as of the Funding Date.
 
“Closing Statement” means the closing statement attached as Exhibit B showing
total costs relating to the subject transaction and use of the Loan proceeds.
 
“Collateral” has the collective meaning ascribed to such term in the Mortgage.
 
“Collateral Substitution” has the meaning ascribed to such term in Section 7.16.
 
“Collateral Substitution Fee” has the meaning ascribed to such term in
Section 7.16.
 
“Contract Rate” means, as the context so requires, the non-default per annum
rate of interest accruing on the outstanding principal balance of the Loan as
set forth in Section 2.2(a).
 
 
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“Converted Treasury Yield” means the yield available, or if there is more than
one yield available, the average yields of United States Treasury non-callable
bonds and notes having a maturity date closest to (before, on, or after) the
Scheduled Maturity Date, as reported in the Wall Street Journal or similar
publication on the fifth (5th) Business Day preceding the date prepayment will
be made, converted to a monthly equivalent yield (the monthly “equivalent yield”
being the rate which, when compounded monthly, is equivalent to the selected
Treasury rate when compounded semi-annually).  The Converted Treasury Yield
shall be calculated by Lender and, absent manifest error, shall be deemed
conclusive.
 
“Debt” means, for any Person, without duplication:  (i) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for
the deferred purchase price of property for which such Person or its assets is
liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or
other credit facility for which such Person would be liable, if such amounts
were advanced under the credit facility, (iii) all amounts required to be paid
by such Person as a guaranteed payment, including guaranteed payments to
partners, members or other equity owners, or a preferred or special dividend,
including any mandatory redemption of shares or interests, (iv) all indebtedness
guaranteed by such Person, directly or indirectly, (v) all obligations under
leases that constitute capital leases for which such Person is liable, and (vi)
all obligations of such Person under interest rate swaps, caps, floors, collars
and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss.
 
“Debt Service” means the monthly payments of interest, principal and any other
scheduled payments due in connection with the Loan for the period of time in
question, but excluding escrows or reserves required pursuant to the terms of
the Loan Documents.
 
“Debt Service Coverage Ratio” means a quotient, expressed as a percentage, of
(i) projected Net Operating Income for the period in question, divided by (ii)
projected Debt Service to become due and payable for such period.  The Net
Operating Income and Debt Service shall be determined by Lender in the exercise
of its reasonable judgment.
 
“Default Rate” means the lesser of (i) the maximum rate of interest allowed by
applicable State law for commercial loans of this type, and (ii) four percent
(4%) per annum in excess of the Contract Rate.
 
“Demand Period” means a period of fifteen (15) days, commencing on the date a
written demand is issued by Lender and expiring at Lender’s close of business on
the fifteenth (15th) day following the date of said demand.
 
“Environmental Indemnity Agreement” means the Environmental Indemnity Agreement
dated as of the Funding Date, executed by Borrower and Carveout Indemnitor for
the benefit of Lender, and pertaining to environmental matters affecting the
Portfolio.
 
“Equipment” means all “equipment” as defined in the UCC, in which Borrower has
any right, title or interest, whether now owned or hereafter acquired, including
all of the following (regardless of how classified under the UCC):  all building
materials, construction materials,
 
 
-4-

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personal property constituting furniture, fittings, signage, computer equipment,
leasehold improvements, machinery, devices, interior improvements,
appurtenances, equipment, plant, fixtures, computers, electronic data processing
equipment, telecommunications equipment and other fixed assets now owned or
hereafter acquired by Borrower, all Proceeds (as defined in the UCC) thereof and
all additions to, substitutions for, replacements of or accessions to any of the
foregoing items and all attachments, components, parts (including spare parts)
and accessories, whether installed thereon or affixed thereto, all regardless of
whether the same are located at a Property or are located elsewhere (including
in warehouses or other storage facilities or in the possession of or on the
premises of a bailee, vendor or manufacturer) for purposes of manufacture,
storage, fabrication or transportation.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“Escrow Agent” means First American Title Insurance Company, responsible for the
consummation of the transaction contemplated by this Agreement pursuant to the
Escrow Instructions.
 
“Escrow Instructions” mean Lender’s written escrow instruction to Escrow Agent
relating to the consummation of the transaction contemplated by this Agreement.
 
“Event of Default” has the meaning ascribed to such term in Article 8.
 
“Funding Date” shall be considered the date that the proceeds of the Loan are
wired or delivered to the Escrow Agent, regardless of the date that the Escrow
Agent releases such funds to Borrower.
 
“GAAP” means generally accepted accounting principles in the United States of
America in effect as of the date of determination, in all cases, consistently
applied from year to year.
 
“General Partner” means, individually and/or collectively, Carveout Indemnitor
and any other Person who may at any time in the future, with Lender’s approval
(such approval not to be unreasonably withheld), become a general partner of any
Individual Borrower.
 
“Governmental Authority” means any court, board, agency, commission, office or
other authority of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence, claiming jurisdiction over the Collateral or any part thereof, or
any rights or remedies available to Lender under the Loan Documents, at law or
in equity.
 
“Impounds” has the meaning ascribed to such term in Section 3.4(a).
 
“Improvements” has the collective meaning ascribed to such term in the Mortgage.
 
“Individual Borrower” has the meaning ascribed to such term in the preamble
hereof.
 
“Insurance” has the meaning ascribed to such term in Section 3.1(a).
 
 
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“Insurance Premiums” has the meaning ascribed to such term in Section 3.1(b).
 
“Lease” or “Leases” have the collective meanings ascribed to such terms in the
Mortgage.
 
“Legal Requirements” means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting the Collateral 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, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any Borrower, at any time in force
affecting the Collateral or any part thereof, including any which may
(i) require repairs, modifications or alterations in or to any Property or any
part thereof or (ii) in any way limit the use and enjoyment of the Collateral.
 
“Lien” means any interest in or to, or claim against, the Collateral, securing
an obligation owed to, or evidencing a claim by, any Person other than the owner
of the subject Property, whether such interest or claim is based on common law,
statute or contract, including the lien or security interest arising from a deed
of trust, mortgage, assignment, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes.  The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting the subject
Property.
 
“Loan” means the loan in the aggregate principal amount of Forty Million Dollars
($40,000,000.00) to be funded by Lender to Borrower under and subject to this
Agreement, to be evidenced by the Note and to be secured by the Loan Documents.
 
“Loan Documents” means, collectively: (i) this Agreement, (ii) the Note, (iii)
the Mortgage, (iv) the Assignment of Leases and Rents, (v) the Assignment of
Property Documents, (vi) the Carveout Indemnity, (vii) the Environmental
Indemnity Agreement, (viii) the Closing Affidavit, (ix) Uniform Commercial Code
financing statements, (x) such assignments of management agreements, contracts
and other rights as may be requested by Lender, (xi) all other documents now or
hereafter executed by Borrower, Carveout Indemnitor or any other Person to
evidence or secure the payment of the Loan or the performance of the duties and
obligations under the documents described in the foregoing items (i) through
(x), including the Assignment of Management Agreement and including all
documents hereafter executed in connection with any Collateral Substitution,
(xii) the Application (provided that any inconsistency between the terms of the
Application and the terms of the Loan Documents shall be controlled by the terms
of the Loan Documents), and (xiii) all amendments, modifications, renewals,
restatements, extensions, substitutions and replacements of any of the foregoing
items.
 
“Loan to Value Ratio” means the ratio of (A) the outstanding balance of the
Loan, compared to (B) the aggregate of the then “as is” value of the Portfolio,
all as determined by Lender in the exercise of its reasonable judgment utilizing
commercially reasonable valuation standards and methodologies.
 
 
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“Lockout Period” means the period commencing on the Funding Date and ending on
August 31, 2012.
 
“Lockout Prepayment Fee” has the meaning ascribed to such term in Section
2.4(f).
 
“Major Damage Event” means any fire or other casualty to any Property or the
other Collateral, or any condemnation proceeding relating to any Property: (i)
for which the total cost to repair or restore, as determined in the reasonable
estimation of Lender after reasonable prior consultation with Borrower, will
exceed five percent (5.00%) of the Allocated Loan Amount associated with the
affected Property, and (ii) that occurs while an Event of Default exists.
 
“Major Lease” means any Lease (i) covering 65,000 square feet or more of space
within any Property (including any series of Leases to the Tenant or an
Affiliate of such Tenant covering in the aggregate 65,000 square feet or more of
space within the Portfolio), (ii) which includes a material modification
(meaning any material increase in the economic obligations of the “lessor” or
“landlord” under the Lease, any material diminution of the economic obligations
of the “lessee” or “tenant” under the Lease, or any material diminution in the
rights or protections afforded the “lessor” or “landlord” under the Lease) to
the standard form lease approved by Lender (such approval not to be unreasonably
withheld), (iii) with an initial term of less than three (3) years or more than
ten (10) years, (iv) that either (y) grants the “lessee” or “tenant” under the
Lease any purchase option or right of first refusal to purchase all or any
portion of any Property, or (z) grants the “lessee” or “tenant” under the Lease
any interest in the ownership of any Property or provides any incentives
equivalent to an ownership interest in any Property, (v) that is not part of an
arms length transaction, or is to Borrower, Carveout Indemnitor, an Affiliate of
Borrower or Carveout Indemnitor, or a creditor of Borrower or Carveout
Indemnitor, or (vi) pursuant to which the “lessee” or “tenant” under the Lease
is not obligated to take possession within 30 days following completion of the
required improvements.
 
“Management Agreement” means any property management agreement hereafter entered
into between any Borrower Party and a Property Manager related to any Property
and any and all amendments, modifications, renewals, extensions, replacements or
supplements thereto permitted in accordance with the terms of the Loan
Documents.
 
“Material Agreement” means any contract or agreement entered into by any
Borrower Party or any Property Manager which cannot be terminated within thirty
(30) days without cause or payment of a termination fee and would be binding on
Lender or any Property upon Lender foreclosing its Lien on the affected Property
(or otherwise accepting a deed-in-lieu of foreclosure).
 
“Maturity Date” means the earlier to occur of (i) the Scheduled Maturity Date
and (ii) any earlier date on which the Loan is required to be paid in full, by
acceleration or otherwise, under this Agreement or any of the other Loan
Documents.
 
“Monetary Potential Default” means Borrower’s failure to make a payment of a
liquidated sum of money on the due date thereof but for which the applicable
grace period has yet to expire.
 
 
 
-7-

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“Mortgage” means, collectively, each deed of trust, mortgage or other property
security instrument now or hereafter executed by any Borrower Party in favor of
Lender, securing such Borrower Party’s obligations under the Loan Documents and
encumbering, among other things, any Property.
 
“Net Operating Income” means, for any period, the amount by which Operating
Revenues for such period exceed Operating Expenses for such period.
 
“Net Proceeds” has the meaning ascribed to such term in Section 3.2(b).
 
“Net Proceeds Deficiency” has the meaning ascribed to such term in Section
3.2(g).
 
“Note” means, collectively, each promissory note evidencing the repayment of the
Loan, now or hereafter executed or assumed by Borrower and payable to the order
of Lender, including: (i) the Promissory Note dated as of the Funding Date, in
the stated principal amount of $30,000,000.00, executed by Borrower and payable
to the order of Hartford Life Insurance Company, a Connecticut corporation, and
(ii) the Promissory Note dated as of the Funding Date, in the stated principal
amount of $10,000,000.00, executed by Borrower and payable to the order of
Hartford Life and Accident Insurance Company, a Connecticut corporation.
 
“Obligations” means, collectively: (i) the Loan, (ii) all other principal and
all interest, fees, expenses, charges, reimbursements, and other amounts due
under or secured by the Loan Documents, (iii) all principal, interest and other
amounts which may hereafter be loaned by Lender, its successors or assigns, to
or for the benefit of Borrower or Carveout Indemnitor, when evidenced by a
promissory note or other instrument which, by its terms, is governed or secured
by any of the Loan Documents, and (iv) all other indebtedness, obligations,
covenants, and liabilities now or hereafter existing of any kind of Borrower or
Carveout Indemnitor to Lender under any of the Loan Documents.
 
“OFAC Prohibited Person” means a country, territory or Person (i) listed on,
included within or associated with any of the countries, territories or Persons
referred to on The Office of Foreign Assets Control’s List of Specially
Designated Nationals and Blocked Persons or any other prohibited person lists
maintained by any Governmental Authority, or otherwise included within or
associated with any of the countries, territories or Persons referred to in or
prohibited by OFAC or any other Anti-Money Laundering Laws, or (ii) which pays,
donates, transfers or otherwise assigns any property, money, goods, services, or
other benefits from any Property directly or indirectly, to any countries,
territories or Persons on or associated with any country, territory or Person on
such list or included in such laws.
 
“Operating Expenses” means, without duplication, all reasonable and necessary
expenses of operating any Property or Properties in question in the ordinary
course of business which are computed in accordance with GAAP (on an accrual
basis) and which are directly associated with and fairly allocable to such
Property or Properties in question for the applicable period, including Taxes,
insurance premiums, maintenance and utility costs, a reserve for replacements
and/or repairs, management fees and costs payable under any Management Agreement
(which fees and costs under any Management Agreement shall not exceed prevailing
market rates), recurring accounting, legal, and other professional fees, fees
relating to
 
 
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environmental audits and income and expense audits and other expenses incurred
by Lender and reimbursed by Borrower under this Agreement and the other Loan
Documents, wages, salaries, and personnel expenses properly allocated to such
Property or Properties in question, and any other category of recurring property
expense that is customary for a property of the type and size as such Property
or Properties in question and is reasonably approved by Lender; but excluding
Debt Service, capital expenditures, any of the foregoing expenses which are paid
from deposits to cash reserves previously included as Operating Expenses, any
payment or expense for which any Borrower Party was or is to be paid or
reimbursed from proceeds of the Loan or for which any Borrower Party was or is
to be reimbursed from proceeds under insurance or by any third party, any
non-cash charges such as depreciation and amortization, and federal, state or
local income taxes, or legal and other professional fees unrelated to the
operation of such Property or Properties in question, in each case subject to
reasonable adjustment by Lender in accordance with its then current audit
policies and procedures.
 
“Operating Revenues” means, without duplication, all cash receipts and other
income of any Borrower Party attributable to the ownership and operation of any
Property or Properties in question, or otherwise arising in respect of such
Property or Properties in question after the Funding Date, computed in
accordance with GAAP (on an accrual basis, but without treating any Rents on a
straight-line basis), and which are properly allocable to such Property or
Properties in question for the applicable period, including receipts from Leases
and parking agreements, license and concession fees and charges and other
miscellaneous operating revenues, proceeds from rental or business interruption
insurance, and withdrawals from cash reserves (except to the extent any expense
paid therewith are excluded from Operating Expenses); but excluding any interest
income from any source, security deposits and earnest money deposits until they
are forfeited by the depositor, income from Tenants in bankruptcy, advance
rentals until they are earned, capital contributions to any Borrower Party and
proceeds from a sale, casualty, condemnation or other disposition of any portion
of such Property or Properties in question, and other proceeds from
non-recurring or extraordinary events, in each case subject to reasonable
adjustment by Lender in accordance with its then current audit policies and
procedures.
 
“Partial Release” has the meaning ascribed to such term in Section 7.15.
 
“Partial Release Prepayment” has the meaning ascribed to such term in Section
7.15.
 
“Payment Date” means the first (1st) calendar day of each calendar month,
commencing on October 1, 2010, and continuing on the first (1st) calendar day of
each calendar month thereafter; provided that if the first (1st) calendar day of
any month is not a Business Day, then the “Payment Date” shall be the first
Business Day immediately following the first (1st) calendar day of such month;
provided further that a change in the Payment Date in accordance with the
immediately preceding proviso shall not change the period for which interest is
calculated in accordance with Section 2.2(b).
 
“Permitted Encumbrances” has the collective meaning ascribed to such term in the
Mortgage.
 
“Permitted Transfer” means:
 
 
 
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(a)   (i)  Transfers of shares or other securities of Carveout Indemnitor by the
holders thereof on any national securities exchange or other stock market on
which the shares or other securities of Carveout Indemnitor are listed or in
private transactions; provided that transfers made in connection with the sale
or merger of Carveout Indemnitor shall not be permitted by this subclause (i)
and shall be governed by subclause (iii) below;
 
(ii)  Issuances of shares or other securities in Carveout Indemnitor (including
the issuance of such shares in connection with the conversion of operating
partnership units in any Individual Borrower or the issuance of such shares in
connection with the exercise of any stock options); provided that issuances made
in connection with the sale or merger of Carveout Indemnitor shall not be
permitted by this subclause (ii) and shall be governed by subclause (iii) below;
or
 
(iii)  Transfers or issuances of shares or other securities in Carveout
Indemnitor in connection with the sale or merger of Carveout Indemnitor, or any
other transaction with Carveout Indemnitor subject to Rule 145(a) of the United
States Securities and Exchange Commission (“Rule 145(a)”); provided that (A)
immediately following any such Transfer or issuance under this subclause (iii),
Carveout Indemnitor or its successor (1) has a Tangible Net Worth of at least
$100,000,000; and (2) is an owner or manager of properties used for research and
development, office or industrial purposes whose executive officers have at
least ten (10) years experience in the ownership and/or management of properties
used for research and development, office or industrial purposes in major
metropolitan areas in the United States; and (B) if in connection with any such
sale or merger or other Rule 145(a) transaction, Carveout Indemnitor is no
longer a separate legal entity complying with the requirements of subclause (i)
above, then the successor to Carveout Indemnitor, prior to the effective date of
any such sale, merger or other Rule 145(a) transaction, must execute and deliver
to Lender a Carveout Indemnity and Environmental Indemnity Agreement
substantially in the form of the Carveout Indemnity and Environmental Indemnity
Agreement executed by Carveout Indemnitor as of the Funding Date, together with
reasonable evidence of such entity’s power and authority to execute, deliver and
perform under such agreements (including an opinion of counsel in form
reasonably required by Lender); or
 
(b) Issuances of limited partnership interests in any Individual Borrower,
including issuances of operating partnership units in any Individual Borrower,
and Transfers by a limited partner of limited partnership interests in any
Individual Borrower.
 
“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, limited liability partnership, unincorporated organization, real estate
investment trust, or any other form of entity.
 
“Personal Property” has the collective meaning ascribed to such term in the
Mortgage.
 
“Policy” or “Policies” has the meaning ascribed to such term in Section 3.1(b).
 
“Portfolio” means, collectively, all of the Properties.
 
 
 
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“Potential Default” means the occurrence of any event or condition that, with
the giving of notice, the passage of time, or both, would constitute an Event of
Default.
 
“Prepayment Notice” means the written notice to be given by Borrower to Lender
at least thirty (30) days but not more than sixty (60) days prior to any
prepayment of the Loan permitted under Section 2.4.
 
“Property” or “Properties” means, as of any date, each of the parcels of land
owned by a Borrower Party, encumbered by a Mortgage as of such date, together
with all Improvements located on such parcels.  As of the Funding Date, each
Property within the Portfolio is described within Exhibit A-1 through Exhibit
A-5.
 
“Property Manager” means any property manager hereafter engaged by any Borrower
Party pursuant to the terms and conditions of Section 7.10, and any replacement
or successor permitted under the terms of the Loan Documents.
 
“Qualified Insurer” has the meaning ascribed to such term in Section 3.1(b).
 
“Rent Roll” has the meaning ascribed to such term in Section 4.1.
 
“Rents” has the collective meaning ascribed to such term in the Mortgage.
 
“Restoration” has the meaning ascribed to such term in Section 3.2(a).
 
“Restoration Documents” has the meaning ascribed to such term in Section 3.2(e).
 
“Restoration Retainage” has the meaning ascribed to such term in Section 3.2(f).
 
“Scheduled Maturity Date” means September 1, 2030.
 
“Servicer” has the meaning ascribed to such term in Section 9.10.
 
“Standard Yield Maintenance” means a yield maintenance prepayment premium equal
to the greater of: (A) in connection with a deemed or permitted partial
prepayment, one percent (1%) of the outstanding principal balance of the Note
being prepaid, and in connection with a deemed or permitted prepayment in full,
one percent (1%) of the outstanding principal balance of the Note (prior to
application of the principal being prepaid); and (B) an amount determined by:
 
(i) Calculating the sum of the present values of all unpaid principal and
interest payments required under the Loan Documents from and including the date
a prepayment is tendered through and including the Scheduled Maturity Date,
including the present value of the outstanding principal balance of the Note as
of such Scheduled Maturity Date (prior to the application of the principal being
prepaid), utilizing a discount rate equal to the sum of (A) the Converted
Treasury Yield plus (B) fifty (50) basis points, divided by the frequency of the
interest payments made during a calendar year; and
 
(ii) Subtracting from such sum the outstanding principal balance (prior to
application of the principal being prepaid) as of the date prepayment will be
made; and
 
 
 
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(iii) Multiplying such remainder by the quotient of (A) the principal being
prepaid, divided by (B) the outstanding principal balance as of the date of
prepayment (prior to application of the principal being prepaid.
 
“State” means the State of California.
 
“Tangible Net Worth” means tangible assets minus tangible liabilities as
determined in accordance with GAAP.
 
“Taxes” means all real estate taxes and assessments, franchise taxes and
charges, personal property taxes, and other governmental charges relating to any
Property (whether or not any such charge or imposition may become Lien upon the
applicable Property) that become due and payable during the term of the Loan.
 
“Tenants” has the collective meaning ascribed to such term in the Mortgage.
 
“Title Policy” means, collectively, the ALTA (or equivalent) mortgagee title
insurance policies issued by First American Title Insurance Company (the “Title
Company”) which are, in the aggregate, for the full amount of the Loan, and each
of which (i) has an effective date as of the Funding Date (unless any such
policy is issued subsequent to the Funding Date as provided in Section 7.16, in
which case such policy shall have an effective date as of the closing of such
Collateral Substitution), (ii) contains no exceptions (printed or otherwise)
other than those approved by Lender (in the exercise of its judgment), (iii)
includes all reasonable and customary endorsements required by Lender, and (iv)
otherwise complies with Lender’s title requirements and is otherwise in
substance and form acceptable to Lender (in the exercise of its reasonable
judgment).
 
“Transfer” means any direct or indirect, voluntary or involuntary sale,
transfer, conveyance, mortgage, pledge, assignment, encumbrance, alienation,
grant or other comparable action relating to the legal and/or beneficial
ownership of, title to or interests in any Property, or any Borrower Party;
provided, however, that “Transfer” shall not include (i) the leasing of space
within any Property, (ii) direct or indirect transfers of interests in any
Borrower Party in compliance with the requirements of Section 7.1(b), or (iii)
transfers of the Portfolio in compliance with the requirements of Section 7.1(c)
or any Property in compliance with the requirements of Section 7.15 or Section
7.16, all of which are deemed to be Permitted Transfers.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in each
state where any Property is located; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
or priority of the security interest in any item or portion of the Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than each state where any Property is located, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority.  Wherever this Agreement refers to terms as defined
in the UCC, if such term is defined in more than one Article of the UCC, the
definition in Article 9 of the UCC shall control.
 
Section 1.2. General Construction.
 
 
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(a) Unless otherwise noted or the context shall indicate otherwise:  (i) all
“Article” and “Section” references shall be to Articles or Sections of this
Agreement, (ii) all uses of the word “including” shall mean “including, without
limitation”, (iii) the words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, (iv) all references
to “day” or “days” shall mean calendar days, (v) all meanings attributed to
defined terms herein shall be equally applicable to both the singular and plural
forms of the terms so defined, and (vi) all references to a “Loan Document”
shall mean such document as it is constituted as of the Funding Date, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
 
(b) The use of the phrases “upon the occurrence of an Event of Default,” “Event
of Default exists,” “Event of Default has occurred,” “Event of Default shall
have occurred and remain uncured” or similar phrases in this Agreement or the
other Loan Documents are intended to mean that an Event of Default will only
cease to exist following acceptance by Lender, in its discretion (unless
acceptance of a cure and reinstatement is mandatory under applicable law), of a
cure of such Event of Default upon such terms and conditions as Lender may
require in its discretion (with any such acceptance of a cure of an Event of
Default to be evidenced by a written reinstatement confirmation issued by
Lender), and use of any of the foregoing phrases does not mean that Borrower,
Carveout Indemnitor or any other Person has the right to any additional grace
periods or cure rights following the occurrence of an Event of Default or that
Lender is obligated under any circumstance to accept any cure offered by
Borrower, Carveout Indemnitor or any other Person following the occurrence of an
Event of Default (unless acceptance of a cure and reinstatement is mandatory
under applicable state law).
 
