Exhibit 10.1

LOAN AGREEMENT

Dated as of October 1, 2012

Between

NH10 CUMMING GA LLC, D08 MARIETTA OH LLC, MPI06 MASON OH LLC,

SRFF08 READING PA, L.P., RPT08 PINEVILLE NC, L.P., IPA12 ASHBURN VA SPE

LLC, and FTCHI07 GRAND RAPIDS MI LLC

individually, collectively, jointly and severally, as Borrower

and

KEYBANK NATIONAL ASSOCIATION,

as Lender

Loan No. 10061971

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TABLE OF CONTENTS

 

            Page  

ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     8   

     Section 1.1

    

Definitions

     8   

     Section 1.2

    

Principles of Construction

     36   

ARTICLE II - GENERAL TERMS

     37   

     Section 2.1

    

Loan Commitment; Disbursement to Borrower

     37   

        2.1.1

    

Agreement to Lend and Borrow

     37   

        2.1.2

    

Single Disbursement to Borrower

     37   

        2.1.3

    

The Note, Mortgage and Loan Documents

     37   

        2.1.4

    

Use of Proceeds

     37   

     Section 2.2

    

Interest Rate

     37   

        2.2.1

    

Interest Rate

     37   

        2.2.2

    

Interest Calculation

     37   

        2.2.3

    

Default Rate

     38   

        2.2.4

    

Usury Savings

     38   

     Section 2.3

    

Loan Payment

     38   

     Section 2.4

    

Prepayments

     38   

     Section 2.5

    

Defeasance

     38   

        2.5.1

    

Voluntary Defeasance

     39   

        2.5.2

    

Collateral

     45   

        2.5.3

    

Successor Borrower

     45   

     Section 2.6

    

Release of Property

     45   

        2.6.1

    

Release of Property

     45   

     Section 2.7

    

Lockbox Account/Cash Management

     46   

        2.7.1

    

Lockbox Account

     46   

        2.7.2

    

Cash Management Account

     47   

        2.7.3

    

Payments Received under the Cash Management Agreement

     48   

ARTICLE III - CONDITIONS PRECEDENT

     48   

     Section 3.1

    

Conditions Precedent to Closing

     48   

ARTICLE IV - REPRESENTATIONS AND WARRANTIES

     48   

     Section 4.1

    

Borrower Representations

     48   

        4.1.1

    

Organization

     48   

        4.1.2

    

Proceedings

     48   

        4.1.3

    

No Conflicts

     48   

        4.1.4

    

Litigation

     49   

        4.1.5

    

Agreements

     49   

        4.1.6

    

Title

     49   

        4.1.7

    

Solvency

     50   

        4.1.8

    

Full and Accurate Disclosure

     50   

        4.1.9

    

No Plan Assets

     50   

        4.1.10

    

Compliance

     51   

        4.1.11

    

Financial Information

     51   

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        4.1.12

    

Condemnation

     51   

        4.1.13

    

Federal Reserve Regulations

     51   

        4.1.14

    

Utilities and Public Access

     51   

        4.1.15

    

Not a Foreign Person

     52   

        4.1.16

    

Separate Lots

     52   

        4.1.17

    

Assessments

     52   

        4.1.18

    

Enforceability

     52   

        4.1.19

    

No Prior Assignment

     52   

        4.1.20

    

Insurance

     52   

        4.1.21

    

Use of Property

     52   

        4.1.22

    

Certificate of Occupancy; Licenses

     52   

        4.1.23

    

Flood Zone

     53   

        4.1.24

    

Physical Condition

     53   

        4.1.25

    

Boundaries

     53   

        4.1.26

    

Leases

     53   

        4.1.27

    

Survey

     54   

        4.1.28

    

Inventory

     54   

        4.1.29

    

Filing and Recording Taxes

     54   

        4.1.30

    

Special Purpose Entity/Separateness

     54   

        4.1.31

    

Management Agreement

     54   

        4.1.32

    

Illegal Activity

     55   

        4.1.33

    

No Change in Facts or Circumstances; Disclosure

     55   

        4.1.34

    

Investment Company Act

     55   

        4.1.35

    

Embargoed Person

     55   

        4.1.36

    

Principal Place of Business; State of Organization

     55   

        4.1.37

    

Environmental Representations and Warranties

     56   

        4.1.38

    

Cash Management Account

     56   

     Section 4.2

    

Survival of Representations

     57   

ARTICLE V - BORROWER COVENANTS

     57   

     Section 5.1

    

Affirmative Covenants

     57   

        5.1.1

    

Existence; Compliance with Legal Requirements

     57   

        5.1.2

    

Taxes and Other Charges

     58   

        5.1.3

    

Litigation

     59   

        5.1.4

    

Access to Property

     59   

        5.1.5

    

Notice of Default

     59   

        5.1.6

    

Cooperate in Legal Proceedings

     59   

        5.1.7

    

Perform Loan Documents

     59   

        5.1.8

    

Award and Insurance Benefits

     60   

        5.1.9

    

Further Assurances

     60   

        5.1.10

    

Principal Place of Business, State of Organization

     60   

        5.1.11

    

Financial Reporting

     61   

        5.1.12

    

Business and Operations

     63   

        5.1.13

    

Title to the Property

     63   

        5.1.14

    

Costs of Enforcement

     64   

        5.1.15

    

Estoppel Statement

     64   

        5.1.16

    

Loan Proceeds

     64   

 

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        5.1.17

    

Performance by Borrower

     64   

        5.1.18

    

Confirmation of Representations

     65   

        5.1.19

    

Environmental Covenants

     65   

        5.1.20

    

Leasing Matters

     67   

        5.1.21

    

Alterations

     68   

        5.1.22

    

Operation of Property

     69   

        5.1.23

    

Embargoed Person

     69   

     Section 5.2

    

Negative Covenants

     69   

        5.2.1

    

Operation of Property

     69   

        5.2.2

    

Liens

     70   

        5.2.3

    

Dissolution

     70   

        5.2.4

    

Change In Business

     70   

        5.2.5

    

Debt Cancellation

     70   

        5.2.6

    

Zoning

     70   

        5.2.7

    

No Joint Assessment

     70   

        5.2.8

    

Intentionally Omitted

     71   

        5.2.9

    

ERISA

     71   

        5.2.10

    

Transfers

     71   

ARTICLE VI - INSURANCE; CASUALTY; CONDEMNATION

     75   

     Section 6.1

    

Insurance

     75   

     Section 6.2

    

Casualty

     78   

     Section 6.3

    

Condemnation

     79   

     Section 6.4

    

Restoration

     80   

ARTICLE VII - RESERVE FUNDS

     84   

     Section 7.1

    

Required Repairs

     84   

     Section 7.2

    

Tax and Insurance Escrow Fund

     84   

     Section 7.3

    

Replacements and Replacement Reserve

     84   

        7.3.1

    

Replacement Reserve Fund

     84   

        7.3.2

    

Disbursements from Replacement Reserve Account

     85   

        7.3.3

    

Performance of Replacements

     86   

        7.3.4

    

Failure to Make Replacements

     88   

        7.3.5

    

Balance in the Replacement Reserve Account

     89   

     Section 7.4

    

Rollover Reserve

     89   

        7.4.1

    

Deposits to Rollover Reserve Fund

     89   

        7.4.2

    

Withdrawal of Rollover Reserve Funds

     89   

     Section 7.5

    

Excess Cash Flow Reserve Fund

     89   

        7.5.1

    

Deposits to Excess Cash Flow Reserve Fund

     89   

        7.5.2

    

Release of Excess Cash Flow Reserve Funds

     90   

     Section 7.6

    

Reserve Funds, Generally

     90   

     Section 7.7

    

Letters of Credit

     91   

     Section 7.8

    

MedPlus Reserves

     92   

        7.8.1

    

Deposit to MedPlus Tenant Improvement Reserve Fund

     92   

        7.8.2

    

Withdrawal of MedPlus Tenant Improvement Reserve Funds

     92   

        7.8.3

    

Deposit to MedPlus Repair Reserve Fund

     92   

        7.8.4

    

Withdrawal of MedPlus Repair Reserve Funds

     93   

        7.8.5

    

Deposit to MedPlus Free Rent Reserve Fund

     93   

 

3

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        7.8.6

    

Withdrawal of MedPlus Free Rent Reserve Funds

     93   

        7.8.7

    

MedPlus Second Expansion

     93   

ARTICLE VIII - DEFAULTS

     94   

     Section 8.1

    

Event of Default

     94   

     Section 8.2

    

Remedies

     96   

     Section 8.3

    

Remedies Cumulative; Waivers

     98   

ARTICLE IX - SPECIAL PROVISIONS

     98   

     Section 9.1

    

Securitization

     98   

        9.1.1

    

Sale of Notes and Securitization

     98   

        9.1.2

    

Securitization Costs

     100   

     Section 9.2

    

Right To Release Information

     100   

     Section 9.3

    

Exculpation

     100   

     Section 9.4

    

Matters Concerning Manager

     102   

     Section 9.5

    

Servicer

     102   

ARTICLE X - MISCELLANEOUS

     103   

     Section 10.1

    

Survival

     103   

     Section 10.2

    

Lender’s Discretion

     103   

     Section 10.3

    

Governing Law

     103   

     Section 10.4

    

Modification, Waiver in Writing

     104   

     Section 10.5

    

Delay Not a Waiver

     105   

     Section 10.6

    

Notices

     105   

     Section 10.7

    

Trial by Jury

     106   

     Section 10.8

    

Headings

     106   

     Section 10.9

    

Severability

     106   

     Section 10.10

    

Preferences

     106   

     Section 10.11

    

Waiver of Notice

     106   

     Section 10.12

    

Remedies of Borrower

     107   

     Section 10.13

    

Expenses; Indemnity

     107   

     Section 10.14

    

Schedules Incorporated

     108   

     Section 10.15

    

Offsets, Counterclaims and Defenses

     108   

     Section 10.16

    

No Joint Venture or Partnership; No Third Party .Beneficiaries

     108   

     Section 10.17

    

Publicity

     109   

     Section 10.18

    

Waiver of Marshalling of Assets

     109   

     Section 10.19

    

Waiver of Counterclaim

     109   

     Section 10.20

    

Conflict; Construction of Documents; Reliance

     109   

     Section 10.21

    

Brokers and Financial Advisors

     110   

     Section 10.22

    

Prior Agreements

     110   

     Section 10.23

    

Joint and Several Liability

     110   

     Section 10.24

    

Certain Additional Rights of Lender (VCOC)

     110   

     Section 10.25

    

OFAC

     111   

     Section 10.26

    

Duplicate Originals; Counterparts

     111   

ARTICLE XI - LOCAL LAW PROVISIONS

     111   

     Section 11.1

    

Inconsistencies

     111   

 

4

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ARTICLE XII - ADDITIONAL OR SPECIAL PROVISIONS

     112   

     Section 12.1

    

Inconsistencies

     112   

        12.1.1.

    

Cross-Default; Cross-Collateralization

     112   

        12.1.2

    

Recording Taxes

     112   

        12.1.3

    

Use of Proceeds

     113   

        12.1.4

    

Voluntary Defeasance

     113   

        12.1.5

    

Successor Borrower

     113   

        12.1.6

    

Release of Property

     113   

        12.1.7

    

Lockbox Account

     114   

        12.1.8

    

Cash Management Account

     114   

        12.1.9

    

Organization

     114   

        12.1.10

    

No Conflicts

     114   

        12.1.11

    

Agreements

     115   

        12.1.12

    

Title

     115   

        12.1.13

    

Full and Accurate Disclosure

     115   

        12.1.14

    

Compliance

     115   

        12.1.15

    

Utilities and Public Access

     115   

        12.1.16

    

Assessments

     115   

        12.1.17

    

Insurance

     115   

        12.1.18

    

Leases

     116   

        12.1.19

    

Survey

     116   

        12.1.20

    

Environmental Representations and Warranties

     116   

        12.1.21

    

Cash Management Account

     117   

        12.1.22

    

Access to Property

     119   

        12.1.23

    

Further Assurances

     119   

        12.1.24

    

Financial Reporting

     119   

        12.1.25

    

Title to the Property

     120   

        12.1.26

    

Estoppel Statement

     120   

        12.1.27

    

Environmental Covenants

     120   

        12.1.28

    

Leasing Matters

     122   

        12.1.29

    

Alterations

     122   

        12.1.30

    

Operation of Property

     122   

        12.1.31

    

Liens

     122   

        12.1.32

    

Transfers

     123   

        12.1.33

    

Condemnation

     124   

        12.1.34

    

Restoration

     124   

        12.1.35

    

Tax and Insurance Escrow Fund

     125   

        12.1.36

    

Replacement Reserve Fund

     126   

        12.1.37

    

Disbursements from Replacement Reserve Account

     126   

        12.1.38

    

Performance of Replacements

     126   

        12.1.39

    

Withdrawal of Rollover Reserve Funds

     127   

        12.1.40

    

Reserve Funds Generally

     127   

        12.1.41

    

Event of Default

     127   

        12.1.42

    

Remedies

     128   

        12.1.43

    

Exculpation

     129   

        12.1.44

    

Matters Concerning Manager

     130   

 

5

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        12.1.45

    

Publicity

     131   

        12.1.46

    

Brokers and Financial Advisors

     131   

 

6

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SCHEDULES

 

Schedule I    -      Rent Roll

Schedule II

   -      Required Repairs - Deadlines for Completion

Schedule III

   -      Organizational Chart of Borrower

Schedule IV

   -      Allocated Loan Amounts

Schedule V

   -      Property Managers

 

7

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of October 1, 2012 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), among KEYBANK NATIONAL ASSOCIATION, a national banking
association, having an address at 11501 Outlook, Suite 300, Overland Park,
Kansas 66211 (“Lender”) and NH10 CUMMING GA LLC, a Delaware limited liability
company (“Cumming”), D08 MARIETTA OH LLC, a Delaware limited liability company
(“Marietta”), MPI06 MASON OH LLC, a Delaware limited liability company
(“Mason”), SRFF08 READING PA, L.P., a Delaware limited partnership (“Reading”),
RPT08 PINEVILLE NC, L.P., a Delaware limited partnership (“Pineville”), IPA12
ASHBURN VA SPE LLC, a Delaware limited liability company (“Ashburn”), and
FTCHI07 GRAND RAPIDS MI LLC, a Delaware limited liability company (“Grand
Rapids”) each having its principal place of business at c/o Gladstone Commercial
Corporation, 1521 Westbranch Drive, Suite 200, McLean, Virginia 22102 (Cumming,
Marietta, Mason, Reading, Pineville, Ashburn and Grand Rapids are hereinafter
referred to individually, collectively, jointly and severally, as the
“Borrower”).

W I T N E S S E T H:

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and

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

NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION.

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

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

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

“Additional Insolvency Opinion” means any subsequent Insolvency Opinion.

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

 

8

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

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

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

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

“Approved Bank” means (a) a bank or other financial institution which has the
Required Rating, (b) if a Securitization has not occurred, a bank or other
financial institution acceptable to Lender or (c) if a Securitization has
occurred, a bank or other financial institution with respect to which Lender
shall have received a Rating Agency Confirmation.

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

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

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

 

9

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“Availability Threshold” means the greater of $30,000.00 or 2% of the initial
principal balance of the Loan.

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

“Bankruptcy Action” means with respect to any Person (a) such Person filing a
voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (b) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law which is not dismissed within 60 days of filing; (c) such
Person filing an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(d) such Person consenting to or acquiescing in or joining in an application for
the appointment of a custodian, receiver, trustee, or examiner for such Person
or any portion of the Property; (e) such Person making an assignment for the
benefit of creditors, or admitting, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §101, et
seq., as the same may be amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors’
rights or any other Federal or state bankruptcy or insolvency law.

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

“Business Day” means a day upon which commercial banks are not authorized or
required by law to close in the city of New York, New York.

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

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

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

“Cash Sweep Event” means the occurrence of: (a) a Lockbox Trigger Event; or
(b) a Rollover Reserve Trigger Event.

“Cash Sweep Event Cure” means (a) if the Cash Sweep Event is caused solely by
the occurrence of a DSCR Trigger Event, the achievement of a Debt Service
Coverage Ratio of 1.20 to 1.00 or greater for two (2) consecutive quarters based
upon the trailing three (3) month period immediately preceding the date of
determination, (b) if the Cash Sweep Event is caused by an Event of Default, the
acceptance by Lender of a cure of such Event of Default (which cure

 

10

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Lender is not obligated to accept and may reject or accept in its discretion) as
evidenced by a writing signed by Lender, (c) if the Cash Sweep Event is caused
by a Bankruptcy Action of Manager, Borrower shall have replaced the Manager with
a Qualified Manager under a Replacement Management Agreement within 60 days of
such Bankruptcy Action, (d) if the Cash Sweep Event is caused by a Rollover
Reserve Trigger Event, the occurrence of a Rollover Reserve Termination Event;
provided, however, that, each Cash Sweep Event Cure set forth in this definition
shall be subject to the following conditions, (i) no Event of Default shall have
occurred and be continuing under this Agreement or any of the other Loan
Documents, (ii) a Cash Sweep Event Cure following a Lockbox Trigger Event may
occur no more than a total of four (4) times in the aggregate during the term of
the Loan, and (iii) Borrower shall have paid all of Lender’s reasonable expenses
incurred in connection with such Cash Sweep Event Cure, including reasonable
attorney’s fees and expenses. Notwithstanding the foregoing, if more than one
Cash Sweep Event occurs, all applicable cures set forth above must occur to
constitute a “Cash Sweep Event Cure”.

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

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

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

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

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

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

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

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

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

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

 

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

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

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

(a) the numerator is the Net Operating Income (excluding interest on credit
accounts and using annualized operating expenses for any recurring expenses not
paid monthly (e.g., Taxes and Insurance Premiums)) for such period as set forth
in the statements required hereunder, without deduction for (i) actual
management fees incurred in connection with the operation of the Property, or
(ii) amounts paid to the Reserve Funds, less (A) management fees equal to the
greater of (1) assumed management fees of 3% of Gross Income from Operations and
(2) the actual management fees incurred, and (B) annual Replacement Reserve Fund
contributions equal to $0.10 per square foot, and (C) annual Rollover Reserve
Fund contributions equal to $0.65 per square foot; and

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

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

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

“Defeasance Date” has the meaning set forth in Section 2.5.1(a)(i)(A) hereof.

“Defeasance Deposit” means an amount equal to the remaining principal amount of
the Note, the Defeasance Payment Amount, any costs and expenses incurred or to
be incurred in the purchase of U.S. Obligations necessary to meet the Scheduled
Defeasance Payments, any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or otherwise
required to accomplish the agreements of Sections 2.4 and 2.5 hereof (including
any fees and expenses of accountants, attorneys and the Rating Agencies incurred
in connection therewith), and a defeasance processing fee in an amount
determined by Lender in its discretion.

“Defeasance Event” has the meaning set forth in Section 2.5.1(a)(i) hereof.

“Defeasance Payment Amount” means the amount which, when added to the remaining
principal amount of the Note, will be sufficient to purchase U.S. Obligations
providing the required Scheduled Defeasance Payments.

“Defeased Note” shall have the meaning set forth in Section 2.5 hereof.

 

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

“DSCR Trigger Event” means, that as of the date of determination, the Debt
Service Coverage Ratio based on the trailing three (3) month period immediately
preceding the date of such determination is less than 1.15 to 1.00.

“Eligible Account” means a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. §9.10(b),
having in either case a combined capital and surplus of at least $50,000,000.00
and subject to supervision or examination by federal and state authority. An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.

“Eligible Institution” means KeyBank National Association or a depository
institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least “A-1” by S&P, “P-1” by Moody’s or “F-1” by Fitch in the
case of accounts in which funds are held for thirty (30) days or less (or, in
the case of accounts in which funds are held for more than thirty (30) days, the
long-term unsecured debt obligations of which are rated at least “A-” by Fitch
or S&P or “A3” by Moody’s).

“Embargoed Person” means any person, entity or government subject to trade
restrictions under U.S. law, including The USA PATRIOT Act (including the anti
terrorism provisions thereof), the International Emergency Economic Powers Act,
50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et
seq., and any Executive Orders or regulations promulgated thereunder including
those related to Specially Designated Nationals and Specially Designated Global
Terrorists, with the result that the investment in Borrower, Principal or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Loan made by the Lender is in violation of law.

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

“Environmental Law” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to Hazardous
Substances, relating to liability for or costs of Remediation or prevention of
Releases of Hazardous Substances or relating to liability for or costs of other
actual or threatened danger to human health or the environment. Environmental
Law includes the following statutes, as amended, any successor thereto, and any

 

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regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including
Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
River and Harbors Appropriation Act. Environmental Law also includes any present
and future federal, state and local laws, statutes, ordinances, rules,
regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a Governmental
Authority of the environmental condition of the Property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of the Property to any Governmental Authority or other Person, whether
or not in connection with transfer of title to or interest in property.

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

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

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

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

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

“Excess Cash Flow Reserve Account” has the meaning set forth in Section 7.5
hereof.

“Excess Cash Flow Reserve Fund” has the meaning set forth in Section 7.5 hereof.

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

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

“Fitch” means Fitch, Inc.

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

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

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

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

 

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

“Guarantor” means Gladstone Commercial Corporation.

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

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

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

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

“Indebtedness” of a Person, at a particular date, means the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including amounts for borrowed money and indebtedness in the form of mezzanine
debt or preferred equity); (b) obligations evidenced by bonds, debentures,
notes, or other similar instruments; (c) obligations for the deferred purchase
price of property or services (including trade obligations); (d) obligations

 

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under letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (g) obligations secured by any
Liens, whether or not the obligations have been assumed (other than the
Permitted Encumbrances).