Section 1.3. Lender’s Discretion.  When used in this Agreement and the other
Loan Documents, unless otherwise specifically qualified by a reasonableness
standard, the phrase (a) “satisfactory to Lender” (or comparable phrases) shall
mean “in form and substance satisfactory to Lender in all respects as determined
by Lender in the exercise of its sole and absolute discretion,” (b) “with
Lender’s consent” or “with Lender’s approval” (or comparable phrases) shall mean
such consent or approval may be granted or withheld in Lender’s sole and
absolute discretion, and (c) “acceptable to Lender,” “in Lender’s discretion” or
“in Lender’s judgment” (or comparable phrases) shall mean acceptable to Lender,
at Lender’s discretion and/or determined by Lender, in each instance in Lender’s
sole and absolute judgment or discretion.  Lender agrees that if Lender has
expressly agreed not to unreasonably withhold its consent or approval on a
particular issue, then use of the phrase “not to be unreasonably withheld” or
comparable phrases in this Agreement or the other Loan Documents shall mean “not
to be unreasonably withheld, conditioned or delayed”; provided, however, that if
Lender shall fail or refuse to give consent or approval, Borrower shall not be
entitled to any damages for any withholding or delay in issuance of such
approval or consent, and Borrower’s sole remedy shall be to bring an action
seeking injunction or specific performance.
 
Section 1.4. Knowledge of Borrower Parties.  For purposes of the Loan Documents,
the phrases “to Borrower’s knowledge”, “to Carveout Indemnitor’s knowledge”, “to
Grantor’s knowledge”, “to Assignor’s knowledge”, “to Indemnitor’s knowledge”, or
comparable phrases (including “to the best of” a Person’s knowledge) shall mean
with respect to Borrower and Carveout Indemnitor, the current knowledge of Carl
E. Berg or Raymond V. Marino, who are
 
 
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Authorized Representatives of one or more Borrower Parties and are charged with
responsibilities relating to the acquisition, ownership, management and
operation of the Portfolio, after reasonable and prudent inquiry consistent with
each of their management responsibilities, including inquiry of the Property
Manager (if any), but without any personal liability of any such individual to
Lender.
 
ARTICLE 2.
 

 
LOAN TERMS
 
Section 2.1. The Loan
 
(a) The Loan evidenced by the Note shall be funded and repaid in accordance with
this Agreement, and any amount borrowed and repaid under this Agreement may not
be re-borrowed.  The proceeds of the Loan shall be used for the purposes set
forth on the Closing Statement attached hereto as Exhibit B.
 
(b) The Loan shall be made upon Lender’s receipt, review, approval and/or
confirmation of each of the following:
 
(i) Each of the items specified in Section 5 of the Application and/or on the
preliminary closing agenda circulated by Lender’s legal counsel (as the same may
be amended from time to time prior to the Funding Date), each to be delivered at
Borrower’s cost and expense within the time periods specified in Section 5 of
the Application, and each in form and content reasonably satisfactory to Lender;
 
(ii) The Closing Affidavit executed by an Authorized Representative of Borrower
and by an Authorized Representative of Carveout Indemnitor, confirming that (a)
since the date of the Application (1) no material, adverse change has occurred
in the financial condition of any Borrower Party or in the Net Operating Income
of any Property; (2) no condemnation or adverse zoning or usage change
proceeding has been initiated or, to the knowledge of Borrower Parties, has been
threatened against any Property; (3) no Property has suffered any material
damage by fire or other casualty which has not been fully repaired; and (4) to
the knowledge of Borrower Parties, no law, regulation, ordinance, moratorium,
injunctive proceeding, restriction, litigation, action, citation or similar
proceeding or matter has been enacted, adopted, or threatened by any
Governmental Authority, which could reasonably be anticipated to have a
material, adverse effect on any Borrower Party and/or any Property; (b) to the
knowledge of Borrower Parties, no Event of Default exists as of the Funding
Date; (c) no Leases currently exist in connection with any Property other than
as set forth in the Rent Roll; and (d) all fees and commissions payable to real
estate brokers, mortgage brokers, or any other brokers or agents in connection
with the Loan have been paid or will be paid on the Funding Date;
 
(iii) The Closing Statement, showing total costs relating to closing of the Loan
and all uses of the proceeds of the Loan in all material respects;
 
 
 
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(iv) Payment of Lender’s costs and expenses in documenting and closing the Loan,
including fees and expenses of Lender’s inspecting engineers, appraiser,
consultants, and outside legal counsel;
 
(v) If the Funding Date occurs on a date other than the first (1st) calendar day
of a month, stub period interest for the period from the Funding Date to and
including the last day of the calendar month in which the Funding Date occurs;
 
(vi) Such other reasonable documents, items or information as Lender or its
counsel may require; and
 
(vii) Evidence of compliance with the other terms and conditions specified in
this Agreement or any other Loan Document.
 
Section 2.2. Interest Rate; Late Charge
 
(a) Except during the existence of an Event of Default, the outstanding
principal balance of the Loan shall bear interest at the rate of six and five
one hundredths percent (6.05%) per annum.  During the existence of any Event of
Default, the outstanding principal balance of the Loan shall bear interest at
the Default Rate.
 
(b) Interest shall be computed for the calendar month immediately preceding the
applicable Payment Date or the Maturity Date on the basis of a fraction, the
denominator of which is three hundred sixty (360) and the numerator of which is
thirty (30) (except for any partial month, in which case the numerator shall be
the actual number of days which have then elapsed during the period in
question).  Each determination by Lender of the amount of interest due and
payable on each Payment Date shall be conclusive and binding for all purposes,
absent manifest error.
 
(c) If Lender does not receive any installment of Debt Service or Impounds (if
any Impounds are required) by 2:00 p.m. (Hartford, Connecticut time) on the
fifth (5th) calendar day of the month in which such installment is due
(excluding the full amount of the Obligations due on the Maturity Date, for
which no late charge or grace period shall apply), Borrower shall pay to Lender,
within the Demand Period, a one-time late charge on such overdue amount (for the
additional expense, time and effort in collecting and handling such overdue
payment, as liquidated damages and not as a penalty) equal to the lesser of
(i) the maximum amount permitted by applicable State law, and (ii) five percent
(5%) of such delinquent amount.  Any such late charge shall be in addition to,
and not in lieu of, interest at the Default Rate and any other rights, powers
and remedies available to Lender and shall be in addition to any attorneys’ fees
and expenses incurred by Lender in connection with such overdue payment.
 
Section 2.3. Terms of Payment; Maturity Date
 
(a) The Loan shall be payable as follows:
 
(i) Commencing on the first Payment Date and continuing to and including the
Payment Date immediately preceding the Maturity Date, Borrower shall pay to
Lender level monthly payments of principal and interest in the amount of Two
Hundred
 
 
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Eighty-Seven Thousand Seven Hundred Twenty-Seven and 43/100 Dollars
($287,727.43) each, representing interest, calculated in arrears for the
calendar month immediately preceding such Payment Date in accordance with
Section 2.2(b), and principal in monthly installments in accordance with an
assumed 20-year amortization schedule.
 
(ii) From and after the payment of any Partial Release Prepayment, the amount of
the monthly payments of interest and/or principal shall be recalculated by
Lender and shall be based on the then-outstanding principal balance of the Loan
as of such prepayment date over an assumed amortization period of 240 months
minus the number of months elapsed since the first Payment Date.
 
(b) On the Maturity Date, Borrower shall pay to Lender all principal outstanding
under the Note or otherwise in respect of the Loan, accrued and unpaid interest,
and all other Obligations due under the Loan Documents.
 
(c) Except during the existence of any Event of Default, all payments received
by Lender under the Loan Documents shall be applied: first, to any fees and
expenses due to Lender under the Loan Documents, including any Applicable
Prepayment Fee; second, to any Default Rate interest and/or late charges; third,
to Impounds (if any are required pursuant to the terms of the Loan Documents);
fourth to accrued and unpaid interest under the Note; fifth, to the principal
sum of the Note, and sixth, to any other amounts due under the Loan
Documents.  During the existence of an Event of Default, payments received by
Lender may be applied to the Obligations in the order or amounts determined by
Lender in its discretion.
 
(d) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 2:00 p.m. (Hartford, Connecticut time) on the date when due and shall be
made in lawful money of the United States of America by wire transfer in federal
or other immediately available funds to its account at such bank(s) as Lender
may from time to time designate by delivering written notice to Borrower.  Any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.  All payments made
by Borrower hereunder, or by any Borrower Party under the other Loan Documents,
shall be made irrespective of, and without any deduction for, any defenses,
set-offs or counterclaims.  Whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, the payment may be made on
the next succeeding Business Day.
 
Section 2.4. Prepayment
 
(a) Except as expressly hereinafter set forth in this Section 2.4 or as
otherwise provided in Sections 3.2(i), 3.3, 7.5, 7.15 or 9.3, no full or partial
prepayments of the principal balance of the Note shall be allowed.
 
(b) At any time following the last day of the Lockout Period, upon issuance of a
Prepayment Notice, Borrower shall have the right to prepay the outstanding
principal balance of the Note in full (but not in part, except as expressly
permitted in Sections 3.2(i), 3.3, 7.5, 7.15 or 9.3) on any Business Day by
paying the sum of (i) the entire remaining outstanding principal
 
 
 
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balance of the Note, plus (ii) all unpaid interest accrued on the prepayment
amount, plus (iii) all other Obligations, plus (iv) a prepayment fee equal to
the Applicable Prepayment Fee.
 
(c) Each Prepayment Notice shall specify the intended date of prepayment, which
date shall be a Business Day.  After delivery of a Prepayment Notice, the
amounts payable under Section 2.4(b) shall be due and payable in full on the
date specified in such Prepayment Notice unless a Borrower Party delivers a
written revocation notice to Lender at least three (3) Business Days prior to
the scheduled prepayment date, and failure to pay the same in full on such date
without proper revocation shall, at Lender’s option, constitute an Event of
Default, without notice or opportunity to cure.  If the amounts necessary to
prepay the Loan in accordance with the terms and provisions hereof are received
by Lender after 2:00 p.m. (Hartford, Connecticut time), such prepayment shall be
deemed to have been made on the next occurring Business Day and Lender shall be
entitled to (i) recalculate the Applicable Prepayment Fee associated with such
prepayment, and (ii) receive interest on the outstanding principal balance to be
prepaid, calculated at the Contract Rate or the Default Rate, as applicable,
through the effective date of such prepayment.
 
(d) Notwithstanding anything to the contrary set forth in this Agreement or any
other Loan Document, at any time between June 1, 2030 and the Scheduled Maturity
Date, upon issuance of a Prepayment Notice, Borrower shall have the right to
prepay the outstanding principal balance of the Loan in full (but not in part,
except as expressly permitted in Sections 3.2(i), 3.3, 7.5, 7.15 or 9.3),
without premium or additional fees or expenses (including any Applicable
Prepayment Fee), by paying the entire remaining outstanding principal balance of
the Loan, all accrued and unpaid interest hereunder, and all other Obligations
(provided that Borrower shall not be entitled to the benefit of the
above-described open prepayment period when calculating the Applicable
Prepayment Fee for any prepayment that is tendered at any time prior to said
open prepayment period).
 
(e) Borrower acknowledges that it possesses no right to prepay the Loan, except
as expressly provided in this Section 2.4 or as otherwise provided in Sections
3.2(i), 3.3, 7.5, 7.15 or 9.3.  Borrower further acknowledges and agrees that,
except as so expressly provided, if the Loan is prepaid prior to June 1, 2030,
for any reason (including acceleration of the Scheduled Maturity Date by reason
of an Event of Default), any subsequent tender of payment of the Loan made by
Borrower or by any Person on behalf of Borrower or otherwise, including any
tender of payment at any time prior to or at foreclosure sale or proceedings or
during any redemption period following foreclosure, or during any federal or
state bankruptcy or insolvency proceedings, shall constitute an evasion of the
restrictions on prepayment set forth herein, and shall be deemed a voluntary
prepayment prior to the Scheduled Maturity Date requiring payment of the
Applicable Prepayment Fee, and Lender shall not be required to accept such
prepayment if it does not include payment of the Applicable Prepayment Fee.
 
(f) If any actual or deemed prepayment is tendered or deemed tendered during the
Lockout Period (other than a prepayment tendered or deemed tendered pursuant to
Sections 3.2(i), 3.3, 7.5, 7.15 or 9.3), Borrower shall be obligated to pay
Lender, and the Obligations shall include, a prepayment fee (the “Lockout
Prepayment Fee”) calculated by Lender in its discretion (which may or may not
equal the Standard Yield Maintenance otherwise due in connection with any such
prepayment but for the operation of the Lockout Period), and
 
 
 
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Lender shall not be required to accept such payment or credit any deemed payment
if it does not include payment of the Lockout Prepayment Fee as calculated by
Lender.
 
(g) Lender’s acceptance of a prepayment without the Applicable Prepayment Fee
shall not constitute or be deemed to constitute a waiver by Lender of its right
to require payment of the Applicable Prepayment Fee in accordance with the terms
hereof or a waiver of any rights and remedies Lender may have under the Loan
Documents, at law or in equity on account of Borrower’s failure to timely pay
the Applicable Prepayment Fee as and when required hereunder.
 
(h) To the extent permitted by law, Lender may bid at any foreclosure sale, as
part of the Obligations, the amount of the Applicable Prepayment Fee calculated
as if prepayment of the Loan occurs on the date of such foreclosure sale.  To
the extent the amount of the Obligations must be determined as of a date certain
pursuant to a judicial foreclosure, the Loan will be deemed prepaid as of the
date judgment enters and the Applicable Prepayment Fee due and payable hereunder
(if any) will be calculated as if prepayment of the Obligations occurred on the
date of said judgment.
 
(i) Borrower and Lender have negotiated the Loan upon the understanding that if
the Loan is paid or prepaid prior to June 1, 2030 for any reason, except as
expressly provided in this Section 2.4 or as otherwise provided in
Sections 3.2(i), 3.3, 7.5, 7.15 or 9.3, Lender shall receive the Applicable
Prepayment Fee as compensation for: (i) the cost of reinvesting the prepayment
proceeds and the loss of the contracted rate of return on the Loan; and (ii) the
privilege of early payment of the Loan, which Borrower has expressly bargained
for and which privilege Lender would not have granted to Borrower without
Borrower’s obligation to pay the Applicable Prepayment Fee.  Borrower agrees
that the Applicable Prepayment Fee provided for herein is reasonable and that
Lender shall not be obligated, as a condition subsequent to its receipt of the
Applicable Prepayment Fee, to actually reinvest all or any part of the amount
prepaid in any United States Treasury instruments or obligations or otherwise.
 
ARTICLE 3.

 
INSURANCE, CONDEMNATION, AND IMPOUNDS
 
Section 3.1. Insurance.
 
(a) Insurance Coverage.  Borrower shall obtain and maintain, or cause to be
maintained, insurance for each Individual Borrower, Lender, each Property and
the other Collateral (collectively, the “Insurance”) providing at a minimum the
following:
 
(i) Insurance with respect to the Improvements and Personal Property relating to
each Property against any peril currently included within the classification
“All Risk” or “Special Perils,” in each case (1) in an amount equal to 100% of
the “Full Replacement Cost,” which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with losses adjusted on a replacement cost
basis; (2) containing an agreed amount endorsement (unless waived by Lender in
its reasonable discretion) with respect to the
 
 
 
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Improvements and Personal Property relating to such Property waiving all
co-insurance provisions; (3) providing for no deductible in excess of $25,000
and no self-retention (unless disclosed to and approved by Lender); (4) with an
“Ordinance or Law Coverage” or “Enforcement” endorsement (including demolition
costs); and (5) with coverage for “mold” and related damage with reasonable and
customary limits (a sublimit of $1,000,000 for “mold” coverage being deemed
“reasonable”).  The Full Replacement Cost of each Property shall be evaluated
from time to time at the request of Lender (but not more frequently than once in
any twelve (12) calendar months, unless an Event of Default exists, in which
case the Full Replacement Cost may be evaluated from time to time as Lender in
its discretion may deem necessary) by an appraiser or contractor designated and
paid by Borrower and approved by Lender, such approval not to be unreasonably
withheld (unless an Event of Default exists, in which case the appraiser or
contractor shall be designated by Lender and paid by Borrower).  No omission on
the part of Lender to request any such ascertainment of the Full Replacement
Cost for any Property shall relieve Borrower of any of its obligations under
this Subsection 3.1(a)(i);
 
(ii) Commercial general liability insurance against all claims for personal
injury or property damage occurring upon, in or about each Property, including
“Dram Shop” or other liquor liability coverage if alcoholic beverages are sold
from or may be consumed at any Property and garage keepers’ liability coverage
(if applicable), such insurance (1) to be on the so-called “occurrence” form
with a general aggregate limit of not less than $2,000,000.00 and a per
occurrence limit of not less than $1,000,000.00; (2) to be continued at not less
than the aforesaid limit until required to be increased by Lender in writing by
reason of changed economic conditions making such protection inadequate (in the
reasonable estimation of Lender); and (3) to cover at least the following
hazards:  (A) premises and operations (including Fire Damage Legal Liability);
(B) products and completed operations on an “if any” basis; (C) independent
contractors; (D) blanket contractual liability for advertising and all written
and oral contracts to the extent of tort liability; and (E) contractual
liability covering the indemnities contained in the Loan Documents to the extent
the same is available;
 
(iii) Business interruption/loss of rents insurance (1) with loss payable to
Lender; (2) covering “All Risks” or “Special Perils” as required to be covered
by the insurance provided for in Subsection 3.1(a)(i) and (ii); (3) in an amount
equal to 100% of the projected gross income from each Property (on an actual
loss sustained basis) for a period of not less than twelve (12) months following
the date of loss (the amount of such coverage shall be determined prior to the
Funding Date and at least once each year thereafter based on the greater of: (x)
reasonable estimate by Borrower Parties of the gross income from each Property
for the succeeding twelve (12) month period, and (y) the highest gross income
received during the term of the Note for any consecutive twelve (12) month
period prior to the date the amount of such insurance is being determined); (4)
with a deductible of not greater than an amount equal to 48 hours loss; and (5)
containing an extended period of indemnity endorsement which provides that after
the physical loss to the affected Improvements has been repaired, the continued
loss of income will be insured until the earlier of such income returning to the
same level it was at prior to the loss or the expiration of one hundred eighty
(180) days from the date that normal operations are resumed at the affected
Property (notwithstanding that the
 
 
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policy may expire prior to the end of such period).  All insurance proceeds
payable to Lender pursuant to this Subsection 3.1(a)(iii) shall be held by
Lender and shall be applied to the Obligations from time to time due and payable
under the Note and this Agreement; provided, however, that so long as no Event
of Default exists, Lender shall disburse to the applicable Individual Borrower,
on a monthly basis (consistent with an annual operating budget delivered to
Lender) funds representing business interruption proceeds (to the extent
actually received by Lender) for payment of Operating Expenses and Debt Service
upon receipt by Lender of a written request for disbursement from the applicable
Individual Borrower, summarizing the Operating Expenses and/or Debt Service to
be paid with the subject disbursement; provided, further, that nothing herein
contained shall be deemed to relieve Borrower of its obligation to pay the
Obligations on the respective dates of payment provided for in the Note and this
Agreement except to the extent such amounts are actually paid to and retained by
Lender out of the proceeds of such business interruption insurance;
 
(iv) At all times during which structural construction, repairs or alterations
are being made with respect to any Property, applicable contractors shall
provide:  (1) owner’s and contractor’s protective liability insurance covering
claims not covered by or under the terms or provisions of the commercial general
liability insurance policy referenced in Subsection 3.1(a)(ii); and (2) the
insurance provided for in Subsections 3.1(a)(i) and (iii), written in a
so-called “builder’s risk completed value form” (A) on a non-reporting basis,
(B) against “All Risks” or “Special Perils” as required pursuant to Subsection
3.1(a)(i), (C) including permission to occupy such Property, and (D) with an
agreed amount endorsement waiving co-insurance provisions;
 
(v) To the extent required by applicable Legal Requirements, workers’
compensation, subject to the statutory limits of the State, and employer’s
liability insurance with a limit of at least $1,000,000.00 per accident and per
disease per employee, and $1,000,000.00 for disease aggregate in respect of any
work or operations on or about each Property, or in connection with each
Property or its operation (if applicable);
 
(vi) Comprehensive boiler and machinery insurance in customary and reasonable
amounts (to the extent Lender, in the exercise of its reasonable judgment, deems
such coverage reasonably necessary based on the equipment at a particular
Property);
 
(vii) If any portion of any Property is at any time located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to 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, or any successor or
comparable law (the “Flood Insurance Acts”), flood hazard insurance in an amount
equal to the lesser of (1) 100% of the “Full Replacement Cost,” determined in
accordance with the provisions of Subsection 3.1(a)(i), and (2) the maximum
limit of coverage available for such Property under the Flood Insurance Acts;
 
 
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(viii) Umbrella liability insurance in an aggregate amount of not less than
$25,000,000.00 per occurrence, and with deductibles (including any self
insurance or retention) and on terms consistent with the commercial general
liability insurance policy required under Subsection 3.1(a)(ii); and
 
(ix) Such other insurance (other than terrorism or earthquake insurance) and in
such amounts as Lender from time to time may reasonably require against such
other insurable hazards which at the time are commonly insured against for
properties similar to each Property located in or around the region in which the
Portfolio is located.
 
(b) Policies.  All insurance provided for in Subsection 3.1(a) shall be obtained
under valid and enforceable policies (collectively, the “Policies” and
individually, a “Policy”), in such forms and, from time to time after the
Funding Date, in such amounts as may be satisfactory to Lender (in the exercise
of its reasonable judgment), issued by financially sound and responsible
insurance companies authorized and admitted to do business in the State, having
a general policy rating of “A” or better and a financial class of “X” or better,
each as determined by AM Best Company, Inc., and otherwise acceptable to Lender
in the exercise of its reasonable judgment (each such insurer satisfying the
foregoing is referred to below as a “Qualified Insurer”).  Not less than ten
(10) days prior to the expiration dates of the Policies in force as of the
Funding Date, Borrower shall deliver to Lender certificates (in ACORD format 25
and ACORD format 28 (2003/10 form)) evidencing renewal Policies complying with
the requirements of this Section 3.1, such certificates to be in format
reasonably required by Lender and to be marked “premium paid” (or Borrower shall
provide other evidence satisfactory to Lender (in its reasonable judgment) of
the payment in full of all premiums due under such Policies (the “Insurance
Premiums”)).
 
(c) Blanket Policies.  Borrower shall not obtain (i) any blanket liability or
casualty Policy unless, in each case, such Policy is approved in advance by
Lender (Lender acknowledges its approval of the blanket policies in effect as of
the Funding Date, and Lender’s approval of Borrower’s blanket Policies following
the Funding Date will not be required so long as any replacement blanket Policy
is substantially similar to the blanket Policy approved by Lender on the Funding
Date, confirmed by the ACORD certificates described in Section 3.1(b)), or
(ii) without Lender’s prior written consent (issued or withheld in Lender’s
reasonable judgment), separate insurance concurrent in form or contributing in
the event of loss with that required in Subsection 3.1(a).  If a Borrower Party
obtains separate insurance or a blanket Policy, Borrower shall notify Lender of
the same and shall cause certificates with respect to each Policy to be
delivered to Lender as required in Subsection 3.1(b).
 