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

“Indemnified Parties” means Lender and, its designee, (whether or not it is the
Lender), any Affiliate of Lender that has filed any registration statement
relating to the Securitization or has acted as the sponsor or depositor in
connection with the Securitization, any Affiliate of Lender that acts as an
underwriter, placement agent or initial purchaser of Securities issued in the
Securitization, any other co underwriters, co placement agents or co initial
purchasers of Securities issued in the Securitization, and each of their
respective officers, directors, partners, employees, representatives, agents and
Affiliates and each Person or entity who Controls any such Person within the
meaning of Section 15 of the Securities Act of 1933 as amended or Section 20 of
the Security Exchange Act of 1934 as amended, any Person who is or has been
involved in the origination of the Loan, any Person who is or will have been
involved in the servicing of the Loan secured hereby, any Person in whose name
the encumbrance created by the Security Instrument is or will have been
recorded, any Person who holds or acquires or will have held a full or partial
interest in the Loan secured hereby (including investors or prospective
investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan secured
hereby for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, employees, authorized agents, authorized
servants, authorized representatives, Affiliates, subsidiaries, participants,
successors and assigns of any and all of the foregoing (including any other
Person who holds or acquires or will have held a participation or other full or
partial interest in the Loan, whether during the term of the Loan or as a part
of or following a foreclosure of the Loan and including any successors by
merger, consolidation or acquisition of all or a substantial portion of Lender’s
assets and business).

“Independent Director” means a natural Person who (a) is not at the time of
initial appointment, or at any time while serving in such capacity, and is not,
and has never been, and shall not while serving as Independent Director be:
(i) a stockholder, director (with the exception of serving as the Independent
Director of Borrower), officer, employee, partner, member (other than a “special
member” or “springing member”), manager, attorney or counsel of Borrower, equity
owners of Borrower or Guarantor or any Affiliate of Borrower or Guarantor;
(ii) a customer, supplier or other person who derives any of its purchases or
revenues from its activities with Borrower or Guarantor, equity owners of
Borrower or Guarantor or any Affiliate of Borrower or Guarantor; (iii) a Person
Controlling or under common Control with any such stockholder, director,
officer, employee, partner, member, manager, attorney, counsel, equity owner,
customer, supplier or other Person; or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, member, manager,
attorney, counsel, equity owner, customer, supplier or other Person and (b) has
(i) prior experience as an independent director or independent manager for a
corporation, a trust or limited liability company whose charter documents
required the unanimous consent of all independent directors or independent
managers thereof before such corporation, trust or limited liability company
could consent to the

 

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institution of bankruptcy or insolvency proceedings against it or could file a
petition seeking relief under any applicable federal or state law relating to
bankruptcy and (ii) at least three years of employment experience with one or
more nationally-recognized companies that provides, inter alia, professional
independent directors or independent managers in the ordinary course of their
respective business to issuers of securitization or structured finance
instruments, agreements or securities or lenders originating commercial real
estate loans for inclusion in securitization or structured finance instruments,
agreements or securities (a “Professional Independent Director”) and is at all
times during his or her service as an Independent Director of Borrower an
employee of such a company or companies. A natural Person who satisfies the
foregoing definition except for being (or having been) the independent director
or independent manager of a “special purpose entity” affiliated with Borrower
(provided such affiliate does not or did not own a direct or indirect equity
interest in an Borrower) shall not be disqualified from serving as an
Independent Director, provided that such natural Person satisfies all other
criteria set forth above and that the fees such individual earns from serving as
independent director or independent manager of affiliates of Borrower or in any
given year constitute in the aggregate less than five percent (5%) of such
individual’s annual income for that year. A natural Person who satisfies the
foregoing definition other than subparagraph (a)(ii) shall not be disqualified
from serving as an Independent Director of Borrower if such individual is a
Professional Independent Director and such individual complies with the
requirements of the previous sentence.

“Individual Property” shall mean each parcel of real property, the Improvements
thereon and all personal property owned by Borrower and encumbered by the
applicable Security Instrument, together with all rights pertaining to such
property and Improvements, as more particularly described in the granting
clauses of the applicable Security Instrument and referred to therein as the
“Property.”

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

“Insolvency Opinion” means that certain non-consolidation opinion letter dated
the date hereof delivered by Richards, Layton & Finger, P.A. in connection with
the Loan.

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

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

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

“Interest Rate” means a rate of 4.86 percent (4.86%).

 

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

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

“Legal Requirements” means, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting the Property or
any part thereof, or the construction, use, alteration or operation thereof, or
any part thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting Borrower, the Property or any part thereof, including any which may
(a) require repairs, modifications or alterations in or to the Property or any
part thereof, or (b) in any way limit the use and enjoyment thereof.

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

“Letter of Credit” means an irrevocable, auto-renewing, unconditional,
transferable, clean sight draft standby letter of credit having an initial term
of not less than one (1) year and with automatic renewals for one (1) year
periods (unless the obligation being secured by, or otherwise requiring the
delivery of, such letter of credit is required to be performed at least thirty
(30) days prior to the initial expiry date of such letter of credit), for which
Borrower shall have no reimbursement obligation and which reimbursement
obligation is not secured by the Property or any other property pledged to
secure the Note, in favor of Lender and entitling Lender to draw thereon, based
solely on a statement that Lender has the right to draw thereon executed by an
officer or authorized signatory of Lender. A Letter of Credit must be issued by
an Approved Bank.

“Lien” means, any mortgage, deed of trust, deed to secure debt, indemnity deed
of trust, lien, pledge, hypothecation, assignment, security interest, or any
other encumbrance, charge or transfer of, on or affecting Borrower, the
Property, any portion thereof or any interest therein, including any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic’s, materialmen’s and other similar liens
and encumbrances.

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

 

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

“Loan to Value Ratio” shall mean, as of the date of its calculation, the ratio
of (i) the sum of the outstanding principal amount of the Loan as of the date of
such calculation to (ii) the fair market value of all applicable Individual
Properties based on either a broker’s opinion of value or an appraisal, as
determined by Lender’s in its reasonable discretion, each of which shall be in
form and substance satisfactory to Lender in its reasonable discretion.

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

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

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

“Lockbox Trigger Event” means (a) an Event of Default; (b) any Bankruptcy Action
of (i) Borrower or (ii) Manager, if the Manager is not replaced within 60 days
in accordance with the terms of this Agreement; or (c) a DSCR Trigger Event.

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

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

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

 

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“Maturity Date” means October 1, 2022, or such other date on which the final
payment of principal of the Note becomes due and payable as therein or herein
provided, whether at such stated maturity date, by declaration of acceleration,
or otherwise.

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

“MedPlus” has the meaning set forth in Section 7.8.5 hereof.

“MedPlus Free Rent Reserve Account” has the meaning set forth in Section 7.8.5
hereof.

“MedPlus Free Rent Reserve Fund” has the meaning set forth in Section 7.8.5
hereof.

“MedPlus Lease” has the meaning set forth in Section 7.8.5 hereof.

“MedPlus Property” has the meaning set forth in Section 7.8.1 hereof.

“MedPlus Repair Reserve Account” has the meaning set forth in Section 7.8.3
hereof.

“MedPlus Repair Reserve Fund” has the meaning set forth in Section 7.8.3 hereof.

“MedPlus Repairs” has the meaning set forth in Section 7.8.3 hereof.

“MedPlus Second Amendment” has the meaning set forth in Section 7.8.5 hereof.

“MedPlus Tenant Improvement Reserve Account” has the meaning set forth in
Section 7.8.1 hereof.

“MedPlus Tenant Improvement Reserve Fund” has the meaning set forth in
Section 7.8.1 hereof.

“Monthly Debt Service Payment Amount” means a constant monthly payment of
$195,997.21.

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

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

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

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

 

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

“Note” means that certain Promissory Note, dated the date hereof, in the
principal amount of $34,000,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time (including, without limitation, any Defeased Note(s) and Undefeased
Note(s) that may exist from time to time).

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

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

“Operating Expenses” means the total of all expenditures, computed in accordance
with GAAP, of whatever kind relating to the operation, maintenance and
management of the Property that are incurred on a regular monthly or other
periodic basis, including, ground rent, bad debt, utilities, ordinary repairs
and maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments as approved by
Lender, and other similar costs, but excluding depreciation, Debt Service,
Capital Expenditures and contributions to the Reserve Funds; provided, however,
Operating Expenses shall not include any expenses related to the operation,
maintenance, or management of the Property which are payable by a Tenant
pursuant to its Lease, and are actually paid by said Tenant.

“Original Principal Amount” means $34,000,000.00.

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

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

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

“Partial Defeasance Condition” means immediately after any proposed release of
an Individual Property in connection with a partial defeasance in accordance
with Section 2.5.1(b) hereof, the Debt Service Coverage Ratio for the Remaining
Property shall be no less than 1.35 to 1.00 based upon the trailing twelve
(12) month period immediately preceding the date of determination;

“Partial Defeasance Date” shall have the meaning set forth in Section 2.5
hereof.

“Partial Defeasance Deposit” means an amount equal to (i) the greater of 120% of
the Allocated Loan Amount or 80% of the proceeds from the sale of the applicable
Individual Property, (ii) the Partial Defeasance Payment Amount, (iii) any costs
and expenses incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Partial

 

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Defeasance Payments, (iv) any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of the Defeased Note
or otherwise required to accomplish the agreements of Sections 2.4 and 2.5
hereof (including any fees and expenses of accountants, attorneys and the Rating
Agencies incurred in connection therewith), and (v) a defeasance processing fee
in an amount determined by Lender in its discretion.

“Partial Defeasance Event” shall have the meaning set forth in Section 2.5
hereof.

“Partial Defeasance Notice Date” shall have the meaning set forth in
Section 2.5(b) hereof.

“Partial Defeasance Payment Amount” means the amount which, when added to the
greater of 120% of the Allocated Loan Amount or 80% of the proceeds from the
sale of the applicable Individual Property, will be sufficient to purchase U.S.
Obligations providing the required Scheduled Partial Defeasance Payments.

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

“Permitted Defeasance Date” means the date that is two (2) years from the
“startup day” within the meaning of Section 860G(a)(9) of the Code for the REMIC
Trust which holds the portion of the Note last to be securitized.

“Permitted Encumbrances” means, with respect to each Individual Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the
applicable Title Insurance Policy, (c) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, and (d) such other title and
survey exceptions as Lender has approved or may approve in writing in Lender’s
discretion, which Permitted Encumbrances, individually or in the aggregate, do
not materially interfere with the value, current use or operation of the
Property or the security intended to be provided by the Security Instrument or
with the current ability of the Property to generate net cash flow sufficient to
service the Loan or Borrower’s ability to pay its obligations under the Loan
Documents when they become due.

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

(i) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including obligations of: the U.S. Treasury (all direct or
fully guaranteed obligations), the Farmers Home Administration (certificates of
beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI financing),
the Small Business Administration (guaranteed

 

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participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;

(ii) Federal Housing Administration debentures;

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

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

(v) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers’ acceptances issued by, any bank
or trust company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in the highest short term rating
category by each Rating Agency (or, if not rated by all Rating Agencies, rated
by at least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in

 

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a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;

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

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

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

 

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

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

“Permitted Par Prepayment Date” means July 2, 2022.

“Permitted Transfer” means any of the following: (a) any transfer, directly as a
result of the death of a natural person, of stock, membership interests,
partnership interests or other ownership interests previously held by the
decedent in question to the Person or Persons lawfully entitled thereto and
(b) any transfer, directly as a result of the legal incapacity of a natural
person, of stock, membership interests, partnership interests or other ownership
interests previously held by such natural person to the Person or Persons
lawfully entitled thereto.

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

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

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

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

“Previous Financing” means the financing incurred by Borrower and secured, in
part, by the Property which, in conjunction with the making of this Loan, is
being released as to Borrower and the Property.

“Principal” means the Special Purpose Entity that is the general partner of
Borrower, if Borrower is a limited partnership, or, if applicable, the managing
member of Borrower, if Borrower is a limited liability company.

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

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

 

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

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

“Rating Agency Confirmation” shall mean (i) prior to a Securitization, that
Lender has (in consultation with the Rating Agencies (if reasonably required by
Lender)) approved the matter in question in writing and (ii) from and after a
Securitization, a written affirmation from each of the Rating Agencies (obtained
at Borrower’s sole cost and expense) that the credit rating of the Securities by
such Rating Agency immediately prior to the occurrence of the event with respect
to which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency’s sole and absolute
discretion.

“Realpoint” means Realpoint, LLC, a Pennsylvania limited liability company.

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

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

“Remaining Property” means that portion of the Property which will remain
encumbered by the lien(s) of the Security Instrument(s) following a release in
connection with a partial defeasance in accordance with Section 2.5.1(b) hereof.

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

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

 

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similar matters with respect to the Loan (or any portion thereof and/or interest
therein) that may now or hereafter exist under applicable legal requirements
(including, without limitation under the Code)).

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

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

“Replacement Management Agreement” means, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and
substance as the Management Agreement, or (ii) a management agreement with a
Qualified Manager, which management agreement shall be reasonably acceptable to
Lender in form and substance, provided, with respect to this subclause (ii),
Lender may require that Borrower shall have obtained prior written confirmation
from the applicable Rating Agencies that such management agreement will not
cause a downgrade, withdrawal or qualification of the then current rating of the
Securities or any class thereof, but only if such confirmation is: (A) required
by any servicing agreement related to the Loan; or (B) required to satisfy any
obligation of Lender pursuant to applicable law or otherwise and (b) an
assignment of management agreement and subordination of management fees
substantially in the form then used by Lender (or of such other form and
substance reasonably acceptable to Lender), executed and delivered to Lender by
Borrower and such Qualified Manager at Borrower’s expense, provided however, if
the applicable Qualified Manager is Borrower or Tenant, no management agreement
shall be required.

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

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

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

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

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

 

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“Required Rating” means (i) a rating of not less than “A-1” (or its equivalent)
from each of the Rating Agencies if the term of such Letter of Credit is no
longer than three (3) months or if the term of such Letter of Credit is in
excess of three (3) months, a rating of not less than “AA-” (or its equivalent)
from each of the Rating Agencies or (ii) such other rating with respect to which
Lender shall have received a Rating Agency Confirmation.

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

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

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

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

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

“Restricted Party” means collectively, (a) Borrower, Principal, any Guarantor,
and any Affiliated Manager and (b) any shareholder, partner, member, non-member
manager, or any direct or indirect legal or beneficial owner of (i) Borrower,
(ii) Principal, (iii) any Guarantor (other than, if the equity interests of
Guarantor are traded on a public exchange, any equity holder or any other direct
or indirect legal or beneficial owner of interests in Guarantor and other
Persons that are indirect legal or beneficial owners of Borrower solely by being
an equity holder of Guarantor), (iv) any Affiliated Manager or (v) any
non-member manager.

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

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

“Rollover Reserve Termination Event” means the occurrence of: any of (a) if the
Rollover Reserve Trigger Event is a Vacation Trigger Event, the tenant in
question re-occupies the subject Rollover Reserve Trigger Premises, or (b) if
the Rollover Reserve Trigger Event is a Tenant Bankruptcy Trigger Event, the
subject Lease has been reaffirmed in the applicable Bankruptcy Action, or
(c) the Rollover Reserve Trigger Premises shall have been demised on terms
satisfactory to Lender, in its reasonable discretion, to a Tenant satisfactory
to Lender, in its reasonable discretion, or (d) as of the date of determination,
the Debt Service Coverage Ratio based on the trailing three (3) month period
immediately preceding the date of such determination shall be not less than 1.20
to 1.00.

“Rollover Reserve Trigger Event” means the occurrence of: (a) (i) a Vacation
Trigger Event; or (ii) a Tenant Bankruptcy Trigger Event; and (b) as of the date
of determination, the Debt Service Coverage Ratio (specifically excluding the
amount of rent allocated to the Rollover Reserve Trigger Premises) based on the
trailing three (3) month period immediately preceding the date of such
determination is 1.19 to 1.00 or less.

 

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“Rollover Reserve Trigger Premises” means the premises that is the subject of
the Rollover Reserve Trigger Event.

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

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

“Scheduled Defeasance Payments” has the meaning set forth in
Section 2.5.1(a)(ii) hereof.

“Scheduled Partial Defeasance Payments” has the meaning set forth in
Section 2.5.1(b)(ii) hereof.

“Second Expansion” has the meaning set forth in Section 7.8.7 hereof.

“Securities” has the meaning set forth in Section 9.1 hereof.

“Securitization” has the meaning set forth in Section 9.1 hereof.

“Security Agreement” has the meaning set forth in Section 2.5.1(a)(i)(E) hereof.

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

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

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

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

(i) is and shall be organized solely for the purpose of (A) in the case of
Borrower, acquiring, developing, owning, holding, selling, leasing,
transferring, exchanging, managing and operating the Property, entering into and
performing its obligations under the Loan Documents with Lender, refinancing the
Property in connection with a permitted repayment of the Loan, and transacting
lawful business that is incident, necessary, advisable, or appropriate to
accomplish the foregoing; or (B) in the case of a Principal, acting as a general
partner of the limited partnership that owns the Property or as manager and
member of the limited liability company that owns the Property and transacting
lawful business that is incident, necessary, advisable, or appropriate to
accomplish the foregoing;

 

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(ii) has not engaged and shall not engage in any business unrelated to (A) the
acquisition, development, ownership, management or operation of the Property, or
(B) in the case of a Principal, acting as general partner of the limited
partnership that owns the Property or acting as a manager and member of the
limited liability company that owns the Property, as applicable;

(iii) has not owned and shall not own any real property other than, in the case
of Borrower, the Property;

(iv) does not have, shall not have and at no time had any assets other than
(A) in the case of Borrower, the Property and personal property necessary or
incidental to its ownership and operation of the Property or (B) in the case of
a Principal, its partnership interest in the limited partnership or the member
interest in the limited liability company that owns the Property and personal
property necessary or incidental to its ownership of such interests;

(v) [Intentionally Deleted].

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

(vii) if such entity is a limited partnership, has and shall have at least one
general partner and has and shall have, as its only general partners, Special
Purpose Entities each of which (A) is a corporation or single-member Delaware
limited liability company, (B) has at least two Independent Directors, and
(C) holds a direct interest as general partner in the limited partnership of not
less than one percent (1.0%);

(viii) if such entity is a corporation, has and shall have at least two
Independent Directors, and shall not cause or permit the board of directors of
such entity to take any Material Action either with respect to itself or, if the
corporation is a Principal, with respect to Borrower or any action requiring the
unanimous affirmative vote of one hundred percent (100%) of the members of its
board of directors unless the Independent Directors shall have participated in
such vote and shall have voted in favor of such action;

 

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(ix) if such entity is a limited liability company (other than a limited
liability company meeting all of the requirements applicable to a single-member
limited liability company set forth in this definition of “Special Purpose
Entity”), has and shall have at least one (1) member that is a Special Purpose
Entity, that is a corporation, that has at least two Independent Directors, and
that directly owns at least one percent (1.0%) of the equity of the limited
liability company;

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

(xi) has not and shall not (and, if such entity is (a) a limited liability
company, has and shall have a limited liability agreement or an operating
agreement, as applicable, (b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of incorporation or articles
that, in each case, provide that such entity shall not) (1) dissolve, merge,
liquidate, consolidate; (2) sell all or substantially all of its assets;
(3) amend its organizational documents with respect to the matters set forth in
this definition without the consent of Lender; or (4) without the affirmative
vote of two Independent Directors of itself or the consent of a Principal that
is a member or general partner in it, take any Material Action; or (5) in the
case of a Principal transfer its partnership or membership interests;

(xii) has at all times been and shall at all times remain solvent and has paid
and shall pay its debts and liabilities (including, a fairly-allocated portion
of any personnel and overhead expenses that it shares with any Affiliate) from
its assets as the same shall become due, and has maintained and shall maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations;

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

(xiv) has maintained and shall maintain its bank accounts, books of account,
books and records separate from those of any other Person and, to the extent
that it is

 

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required to file tax returns under applicable law, has filed and shall file its
own tax returns, except to the extent that, if permitted by applicable law, it
opts to file consolidated tax returns and, if it is a corporation, has not filed
and shall not file a consolidated federal income tax return with any other
corporation, except to the extent that, if permitted by applicable law, it opts
to file consolidated tax returns;

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

(xvi) has not commingled, except pursuant to obligations related to Previous
Financing, and shall not commingle its funds or assets with those of any other
Person and has not participated and shall not participate in any cash management
system with any other Person;

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

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

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

(xx) has paid and shall pay its own liabilities and expenses, including the
salaries of its own employees, if any, out of its own funds and assets, and has
maintained and shall maintain a sufficient number of employees in light of its
contemplated business operations;

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

(xxii) has not incurred any Indebtedness other than (i) acquisition financing
with respect to the Property; construction financing with respect to the
Improvements and certain off-site improvements required by municipal and other
authorities as conditions to the construction of the Improvements; and first
mortgage financings secured by the Property; and Indebtedness pursuant to
letters of credit, guaranties, interest rate protection agreements and other
similar instruments executed and delivered in connection

 

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with such financings, (ii) unsecured trade payables and operational debt not
evidenced by a note, and (iii) Indebtedness incurred in the financing of
equipment and other personal property used on the Property;

(xxiii) shall have no Indebtedness other than (i) the Loan, (ii) Letter of
Credit required by this Agreement or the other Loan Documents, (iii) liabilities
incurred in the ordinary course of business relating to the ownership and
operation of the Property and the routine administration of Borrower, in amounts
not to exceed 2% of the amount of the Loan which liabilities are not more than
sixty (60) days past the date incurred, are not evidenced by a note and are paid
when due, and which amounts are normal and reasonable under the circumstances,
and (iv) such other liabilities that are permitted pursuant to this Agreement;

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

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

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

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

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

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

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

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

 

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(xxxii) has not identified and shall not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it, and
has not identified itself and shall not identify itself as a division of any
other Person;

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

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

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

(xxxvi) has not had and shall not have any of its obligations guaranteed by any
Affiliate except as provided by the Loan Documents or in connection with the
Previous Financing;

(xxxvii) has not formed, acquired or held and shall not form, acquire or hold
any subsidiary, except that a Principal may acquire and hold its interest in
Borrower;

(xxxviii) [Intentionally Deleted].

(xxxix) [Intentionally Deleted];

(xl) has not permitted, except in connection with the Previous Financing, and
shall not permit any Affiliate or constituent party independent access to its
bank accounts;

(xli) is, has always been and shall continue to be duly formed, validly
existing, and in good standing in the state of its incorporation or formation
and in all other jurisdictions where it is qualified to do business;

(xlii) has paid all taxes which it owes and is not currently involved in any
dispute with any taxing authority;

(xliii) is not now, nor has ever been, party to any lawsuit, arbitration,
summons, or legal proceeding that resulted in a judgment against it that has not
been paid in full;

 

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(xliv) has no judgments or Liens of any nature against it except for tax liens
not yet due and the Permitted Encumbrances;

(xlv) has provided Lender with complete financial statements that reflect a fair
and accurate view of the entity’s financial condition; and

(xlvi) has no material contingent or actual obligations not related to the
Property.

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

“Successor Borrower” has the meaning set forth in Section 2.5.3 hereof.

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

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

“Taxes” means all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against the
Property or part thereof by an appropriate authority.

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

“Tenant Bankruptcy Trigger Event” means the occurrence of the following: any
Tenant becomes the subject of a Bankruptcy Action that is not dismissed within
60 days, unless said Tenant has affirmed and assumed its obligations under its
Lease on its original terms or on terms otherwise acceptable to Lender in its
discretion, and such action has been authorized by the applicable bankruptcy
court, all in accordance with the provisions of the Bankruptcy Code, and said
Tenant is paying Rent in accordance with the terms of its Lease and is not in
default under its Lease.

“Tenant Direction Letter” has the meaning set forth in the Cash Management
Agreement.

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

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

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

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

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

 

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

“Undefeased Note” shall have the meaning set forth in Section 2.5.1(b) hereof.

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

“Vacation Trigger Event” means the occurrence of the following: any Tenant
vacates its demised premises or gives notice of its intent to vacate its demised
premises, or ceases to be in occupancy and open for business in at least 75% of
the respective Individual Property unless: (a) such Tenant is an investment
grade tenant, as determined by the Rating Agencies; (b) such Tenant continues to
pay rent under the terms of its Lease; (c) as of the date of determination, the
Debt Service Coverage Ratio based on the trailing three (3) month period
immediately preceding the date of such determination is not less than 1.20 to
1.00; and (d) Borrower shall have hired a Qualified Manager reasonably
acceptable to Lender in its discretion pursuant to a Replacement Management
Agreement.

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

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

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

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

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

(e) the cover page (if any) of, all recitals set forth in, and all Exhibits to,
this Agreement are hereby incorporated herein;

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

 

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

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

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

(j) unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.

ARTICLE II - GENERAL TERMS

Section 2.1 Loan Commitment; Disbursement to Borrower.

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

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

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

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

Section 2.2 Interest Rate.

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

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

 

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

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

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

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

Section 2.5 Defeasance.

 

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2.5.1 Voluntary Defeasance.

(a) Full Defeasance.

(i) Provided no Event of Default shall then exist, Borrower shall have the right
at any time after the Permitted Defeasance Date and prior to the Permitted Par
Prepayment Date to voluntarily defease all, but not part, of the Loan by and
upon satisfaction of the following conditions (such event being a “Defeasance
Event”):

(A) Borrower shall provide not less than thirty (30) days prior written notice
to Lender specifying the Payment Date (the “Defeasance Date”) on which the
Defeasance Event is to occur;

(B) Borrower shall pay to Lender all accrued and unpaid interest on the
principal balance of the Loan to and including the Defeasance Date. If for any
reason the Defeasance Date is not a Payment Date, the Borrower shall also pay
interest that would have accrued on the Note through and including the next
Payment Date, provided, however, if the Defeasance Deposit shall include (or if
the U.S. Obligations purchased with such Defeasance Deposit shall provide for
payment of) all principal and interest computed from the Payment Date prior to
the Defeasance Date through the next succeeding Payment Date, Borrower shall not
be required to pay such short term interest pursuant to this sentence;

(C) Borrower shall pay to Lender all other sums, not including scheduled
interest or principal payments, then due under the Note, this Agreement, the
Security Instrument and the other Loan Documents;

(D) Borrower shall pay to Lender the required Defeasance Deposit for the
Defeasance Event and complies with and satisfies the requirements of
Section 2.5.1(a)(ii) below;

(E) Borrower shall execute and deliver a pledge and security agreement, in form
and substance satisfactory Lender creating a first priority lien on the U.S.
Obligations purchased with the Defeasance Deposit in accordance with the
provisions of this Section 2.5 (the “Security Agreement”);

(F) Borrower shall deliver an opinion of counsel for Borrower, delivered by
counsel acceptable to Lender, stating, among other things but without
substantive qualification, that (a) Lender has a valid, duly perfected, first
priority security interest in the U.S. Obligations purchased with the Defeasance
Deposit and that the Security Agreement is enforceable against Borrower in
accordance with its terms, (b) the delivery of the U.S. Obligations purchased
with the Defeasance Deposit to Lender does not constitute a fraudulent or
preferential or other avoidable transfer under Bankruptcy Code Sections 547 and
548, (c) neither the defeasance nor any other transaction that occurs pursuant
to the provisions of this Section 2.5.1(a) has caused or will cause the Loan
(including for this purpose the Loan Documents) to cease to be a “qualified
mortgage” within the meaning of Section 860G of the Code, either under the
provisions of

 

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Treasury Regulation Sections 1.860G-2(a)(8) or 1.860G-2(b) (as such regulations
may be amended or superseded from time to time) or under any other provision of
the Code or otherwise, and (d) the defeasance and/or any other transaction that
occurs pursuant to the provisions of this Section 2.5.1(a) will not cause the
failure of any REMIC Trust or any other entity that holds the Note to maintain
its tax status. The opinions set forth in clauses (a), (b), (c) and (d) above,
or any portion thereof, may, in Lender’s discretion, be rendered by counsel to
Lender at Borrower’s sole cost and expense;

(G) If required by Lender, Borrower shall deliver confirmation in writing from
each of the applicable Rating Agencies to the effect that such release will not
result in a downgrade, withdrawal or qualification of the respective ratings in
effect immediately prior to such Defeasance Event for the Securities issued in
connection with the Securitization which are then outstanding. Borrower shall
also deliver or cause to be delivered an Additional Insolvency Opinion with
respect to the Successor Borrower from counsel satisfactory to Lender in form
and substance satisfactory to Lender and the applicable Rating Agencies;

(H) Borrower shall deliver an Officer’s Certificate certifying that (a) the
requirements set forth in this Section 2.5.1(a) have been satisfied, (b) the
transactions that are being carried out pursuant to this Section 2.5.1(a)
(including specifically the release of the lien of the Security Instrument) are
being effected to facilitate the disposition of the Property or any other
customary commercial transaction and not as part of an arrangement to
collateralize a REMIC Trust offering with obligations that are not real estate
mortgages, and (c) the amounts of the U.S. Obligations purchased with the
Defeasance Deposit comply with all the requirements of this section including
the requirement that the U.S. Obligations purchased with the Defeasance Deposit
shall generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments required to be paid under the Note through the Maturity Date;

(I) Borrower shall deliver a certificate of Borrower’s independent certified
public accountant, acceptable to Lender in its discretion, certifying that the
U.S. Obligations purchased with the Defeasance Deposit generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments;

(J) Borrower shall deliver such other certificates, documents or instruments as
Lender may reasonably request; and

(K) Borrower shall pay all costs and expenses of Lender incurred in connection
with the Defeasance Event, including (A) any costs and expenses associated with
a release of the Lien of the Security Instrument as provided in Section 2.6
hereof, (B) reasonable attorneys’ fees and expenses incurred in connection with
the Defeasance Event, (C) the costs and expenses of the Rating Agencies, (D) any
revenue, documentary stamp or intangible taxes or any other tax or charge due in
connection with the transfer of the Note, or otherwise required to accomplish
the defeasance and (E) the costs and expenses of Servicer and any trustee,
including reasonable attorneys’ fees and expenses.

 

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(ii) In connection with the Defeasance Event, Borrower shall use the Defeasance
Deposit to purchase U.S. Obligations which provide payments on or prior to, but
as close as possible to, all successive scheduled Payment Dates after the
Defeasance Date upon which interest and principal payments are required under
this Agreement and the Note, and in amounts equal to or more than the scheduled
payments due on such Payment Dates under this Agreement and the Note (including
scheduled payments of principal, interest, servicing fees (if any), and any
other amounts due under the Loan Documents on such Payment Dates) and assuming
the Note is prepaid in full on the Maturity Date (the “Scheduled Defeasance
Payments”). Notwithstanding the foregoing, at Lender’s option, Lender, acting on
Borrower’s behalf as Borrower’s agent and attorney-in-fact, shall use the
Defeasance Deposit to purchase, or cause to be purchased, the above-referenced
U.S. Obligations that Borrower is required to purchase pursuant to this
Section 2.5.1(a)(ii). By depositing the Defeasance Deposit with Lender, Borrower
shall thereby appoint Lender or Lender’s servicer or other agent as Borrower’s
agent and attorney-in-fact, with full power of substitution, for the purpose of
purchasing the U.S. Obligations with the Defeasance Deposit and delivering the
U.S. Obligations to Lender. Borrower, pursuant to the Security Agreement or
other appropriate document, shall authorize and direct that the payments
received from the U.S. Obligations may be applied to satisfy the Debt Service
obligations of Borrower under this Agreement and the Note. Any portion of the
Defeasance Deposit in excess of the amount necessary to purchase the U.S.
Obligations required by this Section 2.5 and satisfy Borrower’s other
obligations under this Section 2.5 and Section 2.6 shall be remitted to
Borrower.

(iii) If any notice of defeasance is given pursuant to Section 2.5.1(a)(i)(A),
Borrower shall be required to defease the Loan on the Defeasance Date (unless
such notice is revoked by Borrower prior to the Defeasance Date in which event
Borrower shall immediately reimburse Lender for any and all reasonable costs and
expenses incurred by Lender in connection with Borrower’s giving of such notice
and revocation).

(b) Partial Defeasance.

(i) Provided (1) no Event of Default shall have occurred and remain uncured and
(2) the Partial Defeasance Condition shall be satisfied, Borrower shall have the
right at any time after the Permitted Defeasance Date and prior to the Permitted
Par Prepayment Date to voluntarily defease a portion of the Loan and obtain a
release of the lien of the applicable Security Instrument as to any one or more
Individual Properties (hereinafter, a “Partial Defeasance Event”) upon
satisfaction of the following conditions precedent:

(A) Borrower shall provide not less than thirty (30) days prior written notice
to Lender specifying the Payment Date (the “Partial Defeasance Date”) on which
the Partial Defeasance Event is to occur (the date of Lender’s receipt of such
notice shall be referred to herein as a the “Partial Defeasance Notice Date”);

 

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(B) Borrower shall pay to Lender all accrued and unpaid interest on the
principal balance of the Loan to and including the Partial Defeasance Date. If
for any reason the Partial Defeasance Date is not a Payment Date, the Borrower
shall also pay interest that would have accrued on the Note through and
including the next Payment Date;

(C) Borrower shall pay to Lender all other sums, not including scheduled
interest or principal payments, then due under the Note, this Agreement, the
Security Instruments and the other Loan Documents;

(D) Borrower shall pay to Lender the required Partial Defeasance Deposit for the
Partial Defeasance Event and complies with and satisfies the requirements of
Section 2.5.1(b)(ii) below;

(E) Lender shall prepare and Borrower shall execute all necessary documents to
modify this Agreement and to amend and restate the Note and issue two substitute
notes, one note having a principal balance equal to the greater of 120% of the
Allocated Loan Amount for the subject Individual Property or Individual
Properties or 80% of the proceeds from the sale of the subject Individual
Property or Individual Properties (the “Defeased Note”), and the other note
having a principal balance equal to the excess of (1) the principal amount of
the Loan existing immediately prior to the applicable Partial Defeasance Event,
over (2) the amount of the Defeased Note (the “Undefeased Note”). The Defeased
Note and Undefeased Note shall have identical terms as the Note except for the
principal balance and payment amounts and the fact that the U.S. Obligations
will be substituted as collateral in lieu of the Individual Property or
Individual Properties to be released. In connection therewith, the Monthly Debt
Service Payment Amount and the amount of each such payment applied to principal
thereafter (if any) shall be divided between the Defeased Note and the
Undefeased Note in the same proportion as the unpaid principal balance (in each
case immediately after the Partial Defeasance Event) of the Defeased Note and
the Undefeased Note, as the case may be, bears to the aggregate principal
balance due under the Defeased Note and the Undefeased Note immediately after
the Partial Defeasance Event. The Defeased Note and the Undefeased Note shall be
cross defaulted and cross collateralized unless the Rating Agencies shall
require otherwise. A Defeased Note may not be the subject of any further
defeasance;

(F) Borrower shall execute and deliver a Security Agreement, in form and
substance satisfactory Lender creating a first priority lien on the U.S.
Obligations purchased with the Partial Defeasance Deposit in accordance with the
provisions of this Section 2.5.1(b);

(G) Borrower shall deliver an opinion of counsel for Borrower, delivered by
counsel acceptable to Lender, stating, among other things but without
substantive qualification, that (a) Lender has a valid, duly perfected, first
priority security interest in the U.S. Obligations purchased with the Partial
Defeasance Deposit and that the Security Agreement is enforceable against

 

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Borrower in accordance with its terms, (b) the delivery of the U.S. Obligations
purchased with the Partial Defeasance Deposit to Lender does not constitute a
fraudulent or preferential or other avoidable transfer under Bankruptcy Code
Sections 547 and 548, (c) neither the defeasance nor any other transaction that
occurs pursuant to the provisions of this Section 2.5.1(b) has caused or will
cause the Loan (including for this purpose the Loan Documents) to cease to be a
“qualified mortgage” within the meaning of Section 860G of the Code, either
under the provisions of Treasury Regulation Sections 1.860G-2(a)(8) or
1.860G-2(b) (as such regulations may be amended or superseded from time to time)
or under any other provision of the Code or otherwise, and (d) the defeasance
and/or any other transaction that occurs pursuant to the provisions of this
Section 2.5.1(b) will not cause the failure of any REMIC Trust or any other
entity that holds the Note to maintain its tax status. The opinions set forth in
clauses (a), (b), (c) and (d) above, or any portion thereof, may, in Lender’s
discretion, be rendered by counsel to Lender at Borrower’s sole cost and
expense;

(H) The Partial Defeasance Event shall be permitted under REMIC Requirements in
effect as of each of (I) the Partial Defeasance Notice Date; and (II) the
Partial Defeasance Date;

(I) If required by Lender, Borrower shall deliver confirmation in writing from
each of the applicable Rating Agencies to the effect that such release will not
result in a downgrade, withdrawal or qualification of the respective ratings in
effect immediately prior to such Partial Defeasance Event for the Securities
issued in connection with the Securitization which are then outstanding;

(J) Borrower shall deliver an Officer’s Certificate certifying that (a) the
requirements set forth in this Section 2.5.1(b) have been satisfied, (b) the
transactions that are being carried out pursuant to this Section 2.5.1(b)
(including specifically the release of the lien of the applicable Security
Instrument) are being effected to facilitate the disposition of the applicable
Property or any other customary commercial transaction and not as part of an
arrangement to collateralize a REMIC Trust offering with obligations that are
not real estate mortgages, and (c) the amounts of the U.S. Obligations purchased
with the Partial Defeasance Deposit comply with all the requirements of this
section including the requirement that the U.S. Obligations purchased with the
Partial Defeasance Deposit shall generate monthly amounts equal to or greater
than the Scheduled Partial Defeasance Payments required to be paid under the
Defeased Note through the Maturity Date;

(K) Borrower shall deliver a certificate of Borrower’s independent certified
public accountant, acceptable to Lender in its discretion, certifying that the
U.S. Obligations purchased with the Partial Defeasance Deposit generate monthly
amounts equal to or greater than the Scheduled Partial Defeasance Payments;

 

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(L) As of each of the Partial Defeasance Notice Date and as of the Partial
Defeasance Date, after giving effect to the release of the lien of the Security
Instrument(s) encumbering the Individual Property or Individual Properties
proposed by Borrower to be released, the Debt Service Coverage Ratio with
respect to the remaining Individual Properties shall be no less than 1.35 to
1.00;

(M) As of each of the Partial Defeasance Notice Date and as of the Partial
Defeasance Date, after giving effect to the release of the lien of the Security
Instrument(s) encumbering the Individual Property or Individual Properties
proposed by Borrower to be released, the Loan to Value Ratio with respect to the
remaining Individual Properties shall be no greater than 125% (such value to be
determined, in Lender’s sole discretion, by any commercially reasonable method
permitted to a REMIC Trust);

(N) Borrower shall deliver such other certificates, opinions, documents and
instruments as Lender may reasonably request; and

(O) Borrower shall pay all costs and expenses of Lender incurred in connection
with the Partial Defeasance Event, including (A) any costs and expenses
associated with a release of the Lien of each applicable Security Instrument or
Security Instruments as provided in Section 2.6 hereof, (B) reasonable
attorneys’ fees and expenses incurred in connection with the Partial Defeasance
Event, (C) the costs and expenses of the Rating Agencies, (D) any revenue,
documentary stamp or intangible taxes or any other tax or charge due in
connection with the transfer of the Defeased Note, or otherwise required to
accomplish the defeasance and (E) the costs and expenses of Servicer and any
trustee, including reasonable attorneys’ fees and expenses.

(ii) In connection with the Partial Defeasance Event, Borrower shall use the
Partial Defeasance Deposit to purchase U.S. Obligations which provide payments
on or prior to, but as close as possible to, all successive scheduled Payment
Dates after the Partial Defeasance Date upon which interest and principal
payments are required under the Defeased Note, and in amounts equal to or more
than the scheduled payments due on such Payment Dates under the Defeased Note
(including scheduled payments of principal, interest, servicing fees (if any),
and any other amounts due under the Defeased Note on such Payment Dates) and
assuming the Defeased Note is prepaid in full on the Maturity Date (the
“Scheduled Partial Defeasance Payments”). Notwithstanding the foregoing, at
Lender’s option, Lender, acting on Borrower’s behalf as Borrower’s agent and
attorney-in-fact, may use the Partial Defeasance Deposit to purchase, or cause
to be purchased, the above-referenced U.S. Obligations that Borrower is required
to purchase pursuant to this Section 2.5.1(b)(ii). By depositing the Partial
Defeasance Deposit with Lender, Borrower shall thereby appoint Lender or
Lender’s servicer or other agent as Borrower’s agent and attorney-in-fact, with
full power of substitution, for the purpose of purchasing the U.S. Obligations
with the Partial Defeasance Deposit and delivering the U.S. Obligations to
Lender. Borrower, pursuant to the Security Agreement or other appropriate
document, shall authorize and direct that the payments received from the U.S.

 

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Obligations may be applied to satisfy the Debt Service obligations of Borrower
under the Defeased Note. Any portion of the Partial Defeasance Deposit in excess
of the amount necessary to purchase the U.S. Obligations required by this
Section 2.5 and satisfy Borrower’s other obligations under this Section 2.5 and
Section 2.6 shall be remitted to Borrower.

(iii) If any notice of partial defeasance is given pursuant to
Section 2.5.1(b)(i)(A), Borrower shall be required to partially defease the Loan
on the Partial Defeasance Date (unless such notice is revoked by Borrower prior
to the Partial Defeasance Date in which event Borrower shall immediately
reimburse Lender for any and all reasonable costs and expenses incurred by
Lender in connection with Borrower’s giving of such notice and revocation).

2.5.2 Collateral. Each of the U.S. Obligations that are part of the defeasance
collateral shall be duly endorsed by the holder thereof as directed by Lender or
accompanied by a written instrument of transfer in form and substance that would
be satisfactory to a prudent lender (including such instruments as may be
required by the depository institution holding such securities or by the issuer
thereof, as the case may be, to effectuate book entry transfers and pledges
through the book entry facilities of such institution) in order to perfect upon
the delivery of the defeasance collateral a first priority security interest
therein in favor of Lender in conformity with all applicable state and federal
laws governing the granting of such security interests.

2.5.3 Successor Borrower. In connection with any Defeasance Event or Partial
Defeasance Event, Lender shall designate a successor entity (the “Successor
Borrower”), which shall be a special purpose entity, which shall not own any
other assets or have any other liabilities or operate other property (except in
connection with other defeased loans held in the same securitized loan pool with
the Loan). Borrower shall transfer and assign all obligations, rights and duties
under and to the Note or Defeased Note (as applicable), together with the
pledged U.S. Obligations to such Successor Borrower. Such Successor Borrower
shall assume the obligations under the Note or Defeased Note (as applicable) and
the Security Agreement and Borrower shall be relieved of its obligations under
such documents. Borrower shall pay all costs and expenses incurred by Lender,
including Lender’s attorneys’ fees and expenses and any fees and expenses of any
Rating Agencies, incurred in connection with such assumption.

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

2.6.1 Release of Property. (a) If Borrower has the right to and has elected to
prepay in full or defease the Loan in accordance with this Agreement and the
Note, upon satisfaction of the requirements of Section 2.4 and Section 9 of the
Note (in the case of a prepayment, if then permitted under this Agreement and
the Note) or Section 2.5 (in the case of a full or partial defeasance, if then
permitted under this Agreement and the Note), as applicable, and this
Section 2.6, each applicable Individual Property shall be released from the Lien
of the applicable Security Instrument.