(d) Lender as Insured.  All Policies, except for the Policies referenced in
Subsection 3.1(a)(v), shall name the applicable Individual Borrower as the named
insured and Lender as an additional insured and loss payee, as their respective
interests may appear, and in the case of property damage, boiler and machinery,
builder’s risk, and flood insurance, shall contain a so-called “New York
standard non-contributing mortgagee” clause in favor of Lender providing that
any loss thereunder covered by such Policy shall be payable to Lender.
 
(e) Policy Endorsements.  All Policies shall contain clauses or endorsements to
the effect that:
 
 
 
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(i) No act or negligence of any Borrower Party, of anyone acting for a Borrower
Party, or of any Tenant, or failure to comply with the provisions of any Policy
that 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) No Policy may be materially changed (other than to increase the coverage
provided thereby) or cancelled without at least thirty (30) days prior written
notice to Lender and any other party named therein as an insured or additional
insured;
 
(iii) The issuers thereof shall give written notice to Lender if the Policy has
not been thirty (30) days prior to its expiration; and
 
(iv) Lender shall not be liable for any Insurance Premiums or assessments
thereon, except that Lender may, but shall have no obligation to, pay any
Insurance Premiums to continue any Policy in full force and effect in the event
Borrower fails to do so (any such amounts so paid by Lender shall be paid by
Borrower to Lender within the Demand Period, and until paid shall constitute
part of the Obligations, shall be secured by the Loan Documents and shall bear
interest at the Default Rate accruing from the expiration of the Demand Period
until Lender receives payment in full of such amount).
 
(f) Intentionally Omitted.
 
(g) Lender Self-Help.  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, upon three (3) Business Days prior notice to
Borrower, to take such action as Lender deems necessary to protect its interest
in the Portfolio, including obtaining such Insurance as Lender, in its
discretion, deems appropriate, and all expenses incurred by Lender in connection
with such action or in obtaining and maintaining such Insurance shall be paid by
Borrower to Lender before the expiration of the Demand Period, and until paid
shall constitute part of the Obligations, shall be secured by the Loan Documents
and shall bear interest at the Default Rate from the expiration of the Demand
Period until Lender receives payment in full of such amount.
 
(h) Vesting in Lender.  In the event of a foreclosure or other transfer of title
to any Property to Lender or a third party purchaser at foreclosure in
extinguishment in whole or in part of the Obligations, and to the extent
permitted under the Policies, all right, title and interest of Borrower Parties
in and to all proceeds payable pursuant to the Policies as of the effective date
of transfer of title (including proceeds payable under blanket policies) shall
thereupon vest exclusively in Lender or the purchaser at such foreclosure.
 
(i) Subrogation.  All Insurance (as applicable) and all renewals thereof shall
contain, in form and substance reasonably acceptable to Lender, a standard
“Waiver of Subrogation” endorsement.
 
Section 3.2. Use and Application of Insurance Proceeds.
 
(a) Restoration.  If any portion of any Property (or any material portion of the
other Collateral) 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.  If Net
 
 
 
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Proceeds are made available to a Borrower Party for Restoration as provided in
Subsections 3.2(c) and 3.2(d), the applicable Individual Borrower shall, in
accordance with the terms of this Section 3.2, promptly commence and diligently
prosecute to completion the repair and restoration of the affected Collateral as
nearly as possible to the condition the affected Collateral was in immediately
prior to such Casualty (such repair and restoration, collectively, a
“Restoration”) and shall pay all costs of such Restoration (even if Net Proceeds
are not sufficient to pay in the full the cost of Restoration).  Regardless of
whether Net Proceeds are made available to any Individual Borrower, Borrower
shall, promptly following the occurrence of a Casualty and diligently
thereafter, undertake all actions necessary to keep the affected Property safe,
secure and free from reasonably foreseeable hazards and otherwise in material
compliance with applicable Legal Requirements.  Notwithstanding any Casualty,
Borrower shall continue to pay the Obligations at the time and in the manner
provided for its payment in this Agreement.
 
(b) Adjustments by Lender.  Upon any Casualty covered by any Insurance, then
(i) if an Event of Default exists, Lender is hereby authorized, at its option
(exercisable in its discretion), to settle and adjust any claim without the
consent of Borrower Parties; or (ii) if the Casualty in question is a Major
Damage Event, Lender shall allow the applicable Individual Borrower up to one
hundred eighty (180) days following the occurrence of the Casualty to settle and
adjust such claim with the prior written consent of Lender (such consent not to
be unreasonably withheld); provided, however, that if the applicable Individual
Borrower has failed to settle and adjust any claim associated with a Casualty
within one hundred eighty (180) days after the occurrence of such Major Damage
Event, Lender is hereby authorized, at its option (exercisable in its reasonable
discretion), to settle and adjust any claim with the prior written consent of
the applicable Individual Borrower (such consent not to be unreasonably
withheld); provided, further, that in any case, Lender shall, and is hereby
authorized to, collect and hold (without interest) any and all such insurance
proceeds subject to the terms of this Section 3.2.  If a Casualty does not
constitute a Major Damage Event, then the applicable Individual Borrower shall
diligently pursue settlement of all insurance claims, shall hold all Net
Proceeds associated with such non-Major Damage Event in trust to be applied
toward the costs associated with the restoration of the affected Property, and
shall promptly commence and diligently pursue to completion all restoration and
repair work reasonably necessary to return the affected Property to the
condition it was in immediately prior to the non-Major Damage Event.  The
applicable Individual Borrower shall provide Lender with reasonable written
updates, at reasonable intervals, in connection with all restoration efforts
associated with non-Major Damage Events.  The reasonable third party expenses
incurred by Lender in the adjustment and collection of insurance proceeds shall
be reimbursed by Borrower to Lender within the Demand Period and until paid
shall constitute part of the Obligations, shall be secured by the Loan Documents
and shall bear interest at the Default Rate from expiration of the Demand Period
until payment in full is received by Lender, or, to the extent sufficient
insurance proceeds are available, said expenses shall be deducted from said
proceeds by Lender prior to any other application thereof.  Each Qualified
Insurer is hereby authorized and directed by Borrower to make payment for all
losses associated with a Major Damage Event to Lender alone, and not to Lender
and any Individual Borrower or any other Person jointly.  Borrower agrees to
promptly execute and deliver to Lender all documents and promptly make all
deliveries reasonably requested by Lender in order to permit Lender to adjust
any such claim and to authorize and direct any insurer to pay
 
 
 
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insurance proceeds relating to a Major Damage Event to Lender alone and not
jointly to Lender and any Individual Borrower or any other Person.  “Net
Proceeds” means the net amount of all insurance proceeds received by Lender
under the Policies described in Subsections 3.1(a) as a result of a Casualty,
after deduction of Lender’s reasonable third party costs and expenses (including
reasonable attorneys’ fees), if any, in collecting same.
 
(c) Conditions to Disbursements for Restoration.  The following provisions shall
apply in connection with any Restoration of a Major Damage Event:
 
(i) Lender shall make the Net Proceeds associated with a Major Damage Event
available to the applicable Individual Borrower for Restoration, provided that
each of the following conditions are satisfied (satisfaction to be determined by
Lender in the exercise of its reasonable judgment):
 
(A) As of the date of each distribution of Net Proceeds, no Monetary Potential
Default then exists and no Event of Default then exists;
 
(B) Within ninety (90) days following the occurrence of the Casualty, the
applicable Individual Borrower shall prepare, or shall cause to be prepared, all
required Restoration Documents and applications for the issuance of all permits
required for the Restoration, with copies thereof delivered to Lender;
 
(C) Lender and the Casualty Consultant shall have approved the Restoration
Documents in accordance with Subsection 3.2(e);
 
(D) As of the date of each distribution of Net Proceeds, Lender shall be
satisfied, in the exercise of its reasonable judgment, that based upon a report
issued by the Casualty Consultant and such other factors as Lender reasonably
deems relevant, the costs of Restoration and ongoing Operating Expenses
(including Debt Service) allocated to the affected Property will be covered out
of (1) undisbursed Net Proceeds (including the proceeds of the coverage referred
to in Subsection 3.1(a)(iii)), (2) Rents that are and shall continue to be
generated by the affected Property despite the Casualty, and/or (3) other funds
of Borrower deposited with Lender pursuant to Subsection 3.2(g);
 
(E) Prior to the initial disbursement of Net Proceeds, Lender shall be satisfied
that, within six (6) months following completion of the Restoration, the Net
Operating Income associated with the affected Property will be restored to a
level sufficient to generate a Debt Service Coverage Ratio (based on a fully
amortizing 20-year schedule and the Allocated Loan Amount associated with the
affected Property) for such affected Property of at least 125%;
 
(F) Prior to the initial disbursement of Net Proceeds, 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) twelve (12) months after the
occurrence of the Casualty, or (3) such time as may be required under all Legal
 
 
 
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Requirements in order to repair and restore the affected Collateral to the
condition it was in immediately prior to such Casualty;
 
(G) Prior to the initial disbursement of Net Proceeds, Borrower shall execute
and deliver to Lender a completion guaranty in form and substance reasonably
satisfactory to Lender and its counsel, pursuant to which Borrower shall
guaranty to Lender the lien-free completion of the Restoration in accordance
with the provisions of this Section 3.2;
 
(H) Prior to the initial disbursement of Net Proceeds, Lender shall be satisfied
that the affected Property and the use thereof after the Restoration will be in
compliance (in all material respects) with and permitted under all Legal
Requirements;
 
(I) Prior to the initial disbursement of Net Proceeds, Lender shall be satisfied
that the Restoration shall be undertaken and completed such that no Lease (or
combination of Leases), which are in place at the affected Property as of the
date of the Casualty and which cover (singularly or in the aggregate) 25% or
more of the gross rentable area of the affected Property, can be terminated as a
result of the Casualty;
 
(J) Promptly following the issuance of all required permits and the decision of
Lender to make Net Proceeds available for Restoration in accordance with this
Subsection 3.2(c), the applicable Individual Borrower shall commence the
Restoration;
 
(K) As of the date of each distribution of Net Proceeds, Lender shall be
satisfied (in the exercise of its reasonable judgment) that the applicable
Individual Borrower is diligently pursuing the Restoration to satisfactory
completion; and
 
(L) As of the date of each distribution of Net Proceeds, Borrower must be in
compliance with the conditions specified in Subsections 3.2(d), (e) and (g)
below.
 
(d) Disbursement Procedures.  The Net Proceeds shall be held by Lender (in a
non-interest bearing account) and, unless and until disbursed to the applicable
Individual Borrower in accordance with the provisions of this Section 3.2, shall
constitute additional security for the Obligations.  Subject to satisfaction of
the conditions of this Section 3.2, the Net Proceeds designated for Restoration
costs shall be disbursed by Lender to, or as directed by, the applicable
Individual Borrower from time to time prior to or during the course of the
Restoration, but not more than once per 30-day period, upon receipt of (i) a
disbursement request from the applicable Borrower Party in form and content
reasonably required by Lender, (ii) an inspection report from the Casualty
Consultant acceptable to Lender (in the exercise of its reasonable judgment),
(iii) evidence reasonably satisfactory to Lender that all materials installed
and work and labor performed in connection with the related Restoration item
have been paid for in full (except to the extent that they are to be paid for
out of the requested disbursement), including a certification from the
applicable Individual Borrower that there exist no notices of pendency, stop
orders,
 
 
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 mechanic’s or material supplier’s liens or notices of intention to file same,
or any other liens or encumbrances of any nature whatsoever on the affected
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, and (iv) title insurance
“date downs” and endorsements to the Title Policy without exception as to
mechanics’ or material supplier’s liens, intervening choate or inchoate liens,
judgments, survey matters, or other material matters of record.  Any Net
Proceeds received by Lender and held for application to Operating Expenses and
Debt Service shall be disbursed to the applicable Individual Borrower in
accordance with Subsection 3.1(a)(iii).  All Net Proceeds disbursed to a
Borrower for Restoration shall be held in trust by the recipient and used for
the sole purpose of completion of the Restoration in accordance with the
provisions of this Section 3.2.
 
(e) Restoration Documents.  All plans and specifications and construction
agreements (collectively, “Restoration Documents”) necessary for the Restoration
shall be subject to prior review and approval by Lender and by a qualified
independent consulting engineer selected by Lender (the “Casualty Consultant”),
all such approvals not to be unreasonably withheld.  In the event Lender does
not notify the applicable Individual Borrower of the approval or disapproval by
Lender and the Casualty Consultant of the Restoration Documents within ten (10)
Business Days after receipt of a complete set thereof by Lender and the Casualty
Consultant, then Lender and the Casualty Consultant shall be deemed to have
approved the Restoration Documents.  Subject to all necessary approvals and
consents (the consent of Borrower Parties being deemed issued), Lender shall
have the use of the Restoration Documents and all permits, licenses and
approvals required or obtained in connection with the Restoration.  The identity
of the general contractor and other significant contractors engaged in the
Restoration shall be subject to prior review and approval by Lender and the
Casualty Consultant (each such approval not to be unreasonably withheld).  All
reasonable third party costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration or for the payment of
Operating Expenses, including reasonable third party attorneys’ fees and
disbursements and the Casualty Consultant’s reasonable fees (which in no event
shall exceed then prevailing market rates), shall be deducted from the Net
Proceeds or if the Net Proceeds are not sufficient, paid by Borrower to Lender
within the Demand Period and until paid shall constitute part of the
Obligations, shall be secured by the Loan Documents and shall bear interest at
the Default Rate from the expiration of the Demand Period until payment in full
is received by Lender.
 
(f) Amount of Disbursements.  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
(including Lender’s reasonable third party costs and expenses), as certified by
the Casualty Consultant, minus the Restoration Retainage.  “Restoration
Retainage” means an amount equal to the greater of (i) ten percent (10%) of the
costs actually incurred for work in place as part of the Restoration, as
certified by the Casualty Consultant, and (ii) the amount actually held back by
the applicable Individual Borrower from contractors, subcontractors and material
suppliers engaged in the Restoration.  The Restoration Retainage shall not be
released until the Casualty Consultant certifies to Lender that the Restoration
has been substantially completed in accordance with the provisions of this
Section 3.2 and that all approvals necessary for the re-occupancy and use of the
affected Property have been obtained from all appropriate Governmental
Authorities, and Lender receives
 
 
 
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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 Restoration Retainage,
provided, however, that Lender will release the portion of the Restoration
Retainage being held with respect to any contractor, subcontractor or material
supplier engaged in the Restoration as of the date upon which either (i) the
Casualty Consultant certifies to Lender that the contractor, subcontractor or
material supplier has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of that contractor’s,
subcontractor’s or material supplier’s contract, or (ii) the applicable
contractor, subcontractor or material supplier delivers to Lender lien waivers
and evidence of payment in full of all sums due to the contractor, subcontractor
or material supplier as may be reasonably requested by Lender or by the Title
Company.  If required by Lender, the release of any such portion of the
Restoration 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 material supplier.
 
(g) Restoration Deficiency.  If at any time the Net Proceeds or the undisbursed
balance thereof, together with Rents that will continue to be generated by the
affected Property despite the Casualty, 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 estimated by the Casualty Consultant to be
incurred in connection with the completion of the Restoration and ongoing
Operating Expenses (including Debt Service) associated with the affected
Property, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”)
with Lender before any further disbursement of the Net Proceeds shall be made
(but in all events Borrower shall make such deposit within sixty (60) days
following demand).  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 and/or for ongoing Operating Expenses (including Debt
Service) associated with the affected Property on the same conditions applicable
to the disbursement of the Net Proceeds, and until so disbursed shall constitute
additional security for the Obligations.
 
(h) Release of Remaining Proceeds.  Provided (i) no Monetary Potential Default
then exists and no Event of Default then exists, (ii) Lender shall re-confirm
that within six (6) months following completion of the Restoration the Net
Operating Income for the affected Property will be restored to a level
sufficient to generate a Debt Service Coverage Ratio (based on a fully
amortizing 20-year schedule and the Allocated Loan Amount associated with the
affected Property) for such affected Property of at least 125%, (iii) the
Casualty Consultant certifies to Lender that the Restoration has been
substantially completed in accordance with the provisions of Section 3.2, and
(iv) Lender receives evidence reasonably satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full (except to
the extent said costs shall be paid out of the final disbursement), Lender shall
promptly remit to the applicable Individual Borrower the excess, if any, of the
Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender.
 
(i) Application of Remaining Proceeds.  If Lender makes a determination (in the
exercise of its reasonable judgment) pursuant to this Section 3.2 that one or
more of the conditions to disbursement of Net Proceeds set forth in Subsection
3.2(c)(i) has not or will not be satisfied, then all Net Proceeds then held by
Lender shall be retained and applied by Lender toward the payment of the
Obligations, whether or not then due and payable in such order, priority and
proportions as Lender in its reasonable discretion shall deem proper.  Provided
no
 
 
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Event of Default has occurred and is continuing as of the date Lender applies
the Net Proceeds to the Obligations, no Applicable Prepayment Fee shall be
payable in connection with any such prepayment.  If an Event of Default exists
while Lender is holding Net Proceeds, Lender may at its option apply the Net
Proceeds toward the payment of the Obligations, whether or not then due and
payable in such order, priority and proportions as Lender in its discretion
shall deem proper (including toward payment of any Applicable Prepayment Fee
applicable to such prepayment).  If Lender applies Net Proceeds to the
Obligations, the lien of the Loan Documents shall be reduced only by the amount
of Net Proceeds actually applied by Lender in reduction of the Obligations, but
if the Net Proceeds do not discharge the Allocated Loan Amount relating only to
the affected Property in full, then Lender may elect to accelerate repayment of,
or Borrower may elect to prepay, the entire remaining outstanding balance of the
Allocated Loan Amount relating only to the affected Property, such prepayment to
be made in either case within one hundred twenty (120) days following notice
from the electing party to the other party (or such longer period as may be
reasonably necessary for Borrower to secure replacement financing as long as
Borrower Parties are diligently pursuing said refinancing in good faith),
without any Applicable Prepayment Fee due thereon so long as no Event of Default
exists as of either the date Lender so accelerates or Borrower elects prepayment
of said Allocated Loan Amount and the date said Allocated Loan Amount is fully
and finally repaid.
 
Section 3.3. Condemnation Awards.  Borrower shall promptly notify Lender of the
receipt by a Borrower Party of notice of the institution of any proceeding for
the condemnation or other taking of any Property or any portion thereof.  Lender
may participate in any such proceeding relating to a Major Damage Event and the
applicable Individual Borrower shall deliver to Lender all instruments necessary
or required by Lender to permit such participation.  Without Lender’s prior
written consent (which consent shall not be unreasonably withheld), no Borrower
Party, in connection with any Major Damage Event, shall agree to any
compensation or award and/or take any action or fail to take any action which
would cause the compensation to be determined.  All awards and compensation for
the taking or purchase in lieu of condemnation of any Property or any part
thereof are hereby assigned to and shall be paid to Lender for application to
the Obligations (except as expressly provided below).  Borrower Parties
authorize Lender to collect and receive such awards and compensation, to give
proper receipts and acquittances therefor, and to apply the same toward the
payment of the Obligations in such order, priority and proportions as Lender in
its reasonable discretion shall deem proper (and provided no Event of Default
exists as of the date Lender applies such condemnation proceeds to the
Obligations, no Applicable Prepayment Fee shall be payable in connection with
any such prepayment), notwithstanding that the Obligations may not then be due
and payable; provided, however, that if the condemnation in question does not
constitute a Major Damage Event and the applicable Individual Borrower requests
that such proceeds be used for non-structural site improvements (such as
landscape, driveway, walkway and parking area repairs) to the affected Property
which are required to be made as a result of such condemnation, Lender will
apply the award to such restoration in accordance with disbursement procedures
applicable to Net Proceeds.  Borrower Parties, upon request by Lender, shall
execute all instruments reasonably requested by Lender to confirm the assignment
of the awards and compensation to Lender, free and clear of all Liens, charges
(except as expressly set forth above) or encumbrances.  If Lender applies
condemnation proceeds to the Allocated Loan Amount relating only to the affected
Property, the lien of the Loan Documents shall be reduced only by the amount of
such proceeds
 
 
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actually applied by Lender in reduction of the Obligations, but if such proceeds
do not discharge the Obligations in full, then Lender may elect to accelerate
repayment of, or Borrower may elect to repay, the entire remaining outstanding
balance of the Allocated Loan Amount relating only to the affected Property,
such prepayment to be made in either case within one hundred twenty (120) days
following notice from the electing party to the other party (or such longer
period as may be reasonably necessary for Borrower Parties to secure replacement
financing as long as Borrower Parties are diligently pursuing said refinancing
in good faith), without any Applicable Prepayment Fee due thereon so long as no
Event of Default exists as of both the date Lender so accelerates or Borrower
elects repayment of said Allocated Loan Amount and the date said Allocated Loan
Amount is fully and finally repaid.
 
Section 3.4. Impounds.
 
(a) In connection with a permitted assumption or transfer of the Loan pursuant
to Subsection 7.1(c), and in order to assure compliance with Borrower’s
obligations pursuant to Section 7.2, but not in lieu of such obligations,
Borrower (or its permitted successor) shall deposit with Lender, monthly on each
Payment Date (commencing on the first Payment Date following Lender’s written
request), one-twelfth (1/12th) of the annual charges for Taxes (collectively,
“Impounds”). Each deposit shall be in an amount reasonably determined by Lender
that will be sufficient (when combined with other monthly installments) to make
full payment of all Impounds thirty (30) days prior to the date any delinquency
or penalty becomes due with respect to such Impounds.  Deposits shall be made on
the basis of the Impounds which have been fixed for the then current year;
provided, however, that prior to the date that such Impounds have been so fixed,
deposits shall be made on the basis of Lender’s reasonable estimate from time to
time of the amount of Impounds for the then current year (after giving effect to
any recalculation or reassessment or, at Lender’s election, on the basis of the
Impounds for the prior year).  All funds so deposited shall not be construed as
trust funds, may be held by Lender, without interest, and may be commingled with
Lender’s general funds.  Borrower Parties (including any permitted successor to
Borrower Parties) hereby grants to Lender a security interest in all Impounds so
deposited with Lender for the purpose of securing the Obligations.  Upon the
occurrence of an Event of Default, all Impounds deposited with Lender may be
applied in payment of the Impounds for which such funds have been deposited, or
to the payment of the Obligations, as Lender may elect, but no such application
shall be deemed to have been made by operation of law or otherwise until
actually made by Lender.  Borrower’s permitted successor shall furnish Lender
with bills for the Impounds at least thirty (30) days prior to the date on which
such Impounds first become payable.  If at any time Lender determines that the
amount on deposit with Lender, together with the monthly installments to be
deposited by Borrower’s permitted successor before the Impounds are payable, are
insufficient to pay the Impounds, Borrower’s permitted successor shall deposit
any deficiency with Lender within the Demand Period.  Provided no Event of
Default has occurred, Lender shall pay the Impounds when the amount on deposit
with Lender is sufficient to pay such Impounds and Lender has received a bill
for such Impounds.
 
(b) Borrower Parties acknowledges that Lender may, at any time Impounds are not
being collected by Lender pursuant to Section 3.4(a) and at the sole cost and
expense of Borrower, engage the services of a tax service company to verify the
status of taxes and assessments on the Portfolio.  Lender shall be entitled to
rely upon (regardless of whether or not
 
 
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Lender engages a tax service company) any certificate, advice or bill from any
authority (or any official thereof) to which such payments are payable, and
Lender shall have no duty to inquire as to the validity or accuracy of any such
certificate, advice or bill or to make any protest in connection therewith.
 