 

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(b) In connection with the release of each applicable Security Instrument,
Borrower shall submit to Lender, not less than thirty (30) days prior to the
Defeasance Date, a release of Lien (and related Loan Documents) for each
applicable Individual Property for execution by Lender. Each such release shall
be in a form appropriate in the jurisdiction in which the applicable Individual
Property is located and that would be satisfactory to a prudent lender and
contains standard provisions, if any, protecting the rights of the releasing
lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer’s Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement. Borrower shall reimburse Lender and
Servicer for any costs and expenses Lender and Servicer incur arising from such
release (including reasonable attorneys’ fees and expenses) and Borrower shall
pay, in connection with such release, (i) all recording charges, filing fees,
taxes or other expenses payable in connection therewith, and (ii) to any
Servicer, a processing fee in an amount determined by Lender and/or Servicer in
its discretion. Upon the release of the applicable Individual Properties in
accordance with this Section 2.6.1 following a defeasance or partial defeasance,
Borrower shall have no further right to prepay the Note or Defeased Note (as
applicable).

Section 2.7 Lockbox Account/Cash Management.

2.7.1 Lockbox Account. (a) During the term of the Loan, Borrower shall establish
and maintain an account (the “Lockbox Account”) with Lockbox Bank in trust for
the benefit of Lender, which Lockbox Account shall be under the sole dominion
and control of Lender. The Lockbox Account shall be entitled “NH10 Cumming GA,
LLC et al Lockbox FBO KeyBank National Association with its successors and
assigns as Lender”. Borrower hereby grants to Lender a first-priority security
interest in the Lockbox Account and all deposits at any time contained therein
and the proceeds thereof and shall take all actions necessary to maintain in
favor of Lender a perfected first priority security interest in the Lockbox
Account, including filing UCC-1 Financing Statements and continuations thereof.
Lender and Servicer shall have the sole right to make withdrawals from the
Lockbox Account. All costs and expenses for establishing and maintaining the
Lockbox Account shall be paid by Borrower. All monies now or hereafter deposited
into the Lockbox Account shall be deemed additional security for the Debt. The
Lockbox Agreement and Lockbox Account shall remain in effect until the Loan has
been repaid or defeased in full.

(b) Borrower shall, or shall cause Manager to, on or prior to the Closing Date,
deliver Tenant Direction Letters to all Tenants under Leases to deliver all
Rents payable thereunder directly to the Lockbox Account. Borrower shall, and
shall cause Manager to, deposit all amounts received by Borrower or Manager
constituting Rents into the Lockbox Account within one (1) Business Day after
receipt thereof.

(c) Borrower shall obtain from Lockbox Bank its agreement to transfer in
immediately available funds by federal wire transfer all amounts on deposit in
the Lockbox Account once every Business Day throughout the term of the Loan to
either: (i) during a Cash Sweep Period, the Cash Management Account; or (ii) so
long as no Cash Sweep Period exists, Borrower.

 

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

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

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

(g) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys’ fees and expenses) arising from or in any way connected with the
Lockbox Account and/or the Lockbox Agreement (unless arising from the gross
negligence or willful misconduct of Lender) or the performance of the
obligations for which the Lockbox Account was established.

2.7.2 Cash Management Account. (a) Following the occurrence of a Cash Sweep
Event, Borrower shall establish and maintain a segregated Eligible Account (the
“Cash Management Account”) to be held by Agent in trust and for the benefit of
Lender, which Cash Management Account shall be under the sole dominion and
control of Lender. Borrower hereby grants to Lender a first priority security
interest in the Cash Management Account and all deposits at any time contained
therein and the proceeds thereof and shall take all actions necessary to
maintain in favor of Lender a perfected first priority security interest in the
Cash Management Account, including filing UCC-1 Financing Statements and
continuations thereof. Borrower shall not in any way alter or modify the Cash
Management Account and shall notify Lender of the account number thereof. Lender
and Servicer shall have the sole right to make withdrawals from the Cash
Management Account and all costs and expenses for establishing and maintaining
the Cash Management Account shall be paid by Borrower.

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

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

(d) Borrower hereby agrees that Lender may modify the Cash Management Agreement
for the purpose of establishing additional sub-accounts in connection with any
payments otherwise required under this Agreement and the other Loan Documents
and Lender shall provide notice thereof to Borrower.

 

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

ARTICLE III - CONDITIONS PRECEDENT

Section 3.1 Conditions Precedent to Closing. The obligation of Lender to make
the Loan hereunder is subject to the fulfillment by Borrower or waiver by Lender
of all of the conditions precedent to closing set forth in the application or
term sheet for the Loan delivered by Borrower to Lender and the commitment or
commitment rider, if any, to the application or term sheet for the Loan issued
by Lender.

ARTICLE IV - REPRESENTATIONS AND WARRANTIES

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

4.1.1 Organization. Each Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own the
applicable Individual Property and to transact the businesses in which it is now
engaged. Borrower is duly qualified to do business and is in good standing in
the jurisdiction in which the applicable Individual Property is located and each
other jurisdiction where it is required to be so qualified in connection with
its businesses and operations. Borrower possesses all rights, licenses, permits
and authorizations, governmental or otherwise, necessary to entitle it to own
the applicable Individual Property and to transact the businesses in which it is
now engaged, and the sole business of Borrower is the ownership, management and
operation of the applicable Individual Property. The direct and indirect
ownership interests in Borrower are as set forth on the organizational chart
attached hereto as Schedule III.

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

4.1.3 No Conflicts. The execution, delivery and performance of this Agreement
and the other Loan Documents by Borrower will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance (other
than pursuant to the Loan Documents) upon any of the

 

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property or assets of Borrower pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement, partnership agreement, management agreement or
other agreement or instrument to which Borrower is a party or by which any of
the Property or Borrower’s assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or any of
Borrower’s properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any court or any such
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents has been obtained and is
in full force and effect.

4.1.4 Litigation. There are no actions, suits or proceedings at law or in
equity, arbitrations, or governmental investigations by or before any
Governmental Authority or other agency now pending, filed, or, to Borrower’s
knowledge, threatened against or affecting Borrower, Guarantor, Principal or the
Property or any portion thereof, which actions, suits or proceedings, or
governmental investigations, if determined against Borrower, Guarantor,
Principal or the Property or any portion thereof, might materially adversely
affect (a) title to the Property or any portion thereof; (b) the validity or
enforceability of each Security Instrument; (c) Borrower’s ability to perform
under the Loan; (d) Guarantor’s ability to perform under the Guaranty; (e) the
use, operation or value of the Property or any portion thereof; (f) the
principal benefit of the security intended to be provided by the Loan Documents;
(g) the current ability of the Property to generate net cash flow sufficient to
service the Loan; or (h) the current principal use of the Property or any
portion thereof.

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

4.1.6 Title. Borrower has good, marketable and insurable fee simple title to the
real property comprising part of the Property and good title to the balance of
the Property, free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as may be expressly permitted pursuant to the
Loan Documents and the Liens created by the Loan Documents. The Permitted
Encumbrances individually and in the aggregate do not materially interfere with
the value, current use or operation of the Property (or any portion thereof) or
the security intended to be provided by each Security Instrument or with the
current ability of the Property (or any portion thereof) to generate net cash
flow sufficient to service the Loan or Borrower’s ability to pay its obligations
under the Loan Documents when they become due. Each Security Instrument, when
properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith,

 

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will create (a) a valid, perfected first priority lien on the applicable
Individual Property, subject only to Permitted Encumbrances and the Liens
created by the Loan Documents and (b) perfected security interests in and to,
and perfected collateral assignments of, all personalty (including the Leases),
all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan Documents. There are no
claims for payment for work, labor or materials affecting the Property which are
or may become a Lien prior to, or of equal priority with, the Liens created by
the Loan Documents.

4.1.7 Solvency. Borrower has (a) not entered into this transaction or executed
the Note, this Agreement or any other Loan Documents with the actual intent to
hinder, delay or defraud any creditor and (b) received reasonably equivalent
value in exchange for its obligations under such Loan Documents. Giving effect
to the Loan, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the making of the Loan, exceed Borrower’s total
liabilities, including subordinated, unliquidated, disputed and contingent
liabilities. The fair saleable value of Borrower’s assets is and will,
immediately following the making of the Loan, be greater than Borrower’s
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower’s assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower). No
petition in bankruptcy has been filed against Borrower or any constituent Person
in the last seven (7) years, and neither Borrower nor any constituent Person in
the last seven (7) years has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of debtors.
Neither Borrower nor any of its constituent Persons are contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of Borrower’s assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it or such constituent Persons.

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

4.1.9 No Plan Assets. Borrower does not sponsor, is not obligated to contribute
to, and is not itself an “employee benefit plan,” as defined in Section 3(3) of
ERISA, subject to Title I of ERISA or Section 4975 of the Code, and none of the
assets of Borrower constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition,
(a) Borrower is not a “governmental plan” within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to any state or
other statute , regulation or other restriction regulating investments of, or
fiduciary obligations with respect to, governmental plans within the meaning of
Section 3(32) of ERISA which is

 

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similar to the provisions of Section 406 of ERISA or Section 4975 of the Code
and which prohibit or otherwise restrict the transactions contemplated by this
Agreement, including the exercise by Lender of any of its rights under the Loan
Documents.

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

4.1.11 Financial Information. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender
in connection with the Loan (a) are true, complete and correct in all material
respects, (b) accurately represent the financial condition of Borrower and the
Property, as applicable, as of the date of such reports, and (c) to the extent
prepared or audited by an independent certified public accounting firm, have
been prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein. Except for Permitted Encumbrances, Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a material adverse
effect on the Property (or any portion thereof) or the current operation
thereof, except as referred to or reflected in said financial statements. Since
the date of such financial statements, there has been no material adverse change
in the financial condition, operations or business of Borrower from that set
forth in said financial statements.

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

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

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

 

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insured by the applicable Title Insurance Policy. All roads necessary for the
use of each Individual Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities.

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

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

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

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

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

4.1.20 Insurance. Borrower has obtained and has delivered to Lender certified
copies of the Policies (or other evidence acceptable to Lender) reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement.
No claims have been made or are currently pending, outstanding or otherwise
remain unsatisfied under any such Policy, and neither Borrower nor any other
Person, has done, by act or omission, anything which would impair the coverage
of any such Policy.

4.1.21 Use of Property. The Individual Property located in Cumming, GA is used
exclusively for medical purposes and other appurtenant and related uses. The
Individual Properties located in Marietta, OH; Reading, PA; and Pineville, NC
are used exclusively for plant, distribution, warehouse and office building
purposes and other appurtenant and related uses. The Individual Properties
located in Mason, OH; Ashburn, VA; and Grand Rapids, MI are used exclusively for
office building purposes and other appurtenant and related uses.

4.1.22 Certificate of Occupancy; Licenses. All certifications, permits,
franchises, licenses, consents, authorizations, and approvals, including,
certificates of completion and occupancy permits, required for the legal use,
occupancy and operation of each Individual

 

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Property have been obtained and are in full force and effect. The use being made
of each Individual Property is in conformity with the certificate of occupancy
issued for the applicable Individual Property.

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

4.1.24 Physical Condition. Each Individual Property, including all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, is in good condition, order and repair in
all material respects; there exists no structural or other material defects or
damages in the Property (or any portion thereof), whether latent or otherwise,
and Borrower has not received notice from any insurance company or bonding
company of any defects or inadequacies in the Property, or any part thereof,
which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.

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

4.1.26 Leases. The Property is not subject to any leases other than the Leases
described in the rent roll attached hereto as Schedule I and made a part hereof,
which rent roll is true, complete and accurate in all respects as of the Closing
Date. Borrower is the owner and lessor of landlord’s interest in the Leases. No
Person has any possessory interest in the Property (or any portion thereof) or
right to occupy the same except under and pursuant to the provisions of the
Leases. The current Leases are in full force and effect and there are no
defaults thereunder by either party and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder. No Rent has been paid more than one (1) month in advance of its due
date. All security deposits are held by Borrower in accordance with applicable
law. All work to be performed by Borrower under each Lease has been performed as
required and has been accepted by the applicable Tenant, and any payments, free
rent, partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by Borrower to any Tenant has already been
received by such Tenant. There has been no prior sale, transfer or assignment,
hypothecation or pledge of any Lease or of the Rents received therein which is
outstanding. No Tenant listed on Schedule I has assigned its Lease or sublet all
or any portion of the premises demised thereby, no such Tenant holds its leased
premises under assignment or sublease, nor does anyone except such Tenant and
its employees occupy such leased premises. No Tenant under any Lease has a right
or option pursuant to such Lease or otherwise to purchase all or any part of the
leased premises or the building of which the leased premises are a part. No
Tenant under any Lease has any right or option for additional space in the
Improvements.

 

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4.1.27 Survey. Each Survey for each Individual Property delivered to Lender in
connection with this Agreement does not fail to reflect any material matter
affecting the applicable Individual Property or the title thereto.

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

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

4.1.30 Special Purpose Entity/Separateness. (a) Until the Debt has been paid in
full, Borrower hereby represents, warrants and covenants that (i) Borrower is,
shall be and shall continue to be a Special Purpose Entity and (ii) Principal
is, shall be and shall continue to be a Special Purpose Entity.

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

(c) Any and all of the stated facts and assumptions made in any Insolvency
Opinion, including any exhibits attached thereto, will have been and shall be
true and correct in all respects, and Borrower and Principal will have complied
and will comply with all of the stated facts and assumptions made with respect
to it in any Insolvency Opinion. Each entity other than Borrower and Principal
with respect to which an assumption is made or a fact stated in any Insolvency
Opinion will have complied and shall comply with all of the assumptions made and
facts stated with respect to it in any such Insolvency Opinion. Borrower
covenants that in connection with any Additional Insolvency Opinion delivered in
connection with this Agreement it shall provide an updated certification
regarding compliance with the facts and assumptions made therein.

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

4.1.31 Management Agreement. The Management Agreement is in full force and
effect and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. The Management Agreement was entered into on
commercially reasonable terms.

 

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

4.1.33 No Change in Facts or Circumstances; Disclosure. All information
submitted by and on behalf of Borrower to Lender and in all financial
statements, rent rolls (including the rent roll attached hereto as Schedule I),
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Borrower in this Agreement or in any other Loan Document, are true, complete and
correct in all material respects. There has been no material adverse change in
any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the use, operation or value of the Property or the business operations or
the financial condition of Borrower. Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could cause
any Provided Information or representation or warranty made herein to be
materially misleading.

4.1.34 Investment Company Act. Borrower is not (a) an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (b) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (c) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

4.1.35 Embargoed Person. As of the date hereof and at all times throughout the
term of the Loan, including after giving effect to any Transfers permitted
pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower and Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any
interest of any nature whatsoever in Borrower or Guarantor, as applicable, with
the result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower or Guarantor, as applicable, have
been derived from any unlawful activity with the result that the investment in
Borrower or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

4.1.36 Principal Place of Business; State of Organization. Borrower’s principal
place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement. NH10 CUMMING GA LLC is organized under
the laws of the State of Delaware and its organizational identification number
is 5210476; D08 MARIETTA OH LLC is organized under the laws of the State of
Delaware and its organizational identification number is 4584200; MPI06 MASON OH
LLC is organized under the laws of the State of Delaware and its organizational
identification number is 4267152; SRFF08 READING PA, L.P. is organized under the
laws of the State of Delaware and its organizational identification number is
4491955; RPT08 PINEVILLE NC, L.P. is organized under the laws of the State of
Delaware and its

 

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organizational identification number is 4535891; IPA12 ASHBURN VA SPE LLC is
organized under the laws of the State of Delaware and its organizational
identification number is 5218540; FTCHI07 GRAND RAPIDS MI LLC is organized under
the laws of the State of Delaware and its organizational identification number
is 4427913.

4.1.37 Environmental Representations and Warranties. Except as otherwise
disclosed by each Phase I environmental report (or Phase II environmental
report, if required) delivered to Lender by Borrower in connection with the
origination of the Loan (such report is referred to below as the “Environmental
Report”), (a) there are no Hazardous Substances or underground storage tanks in,
on, or under any Individual Property and no Hazardous Substances have been
handled, manufactured, generated, stored, processed, or disposed of on or
released or discharged from any Individual Property, except those that are
(i) in compliance with Environmental Laws and with permits issued pursuant
thereto (to the extent such permits are required under Environmental Law),
(ii) de-minimis amounts necessary to operate the Property for the purposes set
forth in the Loan Agreement which will not result in an environmental condition
in, on or under the Property and which are otherwise permitted under and used in
compliance with Environmental Law and (iii) fully disclosed to Lender in writing
pursuant the Environmental Report; (b) there are no past, present or threatened
Releases of Hazardous Substances in, on, under or from any Individual Property
which has not been fully remediated in accordance with Environmental Law;
(c) there is no threat of any Release of Hazardous Substances migrating to any
Individual Property; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property which has not been fully remediated in accordance with
Environmental Law; (e) Borrower does not know of, and has not received, any
written or oral notice or other communication from any Person (including a
Governmental Authority) relating to Hazardous Substances or Remediation thereof,
of possible liability of any Person pursuant to any Environmental Law, other
environmental conditions in connection with any Individual Property, or any
actual or potential administrative or judicial proceedings in connection with
any of the foregoing; (f) Borrower has truthfully and fully disclosed to Lender,
in writing, any and all information relating to environmental conditions in, on,
under or from each Individual Property that is known to Borrower and has
provided to Lender all information that is contained in Borrower’s files and
records, including any reports relating to Hazardous Substances in, on, under or
from each Individual Property and/or to the environmental condition of each
Individual Property; and (g) there are no Institutional Controls on or affecting
any Individual Property.

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

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

 

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

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

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

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

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

ARTICLE V - BORROWER COVENANTS

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

5.1.1 Existence; Compliance with Legal Requirements. Each Borrower shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its existence, rights, licenses, permits, authorizations, and
franchises and comply with all Legal Requirements applicable to it and the
Property, including all regulations, building and zoning codes and certificates
of occupancy. There shall never be committed by Borrower, and Borrower shall
never permit any other Person in occupancy of or involved with the operation or
use of the Property to commit any act or omission affording the federal
government or any state or local government the right of forfeiture against the
Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents. Borrower hereby covenants and
agrees not to commit, permit or suffer to exist any act or omission affording
such

 

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right of forfeiture. Borrower shall at all times maintain, preserve and protect
all franchises and trade names and preserve all the remainder of its property
used or useful in the conduct of its business and shall keep each Individual
Property in good working order and repair, and from time to time make, or cause
to be made, all reasonably necessary repairs, renewals, replacements,
betterments and improvements thereto, all as more fully provided in the Loan
Documents. Borrower shall keep each Individual Property insured at all times by
financially sound and reputable insurers, to such extent and against such risks,
and maintain liability and such other insurance, as is more fully provided in
this Agreement. Borrower shall from time to time, upon Lender’s request, provide
Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Legal Requirements or is exempt from compliance with Legal
Requirements. Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation of any Legal Requirements and of
the commencement of any proceedings or investigations which relate to compliance
with Legal Requirements. After prior written notice to Lender, Borrower, at
Borrower’s own expense, may contest by appropriate legal proceeding promptly
initiated and conducted in good faith and with due diligence, the validity of
any Legal Requirement, the applicability of any Legal Requirement to Borrower or
any Individual Property or any alleged violation of any Legal Requirement,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any instrument to which Borrower is subject
and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable statutes, laws and ordinances;
(iii) neither the applicable Individual Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost; (iv) Borrower shall promptly upon final determination thereof
comply with any such Legal Requirement determined to be valid or applicable or
cure any violation of any Legal Requirement; (v) such proceeding shall suspend
the enforcement of the contested Legal Requirement against Borrower or the
applicable Individual Property; and (vi) Borrower shall furnish such security as
may be required in the proceeding, or as may be requested by Lender, to insure
compliance with such Legal Requirement, together with all interest and penalties
payable in connection therewith. Lender may apply any such security, as
necessary to cause compliance with such Legal Requirement at any time when, in
the reasonable judgment of Lender, the validity, applicability or violation of
such Legal Requirement is finally established or the applicable Individual
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.

5.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Property or any part
thereof as the same become due and payable; provided, however, Borrower’s
obligation to directly pay Taxes shall be suspended for so long as Borrower
complies with the terms and provisions of Section 7.2 hereof. Borrower shall
deliver to Lender receipts for payment or other evidence satisfactory to Lender
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than ten (10) days prior to the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid. Borrower shall furnish to
Lender receipts for the payment of the Taxes and the Other Charges prior to the
date the same shall become delinquent (provided, however, Borrower is not
required to furnish such receipts for payment of Taxes if such Taxes have been
paid by Lender pursuant to Section 7.2 hereof and Lender has received receipts
from the relevant taxing authority). Borrower shall not suffer and shall
promptly cause to be paid and discharged any Lien or charge whatsoever which may
be or become a Lien or charge against any Individual

 

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Property, and shall promptly pay for all utility services provided to the
Property. After prior written notice to Lender, Borrower, at Borrower’s own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that
(i) no Default or Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) neither the
applicable Individual Property nor any part thereof or interest therein will be
in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property; (vi) Borrower shall have set aside adequate reserves for
the payment of the Taxes, together with all interest and penalties thereon,
unless Borrower has paid all of the Taxes under protest; and (vii) Borrower
shall furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon. Lender may pay over any such
cash deposit or part thereof held by Lender to the claimant entitled thereto at
any time when, in the judgment of Lender, the entitlement of such claimant is
established or the applicable Individual Property (or part thereof or interest
therein) shall be in danger of being sold, forfeited, terminated, cancelled or
lost or there shall be any danger of the Lien of the Security Instrument being
primed by any related Lien.

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

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

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

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

5.1.7 Perform Loan Documents. Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions of, and shall pay when due all
costs, fees and expenses to the extent required under the Loan Documents
executed and delivered by, or applicable to, Borrower.