(c) Nothing contained in this Section 3.4 shall be deemed to affect any right,
power, privilege or remedy of Lender under any provision of this Agreement, the
Mortgage, any other Loan Document or any statute or rule of law, to pay any
amount required to be paid pursuant to Section 7.2, to add the amount so paid to
the Obligations and to require Borrower to reimburse Lender for such amount,
together with interest thereon at the Default Rate from the expiration of the
Demand Period until payment in full is received by Lender.  In the event of any
transfer of Borrower’s right, title and interest in or to all or any part of the
Portfolio (without implying any consent of Lender to any such transfer except as
expressly set forth in this Agreement), Lender shall be entitled to treat such
transfer as also effecting an assignment to the transferee of all right, title
and interest of Borrower Parties in and to any and all such deposits relating to
the transferred portion of the Portfolio.  After any assignment by Lender of its
interest in the Loan, any such deposits on hand shall, in Lender’s discretion,
be turned over to the assignee or returned to Borrower Parties, and all further
responsibility of Lender with respect to such deposits shall terminate.
 
ARTICLE 4.

 
LEASING MATTERS
 
Section 4.1. Representations and Warranties.  Borrower represents and warrants
to Lender that:  (a) the rent roll delivered to Lender and attached hereto as
Schedule 4.1 (the “Rent Roll”) is true, complete and correct in all material
respects, and all Leases are valid and in and full force and effect; (b) all of
the Leases (including amendments) are in writing, and there are no oral
agreements with respect thereto; (c) the copies of the Leases delivered to
Lender are true, complete and correct and include any and all amendments; (d) to
Borrower’s knowledge, no Borrower Party as “landlord” nor any Tenant is in
default in any material respect under any of the Leases; (e) Borrower has no
knowledge of any notice of termination or “landlord” default issued by any
Tenant with respect to any Lease, and Borrower has provided to Lender copies of
all “tenant” default notices issued by or on behalf of an Individual Borrower in
respect of uncured tenant defaults; (f) Borrower has not assigned or pledged any
of the Leases, the Rents or any interests therein except to Lender; (g) except
as set forth in the Rent Roll, no Tenant or other party has an option to
purchase all or any portion of any Property; (h) except as set forth on the Rent
Roll, no Tenant has the right to terminate its Lease prior to expiration of the
stated term of such Lease; (i) no Tenant has prepaid more than one month’s Rent
in advance (except for bona fide security deposits as shown on the Rent Roll);
and (j) other than amounts applied or returned in accordance with the Leases,
the amount of all security deposits held by or on behalf of an Individual
Borrower is the entire amount required to be deposited with or on behalf of an
Individual Borrower pursuant to the Leases, and said deposits are held, to the
extent required by applicable Legal Requirements, in separate and/or
interest-bearing accounts.  Within ten (10) days after Lender’s request,
Borrower shall furnish to Lender a statement of all tenant security deposits
held by or on behalf of an Individual Borrower, certified by an Authorized
Representative of Borrower as being true, complete and correct.
 
 
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Section 4.2. Lender’s Lease Approval Rights.
 
(a) Any Lease entered into by or on behalf of any Individual Borrower following
the Funding Date that does not constitute a Major Lease shall be on a standard
form approved by Lender (such approval not to be unreasonably withheld) with no
material modifications (except as approved by Lender in writing, such approval
not to be unreasonably withheld), prior to execution by or on behalf of any
Individual Borrower.
 
(b) From and after the Funding Date, no Borrower Party nor any Person acting on
behalf of a Borrower Party shall, without the prior written consent of Lender
(such consent not to be unreasonably withheld):  (i) enter into any Major Lease,
(ii) enter into any amendment, modification, replacement, extension of, or
renewal of any Major Lease (whether in existence as of the Funding Date or
entered into after the Funding Date), other than extensions and/or renewals
expressly contemplated by the terms of any approved Major Lease, (iii) enter
into any amendment, modification, replacement, extension, or renewal of any
non-Major Lease in a manner that would cause such non-Major Lease to become a
Major Lease, (iv) consent to an assignment or subletting associated with any
Major Lease, or (v) terminate or accept or acquiesce to the surrender of any
Lease (regardless of whether said termination relates to a Major Lease or a
non-Major Lease), other than a termination that is expressly provided for in
such Lease; provided that Lender’s approval for the termination or surrender of
a non-Major Lease shall not be required if following any such termination or
surrender, the aggregate Portfolio occupancy continues to be at least eighty
percent (80%) (for purposes of this subsection (b), “occupancy” means Tenants in
occupancy, paying rent at the rates stipulated in their respective Leases and
without any other economic or material non-economic default under such
Leases).  If any Individual Borrower intends to accept the termination or
surrender of a non-Major Lease based on the immediately preceding exception,
then concurrently with the effectiveness of said termination or surrender, the
applicable Individual Borrower must provide Lender with a current rent roll and
affidavit, in form reasonably required by Lender, confirming compliance with the
conditions of said exception.  Lender may condition its consent (when required)
to any Lease termination on the deposit of any termination or surrender proceeds
with Lender for distribution for costs associated with re-letting the subject
space.  In connection with any request for approval relating to a leasing
matter, provided no Event of Default exists, Lender shall notify Borrower
whether Lender has approved any such Lease or amendment, modification,
replacement, extension, renewal, assignment, subletting, termination or
surrender within ten (10) Business Days following Lender’s receipt of all
information reasonably requested by Lender to review any such leasing approval
request.  If Lender does not so notify Borrower within ten (10) Business Days
following Lender’s receipt of all such information and if no Event of Default
exists, Lender’s approval of such leasing matter shall be deemed granted.
 
Section 4.3. Covenants.  Borrower shall (i) perform, observe, and comply with
each of the covenants and agreements which any Individual Borrower is required
to perform, observe or comply with under the Leases; (ii) use its commercially
reasonable efforts to enforce the obligations to be performed by the Tenants
under the Leases; (iii) promptly furnish to Lender any notice of default or
termination received by a or on behalf of any Individual Borrower from any
Tenant, and any notice of default or termination given by or on behalf of any
Individual Borrower to any Tenant; (iv) not collect any Rents for more than
thirty (30) days in advance of the time when the same shall become due, except
for bona fide security deposits (it being agreed
 
 
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by Borrower that Borrower shall give prompt written notice to Lender if Borrower
collects any security deposit under any Lease equal to or in excess of an amount
equal to three (3) month’s Rent under such Lease; (v) not enter into any ground
lease or master lease of any part of the Portfolio; (vi) not further assign or
encumber any Lease; (vii) hold in trust all payments and other monetary
consideration received by or for the benefit of a Borrower Party in connection
with any surrender or termination of any Lease and shall immediately deposit or
cause to be deposited with Lender all such payments and other monetary
consideration; and (viii) not, except as permitted in Section 4.2, enter into
any new Lease or enter into or accept any extension, modification, termination
or renewal of any existing Lease, and any action in violation of clause (v),
(vi), (vii), or (viii) of this Section 4.3 shall be void (as to all Borrower
Parties ) at the election of Lender.
 
Section 4.4. Tenant Estoppels.  Following the Funding Date, and within thirty
(30) days following Lender’s reasonable request, Borrower shall obtain and
furnish to Lender written estoppels in form and substance satisfactory to
Lender, executed by the Tenants under all Leases and confirming the term, rent
or daily rate, and other provisions and matters relating to the applicable Lease
(provided that unless an Event of Default has occurred, Lender shall not make a
request under this Section 4.4 with respect to any Lease not more than once
during the term of the Loan).
 
Section 4.5. Conflict with Assignment of Leases and Rents. Any inconsistency
between the terms of this Article 4 and the terms of the Assignment of Leases
and Rents shall be controlled by the terms of the Assignment of Leases and
Rents.
 
ARTICLE 5.

 
REPRESENTATIONS AND WARRANTIES
 
As of the Funding Date, Borrower represents and warrants to Lender that:
 
Section 5.1. Organization and Power.  Each Borrower Party is duly organized,
validly existing and in good standing under the laws of the state of its
formation or existence, and is in compliance with all Legal Requirements
applicable to doing business in the State. No Borrower Party is a “foreign
person” within the meaning of § 1445(f)(3) of the Internal Revenue Code.
 
Section 5.2. Validity of Loan Documents.  The execution, delivery and
performance by each Borrower Party (as applicable) of the Loan Documents (i) are
duly authorized and do not require the consent or approval of any other party or
Governmental Authority which has not been obtained (and copies of which have
been provided to Lender); and (ii) will not violate any Legal Requirement or
result in the imposition of any Lien upon the assets of any such party, except
as contemplated by the Loan Documents.  The Loan Documents constitute the legal,
valid and binding obligations of each Borrower Party (as applicable),
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, or similar laws generally affecting the enforcement of
creditors’ rights.
 
Section 5.3. Liabilities; Litigation.
 
 
 
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(a) The general financial and operating information relating to each Borrower
Party and/or the Portfolio, submitted to Lender by or on behalf of any Borrower
Party concurrently with or prior to the date of the Application, is true,
complete and correct in all material respects with no significant change since
the date of submission.
 
(b) No Borrower Party is contemplating either the filing of a petition by it
under state or federal bankruptcy or insolvency laws or the liquidation of all
or a major portion of its assets or property, and no Borrower Party has
knowledge of any Person contemplating the filing of any such petition against
any Borrower Party or any Property.
 
Section 5.4. Taxes and Assessments.  Each Property constitutes a separate tax
parcel, and no parcel forming part of the Portfolio is included within a tax
parcel, for ad valorem or local real estate tax purposes, that also includes
real property not encumbered by the Mortgage.  There are no pending or, to the
knowledge of Borrower Parties, any proposed special or other assessments for
public improvements or otherwise affecting any Property, nor are there any
contemplated improvements to any Property that may result in such special or
other assessments.
 
Section 5.5. Other Agreements; Defaults.  No Borrower Party is a party to any
agreement or instrument or subject to any court order, injunction, permit, or
restriction which might adversely affect any Property or the business,
operations, or condition (financial or otherwise) of any Borrower Party.  No
Borrower Party is in violation of any agreement which violation would have an
adverse effect on any Property or any Borrower Party or the business,
properties, or assets, operations or condition (financial or otherwise) of any
Borrower Party.
 
Section 5.6. Compliance with Legal Requirements.
 
(a) Each Borrower Party has all requisite licenses, permits, franchises,
qualifications, certificates of occupancy or other governmental authorizations
to own, lease and operate each Property and carry on its business.  The use
being made of each Property is in conformity with the certificate of occupancy
and/or applicable permits or governmental authorizations and any other
restrictions, covenants or conditions affecting such Property.
 
(b) Each Property is in compliance with all applicable Legal Requirements
(including building, parking, subdivision, land use, health, fire, safety and
zoning ordinances and codes).
 
(c) No Property constitutes, in whole or in part, a legally non-conforming use
under any Legal Requirements.
 
(d) No condemnation has been commenced or, to Borrower’s knowledge, is
contemplated with respect to all or any portion of any Property or for the
relocation of roadways providing access to any Property.
 
(e) Each Property has adequate rights of access to public ways, and all roads
necessary for the full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by applicable
Governmental Authorities.
 
(f) Except to the extent that any Property is adequately served by private
systems and facilities located on such Property (and disclosed on the survey
delivered to Lender on the
 
 
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Funding Date), each Property is served by adequate water, sewer, sanitary sewer
and storm drain facilities, all public utilities necessary or convenient to the
full use and enjoyment of such Property are located in the public right-of-way
abutting such Property, and all such utilities are connected so as to serve such
Property without passing over other property, except to the extent such other
property is subject to a perpetual easement for such utility benefiting such
Property.
 
(g) Borrower and, to the knowledge of Borrower, each other party bound under any
declaration, reciprocal easement agreement, or other instrument of covenants,
conditions and restrictions affecting any of the Properties are current in the
payment of all sums that may be due thereunder and are otherwise in compliance
in all material respects with the other provisions thereof.
 
Section 5.7. Location of Borrower.  The principal place of business and chief
executive offices of each Borrower Party are located at the addresses stated in
Section 9.1.
 
Section 5.8. ERISA.  No Borrower Party has established any pension plan for
employees that would cause a Borrower Party to be subject to ERISA.
 
Section 5.9. Margin Stock.  No part of proceeds of the Loan will be used for
purchasing or acquiring any “margin stock” within the meaning of Regulations T,
U or X of the Board of Governors of the Federal Reserve System.
 
Section 5.10. Tax Filings.  Each Borrower Party has filed (or have obtained
effective extensions for filing) all federal, state and local tax returns
required to be filed and have paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments payable by
such  Borrower Party, respectively.
 
Section 5.11. Solvency.  The fair saleable value of each Borrower
Parties’  assets exceeds and will, immediately following the funding of the
Loan, exceed such Borrower Party’s total liabilities, including subordinated,
unliquidated, disputed and contingent liabilities.  The fair saleable value of
each Borrower Parties’ assets are and will, immediately following the funding of
the Loan, be greater than such Borrower Party’s probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured.  Each Borrower Parties’ assets do not and,
immediately following the funding of the Loan will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted.  No Borrower Party intends to, and does not believe that it will,
incur Debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such Debts as they mature (taking into
account the timing and amounts of cash to be received by such Borrower Party and
the amounts to be payable on or in respect of obligations of such Borrower
Party).
 
Section 5.12. Full and Accurate Disclosure.  No statement of fact made by or on
behalf of any Borrower Party in this Agreement or in any of the other Loan
Documents contains any untrue statement of a material fact.  There is no fact
presently known to any Borrower Party which has not been disclosed to Lender
that materially and adversely affects, or as far as any Borrower Party can
reasonably predict, might materially and adversely affect, any Property or the
business, operations or condition (financial or otherwise) of any Borrower
Party.
 
 
 
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Section 5.13. Property Conditions.  Each Property is free of material structural
defects, and all building systems contained therein are in good working order in
all material respects, subject to ordinary wear and tear.
 
Section 5.14. Terrorism and Anti-Money Laundering.
 
(a) As of the Funding Date, no direct or indirect holder of a beneficial
interest in Borrower is an OFAC Prohibited Person.
 
(b) To comply with the Anti-Money Laundering Laws, all payments by a Borrower
Party to Lender or from Lender to a Borrower Party shall only be made in the
name of a Borrower Party and to and from a bank account of a bank based or
incorporated in or formed under the laws of the United States or a bank that is
not a “foreign shell bank” within the meaning of the U.S. Bank Secrecy Act (31
U.S.C. § 5311 et seq.), as amended, and the regulations promulgated thereunder
by the U.S. Department of the Treasury, as such regulations may be amended from
time to time.
 
(c) Each Borrower Party agrees to provide to Lender, or to cause any other
Person having a beneficial interest in a Borrower Party, to provide, at any time
and from time to time during the term of the Loan, such information as Lender
determines to be necessary or appropriate to comply with the Anti-Money
Laundering Laws of any applicable jurisdiction, or to respond to requests for
information concerning the identity of any Borrower Party or any Person having a
direct or indirect beneficial interest in any Borrower Party, from any
Governmental Authority, self-regulatory organization or financial institution in
connection with its anti-money laundering compliance procedures, or to update
such information.
 
(d) The representations and warranties set forth in this Section 5.14 shall be
deemed repeated and reaffirmed by each Borrower Party as of each Payment Date
and as of each date on which any Borrower Party receives any funds from
Lender.  Each Borrower Party agrees to promptly notify Lender in writing should
it become aware of any change in the information set forth in this Section 5.14.
 
Section 5.15. Financing Transaction.  The Loan is (or shall be) evidenced by
debt instruments that are intended to be accounted for as “debt” on the balance
sheet of each Borrower Party, and each Borrower Party shall account for the Loan
as “debt” in all financial statements prepared by or on behalf of each Borrower
Party.
 
Section 5.16. Personal Property.  Except for the Personal Property listed on
Schedule 5.16 attached hereto, no material tangible Personal Property is located
within or outside any Property or used or proposed to be used in any
Property.  A Borrower Party has good title to all Personal Property free and
clear of all Liens, except as disclosed on Schedule 5.16.
 
Section 5.17. Additional Real Property.  Except for the Land (as defined in the
Mortgage) and Improvements and any contiguous public streets and sidewalks, no
Borrower Party nor any Property Manager uses or occupies any other material real
property in connection with the operation, occupancy and management of any
Property.
 
Section 5.18. Material Agreements.
 
 
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(a) As of the Funding Date, each Property owned by an Individual Borrower is
managed by Carveout Indemnitor in accordance with the partnership agreement for
such Individual Borrower, and no separate management or leasing agreements
currently exist.  Management fees payable to Carveout Indemnitor shall not be
modified to the extent that such modification would cause the management fees to
exceed market rates payable to unrelated and qualified third party property
managers and/or leasing agents.
 
(b) No Borrower Party other than Carveout Indemnitor has any right or claim to,
or obligation to pay, any fees, commissions, royalties, compensation or other
remuneration in connection with or arising out of the use, occupancy,
management, and operation of any Property.  Except as set forth in Schedule
5.18, there are no Material Agreements affecting any Property.
 
ARTICLE 6.

 
FINANCIAL REPORTING; AUDITS
 
Section 6.1. Financial Statements.  While any of the Obligations remain
outstanding, Borrower shall furnish to Lender, or in the case of the reporting
under Subsection 6.1(e) below, Borrower shall cause Carveout Indemnitor to
furnish to Lender, each of the following within the specified time period, each
in hardcopy and electronic form, and each to be in format reasonably required by
Lender:
 
(a) If requested by Lender, within thirty (30) days after the end of each
calendar quarter (including the last calendar quarter of each year), a quarterly
rent roll for each Property, certified to Lender by an Authorized Representative
of Borrower as true, accurate and complete;
 
(b) Intentionally omitted;
 
(c) If requested by Lender, within thirty (30) days after the end of each
calendar quarter (including the last calendar quarter of each year), quarterly
operating statements for each Property (including capital expenses), certified
by an Authorized Representative of Borrower as true, accurate and complete;
 
(d) Within ninety (90) days following the end of each calendar year: (i) annual
operating statements and a current rent roll for each Property, certified by an
Authorized Representative of Borrower as true, accurate and complete, (ii) a
fully-executed copy (certified by an Authorized Representative of Borrower as
true, complete and correct) of any Lease executed by (or on behalf of) any
Borrower Party during the preceding year that did not require Lender’s consent,
and (iii) a capital expenditure summary for each Property for the preceding
calendar year, certified by an Authorized Representative of Borrower as true,
accurate and complete;
 
(e) Within ninety (90) days following the end of each calendar year, annual
audited financial statements, including a balance sheet, for Carveout
Indemnitor, certified by an Authorized Representative of Carveout Indemnitor as
true, accurate and complete;
 
 
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(f) If prepared by Borrower in the ordinary course of its business, within
thirty (30) days following completion thereof by Borrower, final annual
operating and capital expenditure budgets for each Property for the ensuing
calendar year;
 
(g) Promptly following receipt, copies of all material notices (meaning written
notices of violation of Legal Requirements or material notices to or from any
Tenants, but excluding routine correspondence) issued or received in connection
with the ownership and operation of any Property;
 
(h) Within sixty (60) days following the occurrence of any Permitted Transfer
described in clause (a)(iii) of the definition of “Permitted Transfer” in
Section 1.1, a certification, executed by an Authorized Representative of
Carveout Indemnitor or any successor permitted under said clause (a)(iii) (as
the case may be), confirming that immediately following such Permitted Transfer,
Carveout Indemnitor or any such successor (as the case may be) was in compliance
with the conditions and requirements set forth in said clause (a)(iii); and
 
(i) Promptly following Lender’s request, such other reasonable financial
information relating to any Property or any Borrower Party as Lender may request
in writing from time to time.
 
Section 6.2. Accounting Principles.  All financial statements for the Carveout
Indemnitor set forth above shall be prepared in accordance with GAAP,
consistently applied, except for certain reclassifications allowed by GAAP or to
comply with new GAAP accounting pronouncements.  All operating statements for a
Property shall be prepared in accordance with GAAP, except rental income shall
be prepared on an accrual basis, and not straight-lined.
 
ARTICLE 7.

 
COVENANTS
 
Borrower covenants and agrees with Lender as follows:
 
Section 7.1. Due on Sale and Encumbrance; Transfers of Interests.
 
(a) Without the prior written consent of Lender and except as expressly provided
below:
 
(i) No Borrower Party nor any Person having an ownership or beneficial interest
in a Borrower Party shall (A) consummate a Transfer, or (B) enter into any
easement or other agreement granting rights in or restricting the use or
development of the Collateral; and
 
(ii) No new partners shall be admitted to or created in a Borrower Party (nor
shall any existing partner withdraw from a Borrower Party); and
 
(iii) No change in the day-to-day control and management of a Borrower Party,
any Property or the Portfolio shall be implemented.
 
 
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Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to declare the Obligations to
be immediately due and payable upon a Transfer in violation of this
Agreement.  This provision shall apply to every Transfer in violation of this
Agreement regardless of whether such Transfer was voluntary or not, or whether
or not Lender has previously consented to any Transfer.
 
(b) Notwithstanding the restrictions in Subsection 7.1(a), Permitted Transfers
will be permitted without Lender’s prior consent.  Carveout Indemnitor (or any
successor permitted under clause (a)(iii) of the definition of “Permitted
Transfer” in Section 1.1) shall at all times, whether prior to or following the
occurrence of any Permitted Transfer, be the sole general partner of each
Individual Borrower.
 
(c) Notwithstanding anything to the contrary set forth in this Agreement, Lender
shall consent to a one-time transfer of title to the Portfolio and assumption of
100% of the Loan and the duties and obligations of Borrower and Carveout
Indemnitor under the Loan Documents, subject to satisfaction of each and every
one of the following conditions:
 
(i) At least thirty (30) days prior to such assumption, Borrower Parties shall
provide to Lender: (A) written notice (a “Assumption Request”) of the proposed
transfer, (B) a work fee in the amount of $25,000.00 (the “Assumption Work
Fee”), (C) the name(s), address(es) and organizational documents of the proposed
purchaser and of the principals, affiliates and parent or other majority owners,
as applicable, of the proposed purchaser, (D) detailed and complete financial
statements of the proposed purchaser and of the principals, affiliates and
parent or other majority owners, as applicable, of the proposed purchaser, (E)
information with respect to the business and business experience of the proposed
purchaser and its principals, affiliates and parent or other majority owners, as
applicable, and their experience in the ownership and operation of properties
similar to the Portfolio and other commercial real estate, (F) information on
the proposed property management company and a copy of the proposed property
management agreement, (G) the terms and conditions of the proposed sale and a
copy of the executed purchase and sale agreement, (H) a description of the
ownership structure of the proposed purchaser and each of its principals,
affiliates and parent or other majority owners, as applicable, (I) the
purchaser’s pro-forma operating and management plan for the Portfolio, and (J)
promptly following Lender’s request, such other information as Lender may
reasonably request to permit it to determine the creditworthiness and management
abilities of the proposed purchaser and its principals, affiliates and parent or
other majority owners, as applicable;
 
(ii) Lender must approve, in the exercise of its discretion, the identity,
creditworthiness, management abilities and all other attributes of the proposed
purchaser and the proposed replacement Carveout Indemnitor(s), and their
respective principals, affiliates and parent or other majority owners, as
applicable;
 
(iii) No Event of Default shall have occurred and be continuing, either as of
the date of the Assumption Request or thereafter through the date of transfer of
title to the Portfolio and assumption of the Loan;
 
 
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(iv) The Portfolio, as of the date of transfer and assumption and thereafter,
must be managed by a management company approved by Lender (in the exercise of
its reasonable judgment) under a management agreement satisfactory to Lender (in
the exercise of its reasonable judgment) and otherwise satisfying the
requirements of Section 7.10;
 
(v) At the closing of any approved transfer and assumption, the proposed
purchaser shall assume the duties and obligations of Borrower Parties under the
Loan Documents (subject to the limitations on liability set forth in Article 10)
pursuant to assumption documents in form and substance satisfactory to Lender
(in the exercise of its reasonable judgment).  Additionally, at the time of the
approved transfer and assumption, the proposed purchaser shall provide to Lender
an environmental indemnity agreement from said purchaser and from another
financially responsible Person acceptable to Lender (in its discretion) in form
and substance reasonably satisfactory to Lender (which form may be different
from the form executed by Borrower Parties as a result of Lender’s updating its
standard form of environmental indemnity agreement or as a result of specific
environmental conditions at any Property) and a recourse carveout indemnity in
substantially the same form as the Carveout Indemnity, also from a financially
responsible Person acceptable to Lender (in its discretion).  Borrower Parties
and the proposed purchaser and such other Persons as Lender shall require shall
also deliver and, if applicable, execute (A) evidence of authority and entity
existence, (B) Uniform Commercial Code, judgment and bankruptcy searches, (C)
Uniform Commercial Code financing statements, (D) an endorsement to the Title
Policy updating the effective date to the date of the transfer, showing the
purchaser as the owner of each Property, showing no additional title exceptions,
except as shall be approved by Lender (in its discretion) and otherwise in form
and substance reasonably acceptable to Lender, (E) opinions of counsel
reasonably acceptable to Lender on such matters as Lender shall reasonably
require, (F) evidence of insurance as required by Section 3.1, and (G) such
other documents as Lender shall reasonably require in order to effectuate the
transaction as contemplated by this Subsection (c);
 
(vi) At the closing of any approved transfer and assumption, the proposed
purchaser shall, in accordance with the terms and conditions of Sections 3.4,
deposit with Lender sufficient funds to pay when due all Impounds in accordance
with the terms of Section 3.4.  To the extent the Loan Documents require any
other reserves or deposits the same shall be established by the proposed
purchaser prior to the date of closing of the approved transfer and
assumption.  The foregoing requirement for deposits and reserves shall be
enforced notwithstanding that any of the foregoing may have been waived by
Lender with respect to Borrower Parties either in this Agreement, or in any side
letter or agreement executed by Lender;
 
(vii) At the closing of any approved transfer and assumption, Borrower shall pay
to Lender a fee in the amount of one percent (1%) of the then outstanding
balance of the Loan in immediately available funds (the “Assumption Fee”).  The
obligation to pay the Assumption Fee is consideration to induce Lender to allow
the proposed purchaser to assume the obligations of Borrower Parties’ under the
Loan Documents and to release Borrower Parties from liability thereunder for all
periods of time from and after the date
 
 
 
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of transfer in accordance with this Subsection (c); provided that in no event
shall any Borrower Party be released from any liability accruing prior to the
date of the transfer of the Portfolio pursuant to this Subsection (c), including
acts or omissions leading to a violation of Environmental Laws (as defined in
the Environmental Indemnity Agreement), whether known or unknown as of the
closing of the approved transfer;
 
(viii) The proposed transfer and assumption shall not cause a violation of any
Legal Requirements governing any Property, the Loan, Borrower Parties, the
proposed purchaser, any proposed replacement carveout indemnitor or any of their
respective principals;
 
(ix) Lender must confirm, in the exercise of its reasonable judgment, that as of
the date of the proposed transfer of the Portfolio and assumption of the Loan,
the Portfolio will generate (A) a Loan to Value Ratio equal to the lesser of (1)
sixty-five percent (65%), and (2) the Loan to Value Ratio in effect immediately
preceding the proposed transfer of the Portfolio and assumption of the Loan; and
(B) a Debt Service Coverage Ratio equal to the greater of (1) 140% (calculated
for the 12-month period immediately following the proposed transfer of the
Portfolio and assumption of the Loan based on a fully amortizing 20-year
schedule) and (2) the Debt Service Coverage Ratio in effect immediately
preceding the proposed transfer of the Portfolio and assumption of the Loan;
 
(x) On the earlier of ten (10) days following demand by Lender or the closing of
the approved transfer and assumption, Borrower Parties shall pay all of Lender’s
reasonable costs and expenses incurred in connection with the proposed transfer
of the Portfolio whether or not the transfer actually occurs, including
attorneys’ fees, recording and filing charges, title company charges and the
cost of the endorsement to the Title Policy.  The Assumption Work Fee shall be
applied to reimburse Lender for its costs and expenses (with any excess after
full payment of all of Lender’s costs and expenses being applied to the
Assumption Fee or returned to Borrower Parties), but the Assumption Work Fee
shall not be deemed to be a cap or limitation on the  obligation of Borrower to
reimburse Lender for all costs and expenses incurred by Lender under this
Subsection (c), regardless of whether such amounts exceed the Assumption Work
Fee and/or Lender, in the exercise of its judgment, does not approve the
proposed purchaser, any proposed replacement guarantor or any other aspect of
the proposed transfer; and
 
(xi) Lender shall have no obligation to review or process the request of
Borrower Parties for approval of a proposed transfer of the Portfolio and
assumption of the Loan until such time as Lender has received all of the items,
including the Assumption Work Fee, required to be delivered to Lender pursuant
to this Subsection (c).
 
(d) Notwithstanding the restrictions in Subsection 7.1(a), Lender shall not
withhold its consent to any pledge by Carveout Indemnitor of the general
partnership interests in Borrower in order to secure so-called “mezzanine”
financing subject to satisfaction (to be determined by Lender in the exercise of
its reasonable judgment) of each and every one of the following conditions:
 
 
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(i) No Event of Default shall have occurred and be continuing, either as of the
date of the request for Lender’s consent or thereafter through the date of the
closing of such pledge and the proposed mezzanine financing;
 
(ii) Lender must confirm (in the exercise of its reasonable discretion) that
following the closing of such pledge and the proposed mezzanine financing,
Carveout Indemnitor shall have a Tangible Net Worth of not less than
$100,000,000;
 
(iii) Each Borrower Party must deliver all information reasonably requested by
Lender with respect to such pledge and the proposed mezzanine financing;
 
(iv) Prior to Lender’s consent under this Subsection 7.1(d) becoming effective,
Borrower must reimburse Lender for all reasonable costs and expenses incurred by
Lender in connection with the mezzanine financing, including legal fees and
expenses; and
 
(v) At all times following the closing of such pledge and the proposed mezzanine
financing, Carveout Indemnitor shall remain the sole general partner of each
Individual Borrower and shall continue to control the exercise of all rights,
powers and privileges afforded to Carveout Indemnitor in its capacity as general
partner under the applicable partnership agreements and other organizational
documents and applicable laws, and no pledgee of Carveout Indemnitor’s general
partnership interests in any Individual Borrower may take title to such general
partnership interests or exercise any of the rights, powers and privileges
afforded to Carveout Indemnitor in its capacity as general partner; and
 
(e) The prohibitions and restrictions set forth in this Article 7 shall not
preclude:  (i) any Borrower Party from granting liens that encumber real
property other than the Collateral, or (ii) Carveout Indemnitor from providing
indemnities or guaranties in favor of creditors other than Lender; it being
agreed such actions may be effected without Lender’s consent.
 
Section 7.2. Taxes; Charges.
 
(a) Subject to the terms of Section 3.4, Borrower shall pay before any fine,
penalty, interest or cost may be added thereto, and shall not enter into any
agreement to defer, any Taxes.  Borrower shall not suffer or permit the joint
assessment of any Property with any other real or personal property not
encumbered by the Mortgage.
 
(b) Borrower shall pay when due all claims and demands of mechanics, material
suppliers, laborers and others which, if unpaid, might result in a Lien on any
Property; provided, however, that Borrower Parties may contest the validity of
such claims and demands so long as (i) the applicable Individual Borrower
notifies Lender that it intends to contest such claim or demand, (ii) Borrower
Parties provide Lender with an indemnity, bond or other security satisfactory to
Lender (including an endorsement to the Title Policy insuring against such claim
or demand) assuring the discharge of the obligations of the applicable
Individual Borrower for such claims and demands, including interest and
penalties, and (iii) the applicable Individual Borrower is diligently contesting
the same by appropriate legal proceedings in good faith and at
 
 
 
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its own expense and concludes such contest prior to the tenth (10th) day
preceding the earlier to occur of the Scheduled Maturity Date or the date on
which such Property is scheduled to be sold for non-payment.
 
Section 7.3. Alterations and Renovations.  Borrower Parties shall obtain
Lender’s prior written consent (such consent not to be unreasonably withheld) to
any alterations or renovations to any of the Improvements; provided, however,
that Lender’s consent shall not be required in connection with any alterations
or renovations that (i) are contemplated in connection with any Restoration,
(ii) are permitted to be made by any Tenant under its Lease without the consent
or approval of any Borrower Party, or (iii) will not have a material adverse
effect on the financial condition of any Borrower Party, the value of the
affected Property or the Net Operating Income of the affected Property, provided
further that such alterations permitted under subsection (iii) do not adversely
affect any structural component of any Improvements relating to the affected
Property, any utility or HVAC system contained in any Improvements relating to
the affected Property, or the exterior of any building constituting a part of
any Improvements of the affected Property, and the aggregate cost thereof does
not exceed the lesser of either: (A) ten percent (10%) of the Allocated Loan
Amount of the affected Property, or (B) One Million Dollars ($1,000,000.00).  In
connection with any request for approval relating to any alterations or
renovations to any of the Improvements, provided no Event of Default exists,
Lender shall notify Borrower whether Lender has approved any such request within
ten (10) Business Days following Lender’s receipt of all information reasonably
requested by Lender to review any such request.  If Lender does not so notify
Borrower within ten (10) Business Days following Lender’s receipt of all such
information and if no Event of Default exists, Lender’s approval of such request
shall be deemed granted.
 
Section 7.4. Operation; Maintenance.
 
(a) Borrower shall not cause or permit any waste of any material portion of any
Property.
 
(b) Borrower shall observe and comply with all Legal Requirements applicable to
the ownership, use and operation of each Property and shall promptly commence a
reasonable and good faith cure of any alleged violation of any Legal
Requirements; provided that the applicable Individual Borrower may, upon
providing Lender with security satisfactory to Lender (in the exercise of
Lender’s reasonable judgment) and so long as during any contest the Collateral
shall not be subject to any lien, charge, fine or other liability and shall not
be in danger of being forfeited, lost or closed, proceed diligently and in good
faith to contest the validity or applicability of any such alleged violation of
Legal Requirement.
 
(c) Borrower shall maintain each Property in good condition and promptly repair
any damage or casualty (subject to the terms of this Agreement).
 
(d) Upon reasonable prior notice (except during the existence of an Event of
Default, when no prior notice shall be required), Borrower Parties and any
Property Manager (if any) shall provide Lender and its agents, representatives
and contractors with access to each Property from time to time (subject to the
rights of Tenants) for the purposes of conducting appraisals, engineering
inspections and environmental assessments of such Property (provided that Lender
 
 
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must have a good faith belief that an Individual Borrower is not in material
compliance with its warranties, covenants and agreements relating to physical
condition of the subject Property and/or compliance with Legal Requirements
(including Environmental Laws, as defined in the Environmental Indemnity
Agreement) prior to the commencement of any post-Funding Date engineering
inspection or environmental assessment or investigation with respect to that
Property) and with access to Borrower’s home office for purposes of examining
and copying the books and records relating to the Portfolio.  The costs relating
to such activities shall be paid by Lender unless (i) Lender has a good faith
basis for suspecting that an Individual Borrower is not in material compliance
with its warranties, covenants and agreements relating to the physical condition
of the subject Property and/or compliance with laws (including environmental
laws), (ii) the examination of such books and records reveals that financial
information submitted to Lender by Borrower Parties, Property Manager or anyone
on behalf of Borrower Parties is materially inaccurate, or (iii) an Event of
Default exists (or is discovered as a result of any such inspection or review),
in which case the reasonable third party fees and expenses relating to such
activities shall be paid by Borrower within the Demand Period.
 
(e) All Operating Revenues shall be applied to Operating Expenses, Debt Service
and reasonable and necessary capital expenditures or costs, and then, provided
no Event of Default exists, to general operating purposes of Borrower, including
distributions to members and/or partners of Borrower.
 
Section 7.5. Taxes on Security.  Borrower shall pay all taxes, charges, filing,
registration and recording fees, excises and levies payable with respect to the
Note or the Liens created or secured by the Loan Documents, other than income,
franchise and doing business taxes imposed on Lender.  If there shall be enacted
any law (a) deducting the Loan from the value of the Collateral for the purpose
of taxation, (b) affecting any Lien on any Property, or (c) changing existing
laws of taxation of mortgages, deeds of trust, security deeds, or debts secured
by real property, or changing the manner of collecting any such taxes, Borrower
shall promptly pay to Lender, within thirty (30) days following demand, all
taxes, costs and charges for which Lender is or may be liable as a result
thereof; provided, however, that if any such payment would be prohibited by law
or would render the Loan usurious, then instead of collecting such payment,
Lender may declare all amounts owing under the Loan Documents to be immediately
due and payable (provided that Borrower shall have no obligation to make payment
of any Applicable Prepayment Fee otherwise applicable to prepayment tendered as
a result of Lender’s exercise of its rights under this Section 7.5).
 
Section 7.6. Compliance with Loan Documents; Further Assurances.
 
(a) Each Borrower Party shall observe, perform and satisfy in a timely manner
all the terms, provisions, covenants, conditions, duties and obligations
required to be observed, performed or satisfied by them, and shall pay when due
all costs, fees and expenses required to be paid by them, under and pursuant to
this Agreement, the Note and the other Loan Documents.
 
(b) Each Borrower Party shall promptly (i) cure, or cause to be cured, any
defects in the execution and delivery of the Loan Documents, and (ii) execute
and deliver, or cause to be executed and delivered, all such other documents,
agreements and instruments as Lender may reasonably request to further evidence
and more fully describe the collateral for the Obligations,
 
 
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to correct any omissions or errors in the Loan Documents, to perfect, protect or
preserve any Liens created under any of the Loan Documents, or to make any
recordings, file any notices, or obtain any consents, as may be necessary or
appropriate in connection therewith.
 
(c) No Borrower Party shall (i) change the location of its chief executive
office/chief place of business from that specified in Section 9.1, or (ii)
change its name, or (iii) change the location where it maintains its records
with respect to the Portfolio, unless in each instance Borrower Parties shall
have given Lender at least thirty (30) days prior written notice of any such
change and shall have delivered to Lender all UCC financing statements and
amendments thereto as Lender shall request and taken all other actions deemed
necessary by Lender to continue its perfected first priority lien status in the
Collateral.
 
Section 7.7. Estoppel Certificates.  Borrower Parties, within twenty (20) days
after request, shall furnish to Lender a written statement, duly acknowledged by
an Authorized Representative of Borrower Parties, setting forth the amount due
on the Loan, the terms of repayment of the Loan, the date to which interest has
been paid, whether any offsets or defenses exist against the Loan and, if any
are alleged to exist, the nature thereof in detail, and such other reasonable
matters as Lender may request.
 
Section 7.8. Notice of Certain Events.  Borrower Parties shall, within three (3)
Business Days after gaining knowledge, notify Lender of (i) any Event of
Default, together with a detailed statement of the steps being taken to cure
such Event of Default (Lender having no obligation to accept any such cure of an
Event of Default unless acceptance of a cure and reinstatement is mandatory
under applicable law); (ii) any notice of any material default received by
Borrower Parties under other obligations relating to any Property or otherwise
material to Borrower’s business; and (iii) any threatened or pending legal,
judicial or regulatory proceedings, including any dispute between a Borrower
Party and any Governmental Authority, affecting a Borrower Party or any
Property.
 
Section 7.9. Indemnification.  Borrower shall jointly and severally indemnify,
defend and hold Lender harmless from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever,
including the reasonable fees and actual expenses of Lender’s attorneys, in
connection with (i) any inspection, review or testing of or with respect to any
Property, (ii) any investigative, administrative, mediation, arbitration, or
judicial proceeding, whether or not Lender is designated a party thereto,
commenced or threatened at any time (including after the repayment of the Loan)
in any way related to the execution, delivery or performance of any Loan
Document or to any Property, (iii) any proceeding instituted by any Person
claiming a Lien, and (iv) any brokerage commissions or finder’s fees claimed by
any broker or other party in connection with the Loan, any Property, or any of
the transactions contemplated in the Loan Documents, including those arising
from the joint, concurrent, or comparative negligence of Lender, except to the
extent any of the foregoing is caused by Lender’s gross negligence or willful
misconduct.
 
Section 7.10. Property Management.
 
 
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(a) Each Property has been, and as of the Funding Date will be, managed by
Carveout Indemnitor.  If at any time any Individual Borrower wishes to engage a
third-party property manager (including any Affiliate of Borrower) to manage the
applicable Property, Borrower must request and receive Lender’s approval of such
proposed property manager and the proposed management agreement (Lender’s
approval not to be unreasonably withheld) prior to engaging such proposed
property manager.  Lender may condition its approval of a proposed property
manager and management agreement on such Individual Borrower’s and such proposed
property manager’s execution and delivery of an assignment of management
agreement and subordination of management fees in form and substance acceptable
to Lender whereby, among other things, the proposed property manager agrees to
subordinate payment of its management fees to the full and timely payment of the
Obligations, and such Individual Borrower assigns to Lender all of Borrower’s
rights under the proposed management agreement.
 
(b) Borrower Parties shall (i) diligently perform and observe all of the terms,
covenants and conditions of any Management Agreement on the part of Borrower
Parties to be performed and observed and do all things necessary to preserve and
to keep unimpaired its rights thereunder, and (ii) within three (3) Business
Days following receipt, notify Lender of the giving of any notice by any
Property Manager to Borrower Parties of any default by a Borrower Party in the
performance or observance of any of the terms, covenants or conditions of any
Management Agreement on the part of a Borrower Party to be performed and
observed and deliver to Lender a true copy of each such notice.
 
(c) Without the prior written consent of Lender (such consent not to be
unreasonably withheld if no Event of Default exists), no Borrower Party shall
(i) surrender any Management Agreement, (ii) consent to the assignment by the
Property Manager of its rights, duties or obligations under any Management
Agreement, (iii) terminate or cancel any Management Agreement, or (iv) modify,
change, supplement, alter or amend any Management Agreement, either orally or in
writing.
 
(d) Any change in ownership or control of any Property Manager shall be cause
for Lender to re-approve such Property Manager and the applicable Management
Agreement (such approval not to be unreasonably withheld if no Event of Default
exists).
 
(e) Borrower hereby assigns to Lender all the rights, privileges and
prerogatives of Borrower in and under any Management Agreement (including the
right to surrender any Management Agreement or to terminate, cancel, modify,
change, supplement, alter or amend any Management Agreement in any respect, and
any such surrender of any Management Agreement or termination, cancellation,
modification, change, supplement, alteration or amendment of any Management
Agreement without the prior consent of Lender shall be void and of no force and
effect).
 
(f) Upon the occurrence of an Event of Default, Lender may require, upon ten
(10) Business Days prior written notice to Borrower, that Borrower select a
Property Manager not affiliated with Borrower to manage each Property.  If a
Property Manager is so required by Lender, Borrower shall immediately seek to
appoint a Property Manager acceptable to Lender (in the exercise of its
reasonable discretion), which Property Manager shall (i) be a reputable
management company having at least ten (10) years’ experience in the management
of properties
 
 
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substantially similar to each Property and in the jurisdiction in which each
Property is located, (ii) not be paid management fees in excess of market fees,
(iii) enter into a property management agreement in form and content acceptable
to Lender (such approval not to be unreasonably withheld), and (iv) enter into a
subordination agreement with Lender in form and content reasonably required by
Lender.
 
Section 7.11. Material Agreements.  Borrower shall not enter into or become
obligated under, or permit Property Manager to enter into or become obligated
under, any Material Agreement pertaining to any Property, without the prior
written consent of Lender, which consent shall not be unreasonably withheld.
 
Section 7.12. Intentionally Omitted.
 
Section 7.13. ERISA.
 
(a) No Borrower Party shall engage in any transaction that 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.
 
(b) Borrower Parties shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as requested by
Lender, that (i) no Borrower Party is 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; (ii) no Borrower Party is
subject to any state statute regulating investments of, or fiduciary obligations
with respect to, governmental plans; and (iii) one or more of the following
circumstances is true:
 
(i) Equity interests in each Borrower Party are publicly offered securities,
within the meaning of 29 C.F.R. §2510.3-101(b)(2);
 
(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in each Borrower Party is held by “benefit plan investors” within the
meaning of 29 C.F.R. §2510.3-101(f)(2); or
 
(iii) Each Borrower Party 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).
 
Section 7.14. Appraisal.  Borrower Parties shall cooperate with Lender’s request
for reasonable information necessary to complete a new or updated appraisal of
each Property, and Borrower Parties shall reimburse Lender for all costs
associated with a new or updated appraisal of such Property; provided that so
long as no Event of Default has occurred, Borrower Parties shall only be
obligated to reimburse Lender for one (1) new or updated appraisal for each
Property after the Funding Date (the reimbursement obligations of Borrower
Parties being unlimited following the occurrence of an Event of Default).
 
Section 7.15. Release of Collateral.
 
 
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(a) Following the request of Borrower and subject to the other terms and
conditions of this Section 7.15, Lender agrees to execute and deliver to
Borrower in connection with the sale or transfer by any Individual Borrower of
any Property a partial release instrument (in recordable form) of the lien of
the Mortgage and the other Loan Documents as to such Property (each, a “Partial
Release”), provided that in connection with each such Partial Release, each and
every one of the following conditions are satisfied (to be determined by Lender
in the exercise of its reasonable judgment):
 
(i) As of the date Lender issues such Partial Release, no Monetary Potential
Default then exists, and no Event of Default shall exist;
 
(ii) Borrower shall have submitted a written request for such Partial Release no
less than thirty (30) days prior to the anticipated issuance thereof, such
request identifying the Property subject to such requested Partial Release and
containing all other information required hereunder;
 
(iii) Only Borrower, and not a permitted successor under Section 7.1(c), shall
have the right to request a Partial Release;
 
(iv) Borrower shall not be entitled to request, and Lender shall have no
obligation to issue:  (A) a Partial Release prior to September 1, 2012, and (B)
Partial Releases for more than two (2) Properties in any 12-month period;
 
(v) Borrower shall not be entitled to request, and Lender shall have no
obligation to issue a Partial Release for any Property, if such Property,
together with all Properties previously released pursuant to this Section 7.15,
contains, in the aggregate, more than 186,000 square feet;
 
(vi) Concurrently with its delivery of a Partial Release, Lender shall receive a
partial release prepayment (each a “Partial Release Prepayment”) in an amount
equal to: (A) one hundred twenty-five percent (125%) of the Allocated Loan
Amount for the applicable Property plus (B) the Applicable Prepayment Fee (if
any) relating to such Partial Release Prepayment, such amount to be applied by
Lender in satisfaction of the Obligations (including any such Applicable
Prepayment Fee);
 
(vii) Lender shall have confirmed, in the exercise of its reasonable judgment,
that the remaining Properties within the Portfolio shall, following the issuance
of such Partial Release, generate a Debt Service Coverage Ratio, calculated for
the 12-month period immediately following the issuance of the requested Partial
Release (based on a fully amortizing 20-year schedule), equal to or in excess of
the greater of: (A) 140%, or (B) the Debt Service Coverage Ratio for all
Properties (inclusive of the Property subject to the requested Partial Release
and without giving effect to the Partial Release Prepayment to be made for the
requested Partial Release) calculated for the 12-month period immediately
preceding the issuance of the requested Partial Release;
 
(viii) Lender shall have confirmed in the exercise of its reasonable judgment,
that the Loan to Value Ratio, calculated after giving effect to the issuance of
the
 
 
 
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requested Partial Release and application of the Partial Release Prepayment to
be made for such requested Partial Release, shall not exceed the lesser of (1)
65%, or (2) the Loan to Value Ratio calculated immediately prior to giving
effect to the issuance of such Partial Release and application of the Partial
Release Prepayment to be made for such Partial Release;
 
(ix) Concurrently with Lender’s execution and delivery of each Partial Release,
Lender must receive a partial release fee of $2,500.00 together with payment of
all reasonable costs and expenses incurred by Lender in connection with such
Partial Release, including reasonable outside counsel attorneys’ fees and
expenses; and
 
(x) Lender shall have confirmed in the exercise of its reasonable judgment, that
no Property remaining within the Portfolio will, following the issuance of the
requested Partial Release, be adversely affected by such partial release because
such remaining Property relied on the Property to be released for compliance
with all Legal Requirements (including zoning, subdivision, shared parking,
utilities, and/or access).
 