 

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

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

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

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

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

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

 

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

(b) Borrower shall furnish to Lender annually, within ninety (90) days following
the end of each Fiscal Year of Borrower, a complete copy of Borrower’s annual
financial statements audited by an independent certified public accountant
acceptable to Lender in accordance with GAAP (or such other accounting basis
acceptable to Lender) covering each Individual Property for such Fiscal Year and
containing statements of profit and loss for Borrower and each Individual
Property, an annual rent roll and a balance sheet for Borrower. If Borrower
consists of more than one entity, said financial statements shall also include
an annual combined balance sheet of the Borrower entities (and no other
entities), together with the related combined statements of operations, members’
capital and cash flows, including a combining balance sheet and statement of
income for the Individual Properties on a combined basis. Such statements shall
set forth the financial condition and the results of operations for each
Individual Property for such Fiscal Year, and shall include amounts representing
annual net operating income, net cash flow, gross income, and operating
expenses.

(c) Borrower shall furnish, or cause to be furnished, to Lender on or before
twenty (20) days after the end of each calendar quarter the following items,
accompanied by an Officer’s Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and each Individual Property (subject to
normal year-end adjustments) as applicable: (i) a rent roll for the subject
quarter; (ii) quarterly and year-to-date operating statements (including Capital
Expenditures) prepared for each calendar quarter, noting net operating income,
gross income, and operating expenses (not including any contributions to the
Replacement Reserve Fund and the Required Repair Fund), and other information
necessary and sufficient to fairly represent the financial position and results
of operation of each Individual Property during such calendar quarter, and
containing a comparison of budgeted income and expenses and the actual income
and expenses; and (iii) a calculation reflecting the annual Debt Service
Coverage Ratio for the immediately preceding three (3), six (6), and twelve
(12) month periods as of the last day of such quarter. In addition, such
certificate shall also be accompanied by an Officer’s Certificate stating that
the representations and warranties of Borrower set forth in Section 4.1.30 are
true and correct as of the date of such certificate.

(d) Until the earlier of Securitization or twelve (12) months after the date of
this Agreement, Borrower shall furnish, or cause to be furnished, to Lender on
or before twenty (20) days after the end of each calendar month, all of the
following items with respect to the previous

 

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calendar month, accompanied by an Officer’s Certificate stating that such items
are true, correct, accurate, and complete and fairly present the financial
condition and results of the operations of Borrower and each Individual Property
(subject to normal year-end adjustments) as applicable: (A) a rent roll for the
subject month; (B) monthly operating statement(s) of each Individual Property;
and (C) year-to-date operating statement(s) of each Individual Property.

(e) Not later than each February 1 during the term of the Loan upon Lender’s
request, Borrower shall furnish to Lender, for Lender’s approval, a report
setting forth the minimum economic terms that Borrower proposes for use in
connection with the standard lease form for leases of portions of the Property
during the twelve month period beginning upon such anniversary date. The terms
set forth in the leasing report shall reflect the prevailing market conditions
for like properties in the locality of each Individual Property.

(f) Upon request, Borrower and its affiliates shall furnish to Lender:

(i) a property management report for each Individual Property, showing the
number of inquiries made and/or rental applications received from tenants or
prospective tenants and deposits received from tenants and any other information
requested by Lender, in reasonable detail and certified by Borrower to be true
and complete, but not more frequently than quarterly; and

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

(g) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget not
later than sixty (60) days prior to the commencement of such period or Fiscal
Year in form reasonably satisfactory to Lender. The Annual Budget shall be
subject to Lender’s written approval (each such Annual Budget, an “Approved
Annual Budget”). If Lender objects to a proposed Annual Budget submitted by
Borrower, Lender shall advise Borrower of such objections within fifteen
(15) days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall promptly revise such Annual
Budget and resubmit the same to Lender. Lender shall advise Borrower of any
objections to such revised Annual Budget within ten (10) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise the same in accordance with the
process described in this subsection until Lender approves the Annual Budget.
Until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and
Other Charges.

(h) If Borrower must incur an extraordinary operating expense or capital expense
not set forth in the Approved Annual Budget (each an “Extraordinary Expense”),
then Borrower

 

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shall promptly deliver to Lender a reasonably detailed explanation of such
proposed Extraordinary Expense for Lender’s approval, which may be given or
denied in Lender’s discretion.

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

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

(k) Borrower shall cause Guarantor to furnish to Lender annually, within ninety
(90) days following the end of each Fiscal Year of Guarantor: (i) financial
statements audited by an independent certified public accountant, which shall
include an annual balance sheet and profit and loss statement of Guarantor, in
the form reasonably required by Lender or (ii) a signed personal financial
statement in a form satisfactory to Lender if such Guarantor is an individual.

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

5.1.12 Business and Operations. Borrower shall continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of each Individual
Property. Borrower shall qualify to do business and shall remain in good
standing in the jurisdiction in which each Individual Property is located and
the jurisdiction of its formation. Borrower shall at all times during the term
of the Loan, continue to own all of Equipment, Fixtures and Personal Property
which are necessary to operate each Individual Property in the manner required
hereunder and in the manner in which it is currently operated.

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

 

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5.1.14 Costs of Enforcement. In the event (a) that the Security Instrument
encumbering the Property (or any portion thereof) is foreclosed in whole or in
part or that the Security Instrument is put into the hands of an attorney for
collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage
encumbering the Property (or any portion thereof) prior to or subsequent to the
Security Instrument in which proceeding Lender is made a party, or (c) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of
Borrower or any of its constituent Persons or an assignment by Borrower or any
of its constituent Persons for the benefit of its creditors, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all costs of
collection and defense, including reasonable attorneys’ fees and expenses,
incurred by Lender or Borrower in connection therewith and in connection with
any appellate proceeding or post judgment action involved therein, together with
all required service or use taxes.

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

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

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

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

 

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5.1.18 Confirmation of Representations. Borrower shall deliver, in connection
with any Securitization, (a) one (1) or more Officer’s Certificates certifying
as to the accuracy of all representations made by Borrower in the Loan Documents
as of the date of the closing of such Securitization in all relevant
jurisdictions, and (b) certificates of the relevant Governmental Authorities in
all relevant jurisdictions indicating the good standing and qualification of
Borrower, Principal and Guarantor as of the date of the Securitization.

5.1.19 Environmental Covenants. (a) Borrower covenants and agrees that: (i) all
uses and operations on or of the Property (or any portion thereof), whether by
Borrower or any other Person, shall be in compliance with all Environmental Laws
and permits issued pursuant thereto; (ii) there shall be no Releases of
Hazardous Substances in, on, under or from any Individual Property; (iii) there
shall be no Hazardous Substances in, on, or under any Individual Property,
except those that are (A) in compliance with all Environmental Laws and with
permits issued pursuant thereto (to the extent such permits are required by
Environmental Law), (B) de-minimis amounts necessary to operate the applicable
Individual Property for the purposes set forth in the Loan Agreement which will
not result in an environmental condition in, on or under the applicable
Individual Property and which are otherwise permitted under and used in
compliance with Environmental Law and (C) fully disclosed to Lender in writing;
(iv) Borrower shall keep the Property free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person (the “Environmental Liens”);
(v) Borrower shall, at its sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to subsection (b) below, including
providing all relevant information and making knowledgeable persons available
for interviews; (vi) Borrower shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with the Property, pursuant to any reasonable written request of
Lender made if Lender has reason to believe that an environmental hazard exists
on any Individual Property (including sampling, testing and analysis of soil,
water, air, building materials and other materials and substances whether solid,
liquid or gas), and share with Lender the reports and other results thereof, and
Lender and other Indemnified Parties shall be entitled to rely on such reports
and other results thereof; (vii) Borrower shall, at its sole cost and expense,
comply with all reasonable written requests of Lender made if Lender has reason
to believe that an environmental hazard exists on any Individual Property
(A) reasonably effectuate Remediation of any condition (including a Release of a
Hazardous Substance) in, on, under or from any Individual Property; (B) comply
with any Environmental Law; (C) comply with any directive from any Governmental
Authority; and (D) take any other reasonable action necessary or appropriate for
protection of human health or the environment; (viii) Borrower shall not do or
allow any Tenant or other user of the Property to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any Person (whether on or off the Property (or any portion
thereof)), impairs or may impair the value of the Property (or any portion
thereof), is contrary to any requirement of any insurer, constitutes a public or
private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Property (or any portion thereof);
(ix) Borrower shall immediately notify Lender in writing of (A) any presence or
Releases or threatened Releases of Hazardous Substances in, on, under, from or
migrating towards any Individual Property; (B) any non-compliance with any
Environmental Laws related in any way to any Individual Property; (C) any actual
or potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to any Individual Property; and (E) any
written or oral notice

 

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or other communication of which Borrower becomes aware from any source
whatsoever (including a governmental entity) relating in any way to the release
or potential release of Hazardous Substances or Remediation thereof, likely to
result in liability of any Person pursuant to any Environmental Law, other
environmental conditions in connection with any Individual Property, or any
actual or potential administrative or judicial proceedings in connection with
anything referred to in this Section; (x) Borrower shall not install, use,
generate, manufacture, store, treat, release or dispose of, nor permit the
installation, use, generation, storage, treatment, release or disposal of, any
Hazardous Substances (except de-minimis amounts necessary to operate the
Property (or any portion thereof) for the purposes set forth in the Loan
Agreement which will not result in an environmental condition in, on or under
the Property (or any portion thereof) and which are otherwise permitted under
and used in compliance with Environmental Law) on, under or about the Property
(or any portion thereof), and all uses and operations on or of the Property (or
any portion thereof), whether by Borrower or any other person or entity, shall
be in compliance with all Environmental Laws and permits issued pursuant
thereto; (xi) Borrower shall not make any change in the use or condition of any
Individual Property which (A) might lead to the presence on, under or about the
applicable Individual Property of any Hazardous Substances which is not in
accordance with any applicable Environmental Law, or (B) would require, under
any applicable Environmental Law, notice be given to or approval be obtained
from any governmental agency in the event of a transfer of ownership or control
of the applicable Individual Property, in each case without the prior written
consent of Lender; (xii) Borrower shall not allow any Institutional Control on
or to affect any Individual Property; and (xiii) Borrower shall take all acts
necessary to preserve its status, if applicable, as an “innocent landowner,”
“contiguous property owner,” or “prospective purchaser” as to the Property (or
any portion thereof) and as those terms are defined in CERCLA; provided,
however, that this covenant does not limit or modify any of Borrower’s other
duties or obligations under this Agreement.

(b) If Lender has reason to believe that an environmental hazard exists on any
Individual Property that may, in Lender’s discretion, endanger any Tenants or
other occupants of the applicable Individual Property or their guests or the
general public or may materially and adversely affect the value of the
Individual Property, upon reasonable notice from Lender, Borrower shall, at
Borrower’s expense, promptly cause an engineer or consultant satisfactory to
Lender to conduct an environmental assessment or audit (the scope of which shall
be determined in Lender’s discretion) and take any samples of soil, groundwater
or other water, air, or building materials or any other invasive testing
requested by Lender and promptly deliver the results of any such assessment,
audit, sampling or other testing; provided, however, if such results are not
delivered to Lender within a reasonable period or if Lender has reason to
believe that an environmental hazard exists on the Property that, in Lender’s
sole judgment, endangers any Tenant or other occupant of the Property or their
guests or the general public or may materially and adversely affect the value of
the applicable Individual Property, upon reasonable notice to Borrower, Lender
and any other Person designated by Lender, including any receiver, any
representative of a governmental entity, and any environmental consultant, shall
have the right, but not the obligation, to enter upon the applicable Individual
Property at all reasonable times to assess any and all aspects of the
environmental condition of the applicable Individual Property and its use,
including conducting any environmental assessment or audit (the scope of which
shall be determined in Lender’s discretion) and taking samples of soil,
groundwater or other water, air, or building materials, and reasonably
conducting other invasive testing. Borrower shall cooperate with and provide
Lender and any such Person designated by Lender with access to the applicable
Individual Property.

 

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(c) [Intentionally Deleted.]

(d) [Intentionally Deleted.]

(e) Borrower shall promptly perform all necessary remedial work in response to
the presence of any Hazardous Substances on any Individual Property, any
violation of any Environmental Laws, or any claims or requirements made by any
governmental agency or authority. All such work shall be conducted by licensed
and reputable contractors pursuant to written plans approved by the agency or
authority in question (if applicable), under proper permits and licenses (if
applicable) with such insurance coverage as is customarily maintained by prudent
property owners in similar situations. If the cost of the work exceeds $100,000,
then Lender shall have the right of prior approval over the environmental
contractor and plans, which shall not be unreasonably withheld or delayed. All
costs and expenses of the remedial work shall be promptly paid by Borrower. In
the event Borrower fails to undertake the remedial work, or fails to complete
the same within a reasonable time period after the same is undertaken, and if
Lender is of the good faith opinion that Lender’s security in the applicable
Individual Property is jeopardized thereby, then Lender shall have the right to
undertake or complete the remedial work itself. In such event all costs of
Lender in doing so, including all fees and expenses of environmental
consultants, engineers, attorneys, accountants and other professional advisors,
shall become a part of the Loan and shall be due and payable from Borrower upon
demand. Such amount shall be secured by the Loan Documents, and failure to pay
the same shall be an event of default under the Loan Documents. In the event any
Hazardous Substances are removed from the Property, either by Borrower or
Lender, the number assigned by the United States Environmental Protection Agency
to such Hazardous Substances shall be solely in the name of Borrower, and
Borrower shall have any and all liability for such removed Hazardous Substances.

5.1.20 Leasing Matters. Any Leases with respect to the Property written after
the date hereof, for more than 7,500 square feet shall be subject to the prior
written approval of Lender, which approval shall not be unreasonably withheld,
conditioned or delayed. Upon request, Borrower shall furnish Lender with
executed copies of all Leases. All renewals of Leases and all proposed Leases
shall provide for rental rates comparable to existing local market rates. All
proposed Leases shall be on commercially reasonable terms and shall not contain
any terms which would materially affect Lender’s rights under the Loan
Documents. All Leases executed after the date hereof shall provide that they are
subordinate to the Security Instrument and that the lessee agrees to attorn to
Lender or any purchaser at a sale by foreclosure or power of sale. Borrower
(i) shall observe and perform the obligations imposed upon the lessor under the
Leases in a commercially reasonable manner; (ii) shall enforce and may amend or
terminate the terms, covenants and conditions contained in the Leases upon the
part of the lessee thereunder to be observed or performed in a commercially
reasonable manner and in a manner not to impair the value of the Property (or
any portion thereof) involved except that no termination by Borrower or
acceptance of surrender by a Tenant of any Leases shall be permitted unless by
reason of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Property (or any portion thereof); provided, however,
that no such termination or surrender of any Lease covering more than 7,500
square feet will be permitted without the prior written consent of

 

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Lender; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits); (iv) shall not execute any other
assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent with the provisions of the Loan
Documents; and (vi) shall execute and deliver at the request of Lender all such
further assurances, confirmations and assignments in connection with the Leases
as Lender shall from time to time reasonably require. Notwithstanding anything
to the contrary contained herein, Borrower shall not enter into a lease of all
or substantially all of any Individual Property without Lender’s prior written
consent. Notwithstanding anything to the contrary contained herein, all new
Leases and all amendments, modifications, extensions, and renewals of existing
Leases with Tenants that are Affiliates of Borrower shall be subject to the
prior written consent of Lender.

5.1.21 Alterations. Borrower shall obtain Lender’s prior written consent to any
alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower’s financial condition, the value of any Individual
Property or the applicable Individual Property’s Net Operating Income.
Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower’s financial condition, the value of any Individual Property or the
applicable Individual Property’s Net Operating Income, provided that such
alterations are made in connection with (a) tenant improvement work performed
pursuant to the terms of any Lease executed on or before the date hereof,
(b) tenant improvement work performed pursuant to the terms and provisions of a
Lease and not adversely affecting any structural component of any Improvements,
any utility or HVAC system contained in any Improvements or the exterior of any
building constituting a part of any Improvements, or (c) alterations performed
in connection with the Restoration of any Individual Property after the
occurrence of a Casualty or Condemnation in accordance with the terms and
provisions of this Agreement. If the total unpaid amounts due and payable with
respect to alterations to the Improvements at the Property or any portion
thereof(other than such amounts to be paid or reimbursed by Tenants under the
Leases) shall at any time exceed $100,000.00 (the “Threshold Amount”), Borrower
shall promptly deliver to Lender as security for the payment of such amounts and
as additional security for Borrower’s obligations under the Loan Documents any
of the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and that, at Lender’s option, the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned to any Securities or any class thereof in connection
with any Securitization or (D) a completion and performance bond or an
irrevocable letter of credit (payable on sight draft only) issued by a financial
institution having a rating by S&P of not less than “A-1+” if the term of such
bond or letter of credit is no longer than three (3) months or, if such term is
in excess of three (3) months, issued by a financial institution having a rating
that is acceptable to Lender and that, at Lender’s option, the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned to any Securities or class thereof in connection with
any Securitization. Such security shall be in an amount equal to the excess of
the total unpaid amounts with respect to alterations to the Improvements on the
Property (or any portion thereof) (other than such amounts to be paid or
reimbursed by Tenants under the Leases) over the Threshold Amount and Lender may
apply such security from time to time at the option of Lender to pay for such
alterations.

 

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

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

5.1.23 Embargoed Person. Borrower has performed and shall perform reasonable due
diligence to insure that at all times throughout the term of the Loan, including
after giving effect to any Transfers permitted pursuant to the Loan Documents,
(a) none of the funds or other assets of Borrower, Principal and Guarantor
constitute property of, or are beneficially owned, directly or indirectly, by
any Embargoed Person; (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower, Principal or Guarantor, as applicable, with the result
that the investment in Borrower, Principal or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower, Principal or Guarantor, as
applicable, have been derived from, or are the proceeds of, any unlawful
activity, including money laundering, terrorism or terrorism activities, with
the result that the investment in Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law, or may cause the Property to be subject to forfeiture or
seizure.

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

5.2.1 Operation of Property. (a) Borrower shall not, without Lender’s prior
written consent (which consent shall not be unreasonably withheld):
(i) surrender, terminate, cancel, amend or modify the Management Agreement;
provided, that Borrower may, without Lender’s consent, replace the Manager so
long as the replacement manager is a Qualified Manager pursuant to a Replacement
Management Agreement; (ii) reduce or consent to the reduction of the term of the
Management Agreement; (iii) increase or consent to the increase of the amount of
any charges under the Management Agreement, or (iv) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under, the Management Agreement in any material respect.

 

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

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

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

5.2.3 Dissolution. Borrower shall not (a) engage in any dissolution, liquidation
or consolidation or merger with or into any other business entity, (b) engage in
any business activity not related to the ownership and operation of each
Individual Property, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents or
its qualification and good standing in any jurisdiction or (e) cause the
Principal to (i) dissolve, wind up or liquidate or take any action, or omit to
take an action, as a result of which the Principal would be dissolved, wound up
or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the
organizational documents of the Principal, in each case, without obtaining the
prior written consent of Lender or Lender’s designee.

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

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

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

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

 

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5.2.8 Intentionally Omitted.

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

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

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

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

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

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

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

 

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(c) A Transfer shall include (i) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a substantial part of
any Individual Property for other than actual occupancy by a space Tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower’s right, title and interest in and to any Leases
or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation’s stock or the creation or
issuance of new stock; (iv) if a Restricted Party is a limited or general
partnership or joint venture, any merger or consolidation or the change,
removal, resignation or addition of a general partner or the Sale or Pledge of
the partnership interest of any general partner or any profits or proceeds
relating to such partnership interest, or the Sale or Pledge of limited
partnership interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non managing membership interests or the
creation or issuance of new non managing membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of the managing agent (including an Affiliated Manager) other
than in accordance with Section 5.1.22 hereof.

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

(e) No Transfer of the Property (or any portion thereof) and assumption of the
Loan shall occur during the period that is sixty (60) days prior to and sixty
(60) days after a Securitization. Without limiting Lender’s discretion to
approve or disapprove any request for a waiver of the prohibition against
Transfers, Lender specifically reserves the right to condition its consent to
any waiver of a prohibited Transfer upon satisfaction of the following minimum
conditions:

(i) Borrower shall pay Lender a transfer fee equal to one percent (1%) of the
outstanding principal balance of the Loan at the time of such transfer;

 

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

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

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

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

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

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

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

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

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

 

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

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

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

(xiv) The Property meets all of the Lender’s underwriting standards related to
its financial condition, cash flow, operating income, physical condition,
management and operation.

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

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

 

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

ARTICLE VI - INSURANCE; CASUALTY; CONDEMNATION

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

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

 

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(ii) business income or rental loss insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) in an amount equal to one hundred percent (100%) of
the projected gross revenues from the operation of the applicable Individual
Property (as reduced to reflect expenses not incurred during a period of
Restoration) for a period of (1) not less than twelve (12) months from the date
of casualty or loss if the amount of the Loan is less than $35,000,000, or
(2) not less than eighteen (18) months from the date of casualty or loss if the
amount of the Loan is $35,000,000 or more; and (D) if the amount of the Loan is
$50,000,000 or more, containing an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and Personal
Property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or the
expiration of 180 days from the date that the applicable Individual Property is
repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period. The
amount of such business income or rental loss insurance shall be determined
prior to the date hereof and at least once each year thereafter based on
Borrower’s reasonable estimate of the gross revenues from the applicable
Individual Property for the succeeding twelve (12) month period. Notwithstanding
the provisions of Section 2.7.1 hereof, all proceeds payable to Lender pursuant
to this subsection shall be held by Lender and shall be applied to the
obligations secured by the Loan Documents from time to time due and payable
hereunder and under the Note; provided, however, that nothing herein contained
shall be deemed to relieve Borrower of its obligations to pay the obligations
secured by the Loan Documents on the respective dates of payment provided for in
this Agreement and the other Loan Documents except to the extent such amounts
are actually paid out of the proceeds of such business income insurance;

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

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

(v) commercial general liability insurance against claims for personal injury,
bodily injury, death, contractual damage or property damage occurring upon, in
or about the applicable Individual Property, such insurance (A) to be on the
so-called “occurrence” form with a combined limit of not less than $2,000,000.00
in the aggregate

 

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and $1,000,000.00 per occurrence; (B) to continue at not less than the aforesaid
limit until required to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and completed
operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all written contracts and (5) contractual liability
covering the indemnities contained in Article 9 of the Security Instrument to
the extent the same is available;

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

(vii) worker’s compensation and employee’s liability subject to the worker’s
compensation laws of the applicable state;

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

(ix) the insurance required under this Section 6.1(a) above shall cover perils
of terrorism and acts of terrorism and Borrower shall maintain insurance for
loss resulting from perils and acts of terrorism on terms (including amounts)
consistent with those required under Sections 6.1(a) above at all times during
the term of the Loan; and

(x) upon sixty (60) days written notice, such other reasonable insurance,
including sinkhole or land subsidence insurance, and in such reasonable amounts
as Lender from time to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for property similar to
the applicable Individual Property located in or around the region in which the
Property is located.

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

 

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the Policies theretofore furnished to Lender, certificates of insurance
evidencing the Policies accompanied by evidence satisfactory to Lender of
payment of the premiums due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender.

(c) Any blanket insurance Policy shall specifically allocate to the applicable
Individual Property the amount of coverage from time to time required hereunder
and shall otherwise provide the same protection as would a separate Policy
insuring only the applicable Individual Property in compliance with the
provisions of Section 6.1(a) hereof.

(d) All Policies provided for or contemplated by Section 6.1(a) hereof, except
for the Policy referenced in Section 6.1(a)(vii) of this Agreement, shall name
Borrower as the insured and Lender as the additional insured, as its interests
may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

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

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

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

(iii) the issuers thereof shall give written notice to Lender if the Policy has
not been renewed thirty (30) days prior to its expiration; and

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

(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the applicable Individual Property, including the
obtaining of such insurance coverage as Lender in its discretion deems
appropriate after three (3) Business Days notice to Borrower if prior to the
date upon which any such coverage will lapse or at any time Lender deems
necessary (regardless of prior notice to Borrower) to avoid the lapse of any
such coverage. All premiums incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and, until paid, shall be secured by the Security
Instrument and shall bear interest at the Default Rate.

Section 6.2 Casualty. If any Individual Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall
give prompt written notice of such damage to Lender and shall promptly commence
and diligently prosecute the

 

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completion of the Restoration of the applicable Individual Property pursuant to
Section 6.4 hereof as nearly as possible to the condition the applicable
Individual Property was in immediately prior to such Casualty, with such
alterations as may be reasonably approved by Lender and otherwise in accordance
with Section 6.4 hereof. Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower. In addition,
Lender may participate in any settlement discussions with any insurance
companies (and shall approve the final settlement, which approval shall not be
unreasonably withheld or delayed) with respect to any Casualty in which the Net
Proceeds or the costs of completing the Restoration are equal to or greater than
the Availability Threshold and Borrower shall deliver to Lender all instruments
required by Lender to permit such participation.

Section 6.3 Condemnation. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of any
Individual Property (or any portion thereof) and shall deliver to Lender copies
of any and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any portion of any Individual Property is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property pursuant to Section 6.4 hereof and otherwise comply with the provisions
of Section 6.4 hereof. If the applicable Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt. Notwithstanding the foregoing provisions of
this Section 6.3, and Section 6.4 hereof, if the Loan or any portion thereof is
included in a REMIC Trust and, immediately following a release of any portion of
the Lien of the Security Instrument in connection with a Condemnation (but
taking into account any proposed Restoration on the remaining portion of the
Property), the Loan to Value Ratio is greater than 125% (such value to be
determined, in Lender’s sole discretion, by any commercially reasonable method
permitted to a REMIC Trust), the principal balance of the Loan must be paid down
in an amount sufficient to satisfy the REMIC Requirements, unless the Lender
receives an opinion of counsel that if such amount is not paid, the
Securitization will not fail to maintain its status as a REMIC Trust as a result
of the related release of such portion of the Lien of the Security Instrument.
In connection with the foregoing, the Net Proceeds shall not be available for
Restoration and shall be used to pay down the principal balance of the Loan to
the extent set forth above.

 

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

(a) If the Net Proceeds shall be less than the Availability Threshold and the
costs of completing the Restoration shall be less than the Availability
Threshold, the Net Proceeds shall be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Section 6.4(b)(i)
hereof are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.

(b) If the Net Proceeds are equal to or greater than the Availability Threshold
or the costs of completing the Restoration are equal to or greater than the
Availability Threshold, Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4. The term “Net
Proceeds” for purposes of this Section 6.4 means: (i) the net amount of all
insurance proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv),
(ix) and (x) as a result of such damage or destruction, after deduction of its
reasonable costs and expenses (including reasonable counsel fees), if any, in
collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award,
after deduction of its reasonable costs and expenses (including reasonable
counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever
the case may be.

(i) The Net Proceeds shall be made available to Borrower for Restoration
provided that each of the following conditions are met:

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

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

(C) Leases demising in the aggregate a percentage amount equal to or greater
than the Rentable Space Percentage of the total rentable space in the applicable
Individual Property which has been demised under executed and delivered Leases
in effect as of the date of the occurrence of such Casualty or Condemnation,
whichever the case may be, shall remain in full force and effect during and
after the completion of the Restoration, notwithstanding the occurrence of any
such Casualty or Condemnation, whichever the case may be, and Borrower and/or
Tenant, as applicable under the respective Lease, shall make all necessary
repairs and restorations thereto at their sole cost and expense. The term
“Rentable Space Percentage” means (1) in the event the Net Proceeds are
Insurance Proceeds, a percentage amount equal to ninety percent (90%) and (2) in
the event the Net Proceeds are Condemnation Proceeds, a percentage amount equal
to ninety percent (90%);

 

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

(E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be covered out of
(1) the Net Proceeds, (2) the insurance coverage referred to in
Section 6.1(a)(ii) hereof, if applicable, or (3) by other funds of Borrower;

(F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date,
(2) the earliest date required for such completion under the terms of any
Leases, (3) such time as may be required under all applicable Legal Requirements
in order to repair and restore the applicable Individual Property to the
condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as
applicable, or (4) the expiration of the insurance coverage referred to in
Section 6.1(a)(ii) hereof;

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

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

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

(J) the Debt Service Coverage Ratio for the Property, after giving effect to the
Restoration, shall be equal to or greater than 1.20 to 1.0;

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

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

(ii) The Net Proceeds shall be held by Lender in an Eligible Account and, until
disbursed in accordance with the provisions of this Section 6.4(b), shall
constitute

 

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

(iii) All plans and specifications required in connection with the Restoration
shall be subject to prior review and acceptance in all respects by Lender and by
an independent consulting engineer selected by Lender (the “Casualty
Consultant”). Lender shall have the use of the plans and specifications and all
permits, licenses and approvals required or obtained in connection with the
Restoration. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and approval by Lender and the
Casualty Consultant. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available for the Restoration including reasonable
counsel fees and disbursements and the Casualty Consultant’s fees, shall be paid
by Borrower.

(iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage”
means an amount equal to ten percent (10%) of the costs actually incurred for
work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 6.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
governmental and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the Casualty Retainage; provided, however, that
Lender shall release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
issuing

 

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the Title Insurance Policy, and Lender receives an endorsement to the applicable
Title Insurance Policy insuring the continued priority of the lien of the
applicable Security Instrument and evidence of payment of any premium payable
for such endorsement. If required by Lender, the release of any such portion of
the Casualty Retainage shall be approved by the surety company, if any, which
has issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.

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

(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the opinion of Lender in consultation with the Casualty Consultant, be
sufficient to pay in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net Proceeds
shall be made. The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall
constitute additional security for the Debt and Other Obligations under the Loan
Documents.

(vii) The excess, if any, of the Net Proceeds (and the remaining balance, if
any, of the Net Proceeds Deficiency) deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be deposited in the Cash
Management Account to be disbursed in accordance with this Agreement, provided
no Event of Default shall have occurred and shall be continuing under the Note,
this Agreement or any of the other Loan Documents.

(c) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 6.4(b)(vii) hereof may be retained and applied by Lender toward the
payment of the Debt in accordance with Section 2.4.2 hereof, whether or not then
due and payable in such order, priority and proportions as Lender in its
discretion shall deem proper, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to Borrower for such purposes as Lender shall
approve, in its discretion.

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

 

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ARTICLE VII - RESERVE FUNDS

Section 7.1 Intentionally Deleted.

Section 7.2 Tax and Insurance Escrow Fund. Borrower shall pay to Lender (a) on
the Closing Date an initial deposit and (b) on each Payment Date thereafter
(i) one-twelfth (1/12) of the Taxes and Other Charges that Lender estimates will
be payable during the next ensuing twelve (12) months in order to accumulate
with Lender sufficient funds to pay all such Taxes and Other Charges at least
thirty (30) days prior to their respective due dates, and (ii) one-twelfth
(1/12) of the Insurance Premiums that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies (said
amounts in (a) and (b) above hereinafter called the “Tax and Insurance Escrow
Fund”). Provided, however, so long as Borrower maintains blanket policies of
insurance in accordance with Section 6.1 hereof, the provisions of this Section
with regard to Insurance Premiums shall not be applicable, until and unless
Lender elects to apply such provisions following (i) the issuance by any insurer
or its agent of any notice of cancellation, termination, or lapse of any
insurance coverage required under Section 6.1 hereof, (ii) any cancellation,
termination, or lapse of any insurance coverage required under Section 6.1
hereof whether or not any notice is issued, (iii) Lender having not received
from Borrower evidence of insurance coverages as required by and in accordance
with the terms of Section 6.1 hereof, or (iv) the occurrence of any Event of
Default or the occurrence of any event which with the giving of notice, the
passage of time or both would result in an Event of Default. Lender shall apply
the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to Section 5.1.2 hereof and under the
Security Instrument. In making any payment relating to the Tax and Insurance
Escrow Fund, Lender may do so according to any bill, statement or estimate
procured from the appropriate public office (with respect to Taxes) or insurer
or agent (with respect to Insurance Premiums), without inquiry into the accuracy
of such bill, statement or estimate or into the validity of any tax, assessment,
sale, forfeiture, tax lien or title or claim thereof. If the amount of the Tax
and Insurance Escrow Fund shall exceed the amounts due for Taxes, Other Charges
and Insurance Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. If at any time Lender
reasonably determines that the Tax and Insurance Escrow Fund is not or will not
be sufficient to pay Taxes, Other Charges and Insurance Premiums by the dates
set forth in (a) and (b) above, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to the due date of the Taxes and Other Charges and/or
thirty (30) days prior to expiration of the Policies, as the case may be.

Section 7.3 Replacements and Replacement Reserve.

7.3.1 Replacement Reserve Fund. Borrower shall pay to Lender (a) on the Closing
Date an initial deposit of $4,422.00 and (b) on each Payment Date thereafter,
$4,422.00 (the “Replacement Reserve Monthly Deposit”) which amounts are
reasonably estimated by Lender in its discretion to be due for replacements and
repairs required to be made to any Individual Property during the calendar year
(collectively, the “Replacements”). Amounts so deposited shall hereinafter be
referred to as Borrower’s “Replacement Reserve Fund” and the account in which
such amounts are held shall hereinafter be referred to as Borrower’s
“Replacement Reserve Account”. Notwithstanding the preceding sentence, the
amount of Replacement Reserve Funds on deposit in the Replacement Reserve
Account at any given time shall not

 

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exceed $250,000.00 in the aggregate (the “Replacement Reserve Cap”) and,
accordingly, to the extent a Replacement Reserve Monthly Deposit would result in
the aggregate amount of Replacement Reserve Funds in the Replacement Reserve
Account to exceed the Replacement Reserve Cap, such Replacement Reserve Monthly
Deposit shall be decreased by an amount equal to such excess. Lender may
reassess its estimate of the amount necessary for the Replacement Reserve Fund
from time to time, and may increase the monthly amounts required to be deposited
into the Replacement Reserve Fund upon thirty (30) days notice to Borrower if
Lender determines in its discretion that an increase is necessary to maintain
the proper maintenance and operation of the Property (or any portion thereof).

7.3.2 Disbursements from Replacement Reserve Account. (a) Lender shall make
disbursements from the Replacement Reserve Account to pay Borrower only for the
costs of the Replacements. Lender shall not be obligated to make disbursements
from the Replacement Reserve Account to reimburse Borrower for the costs of
routine maintenance to the Property, replacements of inventory or for costs
which are to be reimbursed from the Required Repair Fund or Rollover Reserve
Fund.

(b) Lender shall, upon written request from Borrower and satisfaction of the
requirements set forth in this Section 7.3.2, disburse to Borrower amounts from
the Replacement Reserve Account necessary to pay for the actual approved costs
of Replacements or to reimburse Borrower therefor, upon completion of such
Replacements (or, upon partial completion in the case of Replacements made
pursuant to Section 7.3.2(e) hereof) as determined by Lender. In no event shall
Lender be obligated to disburse funds from the Replacement Reserve Account if a
Default or an Event of Default exists.

(c) Each request for disbursement from the Replacement Reserve Account shall be
in a form specified or approved by Lender and shall specify (i) the specific
Replacements for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which such request for disbursement is made.
With each request Borrower shall certify that all Replacements have been made in
accordance with all applicable Legal Requirements of any Governmental Authority
having jurisdiction over the Property. Each request for disbursement shall
include copies of invoices for all items or materials purchased and all
contracted labor or services provided and, unless Lender has agreed to issue
joint checks as described below in connection with a particular Replacement,
each request shall include evidence satisfactory to Lender of payment of all
such amounts. Except as provided in Section 7.3.2(e) hereof, each request for
disbursement from the Replacement Reserve Account shall be made only after
completion of the Replacement for which disbursement is requested. Borrower
shall provide Lender evidence of completion of the subject Replacement
satisfactory to Lender in its reasonable judgment.

(d) Borrower shall pay all invoices in connection with the Replacements with
respect to which a disbursement is requested prior to submitting such request
for disbursement from the Replacement Reserve Account or, at the request of
Borrower, Lender shall issue joint checks, payable to Borrower and the
contractor, supplier, materialman, mechanic, subcontractor or other

 

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party to whom payment is due in connection with a Replacement. In the case of
payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender’s disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than $25,000.00 for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the requirements
of applicable law and shall cover all work performed and materials supplied
(including equipment and fixtures) for the applicable Individual Property by
that contractor, supplier, subcontractor, mechanic or materialman through the
date covered by the current reimbursement request (or, if payment to such
contractor, supplier, subcontractor, mechanic or materialmen is to be made by a
joint check, the release of lien shall be effective through the date covered by
the previous release of funds request).

(e) If (i) the cost of a Replacement exceeds $25,000.00, (ii) the contractor
performing such Replacement requires periodic payments pursuant to terms of a
written contract, and (iii) Lender has approved in writing in advance such
periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are on site
at the applicable Individual Property and are properly secured or have been
installed in the applicable Individual Property, (C) all other conditions in
this Agreement for disbursement have been satisfied, (D) funds remaining in the
Replacement Reserve Account are, in Lender’s judgment, sufficient to complete
such Replacement and other Replacements when required, and (E) if required by
Lender, each contractor or subcontractor receiving payments under such contract
shall provide a waiver of lien with respect to amounts which have been paid to
that contractor or subcontractor.

(f) Borrower shall not make a request for disbursement from the Replacement
Reserve Account more frequently than once in any calendar month and (except in
connection with the final disbursement) the total cost of all Replacements in
any request shall not be less than $25,000.00.

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

(b) Lender reserves the right, at its option, to approve all contracts or work
orders with materialmen, mechanics, suppliers, subcontractors, contractors or
other parties providing labor or materials in connection with the Replacements.
Upon Lender’s request, Borrower shall assign any contract or subcontract to
Lender.

(c) In the event Lender determines in its discretion that any Replacement is not
being performed in a workmanlike or timely manner or that any Replacement has
not been completed in a workmanlike or timely manner, Lender shall have the
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such unsatisfactory Replacement and to proceed under existing contracts or to
contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, without providing any prior notice to Borrower and to exercise
any and all other remedies available to Lender upon an Event of Default
hereunder.

(d) In order to facilitate Lender’s completion or making of such Replacements
pursuant to Section 7.3.3(c) above, Borrower grants Lender the right to enter
onto the applicable Individual Property and perform any and all work and labor
necessary to complete or make such Replacements and/or employ watchmen to
protect the applicable Individual Property from damage. All sums so expended by
Lender, to the extent not from the Replacement Reserve Fund, shall be deemed to
have been advanced under the Loan to Borrower and secured by the Security
Instrument. For this purpose Borrower constitutes and appoints Lender its true
and lawful attorney in fact with full power of substitution to complete or
undertake such Replacements in the name of Borrower. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Borrower empowers said attorney in fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing such
Replacements; (ii) to make such additions, changes and corrections to such
Replacements as shall be necessary or desirable to complete such Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the applicable Individual Property, or as may be necessary or desirable for the
completion of such Replacements, or for clearance of title; (v) to execute all
applications and certificates in the name of Borrower which may be required by
any of the contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with the applicable Individual Property or the
rehabilitation and repair of the applicable Individual Property; and (vii) to do
any and every act which Borrower might do in its own behalf to fulfill the terms
of this Agreement.

(e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible for making
or completing any Replacements; (ii) require Lender to expend funds in addition
to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with any Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.

(f) Borrower shall permit Lender and Lender’s agents and representatives
(including Lender’s engineer, architect, or inspector) or third parties making
Replacements pursuant to this Section 7.3.3 to enter onto the applicable
Individual Property during normal business hours (subject to the rights of
Tenants under their Leases) to inspect the progress of any Replacements and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the
applicable Individual Property, and to complete any Replacements made pursuant
to this Section 7.3.3. Borrower shall cause all contractors and subcontractors
to cooperate with Lender or Lender’s representatives or such other persons
described above in connection with inspections described in this
Section 7.3.3(f) or the completion of Replacements pursuant to this
Section 7.3.3.

 

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(g) Lender may require an inspection of the applicable Individual Property at
Borrower’s expense prior to making a monthly disbursement from the Replacement
Reserve Account in order to verify completion of the Replacements for which
reimbursement is sought. Lender may require that such inspection be conducted by
an appropriate independent qualified professional selected by Lender and/or may
require a copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of any amounts from
the Replacement Reserve Account. Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by Lender
or by an independent qualified professional.

(h) The Replacements and all materials, equipment, fixtures, or any other item
comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic’s, materialmen’s or
other liens (except for those Liens existing on the date of this Agreement which
have been approved in writing by Lender).

(i) Before each disbursement from the Replacement Reserve Account, Lender may
require Borrower to provide Lender with a search of title to the applicable
Individual Property effective to the date of the disbursement, which search
shows that no mechanic’s or materialmen’s liens or other liens of any nature
have been placed against the applicable Individual Property since the date of
recordation of the related Security Instrument and that title to the applicable
Individual Property is free and clear of all Liens (other than the lien of the
related Security Instrument and any other Liens previously approved in writing
by Lender, if any).

(j) All Replacements shall comply with all applicable Legal Requirements of all
Governmental Authorities having jurisdiction over the applicable Individual
Property and applicable insurance requirements including applicable building
codes, special use permits, environmental regulations, and requirements of
insurance underwriters.

(k) In addition to any insurance required under the Loan Documents, Borrower
shall provide or cause to be provided workmen’s compensation insurance,
builder’s risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.

7.3.4 Failure to Make Replacements. (a) It shall be an Event of Default under
this Agreement if Borrower fails to comply with any provision of this
Section 7.3 and such failure is not cured within thirty (30) days after notice
from Lender. Upon the occurrence of such an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose, including
completion of the Replacements as provided in Section 7.3.3, or for any other
repair or replacement to the Property or toward payment of the Debt in such
order, proportion and priority as Lender may determine in its discretion.
Lender’s right to withdraw and apply the Replacement Reserve Fund shall be in
addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.

 

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

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

Section 7.4 Rollover Reserve.

7.4.1 Deposits to Rollover Reserve Fund. Borrower shall pay to Lender on the
Closing Date an initial deposit in the amount of $500,000.00 and, if MedPlus
exercises its option to terminate the MedPlus Lease on the Termination Date (as
defined in the MedPlus Lease), then Borrower shall immediately pay to Lender the
termination amount set forth in Section 2.01(ii) of the MedPlus Lease (Section
2.b.(ii) of the MedPlus Second Amendment) upon receipt of said amount, which
amounts shall be deposited with and held by Lender for tenant improvement and
leasing commission obligations incurred following the date hereof. Amounts so
deposited shall hereinafter be referred to as the “Rollover Reserve Fund” and
the account to which such amounts are held shall hereinafter be referred to as
the “Rollover Reserve Account”. Provided, further, that if disbursements are
made from the Rollover Escrow Fund in accordance with Section 7.4.2 so that the
balance of the Rollover Reserve Account is at any time less than $500,000.00,
Borrower shall be required to pay the sum of $28,750.00 to Lender commencing on
the next following Payment Date and continuing on each Payment Date thereafter
until the balance in the Rollover Reserve Account shall equal $500,000.00. To
the extent the payments into the Rollover Reserve Account (excluding the payment
resulting from the aforementioned termination payment) results in the balance in
such account exceeding $500,000.00, such excess shall be disbursed to Borrower.

7.4.2 Withdrawal of Rollover Reserve Funds. Provided no Default or an Event of
Default hereunder exists, Lender shall make disbursements from the Rollover
Escrow Fund for tenant improvement and leasing commission obligations incurred
by Borrower. All such expenses shall be approved by Lender in its discretion.
Lender shall make disbursements as requested by Borrower on a quarterly basis in
increments of no less than $5,000.00 upon delivery by Borrower of Lender’s
standard form of draw request accompanied by copies of paid invoices for the
amounts requested and, if required by Lender, lien waivers and releases from all
parties furnishing materials and/or services in connection with the requested
payment. Lender may require an inspection of the applicable Individual Property
at Borrower’s expense prior to making a quarterly disbursement in order to
verify completion of improvements for which reimbursement is sought.