(b) Upon approval of a requested Partial Release and satisfaction of the terms
and conditions specified in this Section 7.15, Lender shall execute and deliver
to Borrower Parties the Partial Release.
 
Section 7.16. Substitution of Collateral.
 
(a) Subject to the terms and conditions of this Section 7.16, Lender agrees to
accept the substitution of collateral for a Property (each, a “Collateral
Substitution”), provided that in connection with each Collateral Substitution,
each and every one of the following conditions are satisfied (to be determined
by Lender in the exercise of its reasonable judgment):
 
(i) As of the date Lender consents to the Collateral Substitution and as of the
date the Collateral Substitution is deemed effective, no Monetary Potential
Default then exists, and no Event of Default shall exist;
 
(ii) Borrower shall not be entitled to request, and Lender shall have no
obligation to approve: (A) a Collateral Substitution prior to September 1, 2011
or after September 1, 2029, and (B) Collateral Substitutions for more than two
(2) Properties in any 12-month period;
 
(iii) Only Borrower, and not a permitted successor under Section 7.1(c), shall
have the right to request a Collateral Substitution;
 
(iv) Borrower shall not be entitled to request, and Lender shall have no
obligation to approve a Collateral Substitution for any Property, if such
Property, together with all Properties previously substituted pursuant to this
Section 7.16, contains, in the aggregate, more than 186,000 square feet;
 
(v) Lender shall have confirmed, in the exercise of its reasonable judgment,
that the Portfolio will, following the closing of such Collateral Substitution,
generate a Debt Service Coverage Ratio, calculated for the 12-month period
immediately following
 
 
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the closing of the requested Collateral Substitution (based on a fully
amortizing 20-year schedule), equal to or in excess of the greater of: (A) 140%,
or (B) the Debt Service Coverage Ratio (inclusive of the Property to be released
from the Portfolio and exclusive of the Substitute Property to be added to the
Portfolio in connection with the requested Collateral Substitution) calculated
for the 12-month period immediately preceding the closing of the requested
Collateral Substitution;
 
(vi) Lender shall have confirmed in the exercise of its reasonable judgment,
that the Loan to Value Ratio, calculated after giving effect to the closing of
the Collateral Substitution, will not exceed the lesser of (1) 65%, or (2) the
Loan to Value Ratio calculated immediately prior to giving effect to the closing
of the Collateral Substitution;
 
(vii) Borrower Parties shall have submitted a written request for the Collateral
Substitution no less than sixty (60) days prior to the anticipated consummation
thereof, such request identifying the Property subject to the requested
Collateral Substitution and the proposed substitute collateral therefor, and
containing all other information reasonably requested by Lender in connection
with its consideration of the request for the Collateral Substitution (said
sixty (60) day review period commencing when Lender receives all information
reasonably requested by Lender).  At the time of submission of such written
request, Borrower Parties shall provide to Lender a work fee in the amount of
$25,000.00 (the “Substitution Work Fee”);
 
(viii) Borrower Parties must provide the same scope and quality of due diligence
materials in connection with Lender’s consideration of the proposed Substitute
Property as provided in connection with Lender’s underwriting and due diligence
associated with the applicable Property for which substitute collateral is being
provided (including title, survey, property condition, environmental and seismic
reports, evidence of zoning compliance, evidence of insurance and tenant
estoppels) and any additional materials then required as a result of changes to
Lender’s standard underwriting or due diligence processes;
 
(ix) Lender must approve, in the exercise of its reasonable discretion, all
aspects of the proposed substitute collateral (the “Substitute Property”),
including such factors as value, age, cash flow, quality, property condition,
location, tenancy and other factors then included in Lender’s underwriting
criteria;
 
(x) If requested by Lender in its reasonable discretion as a condition to its
approval of any Substitute Property, Lender and Borrower shall have amended and
restated the Allocated Loan Amounts for the Substitute Property and each
remaining Property within the Portfolio;
 
(xi) If Lender approves the request for a Collateral Substitution, Lender shall
receive a collateral substitution fee in an amount equal to $25,000.00, payable
concurrently with the consummation of the Collateral Substitution; and
 
(xii) Lender shall have confirmed in the exercise of its reasonable judgment,
that no Property remaining within the Portfolio will, following the consummation
of the
 
 
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Collateral Substitution, be adversely affected by such Collateral Substitution
because such remaining Property relied on the Property to be released for
compliance with all Legal Requirements (including zoning, subdivision, shared
parking, utilities, and/or access).
 
(b) Borrower agrees to pay or reimburse Lender for all reasonable costs and
expenses incurred by Lender in connection with the proposed Collateral
Substitution, including reasonable outside counsel fees and expenses, regardless
of whether the Collateral Substitution is approved by Lender.  Payment of costs
and expenses must be tendered upon the earlier of consummation of the Collateral
Substitution or within the Demand Period.  The Substitution Work Fee shall be
applied to reimburse Lender for its costs and expenses (with any excess after
full payment of all of Lender’s costs and expenses being applied to the
collateral substitution fee of $25,000 or returned to Borrower Parties), but the
Substitution Work Fee shall not be deemed to be a cap or limitation on
the  obligation of Borrower to reimburse Lender for all costs and expenses
incurred by Lender under this Section 7.16, regardless of whether such amounts
exceed the Substitution Work Fee and/or Lender, in the exercise of its judgment,
does not approve the requested Collateral Substitution.
 
(c) If a proposed Collateral Substitution is approved by Lender, Borrower
Parties shall, at their sole cost, execute and/or deliver:  (i) all documents
reasonably required by Lender, which documentation shall be in form comparable
to the Loan Documents executed as of the date hereof and which shall include a
modification and/or reaffirmation agreement covering the existing Loan
Documents, a mortgage, deed of trust or other customary security instrument, an
assignment of leases and rents, an assignment of property documents, an
assignment of management agreement and subordination of management fees, an
environmental indemnity agreement, a closing affidavit and Uniform Commercial
Code financing statements; (ii) an ALTA (or equivalent) mortgagee title policy
for the Substitute Property, such title policy to be in form and substance
satisfactory to Lender in its reasonable discretion; (iii) evidence of authority
and entity existence; (iv) Uniform Commercial Code, judgment and bankruptcy
searches; (v) opinions of counsel reasonably acceptable to Lender on such
matters as Lender shall reasonably require; (vi) evidence of insurance as
required by Section 3.1 for the Substitute Property; and (vii) such other
documents or items as Lender shall reasonably require in order to effectuate the
Collateral Substitution.
 
(d) Upon approval of the proposed Collateral Substitution and satisfaction of
the terms and conditions specified in this Section 7.16, Lender shall execute
and deliver to Borrower Parties a partial release (in recordable form) of the
lien of the Mortgage and the other Loan Documents with respect to the Property
for which substitute collateral is being provided.  Following the consummation
of the Collateral Substitution, the Substitute Property shall be considered and
deemed to be a “Property” and included within the “Portfolio” for all purposes
under this Agreement and the other Loan Documents.
 
ARTICLE 8.

 
EVENTS OF DEFAULT
 
 
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Section 8.1. Defaults.  The Obligations shall, at the option of Lender, become
immediately due and payable, interest under the Note shall begin to accrue at
the Default Rate, and Lender shall be entitled to pursue all available rights
and remedies, upon the occurrence and during the existence of any one or more of
the following events (individually an “Event of Default” and collectively,
“Events of Default”); provided that the following acts, omissions or conditions
shall not be deemed to constitute an “Event of Default” (and thereby cause
interest to accrue at the Default Rate and/or entitle Lender to pursue all
available rights and remedies) until any and all specified grace or cure periods
have expired:
 
(a) If any monthly installment of Debt Service and/or Impounds (if any) is not
received by Lender on or before 2 p.m. (Hartford, Connecticut time) on the fifth
(5th) day of the month in which such installment is due;
 
(b) If the Obligations are not paid in full on the Maturity Date;
 
(c) If any other amounts reserved under this Agreement (including payments
required under Section 9.5) are not received by Lender prior to the expiration
of the applicable Demand Period;
 
(d) If Borrower Parties (1) fail to comply with any of their duties and
obligations under Subsection 3.1(a) in any respects, or (2) fail to comply with
their duties and obligations under Subsection 3.1(b) through (i) in all material
respects, subject to the notice and cure periods specified in Section 3.1(g);
 
(e) If any Borrower Party fails to provide any material aspect of the financial
reporting required pursuant to Section 6.1, and such failure continues for
thirty (30) days following written notice from Lender of such failure;
 
(f) If any fact, circumstance or event (other than those specifically addressed
elsewhere in this Article 8) shall occur that is specifically characterized
under any provision of any other Loan Document as an “Event of Default” under
such Loan Document;
 
(g) If any Federal or state tax Lien (other than an inchoate lien for local real
estate taxes and assessments not yet due and payable) is filed against any
Borrower Party and the same is not discharged of record within sixty (60) days
after the same is filed, unless (1) such tax Lien is being diligently contested
by the applicable Borrower Party in good faith, (2) the applicable Borrower
Party, as the case may be, shall have deposited with Lender cash reserves (or
other appropriate security acceptable to Lender in its discretion) which, in the
opinion of Lender, will be sufficient to cover the tax Lien and all interest and
penalties thereon, and (3) Lender is satisfied that such tax Lien does not have
a materially adverse effect on the business, assets or financial or other
condition of any Borrower Party, as the case may be, or on any Property, the
Mortgage or the Lien thereof;
 
(h) If a Transfer occurs in violation of the covenants set forth in Section 7.1;
 
(i) Intentionally omitted;
 
 
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(j) If any representation or warranty of or on behalf of any Borrower Party,
made in this Agreement, the Carveout Indemnity, the Environmental Indemnity
Agreement or in any of the other Loan Documents, or in any certificate, report,
financial statement or other instrument furnished by or on behalf of any
Borrower Party in connection with this Agreement, the Carveout Indemnity, the
Environmental Indemnity Agreement or any other Loan Document, shall prove false
or misleading in any material respect as of the date made or furnished;
 
(k) If any Borrower Party shall make an assignment for the benefit of creditors;
 
(l) If a court of competent jurisdiction enters a decree or order appointing a
receiver, liquidator, assignee, trustee, custodian, examiner, magistrate,
arbitrator, sequestrator (or similar official) of any Borrower Party, or of any
substantial part of their respective properties or assets, or if such court
decrees or orders the winding up or liquidation of the affairs of any Borrower
Party, and any such decree or order is not dismissed, discharged or vacated of
record within ninety (90) days after the same has been entered;
 
(m) If any Borrower Party voluntarily files a petition for relief or an answer
or consent seeking relief under the Bankruptcy Code, or under any other Federal
or state bankruptcy, insolvency or other similar law, rule or regulation;
 
(n) If an involuntary case or other proceeding is commenced against any Borrower
Party or any Property which seeks liquidation, reorganization or other relief
with respect to debts or other liabilities under any bankruptcy, insolvency or
other similar law now or hereafter in effect, and such involuntary case or other
proceeding shall remain undismissed or unstayed for a period of ninety (90)
days;
 
(o) If any Borrower Party, whether by operation of law or otherwise, dissolves,
is wound up or its existence is otherwise terminated or dissolved;
 
(p) If Carveout Indemnitor is not the sole general partner of each Individual
Borrower or does not control the exercise of all rights, powers and privileges
related thereto in violation of the terms, conditions and covenants set forth in
Section 7.1(d);
 
(q) If any Property becomes subject to any lis pendens, notice of pendency, stop
order, notice of intention to file mechanic’s or material supplier’s lien,
mechanic’s or material supplier’s lien (excluding, however, any noticed filed
pursuant to applicable state law solely to preserve future lien rights) or other
Lien of any nature whatsoever (other than Permitted Encumbrances) and the same
shall not either be discharged of record or in the alternative insured over to
the satisfaction of Lender by the Title Company within a period of sixty (60)
days after the same is filed or recorded (irrespective of whether the same is
superior or subordinate in Lien or other priority to the Lien of the Mortgage
and irrespective of whether the same constitutes a perfected or inchoate Lien or
encumbrance on such Property or is only a matter of record or notice), subject
to the right of Borrower Parties to contest same as set forth in Section 7.2(b);
 
(r) If Borrower fails to remit payment in full of the Loan and other Obligations
(1) pursuant to Section 2.4(b) on the date identified in the Prepayment Notice
following the issuance of any Prepayment Notice, unless the Prepayment Notice is
revoked in accordance with
 
 
 
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Section 2.4(c), or (2) within the time period specified in Sections 3.2 or 3.3
if Borrower Parties make an election to, or are required by Lender to, prepay
the Obligations following a Casualty or condemnation;
 
(s) If any Borrower Party ceases to operate any Property in a manner consistent
with the uses of such Property effective as of the Funding Date or terminates
such business for any reason whatsoever (other than temporary cessation in
connection with any renovations to any Property or completion of a Restoration);
 
(t) If any Borrower Party (as the case may be) fails to comply with its duties
and obligations under (1) the Assignment of Property Documents and such failure
continues for thirty (30) days after written notice from Lender; (2) the
Environmental Indemnity Agreement and such failure continues for thirty (30)
days after written notice from Lender (provided, however, that if a shorter cure
period is required by Lender (in the exercise of its discretion) because of a
potential impairment to human safety or a potential material impairment to the
value of any Property, then Borrower Parties shall have such shorter cure period
as set forth in Lender’s written notice); (3) the Carveout Indemnity and such
failure continues for fifteen (15) days after written notice from Lender); (4)
the Assignment of Leases and Rents and such failure continues for fifteen (15)
days after written notice from Lender; or (5) any Assignment of Management
Agreement and such failure continues for fifteen (15) days after written notice
from Lender; provided, however, that so long as (A) any such failure does not
involve the failure to make payment of a liquidated sum of money (which must be
paid within any applicable Demand Period), (B) an extension of the applicable
cure period will not, in the reasonable estimation of Lender, cause a material
impairment to the value, use, utility, or operation of any Property, the
Portfolio or the other Collateral, (C) an extension of the applicable cure
period will not, in the reasonable estimation of Lender, expose Lender to any
fines or penalties (whether civil or criminal), (D) any such failure cannot
reasonably be cured within the applicable cure period, and (E) the applicable
Borrower Party shall have commenced a reasonable cure for such Potential Default
within the applicable cure period and thereafter diligently and expeditiously
proceeds to cure the same, then the applicable cure period shall be extended for
so long as it shall be reasonably necessary for such Borrower Party, in the
exercise of due diligence, to cure such Potential Default (Borrower Parties
agreeing that they shall bear the burden of proof before any court, arbitrator
or other trier of fact in connection with establishing the reasonableness of any
cure or extended cure period and/or that Lender is acting in a commercially
unreasonable manner if Lender makes a determination adverse to such Borrower
Party under subsections (B) or (C) of this subparagraph (t)); provided further,
that in no event shall the cure period available under this subparagraph (t)
exceed ninety (90) days in the aggregate; or
 
(u) If any Borrower Party shall fail to comply with any of their respective
covenants, agreements, warranties, duties or obligations under this Agreement or
any other Loan Document that is not otherwise specifically addressed in this
Article 8 and such failure continues for thirty (30) days after written notice
from Lender; provided, however, that so long as (A) any such failure does not
involve the failure to make payment of a liquidated sum of money (which must be
paid within any applicable Demand Period), (B) an extension of the thirty (30)
day cure period will not, in the reasonable estimation of Lender, cause a
material impairment to the value, use, utility, or operation of any Property,
the Portfolio or the other Collateral, (C) an extension of the thirty (30) day
cure period will not, in the reasonable estimation of Lender, expose Lender to
any fines or
 
 
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penalties (whether civil or criminal), (D) any such failure cannot reasonably be
cured within the thirty (30) day cure period, and (E) the applicable Borrower
Party shall have commenced a reasonable cure for such Potential Default within
the thirty (30) day cure period and thereafter diligently and expeditiously
proceeds to cure the same, then the thirty (30) day cure period shall be
extended for so long as it shall be reasonably necessary for the applicable
Borrower Party, in the exercise of due diligence, to cure such Potential Default
(Borrower Parties agreeing that they shall bear the burden of proof before any
court, arbitrator or other trier of fact in connection with establishing the
reasonableness of any cure or extended cure period and/or that Lender is acting
in a commercially unreasonable manner if Lender makes a determination adverse to
such Borrower Party under subsections (B) or (C) of this subparagraph (u));
provided, further, that in no event shall the cure period available under this
subparagraph (u) exceed ninety (90) days in the aggregate.
 
Section 8.2. Remedies.
 
(a) Upon the occurrence of any Event of Default, interest shall automatically
begin to accrue at the Default Rate, and at the option of Lender (except in
connection with any of the Events of Default described in Section 8.1(k) through
(o), when acceleration is automatic), all Obligations shall become immediately
due and payable, and Lender may exercise all rights and remedies under the Loan
Documents and at law or in equity, all without written notice and without
presentment, demand, protest, notice of protest or dishonor, notice of intent to
accelerate the maturity thereof, notice of acceleration of the maturity thereof,
or any other notice of default of any kind, all of which are hereby expressly
waived by each Borrower Party for itself and all other Borrower Parties.
 
(b) Upon the occurrence of any of the events specified in Section 8.1(k) through
(o), interest shall automatically begin to accrue at the Default Rate, all
Obligations shall automatically become immediately due and payable, and Lender
may exercise all rights and remedies under the Loan Documents and at law or in
equity, all without written notice and without presentment, demand, protest,
notice of protest or dishonor, notice of intent to accelerate the maturity
thereof, notice of acceleration of the maturity thereof, or any other notice of
default of any kind, all of which are hereby expressly waived by each Borrower
Party for itself and all other Borrower Parties.
 
Section 8.3. Lender’s Right to Perform the Obligations.
 
(a) If a Borrower Party shall fail, refuse or neglect to make any payment or
perform any act required by the Loan Documents and such failure constitutes an
Event of Default, then without notice to or demand upon any  Borrower Party or
any other Person, and without waiving or releasing any other right, remedy or
recourse Lender may have because of such Event of Default, Lender may (but shall
not be obligated to) make such payment or perform such act for the account of
and at the expense of Borrower Parties, and shall have the right to enter upon
any Property for such purpose and to take all such action thereon and with
respect to such Property as it may deem necessary or appropriate.
 
(b) If Lender shall elect to pay any sum due with reference to any Property,
Lender may do so in reliance on any bill, statement or assessment procured from
the appropriate
 
 
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Governmental Authority or other issuer thereof without inquiring into the
accuracy or validity thereof. Similarly, in making any payments to protect the
security intended to be created by the Loan Documents, Lender shall not be bound
to inquire into the validity of any apparent or threatened adverse title claim,
Lien, encumbrance, claim or charge before making an advance for the purpose of
preventing or removing the same.
 
(c) Each Individual Borrower shall jointly and severally indemnify, defend and
hold Lender harmless from and against any and all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever, including reasonable attorneys’
fees, incurred or accruing by reason of any acts performed by Lender pursuant to
the provisions of this Section 8.3, including those arising from the joint,
concurrent, or comparative negligence of Lender, except as a result of Lender’s
gross negligence or willful misconduct.  All sums paid by Lender pursuant to
this Section 8.3, and all other sums expended by Lender to which it shall be
entitled to be indemnified, shall be paid by Borrower to Lender prior to
expiration of the Demand Period.  Any costs and expenses due and payable to
Lender pursuant to this Section 8.3 shall bear interest at the Default Rate from
the expiration of the Demand Period until payment in full is received by Lender,
and if Borrower fails to reimburse Lender within the Demand Period, then Lender
may, in its discretion, either (i) without additional notice to Borrower, add
such amounts to the principal balance of the Obligations to accrue interest at
the Contract Rate and be secured by the Loan Documents, or (ii) deem the failure
by Borrower to make timely reimbursement as an Event of Default and continue to
accrue interest at the Default Rate in connection with such unpaid amounts until
repayment in full.
 
ARTICLE 9.

 
MISCELLANEOUS
 
Section 9.1. Notices.  Any notice required or permitted to be given under this
Agreement shall be in writing and either shall be sent by overnight air courier
service, or personally delivered to a representative of the receiving
party.  All such communications shall be mailed or delivered, addressed to the
party for whom it is intended at its address set forth below.  Any single notice
sent to a Borrower Party pursuant to the terms of this Section 9.1 shall be
deemed to have been simultaneously given to all Borrower Parties.

If to a Borrower
Party:                                      c/o Mission West Properties, Inc.
10050 Bandley Drive
Cupertino, California 95014
Attention:        Ray V. Marino,
President and Chief Operating Officer
Telephone:      408-725-0700
E-mail:  rmarino@missionwest.com
 
If to Lender:                           c/o Hartford Investment Management
Company
55 Farmington Avenue
Hartford, Connecticut 06105
 
 
 
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Attn:  Steve Kalmin
Vice President - Real Estate Asset Management
Telephone:  (860) 297-6479
E-mail:  steve.kalmin@himco.com
 
with a copy to
concurrently to:                    Robert W. McKay, Esq.
c/o Hartford Investment Management Company
55 Farmington Avenue
Hartford, Connecticut 06105
Telephone: (860) 297-6449
E-mail: robert.mckay@himco.com
 
 
           Any communication so addressed and mailed shall be deemed to be given
on the earliest of (1) when actually delivered or (2) on the first Business Day
after deposit with an overnight air courier service, if such deposit is timely
and appropriate in accordance with the requirements of such courier service for
next business day delivery, in either case to the address of the intended
addressee (except as otherwise provided in the Mortgage), and any communication
so delivered in person shall be deemed to be given when receipted for by, or
actually received by Lender or a Borrower Party, as the case may be.  Either
party may designate a change of address within the United States of America by
written notice to the other by giving at least ten (10) days prior written
notice of such change of address.
 
Section 9.2. Amendments and Waivers.  No purported amendment or waiver of any
provision of the Loan Documents shall be effective unless in writing and signed
by the party against whom enforcement is sought.
 
Section 9.3. Limitation on Interest.  Under no circumstances shall the aggregate
amount paid or agreed to be paid as interest under the Loan Documents exceed the
highest lawful rate permitted under applicable usury law of the State or of any
state in which any Property is located, and the payment obligations of Borrower
Parties under the Loan Documents are hereby limited accordingly.  If under any
circumstances, whether by reason of advancement or acceleration of the unpaid
principal balance of the Loan or otherwise, the aggregate amounts paid on the
Loan shall include amounts which by law are deemed interest and which would
exceed such highest lawful rate, Borrower Parties hereby stipulate that payment
and collection of such excess amounts shall have been and will be deemed to have
been the result of a mistake on the part of both Borrower Parties and Lender,
and Lender shall, at its option, either return such excess to Borrower Parties
or credit such excess against the principal balance of the Obligations then
outstanding (without application of any Applicable Prepayment Fee), in which
event any and all penalties of any kind under applicable law as a result of such
excess interest shall be inapplicable.
 
Section 9.4. Invalid Provisions.  If any provision of any Loan Document is held
to be illegal, invalid or unenforceable, then (i) such provision shall
automatically be deemed fully severable; (ii) the Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part thereof; (iii) the remaining provisions of the Loan
Documents shall remain in full effect and shall not be affected by the illegal,
invalid, or
 
 
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unenforceable provision or by its severance therefrom; and (iv) in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part of such Loan Document a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible so that said substitute
provision is legal, valid and enforceable.
 
Section 9.5. Payment and Reimbursement of Expenses.
 
(a) In addition to its reimbursement or payment obligations set forth elsewhere
in this Agreement or in the other Loan Documents, and prior to the expiration of
any Demand Period, Borrower Parties shall pay to Lender or, at Lender’s option,
shall reimburse Lender, for all reasonable costs and expenses (including
reasonable attorneys’ fees and disbursements and fees and expenses of appraisers
and environmental professionals) incurred by Lender in connection with (i)
intentionally omitted; (ii) intentionally omitted; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters (including leasing matters) requested by
Borrower Parties; (iv) the filing and recording fees and expenses, title
insurance and reasonable fees and expenses of attorneys for providing to Lender
all required legal opinions, and other similar expenses incurred, in creating
and perfecting the Liens and security interest in favor of Lender pursuant to
this Agreement and the other Loan Documents; (v) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting a Borrower Party, this Agreement, the other Loan Documents, the
Portfolio, or any other security given for the Obligations; and (vi) enforcing
any obligations of or collecting any payments due from Borrower Parties under
this Agreement, the other Loan Documents or with respect to the Portfolio 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.
 
(b) Any costs and expenses due and payable to Lender pursuant to this Section
9.5 shall bear interest at the Default Rate from the expiration of the
applicable Demand Period until Lender receives payment in full.  If Borrower
Parties fail to reimburse Lender prior to the expiration of the applicable
Demand Period, then Lender may, in its discretion, either (i) without additional
notice to Borrower Parties, add such amounts to the principal balance of the
Obligations to accrue interest at the Contract Rate and be secured by the Loan
Documents, or (ii) deem the failure of Borrower Parties to make timely
reimbursement to be an Event of Default and continue to accrue interest at the
Default Rate in connection with such unpaid amounts until repayment in full.
 
Section 9.6. Approvals; Third Parties; Conditions.  All approval rights retained
or exercised by Lender with respect to Leases, contracts, plans, studies and
other matters shall not be deemed or construed as a determination that Lender
has passed on the adequacy thereof for any other purpose and may not be relied
upon by Borrower Parties or any other Person.  This Agreement is for the sole
and exclusive use of Borrower Parties and Lender and may not be enforced, nor
relied upon, by any Person other than Borrower Parties and Lender. All
conditions of the obligations of Lender hereunder, including Lender’s
discretionary right to make protective advances pursuant to Sections 8.3 or 9.5,
are imposed solely and exclusively for the benefit of Lender, its successors and
assigns, and no other Person shall have standing to require satisfaction
 
 
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of such conditions or be entitled to assume that Lender will refuse to make
advances (if any) in the absence of strict compliance with any or all of such
conditions, and no other Person shall, under any circumstances, be deemed to be
a beneficiary of such conditions, any and all of which may be freely waived in
whole or in part by Lender at any time in Lender’s discretion.
 
Section 9.7. Lender Not in Control; No Partnership.  None of the covenants or
other provisions contained in this Agreement shall, or shall be deemed to, give
Lender the right or power to exercise control over the affairs or management of
a Borrower Party, the power of Lender being limited to the rights to exercise
the remedies referred to in the Loan Documents, at law or in equity.  The
relationship between Borrower Parties and Lender is, and at all times shall
remain, solely that of debtor and creditor. No covenant or provision of the Loan
Documents is intended, nor shall it be deemed or construed, to create a
partnership, joint venture, agency or common interest in profits or income
between Lender and Borrower Parties or to create any equity in the Portfolio in
Lender.  Lender neither undertakes nor assumes any responsibility or duty to
Borrower Parties or to any other Person with respect to the Portfolio or the
Loan, except as expressly provided in the Loan Documents, and notwithstanding
any other provision of the Loan Documents: (i) Lender is not, and shall not be
construed as, a partner, joint venturer, alter ego, manager, controlling person
or other business associate or participant of any kind of a Borrower Party or
its stockholders, members, or partners (as the case may be) and Lender does not
intend to ever assume such status; (ii) Lender shall in no event be liable for
any Debts, expenses or losses incurred or sustained by a Borrower Party; and
(iii) Lender shall not be deemed responsible for or a participant in any acts,
omissions or decisions of a Borrower Party or its stockholders, members, or
partners (as the case may be).  Lender and Borrower Parties each disclaim any
intention to create any partnership, joint venture, agency or common interest in
profits or income between Lender and a Borrower Party, or to create equity in
the Portfolio in Lender, or any sharing of liabilities, losses, costs or
expenses.
 
Section 9.8. Time of the Essence.  Time is of the essence with respect to the
performance of each Borrower Parties’ obligations under the Loan Documents.
 
Section 9.9. Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of Lender, Borrower Parties and their respective successors
and assigns, provided that no  Borrower Party shall, without the prior written
consent of Lender (which may be granted or withheld in Lender’s discretion) or
except as expressly permitted pursuant to Section 7.1, assign any rights, duties
or obligations hereunder or under any other Loan Document.
 
Section 9.10. Servicing, Transfers, Assignments and Participations.
 
(a) At the option of Lender, the Loan may be serviced by a servicer (the
“Servicer”) selected by Lender from time to time and Lender may delegate all or
any portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement between Lender and
Servicer.  Servicer shall be entitled to reimbursement of costs and expenses as
and to the same extent (but without duplication) as Lender is entitled thereto
under the applicable provisions of this Agreement and the other Loan Documents,
provided that Borrower Parties shall not be obligated to pay any servicing fee
payable to the Servicer by Lender.  Upon notice thereof from Lender, Servicer
shall have the right to exercise all rights of Lender and enforce all
obligations of Borrower Parties pursuant to the provisions of
 
 
 
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this Agreement, the Note and the other Loan Documents.  Provided Borrower
Parties shall have been given notice of Servicer’s address by Lender, Borrower
Parties shall deliver to Servicer duplicate originals of all notices and other
instruments which Borrower Parties may or shall be required to deliver to Lender
pursuant to this Agreement, the Note and the other Loan Documents (and no
delivery of such notices or other instruments by Borrower Parties shall be of
any force or effect unless delivered to Lender and Servicer as provided above).
 
(b) Lender may at any time sell, transfer or assign the Note, this Agreement,
the Mortgage, and the other Loan Documents, and any or all servicing rights with
respect thereto or grant participations therein or issue mortgage pass-through
certificates, provided that Lender shall remain as the “lead” lender and primary
contact for all required consents and approvals under the Loan
Documents.  Lender may forward to any present, future or prospective purchaser,
assignee, servicer, participant or investor (each, a “Transferee”), all
documents and information which Lender now has or may hereafter acquire relating
to any Borrower Party or the Portfolio, whether furnished by a Borrower Party,
any Property Manager or any other Person, as Lender determines necessary or
desirable; provided that Lender receives a reasonable undertaking from the
applicable Transferee to maintain the confidential nature (if any) of such
information. Each Borrower Party shall cooperate with Lender in connection with
any transfer made pursuant to this Section 9.10, including the delivery of an
estoppel certificate and such other documents as may be reasonably requested by
Lender.  Each Borrower Party shall also furnish, and hereby consents to Lender
furnishing to such Transferee, any and all current or updated information
concerning its financial condition and any and all information concerning the
Portfolio as may be requested by Lender or any Transferee; provided that Lender
receives a reasonable undertaking from the applicable Transferee to maintain the
confidential nature (if any) of such information.  No exercise by Lender of any
transfer rights pursuant hereto shall operate to release or diminish the duties,
obligations or liabilities of any Borrower Party under this Agreement or the
other Loan Documents.
 
(c) Without in any way limiting Lender’s other rights hereunder, Lender shall
have the right, in its discretion at any time after the Funding Date, to require
Borrower Parties to split the Loan into one or more loans secured by the
Portfolio (individually, a “Split Loan” and collectively, the “Split Loans”),
provided that (i) the aggregate principal amount of all notes evidencing the
Split Loans shall equal the outstanding principal balance of the Loan
immediately prior to the creation of such split notes, (ii) the aggregate debt
service payments on the Split Loans shall on the date created equal the debt
service payment which was due under the Loan immediately prior to the creation
of such Split Loans, and (iii) the other terms and provisions of the documents
evidencing and/or securing the Split Loans shall be substantially similar in
form and substance to the Loan Documents.  Borrower Parties, at no cost or
expense to it, shall cooperate with all reasonable requests of Lender in order
to establish the Split Loans and shall execute and deliver such documents as
shall be reasonably required by Lender in connection therewith, all in form and
substance reasonably satisfactory to Lender, including modified and severed
notes, mortgages and other security documents in such denominations as Lender
shall determine in its discretion, release documents and any and all documents
necessary to assign the Split Loans.
 
Section 9.11. Replacement Documents.  Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of the Note or any
other document(s) which
 
 
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is not of public record and, in the case of any such destruction or mutilation,
upon surrender and cancellation of the Note or other document(s), Borrower
Parties shall issue, in lieu thereof, a replacement Note or other document(s) in
the same principal amount thereof and otherwise of like tenor.
 
Section 9.12. Renewal, Extension or Rearrangement.  All provisions of the Loan
Documents shall apply with equal effect to each and all promissory notes and
amendments thereof hereinafter executed which in whole or in part represent a
renewal, extension, increase or rearrangement of the Loan.
 
Section 9.13. Waivers.  No course of dealing on the part of Lender, its
officers, employees, attorneys, consultants or agents, nor any failure or delay
by Lender with respect to exercising any right, power, privilege or remedy of
Lender under any of the Loan Documents, shall operate as a waiver thereof.
 
Section 9.14. Cumulative Rights.  All rights and remedies of Lender under the
Loan Documents, at law or in equity shall be cumulative, and the exercise or
partial exercise of any such right or remedy shall not preclude the exercise of
any other right or remedy.
 
Section 9.15. Exhibits and Schedules.  The exhibits and schedules attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein.
 
Section 9.16. Titles of Articles, Sections and Subsections.  All titles or
headings to articles, sections, subsections or other divisions of this Agreement
and the other Loan Documents or the exhibits hereto and thereto, are only for
the convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such articles, sections,
subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
 
Section 9.17. Promotional Material.  Borrower Parties authorizes Lender to issue
press releases, advertisements and other promotional materials in connection
with Lender’s own promotional and marketing activities, and describing the Loan
in general terms or in detail and Lender’s participation in the Loan.  All
references to Lender contained in any press release, advertisement or
promotional material issued by any Borrower Party must be approved in writing by
Lender in advance of issuance.
 
Section 9.18. Survival.  All of the representations, warranties, covenants, and
indemnities made in this Agreement, the Environmental Indemnity Agreement or any
other Loan Document shall survive the repayment in full of the Obligations and
the release of the Liens evidencing or securing the Loan, and shall survive the
transfer (by sale, foreclosure, conveyance in lieu of foreclosure or otherwise)
of any or all right, title and interest in and to all or any portion of the
Collateral to any party.
 
Section 9.19. Governing Law.  The Loan Documents are being executed and
delivered, and are intended to be performed, in the State and the laws of the
State and of the United States of America shall govern the rights and duties of
the parties hereto and the validity, construction,
 
 
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enforcement and interpretation of the Loan Documents, except to the extent
otherwise specified in any of the Loan Documents.
 
Section 9.20. Entire Agreement.  This Agreement and the other Loan Documents
embody the entire agreement and understanding between Lender and Borrower and
supersede all prior agreements and understandings between such parties relating
to the subject matter hereof and thereof.  Accordingly, the Loan Documents may
not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.  There are no unwritten oral agreements between the
parties.
 
Section 9.21. Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.
 
Section 9.22. Obligations of Borrower, Joint and Several.  If more than one
Person has executed this Agreement or any other Loan Document as “Borrower”,
“Grantor” or “Assignor”, the obligations of all such Persons hereunder or
thereunder shall be joint and several.
 
Section 9.23. WAIVER OF PUNITIVE OR CONSEQUENTIAL DAMAGES.  NEITHER LENDER NOR
BORROWER PARTIES SHALL BE RESPONSIBLE OR LIABLE TO THE OTHERS OR TO ANY OTHER
PERSON FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED
AS A RESULT OF THE LOAN OR THE TRANSACTION CONTEMPLATED HEREBY, INCLUDING ANY
BREACH OR OTHER DEFAULT BY ANY PARTY HERETO.
 
Section 9.24. WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT PERMITTED BY LAW,
EACH BORROWER PARTY AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF
ANY PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN
DOCUMENTS OR IN ANY WAY RELATING TO THE LOAN OR THE COLLATERAL (INCLUDING ANY
ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING
THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE).  THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER THIS
AGREEMENT.
 
ARTICLE 10.
 

 
LIMITATIONS ON LIABILITY
 
Section 10.1. Limitation on Liability.
 
 
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(a) Subject to the qualifications and exceptions set forth below, Lender shall
not enforce the liability and obligations of Borrower to perform and observe its
duties and obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against any Borrower Party, provided 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, the Carveout Indemnity, this Agreement, the Mortgage and the
other Loan Documents, or in the Collateral given to Lender pursuant to the Loan
Documents; provided, further, that, subject to the qualifications and exceptions
set forth below, any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of its interest in the
Collateral, and Lender, by accepting the Note, this Agreement, the Mortgage and
the other Loan Documents, agrees that subject to the qualifications and
exceptions set forth below, it shall not sue for, seek or demand any deficiency
judgment against Borrower, any other Borrower Party or any officer, director,
manager, member or partner of Borrower in any such action or proceeding under or
by reason of or under or in connection with the Note, this Agreement, the
Mortgage or the other Loan Documents.
 
(b) Notwithstanding anything to the contrary set forth in this Agreement or the
other Loan Documents:
 
(i) the provisions of Section 10.1(a) shall not:
 
(A) Constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents;
 
(B) Impair the right of Lender to name any Borrower Party as a party defendant
in any action or suit for foreclosure and sale under the Mortgage;
 
(C) Affect the validity or enforceability of the Carveout Indemnity, affect the
liability, duties and obligations of Carveout Indemnitor under the Carveout
Indemnity, or affect any of the rights and remedies of Lender under the Carveout
Indemnity;
 
(D) Impair the right of Lender to obtain the appointment of a receiver or affect
the validity or enforceability of the Assignment of Leases and Rents, affect the
liability, duties and obligations of any Borrower Party under the Assignment of
Leases and Rents, or affect any of the rights and remedies of Lender under the
Assignment of Leases and Rents;
 
(E) Affect the validity or enforceability of the Environmental Indemnity
Agreement, affect the liability, duties and obligations of any Borrower Party
under the Environmental Indemnity Agreement, or limit the rights and remedies of
Lender under the Environmental Indemnity Agreement; or
 
(F) Constitute a prohibition against Lender to seek a deficiency judgment
against any Borrower Party solely in order to satisfy procedural requirements
necessary to fully realize the security granted by the Mortgage or
 
 
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under any other Loan Documents, or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Collateral;
(and in no event shall any such deficiency judgment issued solely in order to
satisfy procedural requirements be enforced against assets of any Borrower Party
other than the Collateral) and
 
(ii) Each Individual Borrower, jointly and severally, and jointly and severally
with Carveout Indemnitor pursuant to the Carveout Indemnity, hereby agrees to
indemnify and reimburse Lender, within the Demand Period (and nothing set forth
in this Section 10.1 shall constitute a waiver of the right of Lender to enforce
the liability and obligation of Borrower Parties, by money judgment or
otherwise), to the extent of any and all liabilities, costs, losses (including
any reduction in value of any Property or any other Collateral or the loss of
Lender’s security interest therein), damages, expenses (including reasonable
attorneys’ fees and disbursements, and court costs, if any), or claims suffered
or incurred by Lender by reason of or in connection with any of the following:
 
(A) Any fraud committed by any Borrower Party in connection with the Loan;
 
(B) Any material misrepresentation contained in any of the Loan Documents or any
report furnished pursuant to any of the Loan Documents by any Borrower Party;
 
(C) The failure by Borrower to maintain insurance in accordance with Section
3.1;
 
(D) The failure of any Borrower Party to apply Operating Revenues received by
any Borrower Party to pay Debt Service, Impounds (if any), Operating Expenses
(including in fulfilling the obligations of any Individual Borrower as
“landlord” under any Lease) and reasonable and necessary capital expenditures or
costs during the 12-month period immediately preceding the occurrence of the
Event of Default triggering Lender’s exercise of remedies; provided, however,
that Borrower shall not have liability under this subparagraph (D) to the extent
Operating Revenues generated during the 12-month period immediately preceding
the occurrence of the Event of Default triggering Lender’s exercise of remedies
were not sufficient to pay in full all such amounts and all Operating Revenues
so received by any Borrower Party were applied to pay such amounts to the full
extent of Operating Revenues so received;
 
(E) The misappropriation of any Net Proceeds or condemnation awards by any
Borrower Party;
 
(F) The failure of any Borrower Party to (x) properly apply any and all security
deposits held by any Borrower Party, (y) properly return same to Tenants when
due, or (z) deliver security deposits to Lender, any receiver or any Person
purchasing any Property or any part thereof at a foreclosure sale or upon the
 
 
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 taking of possession of such Property or any part thereof by Lender, such
receiver or such other Person; provided, however, that Borrower shall not have
the liability under this subparagraph (F) if the required activity under (z)
above is limited or prohibited by applicable Legal Requirements or if Borrower
is operating under the express written direction of Lender;
 
(G) Intentional removal or destruction of property (without the concurrent
replacement thereof with property of at least equivalent value and utility)
constituting any material portion of the Collateral, or any other intentional
and material waste of any portion of the Collateral, by any Borrower Party;
 
(H) Any Borrower Party contesting or in any way interfering with, directly or
indirectly, any foreclosure action, Uniform Commercial Code sale and/or deed in
lieu of foreclosure transaction commenced by Lender or with any other
enforcement of Lender’s rights, power or remedies under any of the Loan
Documents (whether by making any motion, bringing any counterclaim, claiming any
defense, seeking any injunction or other restraint, commencing any action or
otherwise) in connection with Lender’s rights arising from an Event of Default;
provided, however, that if any Borrower Party obtains a final, non-appealable
order successfully contesting the exercise by Lender of a right or remedy, then
Borrower shall not have liability under this subparagraph (H);
 
(I) Any Borrower Party (i) filing a voluntary petition under the Bankruptcy Code
or any other Federal or state bankruptcy or insolvency law, or (ii) making an
assignment for the benefit of creditors; or
 
(J) Any Borrower Party (i) filing, or joining in the filing of, an involuntary
petition against any other Borrower Party under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or (ii) soliciting or causing to
be solicited petitioning creditors for any involuntary petition against any
other Borrower Party, or (iii) filing an answer consenting to or otherwise
acquiescing in or joining in any involuntary petition filed against any other
Borrower Party by any other Person under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or (iv) voting adversely to
Lender’s interest in any proceeding under the Bankruptcy Code or any other state
or Federal bankruptcy or insolvency law which involves any Borrower Party or any
portion of the Collateral, or (v) consenting to or acquiescing or joining in an
application for the appointment of a custodian, receiver, trustee or examiner
for any Borrower Party or any portion of the Collateral (unless such action is
at the written request of Lender).
 
Notwithstanding the foregoing, if Borrower and any necessary Borrower Parties
consent, pursuant to a stipulation in form reasonably required by Lender (to be
executed by Borrower and any necessary Borrower Parties and delivered to Lender
within five (5) Business Days following Lender’s request), to the appointment of
a receiver for any Property identified by Lender (the identity of such receiver
to be designated by Lender and approved by Borrower Parties, such approval not
to be unreasonably withheld), and no Borrower Party seeks or participates in the
 
 
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removal of said receiver (absent a material violation by said receiver of the
order appointing the receiver, in which case a substitute receiver designated by
Lender and approved by Borrower Parties, such approval not to be unreasonably
withheld, will be appointed) then Borrower shall not have liability under this
Subsection (b)(ii) solely as a result of any reduction in value of such Property
or any other Collateral during the period that Lender is pursuing its rights and
remedies as a result of an Event of Default.
 
(c) Notwithstanding anything to the contrary set forth in this Agreement or any
of the other Loan Documents: (i) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Obligations or to require that all Collateral shall continue to secure all of
the Obligations owing to Lender in accordance with the Loan Documents; and (ii)
the Obligations shall be fully recourse to Borrower in the event any Transfer
occurs in violation of Section 7.1 (including the voluntary placement of a Lien
on all or any portion of the Collateral in violation of the Loan Documents).
 
[Remainder of this page intentionally blank.  Signature Page follows.]
 

 
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IN WITNESS WHEREOF, this Agreement has been executed by the undersigned and is
effective as of the day and year first above written.
 
BORROWER:
 
MISSION WEST PROPERTIES, L.P.,
a Delaware limited partnership

By:           Mission West Properties, Inc.
a Maryland corporation
its general partner

By:           /s/ Raymond V. Marino                                           
Name:  Raymond V. Marino
Title:  President & COO
 
MISSION WEST PROPERTIES, L.P. I,
a Delaware limited partnership

By:           Mission West Properties, Inc.
a Maryland corporation
its general partner

By:           /s/ Raymond V. Marino                                           
Name:  Raymond V. Marino
Title:  President & COO
 

[Signature Page of Borrower to Fixed Rate Term Loan Agreement]
 
 

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IN WITNESS WHEREOF, this Agreement has been executed by the undersigned and is
effective as of the day and year first above written.
 
LENDER:
 
HARTFORD LIFE INSURANCE COMPANY,
a Connecticut corporation

By:          Hartford Investment Management Company,
a Delaware corporation,
Its Agent and Attorney-in-Fact
 
By:           /s/ John M.
Maher                                                      
Name: John M. Maher
Title: Executive Vice President
 
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY,
a Connecticut corporation

By:          Hartford Investment Management Company,
a Delaware corporation,
Its Agent and Attorney-in-Fact
 
By:           /s/ John M.
Maher                                                      
Name: John M. Maher
Title: Executive Vice President
 

[Signature Page of Lender to Fixed Rate Term Loan Agreement]
 
 

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EXHIBIT A-1
 
Legal Description
 

 
5830, 5850, 5870 Hellyer Avenue, San Jose, California
 
Real property in the City of San Jose, County of Santa Clara, State of
California, described as follows:
 
ALL OF PARCEL A AS DESCRIBED IN THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED
SEPTEMBER 29, 1999 UNDER RECORDER'S SERIES NO. 15000706, SANTA CLARA COUNTY,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 
ALL OF PARCEL A AS DESCRIBED IN THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED
JUNE 22, 1998 UNDER RECORDER'S SERIES NO. 14246279, SANTA CLARA COUNTY, BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
ALL THAT REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA, BEING A PORTION OF LOT 12 AS SHOWN UPON THAT CERTAIN MAP
FILED FOR RECORD IN BOOK "H" OF MAPS AT PAGE 147, SANTA CLARA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY RIGHT OF WAY LINE OF HELLYER AVENUE AT
THE MOST WESTERLY CORNER OF PARCEL 12 AS SHOW UPON THE RECORD OF SURVEY FILED IN
BOOK 636 OF MAPS AT PAGES 11 THROUGH 22, SANTA CLARA COUNTY RECORDS;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID LOT 12 NORTH 44°23'57" EAST 604.28
FEET TO THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF SILVER CREEK VALLEY ROAD, AS SAID
ROAD IS SHOWN ON SAID RECORD OF SURVEY FILED IN BOOK 636 OF MAPS OF AT PAGE 11,
SANTA CLARA COUNTY RECORDS;
THENCE ALONG SAID RIGHT-OF-WAY LINE THE FOLLOWING TWO (2) COURSES:
SOUTH 45°00'34" EAST 8.22 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT;
ALONG SAID CURVE HAVING A RADIUS OF 548.00 FEET, THROUGH A CENTRAL ANGLE OF
36°11'38", AN ARC DISTANCE OF 346.17 FEET TO THE SOUTHEASTERLY LINE OF SAID LOT
12;
THENCE ALONG SAID SOUTHEASTERLY LINE SOUTH 44°28'22" WEST 486.78 FEET TO THE
BEGINNING OF A NON-TANGENT CURVE TO THE RIGHT, TO WHICH POINT A RADIAL LINE
BEARS SOUTH 39°05'24" WEST, SAID POINT BEING ON SAID NORTHEASTERLY RIGHT OF WAY
LINE OF HELLYER AVENUE, AS SHOWN ON SAID RECORD OF
 
 
Exhibit A-1-1

--------------------------------------------------------------------------------

 
SURVEY;
THENCE ALONG SAID RIGHT-OF-WAY LINE THE FOLLOWING TWO(2) COURSES:
NORTHWESTERLY ALONG SAID CURVE HAVING A RADIUS OF 1996.18 FEET, THROUGH A
CENTRAL ANGLE OF 5°24'06", AN ARC DISTANCE OF 188.20 FEET;
NORTH 45°30'30" WEST 142.16 FEET TO THE POINT OF BEGINNING.
 