Section 7.5 Excess Cash Flow Reserve Fund.

7.5.1 Deposits to Excess Cash Flow Reserve Account. During a Cash Sweep Period:
(i) caused by a DSCR Trigger Event, or (ii) caused by a Rollover Reserve Trigger
Event, Borrower shall deposit with Lender all Excess Cash Flow in the Cash
Management Account, which shall be held by Lender as additional security for the
Loan and amounts so held shall be hereinafter referred to as the “Excess Cash
Flow Reserve Fund” and the account to which such amounts are held shall
hereinafter be referred to as the “Excess Cash Flow Reserve Account”.

 

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7.5.2 Release of Excess Cash Flow Reserve Funds. Upon the termination of the
Cash Sweep Period, the Excess Cash Flow Reserve Funds shall be disbursed as
follows: (i) if the amount in the Replacement Reserve Account is less than the
Replacement Reserve Cap, Lender may deposit into the Replacement Reserve Account
a portion of the Excess Cash Flow Reserve Funds in an amount which, when added
to the then-current balance of the Replacement Reserve Account, shall equal the
Replacement Reserve Cap (if sufficient Excess Cash Flow Reserve Funds are not
available, then all Excess Cash Flow Reserve Funds may be deposited into the
Replacement Reserve Account); (ii) if the balance in the Replacement Reserve
Account shall be not less than the Replacement Reserve Cap, Lender shall
disburse the Excess Cash Flow Reserve Funds or any portion thereof remaining to
Borrower. Any Excess Cash Flow Reserve Funds remaining after the Debt has been
paid in full or the Loan has been defeased shall be paid to Borrower.

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

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

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

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

(e) Lender and Servicer shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds. Borrower shall indemnify
Lender and Servicer and hold Lender and Servicer harmless from and against any
and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys’ fees and expenses) arising from or in any way connected with the
Reserve Funds or the performance of the obligations for which the Reserve Funds
were established. Borrower shall assign to Lender all rights and claims Borrower
may have against all persons or

 

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entities supplying labor, materials or other services which are to be paid from
or secured by the Reserve Funds; provided, however, that Lender may not pursue
any such right or claim unless an Event of Default has occurred and remains
uncured.

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

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

Section 7.7 Letters of Credit.

(a) This Section shall apply to any Letters of Credit which are permitted to be
delivered pursuant to the express terms and conditions hereof. Other than in
connection with any Letters of Credit delivered in connection with the closing
of the Loan, Borrower shall deliver to Lender a draft of the proposed Letter of
Credit and Borrower shall pay to Lender all of Lender’s reasonable out-of-pocket
costs and expenses in connection therewith. No party other than Lender shall be
entitled to draw on any such Letter of Credit. In the event that any
disbursement of any Reserve Funds relates to a portion thereof provided through
a Letter of Credit, any “disbursement” of said funds as provided above shall be
deemed to refer to (i) Borrower providing Lender a replacement Letter of Credit
in an amount equal to the original Letter of Credit posted less the amount of
the applicable disbursement provided hereunder and (ii) Lender, after receiving
such replacement Letter of Credit, returning such original Letter of Credit to
Borrower; provided, that, no replacement Letter of Credit shall be required with
respect to the final disbursement of the applicable Reserve Funds such that no
further sums are required to be deposited in the applicable Reserve Funds.

(b) Each Letter of Credit delivered hereunder shall be additional security for
the payment of the Debt. Upon the occurrence and during the continuance of an
Event of Default, Lender shall have the right, at its option, to draw on any
Letter of Credit and to apply all or any part thereof to the payment of the
items for which such Letter of Credit was established or to apply each such
Letter of Credit to payment of the Debt in such order, proportion or priority as
Lender may determine. Any such application to the Debt shall be subject to the
terms and conditions hereof relating to application of sums to the Debt. Lender
shall have the additional rights to draw in full any Letter of Credit: (i) if
Lender has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided at least
forty five (45) days prior to the date on which the outstanding Letter of Credit
is scheduled to expire; (ii) if Lender has not received a notice from the
issuing bank that it has renewed the Letter of Credit at least forty five
(45) days prior to the date on which such Letter of Credit is scheduled to
expire and a substitute Letter of Credit is not provided at least forty five
(45) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (iii) upon receipt of notice from the issuing bank that the
Letter of Credit will be terminated (except if the termination of such Letter of
Credit is permitted pursuant to the terms and conditions hereof or a substitute
Letter of Credit is provided by no later than forty five (45) days prior to such
termination); (iv) if Lender has received notice that the bank issuing the
Letter of Credit shall cease to be an Approved Bank and Borrower has not
substituted a Letter of Credit from an

 

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Approved Bank within fifteen (15) days after notice; and/or (v) if the bank
issuing the Letter of Credit shall fail to (A) issue a replacement Letter of
Credit in the event the original Letter of Credit has been lost, mutilated,
stolen and/or destroyed or (B) consent to the transfer of the Letter of Credit
to any Person designated by Lender. If Lender draws upon a Letter of Credit
pursuant to the terms and conditions of this Agreement, provided no Event of
Default exists, Lender shall apply all or any part thereof for the purposes for
which such Letter of Credit was established. Notwithstanding anything to the
contrary contained in the above, Lender is not obligated to draw any Letter of
Credit upon the happening of an event specified in (i), (ii), (iii), (iv) or
(v) above and shall not be liable for any losses sustained by Borrower due to
the insolvency of the bank issuing the Letter of Credit if Lender has not drawn
the Letter of Credit.

Section 7.8 MedPlus Reserves.

7.8.1 Deposit to MedPlus Tenant Improvement Reserve Fund. Borrower shall pay to
Lender on the Closing Date a deposit in the amount of $300,000.00, which amount
shall be deposited with and held by Lender for tenant improvements with respect
to the Individual Property in Mason, Ohio (“MedPlus Property”) incurred or to be
incurred following the date hereof. Amounts so deposited shall hereinafter be
referred to as the “MedPlus Tenant Improvement Reserve Fund” and the account to
which such amounts are held shall hereinafter be referred to as the “MedPlus
Tenant Improvement Reserve Account”.

7.8.2 Withdrawal of MedPlus Tenant Improvement Reserve Funds. Provided no
Default or an Event of Default hereunder exists, Lender shall make disbursements
from the MedPlus Tenant Improvement Reserve Fund for tenant improvement
obligations incurred or to be incurred by Borrower with respect to the MedPlus
Property. All such expenses shall be approved by Lender in its discretion, such
approval not to be unreasonably withheld, conditioned or delayed. Lender shall
make disbursements as requested by Borrower on a quarterly basis in increments
of no less than $5,000.00 upon delivery by Borrower of Lender’s standard form of
draw request accompanied by copies of paid invoices for the amounts requested
and, if required by Lender with respect to parties furnishing materials and/or
services who are to receive payment in an amount equal to or greater than
$25,000.00, lien waivers and releases. Alternatively, at the request of
Borrower, Lender shall issue joint checks, payable to Borrower and the
contractor, supplier, materialman, mechanic, subcontractor or other party to
whom payment is due in connection with a tenant improvement. In the case of
payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment in an amount equal to or greater than $25,000.00 prior
to Lender’s disbursement from the MedPlus Tenant Improvement Reserve Account.
Upon reasonable advance notice and subject to the rights of tenants, Lender may
require an inspection of the MedPlus Property at Borrower’s expense prior to
making a quarterly disbursement in order to verify completion of improvements
for which reimbursement is sought. Notwithstanding the foregoing, Lender shall
not require more than two (2) such inspections for the MedPlus Property in any
calendar year.

7.8.3 Deposit to MedPlus Repair Reserve Fund. Borrower shall pay to Lender on
the Closing Date a deposit in the amount of $180,000.00, which amount shall be
deposited with and held by Lender for the installation of a backup generator and
the completion of exterior caulking and other capital repairs, each with respect
to the MedPlus Property (“MedPlus Repairs”). Amounts so deposited shall
hereinafter be referred to as the “MedPlus Repair Reserve Fund”

 

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and the account to which such amounts are held shall hereinafter be referred to
as the “MedPlus Repair Reserve Account”. Provided each MedPlus Repair has been
completed as required herein and the conditions for release set forth in
Section 7.8.4 have been satisfied as required herein, the entirety of the funds
in the MedPlus Repair Account shall be disbursed to Borrower.

7.8.4 Withdrawal of MedPlus Repair Reserve Funds. Lender shall disburse to
Borrower the MedPlus Repair Reserve Funds from the MedPlus Repair Reserve
Account upon satisfaction by Borrower of the following conditions: (a) Borrower
shall submit a written request for payment, (b) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (c) Lender shall have received
an Officers’ Certificate (i) stating that the MedPlus Repairs have been
completed in a good and workmanlike manner, (ii) identifying each Person that
supplied materials or labor in connection with the MedPlus Repairs, and
(iii) stating that each such Person has been paid in full or will be paid upon
such disbursement, such Officers’ Certificate to be accompanied by lien waivers
or other evidence of payment reasonably satisfactory to Lender, and (d) Lender
shall have received such other evidence as Lender shall reasonably request that
the MedPlus Repairs have been completed and are paid for.

7.8.5 Deposit to MedPlus Free Rent Reserve Fund. Borrower shall pay to Lender on
the Closing Date a deposit in the amount of $192,000.00, which amount shall be
deposited with and held by Lender for the free rent period with respect to that
certain lease between Mason and MedPlus, Inc., an Ohio corporation (“MedPlus”)
dated April 18, 2002, as amended by that certain First Amendment to Lease dated
June 30, 2006 and that certain Second Amendment to Lease (“MedPlus Second
Amendment”) effective September 1, 2012 (collectively, the “MedPlus Lease”).
Amounts so deposited shall hereinafter be referred to as the “MedPlus Free Rent
Reserve Fund” and the account to which such amounts are held shall hereinafter
be referred to as the “MedPlus Free Rent Reserve Account”.

7.8.6 Withdrawal of MedPlus Free Rent Reserve Funds. Lender shall disburse to
Borrower the MedPlus Free Rent Reserve Funds from the MedPlus Free Rent Reserve
Account upon satisfaction by Borrower of the following conditions: (a) no
Default or Event of Default shall exist and remain uncured, and (b) Lender shall
have received an original estoppel certificate in form and substance
satisfactory to Lender in its reasonable discretion executed by MedPlus stating,
among other things, that (i) the free rent period has expired and MedPlus has
commenced payment of full rent in accordance with the terms of the MedPlus
Lease; and (ii) there are no defaults under the MedPlus Lease (nor, to MedPlus’s
knowledge, does there exist any event or condition which with the passage of
time or the giving of notice, or both, could result in such a default).

7.8.7 MedPlus Second Expansion. Notwithstanding any provision in Section 5.1.21
to the contrary, provided no Event of Default shall have occurred and be
continuing, Lender shall be deemed to have consented to the alterations
contemplated by the Second Expansion, as set forth in Section 16.19 of the
MedPlus Lease (“Second Expansion”), if Lender has failed to respond (with
objections that such deliveries are not in form reasonably satisfactory to
Lender) to Borrower within fifteen (15) days after Lender’s receipt of all of
the following items, provided that such deliveries are accompanied by a written
notice to Lender that conspicuously states, in all capital letters, that
Lender’s failure to respond in fifteen (15) days shall constitute deemed

 

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approval: (i) written notice that MedPlus has exercised its option relating to
the Second Expansion; (ii) a Letter of Credit for the benefit of Lender in the
amount of $1,500,000.00; (iii) copies of the material plans, specifications,
architect’s drawings and an engineering report relating to the contemplated
alterations; (iv) copies of all material permits, licenses and other
governmental approvals that are applicable to the contemplated alterations and
obtainable prior to the commencement of construction; (v) copies of all
construction and architect’s contracts relating to the contemplated alterations;
and (vi) evidence of builder’s risk insurance covering the period of
construction and naming Lender as an additional insured. Lender shall hold the
Letter of Credit as additional security until satisfaction of the following
conditions, at which time Lender shall return the Letter of Credit to Borrower:
(a) no Default or Event of Default shall exist and remain uncured, (b) Lender
shall have received an Officers’ Certificate (i) stating that the Second
Expansion has been completed in a good and workmanlike manner, (ii) identifying
each Person that supplied materials or labor in connection with the Second
Expansion, and (iii) stating that each such Person has been paid in full, such
Officers’ Certificate to be accompanied by lien waivers or other evidence of
payment satisfactory to Lender, (d) at Lender’s option, a title search for the
MedPlus Property indicating that the MedPlus Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (e) Lender
shall have received such other evidence as Lender shall reasonably request that
the Second Expansion alterations have been completed in all material respects
and are paid for.

ARTICLE VIII - DEFAULTS

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

(i) if any portion of the Debt is not paid when due;

(ii) if any of the Taxes or Other Charges are not paid when the same are due and
payable;

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

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

(v) if any representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made;

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

(vii) if (A) Borrower, Principal, Guarantor or any other guarantor or indemnitor
under any guarantee issued in connection with the Loan shall commence any case,
proceeding or other action (I) under any existing or future law of any
jurisdiction,

 

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domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(II) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower, Principal, Guarantor or any other guarantor or indemnitor shall make a
general assignment for the benefit of its creditors; or (B) there shall be
commenced against Borrower, Principal, Guarantor or any other guarantor or
indemnitor any case, proceeding or other action of a nature referred to in
clause (A) above that is not dismissed within thirty (30) days of filing; or
(C) there shall be commenced against the Borrower, Principal, Guarantor or any
other guarantor or indemnitor any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets; or (D) the Borrower,
Principal, Guarantor or any other guarantor or indemnitor shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (A), (B), or (C) above; or (E) the
Borrower, Principal, Guarantor or any other guarantor or indemnitor shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;

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

(ix) if Borrower breaches any covenant contained in Section 4.1.30 hereof or any
negative covenant contained in Section 5.2 hereof;

(x) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be
in default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;

(xi) if any of the assumptions contained in the Insolvency Opinion delivered to
Lender in connection with the Loan, or in any Additional Insolvency Opinion
delivered subsequent to the closing of the Loan, is or shall become untrue in
any material respect;

(xii) if a material default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any Replacement Management
Agreement) and if such default permits the Manager thereunder to terminate or
cancel the Management Agreement (or any Replacement Management Agreement);

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

 

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

(xv) if there shall be default under any of the other Loan Documents beyond any
applicable cure periods contained in such documents, whether as to Borrower or
the Property (or any portion thereof), or if any other such event shall occur or
condition shall exist, if the effect of such default, event or condition is to
accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt; or

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

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

Section 8.2 Remedies. (a) Upon the occurrence of an Event of Default, all or any
one or more of the rights, powers, privileges and other remedies available to
Lender against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any part of the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singularly,
successively, together or otherwise, at such time

 

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and in such order as Lender may determine in its discretion, to the fullest
extent permitted by law, without impairing or otherwise affecting the other
rights and remedies of Lender permitted by law, equity or contract or as set
forth herein or in the other Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing
(i) Lender is not subject to any “one action” or “election of remedies” law or
rule, and (ii) all liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of
its remedies against the Property and the Security Instruments have been
foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or
the Debt has been paid in full.

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

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

 

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

Section 8.3 Remedies Cumulative; Waivers. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s discretion. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Borrower
shall not be construed to be a waiver of any subsequent Default or Event of
Default by Borrower or to impair any remedy, right or power consequent thereon.

ARTICLE IX - SPECIAL PROVISIONS

Section 9.1 Securitization.

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

(b) At the request of Lender, and to the extent not already required to be
provided by or on behalf of Borrower under this Agreement, Borrower shall use
reasonable efforts to provide information not in the possession of Lender or
which may be reasonably required by Lender or take other actions reasonably
required by Lender, in each case in order to satisfy the market standards to
which Lender customarily adheres or which may be reasonably required by
prospective investors and/or the Rating Agencies in connection with any such
Securitization. Lender shall have the right to provide to prospective investors
and the Rating Agencies any information in its possession, including financial
statements relating to Borrower, Guarantors, if any, the Property and any Tenant
of the Improvements. Borrower acknowledges that certain information regarding
the Loan and the parties thereto and the Property may be included in a private
placement memorandum, prospectus or other disclosure documents. Borrower agrees
that each of Borrower, Principal, Guarantor and their respective officers and
representatives, shall, at Lender’s request, at its sole cost and expense,
cooperate with Lender’s efforts to arrange for a Securitization in accordance
with the market standards to which Lender customarily adheres and/or which may
be required by prospective investors and/or the Rating Agencies in connection
with any such Securitization. Borrower, Principal and Guarantor agree to review,
at Lender’s request in connection with the Securitization, the Disclosure
Documents as such Disclosure Documents relate to Borrower, Principal, Guarantor,
the Property and the Loan, including, the sections entitled “Risk Factors,”
“Special Considerations,” “Description of the Security Instrument,” “Description
of the Mortgage Loan and Mortgaged Property,” “The

 

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Manager,” “The Borrower,” and “Certain Legal Aspects of the Mortgage Loan,” and
shall confirm that the factual statements and representations contained in such
sections and such other information in the Disclosure Documents (to the extent
such information relates to, or is based on, or includes any information
regarding the Property, Borrower, Guarantor, Manager and/or the Loan) do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.

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

(d) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any financial statements, or financial, statistical or operating
information, as Lender shall determine to be required pursuant to Regulation AB
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or any amendment, modification or
replacement thereto or other legal requirements in connection with any private
placement memorandum, prospectus or other disclosure documents or any filing
pursuant to the Exchange Act in connection with the Securitization or as shall
otherwise be reasonably requested by Lender.

(e) Borrower hereby appoints Lender its attorney-in-fact with full power of
substitution (which appointment shall be deemed to be coupled with an interest
and to be irrevocable until the Loan is paid and the Security Instrument is
discharged of record, with Borrower hereby ratifying all that its said attorney
shall do by virtue thereof) to execute and deliver all documents and do all
other acts and things necessary or desirable to effect any Securitization
authorized hereunder; provided, however, that unless an Event of Default exists,
Lender shall not execute or deliver any such documents or do any such acts or
things under such power until five (5) days after written notice has been given
to Borrower by Lender of Lender’s intent to exercise its rights under such
power. Borrower’s failure to deliver any document or to take any other action
Borrower is obligated to take hereunder with respect to any Securitization for a
period of ten (10) Business Days after such notice by Lender shall, at Lender’s
option, constitute an Event of Default hereunder.

 

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

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

Section 9.3 Exculpation. (a) Subject to the qualifications below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Note, this Agreement, the Security Instrument or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Security Instrument and the other Loan Documents, or
in the Property (or any portion thereof), the Rents, or any other collateral
given to Lender pursuant to the Loan Documents; provided, however, that, except
as specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Property, in the Rents and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Security Instrument and the
other Loan Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Borrower in any such action or proceeding under or
by reason of or under or in connection with the Note, this Agreement, the
Security Instrument or the other Loan Documents. The provisions of this Section
shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by any of the Loan Documents; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Security Instrument; (iii) affect the validity or
enforceability of or any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder; (iv) impair the right of Lender to
obtain the appointment of a receiver; (v) impair the enforcement of any
assignment of leases contained in the Security Instrument; or (vi) constitute a
prohibition against Lender to seek a deficiency judgment against Borrower in
order to fully realize the security granted by the Security Instrument or to
commence any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Property (or any portion thereof).

(b) Nothing contained herein shall in any manner or way release, affect or
impair the right of Lender to recover, and Borrower shall be fully and
personally liable and subject to legal action, for any loss, cost, expense,
damage, claim or other obligation (including reasonable attorneys’ fees and
court costs) incurred or suffered by Lender arising out of or in connection with
the following:

(i) fraud or willful misrepresentation by Borrower or any of its affiliates,
Principal or Guarantor or any agent, employee or other person with actual or
apparent authority to make statements or representations on behalf of Borrower,
any affiliate of Borrower, Principal or Guarantor in connection with the Loan
(“apparent authority” meaning such authority as the principal knowingly or
negligently permits the agent to assume, or which he holds the agent out as
possessing);

 

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

(iii) material physical waste of the Property (or any portion thereof);

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

(v) the misapplication, misappropriation, or conversion by Borrower, Principal
or Guarantor of (A) any Insurance Proceeds paid by reason of any loss, damage or
destruction to the Property (or any portion thereof), (B) any Awards received in
connection with a Condemnation of all or a portion of the Property, (C) any
Rents or other Property income or collateral proceeds, or (D) any Rents paid
more than one month in advance (including, but not limited to, security
deposits);

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

(vii) failure to maintain insurance or to pay taxes and assessments, or to pay
charges for labor or materials or other charges or judgments that can create
Liens on any portion of the Property (unless Lender is escrowing funds therefor
and fails to make such payments or has taken possession of the Property
following an Event of Default, has received all Rents from the Property
applicable to the period for which such insurance, taxes or other items are due,
and thereafter fails to make such payments);

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

(ix) the breach of the representation by Borrower that on the Closing Date, the
Property and all Improvements at the Property were in material compliance with
applicable laws; or

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

 

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(c) Notwithstanding anything to the contrary in this Agreement, the Note or any
of the other Loan Documents,

(i) Borrower and any general partner of Borrower shall be personally liable for
the Debt if (A) Borrower fails to obtain Lender’s prior written consent to any
Transfer as required by this Agreement or the Security Instrument; (B) Borrower
fails to obtain Lender’s prior written consent to any Indebtedness or voluntary
Lien encumbering the Property (or any portion thereof); (C) Borrower shall at
any time hereafter make an assignment for the benefit of its creditors;
(D) Borrower fails to permit on-site inspections of any Individual Property,
fails to maintain its status as a Single Purpose Entity or comply with any
representation, warranty or covenant set forth in Section 4.1.30 hereof or fails
to appoint a new property manager upon the request of Lender as permitted under
this Agreement, each as required by, and in accordance with, the terms and
provisions of this Agreement or the Security Instrument; (E) Borrower or any
Principal admits, in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due; (F) Borrower fails to make the
first full monthly payment of principal and interest on or before the first
Payment Date; (G) Borrower files, consents to, or acquiesces in a petition for
bankruptcy, insolvency, dissolution or liquidation under the Bankruptcy Code or
any other Federal or State bankruptcy or insolvency law, or there is a filing of
an involuntary petition against Borrower or any Principal under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law in which
Borrower or Guarantor or any Principal colludes with, or otherwise assists any
party in connection with such filing, or solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower or such
Principal from any party; or (H) the Property or any part thereof shall at any
time hereafter become property of the estate or an asset in (1) a voluntary
bankruptcy, insolvency, receivership, liquidation, winding up, or other similar
type of proceeding, or (2) an involuntary bankruptcy or insolvency proceeding
(other than one filed by Lender) that is not dismissed within sixty (60) days of
filing.