AND, IN ADDITION THERETO, THE FOLLOWING AREA:

 
A PORTION OF LOT 13 AS SHOWN ON THAT CERTAIN MAP FILED IN BOOK "H" OF MAPS AT
PAGE 147, SANTA CLARA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY RIGHT OF WAY LINE OF HELLYER AVENUE AT
THE MOST WESTERLY CORNER OF PARCEL 13 AS SHOWN UPON THE RECORD OF SURVEY FILED
IN BOOK 636 OF MAPS AT PAGES 11 THROUGH 22, SANTA CLARA COUNTY RECORDS;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID LOT 13 NORTH 44°29'58" EAST 607.14
FEET TO THE SOUTHWESTERLY RIGHT OF WAY LINE OF SILVER CREEK VALLEY ROAD, AS
SHOWN ON SAID RECORD OF SURVEY FILED IN BOOK 636 OF MAPS AT PAGE 11, SANTA CLARA
COUNTY RECORDS.
THENCE ALONG SAID RIGHT-OF-WAY LINE SOUTH 45°00'34" EAST 328.87 FEET TO THE
SOUTHEASTERLY LINE OF SAID LOT 13;
THENCE ALONG LAST SAID LINE SOUTH 44°23'57" WEST 604.28 FEET TO SAID
NORTHEASTERLY LINE OF HELLYER AVENUE;
THENCE ALONG SAID RIGHT-OF-WAY LINE NORTH 45°30'30" WEST 329.92 FEET TO THE
POINT OF BEGINNING.

 
AND, IN ADDITION THERETO, THE FOLLOWING AREA:
 
A PORTION OF PARCEL "A" AS SHOWN UPON THAT CERTAIN MAP FILED IN BOOK 371 OF
MAPS, AT PAGE 29, SANTA CLARA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHEASTERLY RIGHT OF WAY LINE OF HELLYER AVENUE AT
THE MOST WESTERLY CORNER OF THAT PARCEL SHOWN AS "THE LANDS OF HELEN E. RYAN"
UPON THE RECORD OF SURVEY FILED IN BOOK 636 OF MAPS AT PAGES 11 THROUGH 22,
SANTA CLARA COUNTY RECORDS;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID PARCEL "A" NORTH 44°28'22" EAST
486.78 FEET TO THE BEGINNING OF A NON-TANGENT CURVE TO THE RIGHT, TO WHICH POINT
A RADIAL LINE BEARS NORTH 81°11'04" EAST, SAID POINT BEING ON THE SOUTHWESTERLY
RIGHT OF WAY LINE OF SILVER CREEK VALLEY ROAD, AS SHOWN ON SAID RECORD OF SURVEY
FILED IN BOOK 636
 
 
 
Exhibit A-1-2

--------------------------------------------------------------------------------

 
 
OF MAPS AT PAGE 11, SANTA CLARA COUNTY RECORDS;
THENCE ALONG SAID RIGHT OF WAY LINE THE FOLLOWING THREE (3) COURSES:
SOUTHEASTERLY ALONG SAID CURVE HAVING A RADIUS OF 548.00 FEET, THROUGH A CENTRAL
ANGLE OF 44°04'10", AN ARC DISTANCE OF 421.50 FEET;
SOUTH 35°15'13" WEST 15.81 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE
RIGHT;
ALONG SAID CURVE HAVING A RADIUS OF 88.00 FEET, THROUGH A CENTRAL ANGLE OF
90°00'31", AN ARC DISTANCE OF 138.24 FEET TO SAID RIGHT OF WAY LINE OF HELLYER
AVENUE;
THENCE ALONG SAID RIGHT OF WAY LINE THE FOLLOWING TWO (2) COURSES:
NORTH 54°44'16" WEST 10.98 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE
RIGHT;
ALONG SAID CURVE HAVING A RADIUS OF 1996.18 FEET, THROUGH A CENTRAL ANGLE OF
3°49'40", AN ARC DISTANCE OF 133.36 FEET TO THE POINT OF BEGINNING.
 
EXCEPTING THEREFROM THE FOLLOWING AREA:

 
ALL OF PARCEL A-1 AS DESCRIBED IN THAT CERTAIN LOT LINE ADJUSTMENT PERMIT
RECORDED SEPTEMBER 29, 1999 UNDER RECORDER'S SERIES NO. 15000706, SANTA CLARA
COUNTY, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA
CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL A AS DESCRIBED IN THAT
CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED JUNE 22, 1998 UNDER RECORDER'S
SERIES NO. 14246279, SANTA CLARA COUNTY, BEING MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHWESTERLY LINE OF SAID PARCEL A WITH
THE NORTHEASTERLY RIGHT OF WAY LINE OF HELLYER AVENUE AS SAID AVENUE IS SHOWN ON
THAT CERTAIN RECORD OF SURVEY FILED IN BOOK 525 OF MAPS AT PAGES 52 THROUGH 59,
SANTA CLARA COUNTY RECORDS;
THENCE ALONG SAID NORTHWESTERLY LINE OF SAID PARCEL A, NORTH 44°29'56" EAST,
607.14 FEET TO THE SOUTHWESTERLY RIGHT OF WAY LINE OF SILVER CREEK VALLEY ROAD
AS SAID ROAD IS SHOWN ON THE RECORD OF SURVEY FILED IN BOOK 636 OF MAPS AT PAGES
11 THROUGH 22, SANTA CLARA COUNTY RECORDS;
THENCE ALONG SAID SOUTHWESTERLY RIGHT OF WAY LINE SOUTH 45°00'34" EAST, 95.00
FEET;
THENCE SOUTH 44°29'58" WEST, 606.32 FEET TO SAID NORTHEASTERLY RIGHT OF WAY OF
HELLYER AVENUE;
 
 
 
Exhibit A-1-3

--------------------------------------------------------------------------------

 
 
THENCE ALONG SAID NORTHEASTERLY RIGHT OF WAY LINE NORTH 45°30'30" WEST, 95.00
FEET TO THE POINT OF BEGINNING.
 
APN:  679-02-016
 

 

Exhibit A-1-4

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A-2
 
Legal Description
 

 
5750 Hellyer Avenue, San Jose, California
 
Real property in the City of San Jose, County of Santa Clara, State of
California, described as follows:
 
PARCEL ONE:
 
PARCEL 3, AS SHOWN ON THAT CERTAIN PARCEL MAP FILED FOR RECORD ON NOVEMBER 19,
2009 IN BOOK 834 OF MAPS, AT PAGES 34 AND 35, SANTA CLARA COUNTY RECORDS.
 
PARCEL TWO:
 
AN EASEMENT FOR STORM DRAIN PURPOSES AS MORE PARTICULARLY DESCRIBED IN THAT
CERTAIN DOCUMENT RECORDED DECEMBER 19, 2008 AS DOCUMENT NO. 20072892 OF OFFICIAL
RECORDS, SANTA CLARA COUNTY.
 
APN:  679-02-017 and 679-02-019

Exhibit A-2-1

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A-3
 
Legal Description
 
5970 Optical Court, San Jose, California
 
Real property in the City of San Jose, County of Santa Clara, State of
California, described as follows:
 
PARCEL ONE:
 
PARCEL 3A AS SHOWN ON THAT CERTAIN PARCEL MAP FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON DECEMBER 11, 2008,
IN BOOK 829 OF MAPS AT PAGES 8-11.
 
RESERVING THEREFROM A PRIVATE EASEMENT FOR STORM DRAINAGE PURPOSES OVER THAT
PORTION OF SAID PARCEL 3A SHOWN AS "10' P.S.D.E." (PRIVATE STORM DRAINAGE
EASEMENT) FOR THE BENEFIT OF PARCEL 3 OF SAID PARCEL MAP.
 
ALSO RESERVING THEREFROM A PRIVATE EASEMENT FOR TELEPHONE AND ELECTRICAL
PURPOSES OVER THAT PORTION OF SAID PARCEL 3A SHOWN AS "PR.U.E." (PRIVATE UTILITY
EASEMENT) FOR THE BENEFIT OF PARCEL 3 OF SAID PARCEL MAP.
 
PARCEL TWO:
 
A NON-EXCLUSIVE EASEMENT, APPURTENANT TO THE ABOVE SHOWN PARCEL ONE, FOR
INGRESS, EGRESS, UTILITIES, AND OVERLAND RELEASE OF STORM WATER OVER A PRIVATE
STREET (OPTICAL COURT) AS SHOWN ON SAID PARCEL MAP AND AS CREATED BY THAT
CERTAIN GRANT DEED RECORDED FEBRUARY 22, 2001 AS DOCUMENT NO. 15567589 AND
RE-RECORDED MARCH 22, 2001 AS DOCUMENT NO. 15602149 BOTH OF OFFICIAL RECORDS,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
 
BEGINNING AT THE ANGLE POINT IN THE NORTHWESTERLY LINE OF LOT 4, ALSO BEING THE
ANGLE POINT IN THE CENTERLINE OF PIERCY ROAD, 40 FEET WIDE, AS SAID LOT AND ROAD
ARE SHOWN UPON THAT CERTAIN MAP ENTITLED, "MAP OF THE E. M. PIERCY SUBDIVISION
NO. 1" WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF
 
 
 
Exhibit A-3-1

--------------------------------------------------------------------------------

 
 
THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON NOVEMBER 27, 1906 IN BOOK "L"
OF MAPS AT PAGE 51; THENCE WEST 193.82 FEET ALONG SAID CENTERLINE TO THE TRUE
POINT OF BEGINNING; THENCE SOUTH 0°01'44" WEST 298.09 FEET; THENCE SOUTHEASTERLY
ALONG A TANGENT CURVE TO THE LEFT WITH A RADIUS OF 170.00 FEET THROUGH A CENTRAL
ANGLE OF 45°01'41" FOR AN ARC DISTANCE OF 133.60 FEET; THENCE SOUTH 44°59'58"
EAST 273.57 FEET; THENCE SOUTHERLY ALONG A TANGENT CURVE TO THE RIGHT WITH A
RADIUS OF 30.00 FEET THROUGH A CENTRAL ANGLE OF 51°19'04" FOR AN ARC DISTANCE OF
26.87 FEET; THENCE ALONG A REVERSE CURVE TO THE LEFT WITH A RADIUS OF 50.00 FEET
THROUGH A CENTRAL ANGLE OF 282°38'08" FOR AN ARC DISTANCE OF 246.65 FEET; THENCE
ALONG A REVERSE CURVE TO THE RIGHT WITH A RADIUS OF 30.00 FEET THROUGH A CENTRAL
ANGLE OF 51°19'04" FOR AN ARC DISTANCE OF 26.87 FEET; THENCE NORTH 44°59'58"
WEST 273.57 FEET; THENCE NORTHWESTERLY ALONG A TANGENT CURVE TO THE RIGHT WITH A
RADIUS OF 130.00 FEET THROUGH A CENTRAL ANGLE OF 45°01'41" FOR AN ARC DISTANCE
OF 102.17 FEET; THENCE NORTH 0°01'44" EAST 298.11 FEET TO A POINT ON SAID
CENTERLINE OF PIERCY STREET; THENCE WEST 40.00 FEET ALONG SAID CENTERLINE TO THE
TRUE POINT OF BEGINNING.
 
EXCEPTING THEREFROM ALL THAT PORTION LYING WITHIN THE BOUNDS OF THE ABOVE SHOWN
PARCEL ONE.
 
PARCEL THREE:
 
A NON-BUILDABLE EASEMENT APPURTENANT TO AND FOR THE BENEFIT OF THE ABOVE SHOWN
PARCEL ONE, AS CREATED BY SAID PARCEL MAP OVER THAT PORTION OF PARCEL 3 OF SAID
MAP DESIGNATED AS "60' WIDE NON-BUILDABLE EASEMENT".
 
PARCEL FOUR:
 
A NON-EXCLUSIVE PRIVATE EASEMENT FOR STORM DRAINAGE PURPOSES OVER THAT PORTION
OF PARCEL 3 SHOWN ON SAID PARCEL MAP AS "10' P.S.D.E." (PRIVATE STORM DRAINAGE
EASEMENT), APPURTENANT TO THE ABOVE SHOWN PARCEL ONE.
 
PARCEL FIVE:
 
 
 
Exhibit A-3-2

--------------------------------------------------------------------------------

 
 
A NON-EXCLUSIVE PRIVATE EASEMENT FOR WATER LINE PURPOSES OVER THAT PORTION OF
PARCEL 3 OF SAID PARCEL MAP SHOWN AS "15' P.W.L.E." (PRIVATE WATER LINE
EASEMENT), APPURTENANT TO THE ABOVE SHOWN PARCEL ONE.
 
APN:  678-07-042

Exhibit A-3-3

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A-4
 
Legal Description
 
255 Caspian Drive, Sunnyvale, California
 
Real property in the City of Sunnyvale, County of Santa Clara, State of
California, described as follows:
 
PARCEL ONE:
 
LOT 1, AS SHOWN ON THAT CERTAIN MAP FIELD IN THE OFFICE OF THE RECORDER OF THE
COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON FEBRUARY 25, 1992 IN BOOK 634 OF
MAPS, PAGES 30 AND 31.
 
PARCEL TWO:
 
A NON-EXCLUSIVE 15 FOOT WIDE INGRESS AND EGRESS EASEMENT OVER THAT CERTAIN STRIP
OF LAND OF LOT 2, DESIGNATED AS "PROPOSED NON-EXCLUSIVE 15' INGRESS AND EGRESS
EASEMENT", FOR THE BENEFIT OF LOT 1, AS SAID EASEMENT AND LOT ARE SHOWN ON THAT
CERTAIN PARCEL MAP RECORDED FEBRUARY 25. 1992 IN BOOK 634 OF MAPS, PAGES 30 AND
31.
 
APN:  110-33-038

Exhibit A-4-1

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A-5
 
Legal Description
 

 
3301 Olcott Street, Santa Clara, California
 
Real property in the City of Santa Clara, County of Santa Clara, State of
California, described as follows:
 
PARCEL 1, AS SHOWN ON THAT CERTAIN PARCEL MAP RECORDED JULY 1, 1977 IN BOOK 399,
PAGE 51 OF MAPS, IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA.
 
EXCEPTING THEREFROM THAT PORTION OF THE PREMISES AS GRANTED TO THE STATE OF
CALIFORNIA, IN THAT CERTAIN INSTRUMENT RECORDED APRIL 23, 1982 IN BOOK G 744
PAGE 72 OF OFFICIAL RECORDS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
 
COMMENCING AT A POINT ON THE GENERAL SOUTHERLY LINE OF THE EXISTING STATE
FREEWAY IN SANTA CLARA COUNTY, ROAD 04-SC1-101, SHOWN AS BAYSHORE FREEWAY, AS
SAID SOUTHERLY FREEWAY LINE WAS ESTABLISHED, DEFINED AND DESCRIBED IN PARCEL 3
OF THE DEED TO STATE OF CALIFORNIA RECORDED JUNE 6, 1960 IN VOLUME 4815 AT PAGE
705, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID POINT BEING ALSO THE
NORTHEASTERLY CORNER OF PARCEL 6 SHOWN UPON THAT CERTAIN RECORD OF SURVEY MAP
FILED FOR RECORD ON MAY 6, 1963 IN BOOK 160 OF MAPS AT PAGES 50 AND 51 IN THE
OFFICE OF THE RECORDER OF SANTA CLARA COUNTY; THENCE ALONG THE EASTERLY LINE OF
SAID PARCEL 6, SOUTH 0° 58' 53" WEST, 29.75 FEET; THENCE LEAVING SAID EASTERLY
LINE, SOUTH 65° 50' 31" EAST, 437.09 FEET TO A POINT ON THE LINE COMMON TO
PARCEL "C" AND PARCEL "D" AS SAID PARCELS C AND D ARE SHOWN UPON THAT CERTAIN
MAP ENTITLED "PARCEL MAP-LANDS OF KAISER AETNA", WHICH MAP WAS FILED FOR RECORD
ON SEPTEMBER 23, 1975 IN BOOK 361 OF MAPS AT PAGE 46, IN THE OFFICE OF THE
RECORDER OF SANTA CLARA COUNTY; THENCE ALONG THE SOUTHEASTERLY PROLONGATION OF
LAST SAID COURSE, SOUTH 65° 50' 31" EAST, 298.72 FEET TO THE BEGINNING OF A
TANGENT CURVE TO THE RIGHT WITH A RADIUS OF 249.00 FEET, WHICH CURVE IS ALSO
TANGENT TO THE NORTHERLY
 
 
 
Exhibit A-5-1

--------------------------------------------------------------------------------

 
 
PROLONGATION OF THE COURSE DESCRIBED AS "NORTH 20° 29' 40" WEST 124.04 FEET" IN
THAT CERTAIN FINAL ORDER OF CONDEMNATION RECORDED JANUARY 19, 1961 IN VOLUME
5048 AT PAGE 9, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG SAID
TANGENT CURVE TO THE RIGHT WITH A RADIUS OF 249.00 FEET, THROUGH AN ANGLE OF 45°
20' 51", AN ARC LENGTH OF 197.07 FEET TO SAID NORTHERLY PROLONGATION; THENCE
ALONG SAID NORTHERLY PROLONGATION SOUTH 20° 29' 40" EAST 326.67 FEET TO THE
NORTHERLY TERMINUS OF SAID 124.04 FOOT COURSE, BEING THE INTERSECTION OF LAST
SAID COURSE WITH THE COURSE DESCRIBED AS "SOUTH 59° 36' 10" EAST 385.76 FEET" IN
SAID FINAL ORDER OF CONDEMNATION; THENCE ALONG LAST DESCRIBED COURSE SOUTH 89°
36' 10" EAST 49.24 FEET TO THE GENERAL SOUTHWESTERLY LINE OF SAID EXISTING STATE
FREEWAY AS DEFINED AND DESCRIBED IN SAID DEED (4815 OR 705); THENCE ALONG SAID
GENERAL SOUTHWESTERLY AND SOUTHERLY FREEWAY LINE NORTH 20° 29' 40" WEST, 351.97
FEET, ALONG A TANGENT CURVE TO THE LEFT WITH A RADIUS OF 245.00 FEET, THROUGH AN
ANGLE OF 42° 11' 22", AN ARC LENGTH OF 180.40 FEET, NORTH 62° 41' 02" WEST,
351.61 FEET AND NORTH 69° 22' 12" WEST, 450.90 FEET TO THE POINT OF
COMMENCEMENT, EXCEPTING THEREFROM ALL THAT PORTION OF SAID PARCEL "C"
(361-MAPS-46) INCLUDED WITHIN THE EXTERIOR BOUNDARIES OF THE HEREINABOVE
DESCRIBED REAL PROPERTY.
 
APN:  224-47-019

 

Exhibit A-5-2

 
 

--------------------------------------------------------------------------------

 

EXHIBIT B
 
CLOSING STATEMENT
 
[Missing Graphic Reference]
First American Title Insurance Company
National Commercial Services
1737 North First Street, Suite 500 • San Jose, CA 95112
 
Borrower’s Final Settlement Statement
 
 
Property:
5850 Hellyer Avenue, San Jose, CA
File No:
NCS-441275-SC
 
Officer:
Liz Zankich/lz
 
New Loan No:
   
Settlement Date:
08/04/2010
 
Disbursement Date:
   
Print Date:
8/4/2010, 1:42 PM
Buyer:
Mission West Properties, L.P.; Mission West Properties L.P. I
Address:
 
Seller:
 
Address:
 

Charge Description
Borrower Charge
Borrower Credit CredCCharge
New Loan(s):
   
Lender: Hartford Insurance Company
   
New Loan Amount   - Hartford Insurance Company
 
40,000,000.00
Credit Application fee   - Hartford Insurance Company
 
800,000.00
Administrative Fee   - Hartford Insurance Company
POC $20,000.00
   
Stub Interest   - Hartford Insurance Company
188,222.22
 
Return of Work fee   - Hartford Insurance Company
 
75,000.00
Interest on App Fees   - Hartford Insurance Company
 
160.55
     
Title/Escrow Charges to:
   
Policy-Extended ALTA 2006 Lender's to First American Title Insurance Company
National Commercial Services
23,600.00
 
Closing-Escrow Fee to First American Title Insurance Company National Commercial
Services
9,450.00
 
Endorsement-Zoning-ALTA 3.1 to First American Title Insurance Company National
Commercial Services
5,400.00
 
Endorsement-Usury to First American Title Insurance Company National Commercial
Services
2,000.00
 
Endorsement-Subdivision to First American Title Insurance Company National
Commercial Services
100.00
 
Endorsement-Separate Tax Parcel to First American Title Insurance Company
National Commercial Services
100.00
 
Endorsement-First Loss to First American Title Insurance Company National
Commercial Services
2,360.00
 
Endorsement-Doing Business As to First American Title Insurance Company National
Commercial Services
500.00
 
Endorsement-Contiguity to First American Title Insurance Company National
Commercial Services
100.00
 
Endorsement-Access to First American Title Insurance Company National Commercial
Services
25.00
 
Endorsement-104.6 to First American Title Insurance Company National Commercial
Services
50.00
 
Endorsement-Utility Facility to First American Title Insurance Company National
Commercial Services
100.00
 
Record Deed of Trust to First American Title Insurance Company National
Commercial Services
153.00
 

 
 
 
Exhibit B-1

--------------------------------------------------------------------------------

 
 
Record Assignment of Leases and Rents
54.00
 
Record UCC Statement
20.00
 
Record Deed of Trust to First American Title Insurance Company National
Commercial Services
105.00
 
Record Assignment of Leases and Rents
36.00
 
Record UCC Statement
20.00
 
Record Subordination & Non-Disturbance Agreement
75.00
       
Disbursements Paid:
   
UCC filing fees (MWP) to Delaware Secretary of State
91.00
 
UCC Filing fees (MWP I) to Delaware Secretary of State
81.00
 
Reimburse GS certificates and UCC from CSC to Bingham McCutchen
2,397.20
 
Legal fees to Bingham McCutchen
48,000.00
 
Survey fees to Kier & Wright Civil Engineering
POC $1.00
   
Appraisal fee to Cushman & Wakefield, Inc.
26,500.00
 
Payment to The Planning & Zoning Resource Corp.
5,137.50
 
ASTM ESA/PCA/PML to Nova Consulting
23,900.00
 
Placement fee to NorthMarq Capital, Inc.
250,000.00
       
Cash (From) (X To) Borrower
40,286,583.63
       
Totals
40,875,160.55
40,875,160.55

Exhibit B-2

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 1
 
ALLOCATED LOAN AMOUNTS
 
Borrower                                                                                     
  Property                                                                                                                                                                                            Allocated
Loan Amount
 
Mission West Properties, L.P.
 
 
5830, 5850, 5870 Hellyer Avenue, San Jose,
California
$6,800,000.00

 
 

                    5750 Hellyer Avenue, San Jose,
California                                                                                                                                  
 $5,930,000.00

                    5970 Optical Court, San Jose,
California                                                                                                                                       
$11,510,000.00

                    255 Caspian Drive, Sunnyvale,
California                                                                                                                                    
$11,290,000.00

Mission West Properties, L.P.
I                                                  3301 Olcott Street, Santa
Clara,
California                                                                                                                                  
  $4,470,000.00
 

 

Schedule 1-1

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 4.1
 
RENT ROLL
 
CONFIDENTIAL TREATMENT – THE RENT ROLLS ARE OMITTED
 

Schedule 4.1-1

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 5.16
 
PERSONAL PROPERTY
 
NONE
 

Schedule 5.16-1

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 5.18
 
LIST OF MATERIAL AGREEMENTS
 
NONE
 

Schedule 5.18-1

 
 

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