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

Section 9.4 Matters Concerning Manager. If (a) an Event of Default hereunder has
occurred and remains uncured, (b) Manager shall become subject to a Bankruptcy
Action, (c) a default occurs under the Management Agreement, or (d) the
occurrence of a DSCR Trigger Event, Borrower shall, at the request of Lender,
terminate the Management Agreement and replace the Manager with a Qualified
Manager pursuant to a Replacement Management Agreement, it being understood and
agreed that the management fee for such Qualified Manager shall not exceed then
prevailing market rates.

Section 9.5 Servicer. At the option of Lender, the Loan may be serviced by a
master servicer, primary servicer, special servicer and/or trustee (any such
master servicer, primary servicer, special servicer, and trustee, together with
its agents, nominees or designees, are collectively referred to as “Servicer”)
selected by Lender and Lender may delegate all or any

 

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portion of its responsibilities under this Agreement and the other Loan
Documents to Servicer pursuant to a pooling and servicing agreement, servicing
agreement, special servicing agreement or other agreement providing for the
servicing of one or more mortgage loans (collectively, the “Servicing
Agreement”) between Lender and Servicer. Borrower shall be responsible for any
set up fees or any other initial costs relating to or arising under the
Servicing Agreement, but Borrower shall not be responsible for payment of the
regular monthly master servicing fee or trustee fee due to Servicer under the
Servicing Agreement or any fees or expenses required to be borne by, and not
reimbursable to, Servicer. Notwithstanding the foregoing, Borrower shall
promptly reimburse Lender on demand for the following costs and expenses payable
by Lender to Servicer as a result of the Loan becoming specially serviced:
(i) any liquidation fees that are due and payable to Servicer under the
Servicing Agreement in connection with the exercise of any or all remedies
permitted under this Agreement, (ii) any workout fees and special servicing fees
that are due and payable to Servicer under the Servicing Agreement, which fees
may be due and payable under the Servicing Agreement on a periodic or continuing
basis, and which may be payable to a special servicer, in an amount as great as
one percent of the outstanding principal balance of the Loan, upon return of the
Loan by the special servicer to the master servicer, and (iii) the costs of all
amounts owed to any third-party contractor in connection with the Servicer
obtaining any third-party report, including any property inspections and/or
appraisals of the Properties (or any updates to any existing inspection or
appraisal) that Servicer determines to obtain or may be required to obtain
(other than the cost of regular annual inspections required to be borne by
Servicer under the Servicing Agreement).

ARTICLE X - MISCELLANEOUS

Section 10.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.

Section 10.2 Lender’s Discretion. Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole and absolute discretion of Lender and shall be final and conclusive.

Section 10.3 Governing Law.

(a) LENDER HAS OFFICES IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE LOAN
DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK (“GOVERNING
STATE”), WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND

 

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

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS (“ACTION”) MAY AT
LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH ACTION, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY ACTION.

Section 10.4 Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on Borrower, shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.

 

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Section 10.5 Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under the Note or under any other Loan Document, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

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

 

If to Lender:    KeyBank National Association    11501 Outlook, Suite 300   
Overland Park, Kansas 66211    Facsimile No.: 877-379-1625    Attention: Loan
Servicing with a copy to:       Daniel Flanigan, Esq.    Polsinelli Shughart PC
   700 W. 47th Street, Suite 1000    Kansas City, Missouri 64112    Facsimile
No.: (816) 753-1536 If to Borrower:    c/o Gladstone Commercial Corporation   
1521 Westbranch Drive, Suite 200    McLean, Virginia 22102    Attention:
Portfolio Management    Facsimile No.: (703) 287-5801 With a copy to:   
Dickstein Shapiro LLP    1825 Eye Street NW    Washington, DC 20006   
Attention: James D. Kelly    Facsimile No.: (202) 420-2201

 

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

Section 10.7 Trial by Jury. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

Section 10.8 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

Section 10.9 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

Section 10.10 Preferences. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder. To the extent Borrower makes a payment
or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

Section 10.11 Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and except with respect to matters for
which Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to Borrower.

 

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Section 10.12 Remedies of Borrower. If a claim or adjudication is made that
Lender or its agents have acted unreasonably or unreasonably delayed acting in
any case where by law or under this Agreement or the other Loan Documents,
Lender or such agent, as the case may be, has an obligation to act reasonably or
promptly, Borrower agrees that neither Lender nor its agents shall be liable for
any monetary damages, and Borrower’s sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.

Section 10.13 Expenses; Indemnity. (a) Borrower covenants and agrees to pay or,
if Borrower fails to pay, to reimburse, Lender upon receipt of written notice
from Lender for all costs and expenses (including attorneys’ fees and expenses)
incurred by Lender in connection with (i) the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Borrower (including any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Property or any portion thereof);
(ii) Borrower’s ongoing performance of and compliance with Borrower’s respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including confirming compliance with environmental and insurance requirements;
(iii) Lender’s ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Lien in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property (or any portion thereof), or any other security given for the Loan;
and (viii) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect to the
Property or any portion thereof (including any fees incurred by Servicer in
connection with the transfer of the Loan to a special servicer prior to a
Default or Event of Default) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a “work out” or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender. Any cost and expenses due and
payable to Lender may be paid from any amounts in the Lockbox Account or Cash
Management Account, as applicable.

 

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(b) Borrower shall indemnify, defend and hold harmless the Indemnified Parties
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not an Indemnified Party
shall be designated a party thereto), that may be imposed on, incurred by, or
asserted against any Indemnified Party in any manner relating to or arising out
of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that Borrower
shall not have any obligation to any Indemnified Party hereunder to the extent
that such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of such Indemnified Party. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnified Parties.

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

Section 10.14 Schedules Incorporated. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

Section 10.15 Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein is intended to create a joint venture, partnership, tenancy in
common, or joint tenancy relationship between Borrower and Lender nor to grant
Lender any interest in the Property (or any portion thereof) other than that of
mortgagee, beneficiary or lender.

 

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

Section 10.17 Publicity. All news releases, publicity or advertising by Borrower
or its Affiliates through any media intended to reach the general public which
refers to the Loan Documents or the financing evidenced by the Loan Documents,
to Lender, KeyBank National Association or any of their Affiliates shall be
subject to the prior written approval of Lender and KeyBank National Association
in their discretion.

Section 10.18 Waiver of Marshalling of Assets. To the fullest extent permitted
by law, Borrower, for itself and its successors and assigns, waives all rights
to a marshalling of the assets of Borrower, Borrower’s partners and others with
interests in Borrower, and of the Property, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Property (or any portion
thereof) for the collection of the Debt without any prior or different resort
for collection or of the right of Lender to the payment of the Debt out of the
net proceeds of the Property (or any portion thereof) in preference to every
other claimant whatsoever.

Section 10.19 Waiver of Counterclaim. Borrower hereby waives the right to assert
a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.

Section 10.20 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in
the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or Affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s

 

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exercise of any such rights or remedies. Borrower acknowledges that Lender
engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

Section 10.21 Brokers and Financial Advisors. Borrower hereby represents that it
has dealt with no financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the transactions contemplated by this
Agreement. Borrower hereby agrees to indemnify, defend and hold Lender harmless
from and against any and all claims, liabilities, costs and expenses of any kind
(including Lender’s attorneys’ fees and expenses) in any way relating to or
arising from a claim by any Person that such Person acted on behalf of Borrower
or Lender in connection with the transactions contemplated herein. The
provisions of this Section 10.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.

Section 10.22 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, between Borrower and Lender are
superseded by the terms of this Agreement and the other Loan Documents.

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

Section 10.24 Certain Additional Rights of Lender (VCOC). Notwithstanding
anything to the contrary contained in this Agreement, Lender shall have:

(a) the right to routinely consult with and advise Borrower’s management
regarding the significant business activities and business and financial
developments of Borrower; provided, however, that such consultations shall not
include discussions of environmental compliance programs or disposal of
hazardous substances. Consultation meetings should occur on a regular basis (no
less frequently than quarterly) with Lender having the right to call special
meetings at any reasonable times and upon reasonable advance notice;

 

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(b) the right, in accordance with the terms of this Agreement, to examine the
books and records of Borrower at any reasonable times upon reasonable notice;

(c) the right, in accordance with the terms of this Agreement, including
Section 5.1.11 hereof, to receive monthly, quarterly and year end financial
reports, including balance sheets, statements of income, shareholder’s equity
and cash flow, a management report and schedules of outstanding indebtedness;
and

(d) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to approve any acquisition by Borrower
of any other significant property (other than personal property required for the
day to day operation of the Property).

The rights described above in this Section 10.24 may be exercised by any entity
which owns and controls, directly or indirectly, substantially all of the
interests in Lender.

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

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

ARTICLE XI - LOCAL LAW PROVISIONS

Section 11.1 Inconsistencies. In the event of any inconsistencies between the
terms and conditions of this Article 11 and the other provisions of this
Agreement (other than the terms and provisions of Article 12), the terms and
conditions of this Article 11 shall control and be binding.

None.

 

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ARTICLE XII - ADDITIONAL OR SPECIAL PROVISIONS OR MODIFICATIONS

Section 12. 1 Inconsistencies. In the event of any inconsistencies between the
terms and conditions of this Article 12 and the other provisions of this
Agreement, the terms and conditions of this Article 12 shall control and be
binding.

12.1.1. Cross-Default; Cross-Collateralization.

(a) Borrower acknowledges that Lender has made the Loan to Borrower upon the
security of its collective interest in the Properties and in reliance upon the
aggregate of the Properties taken together being of greater value as collateral
security than the sum of each Individual Property taken separately. Borrower
agrees that each of the Loan Documents (including, without limitation, the
Security Instruments) are and will be cross collateralized and cross defaulted
with each other so that (i) an Event of Default under any of Loan Documents
shall constitute an Event of Default under each of the other Loan Documents;
(ii) an Event of Default hereunder shall constitute an Event of Default under
each Security Instrument; (iii) each Security Instrument shall constitute
security for the Note as if a single blanket lien were placed on all of the
Properties as security for the Note; and (iv) such cross collateralization shall
in no event be deemed to constitute a fraudulent conveyance and Borrower waives
any claims related thereto.

(b) To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower’s partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Security Instruments, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Security Instruments, any equitable right
otherwise available to Borrower which would require the separate sale of the
Properties or require Lender to exhaust its remedies against any Individual
Property or any combination of the Properties before proceeding against any
other Individual Property or combination of Properties; and further in the event
of such foreclosure Borrower does hereby expressly consent to and authorize, at
the option of Lender, the foreclosure and sale either separately or together of
any combination of the Properties.

12.1.2 Recording Taxes. Borrower represents that it has paid all state, county
and municipal recording and all other taxes imposed upon the execution and
recordation of each Security Instrument. If at any time Lender determines, based
on applicable Legal Requirements, that Lender is not being afforded the maximum
amount of security available from any one or more of the Properties as a direct
or indirect result of applicable taxes not having been paid with respect to any
Individual Property, Borrower agrees that Borrower will execute, acknowledge and
deliver to Lender, immediately upon Lender’s request, supplemental affidavits
increasing the amount of the Debt attributable to any such Individual Property
to an amount determined by Lender to be equal to the lesser of (i) the greater
of the fair market value of the applicable Individual Property (1) as of the
date hereof and (2) as of the date such supplemental affidavits

 

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are to be delivered to Lender, and (ii) the amount of the Debt attributable to
any such Individual Property (as set forth on Schedule IV hereof), and Borrower
shall, on demand, pay any additional taxes.

12.1.2.1 Principles of Construction. Section 1.2(c) is hereby modified by adding
the following to the end thereof: “or a cure has been accepted by Lender”.

12.1.3 Use of Proceeds. The second line of Section 2.1.4(d) is hereby modified
by inserting “reasonably” between “as” and “approved”.

12.1.3.1 Default Rate. The second sentence of Section 2.2.3 is hereby modified
by adding the following to the end thereof: “or a cure has been accepted by
Lender”.

12.1.4 Voluntary Defeasance. The second line of Section 2.5.1(a)(i)(F) is hereby
modified by inserting “reasonably” between “counsel” and “acceptable”. The
penultimate line of Section 2.5.1(a)(i)(F) is hereby modified by inserting “to
the extent reasonably approved by Borrower,” between “Lender” and “at”. The last
line of Section 2.5.1(a)(i)(F) is hereby modified by inserting “, but
reasonable,” between “sole” and “cost”.

Section 2.5.1(a)(i)(G) is hereby modified by deleting the second sentence
thereof.

The first line of Section 2.5.1(a)(i)(K) is hereby modified by inserting
“reasonable” between “all” and “costs”.

The first line of Section 2.5.1(b)(i) is hereby modified by deleting “have
occurred and remain uncured” and substituting “then exist” therefor.

The last line of Section 2.5.1(b)(i)(G) is hereby modified by inserting “to the
extent reasonably approved by Borrower,” between “Lender” and “at”. The last
line of Section 2.5.1(b)(i)(G) is hereby further modified by inserting “, but
reasonable,” between “sole” and “cost”.

The first line of Section 2.5.1(b)(i)(O) is hereby modified by inserting
“reasonable” between “all” and “costs”.

12.1.5 Successor Borrower. The ninth line of Section 2.5.3 is hereby modified by
inserting “reasonable” between “all” and “costs”.

12.1.6 Release of Property. The 11th line of Section 2.6.1(b) is hereby modified
by inserting “reasonable” between “any” and “costs”.

The 15th line of Section 2.6.1(b) is hereby modified by inserting “reasonable”
between “its” and “discretion”.

The last line of Section 2.6.1(b) is hereby modified by deleting “Note or” and
by deleting “(as applicable)”.

 

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12.1.7 Lockbox Account. The 9th line of Section 2.7.1(a) is hereby modified by
inserting “reasonable” between “All” and “costs”.

The second line of Section 2.7.1(c) is hereby modified by inserting “or book
entry” between “transfer” and “all”.

Section 2.7.1(d) is hereby deleted in its entirety and the following is
substituted therefor: “(d) (i) during the continuance of an Event of Default; or
(ii) upon the occurrence of any Bankruptcy Action of Borrower; or (iii) upon the
occurrence of any Bankruptcy Action of Manager if the Manager is not replaced
within 60 days in accordance with the terms of this Agreement, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in the Lockbox Account to the payment of the Debt in any order
in its discretion.”

Section 2.7.1(g) is hereby deleted and the following is substituted therefor:
“(g) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys’ fees and expenses) arising from or in any way connected with the
Lockbox Account and/or the Lockbox Agreement or the performance of the
obligations for which the Lockbox Account was established, excluding any
actions, suits, claims, demands, liabilities, losses, damages, obligations and
costs and expenses arising from the gross negligence or willful misconduct of
Lender”.

12.1.8 Cash Management Account. Section 2.7.2(c) is hereby deleted and the
following is substituted therefor: “(c) All funds on deposit in the Cash
Management Account (i) during the continuance of an Event of Default; or
(ii) upon the occurrence of any Bankruptcy Action of Borrower; or (iii) upon the
occurrence of any Bankruptcy Action of Manager if the Manager is not replaced
within 60 days in accordance with the terms of this Agreement, may be applied by
Lender in such order and priority as Lender shall determine.”

12.1.9 Organization. The sixth line of Section 4.1.1 is hereby modified by
inserting “material” between “all” and “rights”.

The ninth line of Section 4.1.1 is hereby modified by inserting “entering into
and performing its obligations with respect to the financing of the applicable
Individual Property and” between “is” and “the”. The tenth line of Section 4.1.1
is hereby modified by inserting “and other activities necessary in connection
therewith” between “Property” and “.” The last line of Section 4.1.1 is hereby
modified by adding the following to the end thereof: “(excluding any ownership
interests in Guarantor)”.

12.1.10 No Conflicts. The seventh line of Section 4.1.3 is hereby modified by
adding the following to the end thereof: “, to Borrower’s knowledge,”.

12.1.10.1 Litigation. The text of Section 4.1.4 is hereby amended in its
entirety as follows: “There are no actions, suits or proceedings at law or in
equity, arbitrations, or governmental investigations by or before any
Governmental Authority or other agency now pending, filed, or, to Borrower’s
knowledge, threatened against or affecting Borrower, Principal or the Property
or any portion thereof, which actions, suits or proceedings, or governmental

 

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investigations, if determined against Borrower, Principal or the Property or any
portion thereof, would reasonably be expected to materially adversely affect
(a) title to the Property or any portion thereof; (b) the validity or
enforceability of each Security Instrument; (c) Borrower’s ability to perform
under the Loan; (d) Guarantor’s ability to perform under the Guaranty; (e) the
use, operation or value of the Property or any portion thereof; (f) the
principal benefit of the security intended to be provided by the Loan Documents;
(g) the current ability of the Property to generate net cash flow sufficient to
service the Loan; or (h) the current principal use of the Property or any
portion thereof.”

12.1.11 Agreements. The third line of Section 4.1.5 is hereby modified by adding
the following to the beginning thereof: “material”. The fifth line of
Section 4.1.5 is hereby modified by inserting “material” between “any” and
“agreement”. The ninth line of Section 4.1.5 is hereby modified by inserting
“material” between “any” and “portion”.

The second line of Section 4.1.5(a) is hereby modified by inserting
“acquisition, ownership and” between “the” and “operation”.

12.1.12 Title. The sixth line of Section 4.1.6 is hereby modified by inserting
“material” between “any” and “portion”. The eighth line of Section 4.1.6 is
hereby modified by inserting “material” between “any” and “portion”. The second
line of Section 4.1.6(b) is hereby modified by inserting “of Borrower’s interest
in” between “all” and “personalty”.

12.1.13 Full and Accurate Disclosure. The last sentence of Section 4.1.8 is
hereby deleted and the following is substituted therefor: “There is no material
fact presently known to Borrower which has not been disclosed to Lender which
materially adversely affects, nor as far as Borrower can reasonably foresee,
would reasonably be expected to materially adversely affect, the Property or the
business, operations or financial condition of Borrower.”

12.1.14 Compliance. The first line of Section 4.1.10 is hereby modified by
inserting “, to Borrower’s knowledge,” between “and” and “the”. The fifth line
of Section 4.1.10 is hereby modified by inserting “, to Borrower’s knowledge,”
between “or” and “any”.

12.1.14.1 Financial Information. The tenth line of Section 4.1.11 is hereby
modified by inserting “material” between “any” and “portion”.

12.1.15 Utilities and Public Access. The third and fourth lines of
Section 4.1.14 are hereby modified by deleting “or convenient”.

12.1.16 Assessments. Section 4.1.17 is hereby deleted and the following is
substituted therefor: “There are no pending or, to Borrower’s knowledge,
proposed special or other assessments for public improvements or otherwise
affecting the Property of any portion thereof, nor does Borrower contemplate any
improvements to the Property (or any portion thereof) that would reasonably be
expected to result in such special or other assessments.”

12.1.17 Insurance. The second line of Section 4.1.20 is hereby modified by
inserting “reasonably” between “evidence” and “acceptable”. The fourth line of
Section 4.1.20 is hereby modified by inserting “to Borrower’s knowledge are”
between “pending,” and “outstanding”. The fifth line of Section 4.1.20 is hereby
modified by inserting “, to Borrower’s knowledge,” between “nor” and “any”.

 

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12.1.17.1 Physical Condition. The sixth line of Section 4.1.24 is hereby
modified by inserting “material” between “any” and “portion”.

12.1.18 Leases. The sixth line of Section 4.1.26 is hereby modified by inserting
“, to the best or Borrower’s knowledge with respect to tenants,” between “and”
and “there”.

The 13th line of Section 4.1.26 is hereby modified by inserting “as of the date
hereof” between “Tenant” and “has”.

Each of the last two sentences of Section 4.1.26 are hereby modified by adding
the following to the beginning thereof: “Except as disclosed in estoppels
delivered to Lender in connection with the Loan,”.

12.1.19 Survey. Section 4.1.27 is hereby modified by adding the following to the
beginning thereof: “To Borrower’s knowledge,”.

12.1.19.1 Inventory. Section 4.1.28 is hereby modified by adding the following
to the end thereof: “by Borrower.”

12.1.19.2 Special Purpose Entity/Separateness. Section 4.1.30(c) is hereby
deleted in its entirety.

12.1.19.3 No Change in Facts or Circumstances; Disclosure. The eighth line of
Section 4.1.33 is hereby modified by deleting “might” and substituting “would
reasonably be expected to”. The penultimate line of Section 4.1.33 is hereby
modified by inserting “known to Borrower” between “facts” and “and” and also
between “fact” and “that”.

12.1.19.4 Investment Company Act. Section 4.1.34(b) is hereby deleted in its
entirety.

Section 4.1.34(c) is hereby modified by adding the following to the end thereof:
“and which the execution and delivery of the Loan Documents and the performance
thereunder would reasonably be expected to violate”.

12.1.19.5 Embargoed Person. The first line of Section 4.1.35(a) is hereby
modified by inserting “, to Borrower’s knowledge,” between “and” and
“Guarantor”. The second line of Section 4.1.35(b) is hereby modified by
inserting “, to Borrower’s knowledge,” between “or” and “Guarantor”. The second
line of Section 4.1.35(c) is hereby modified by inserting “, to Borrower’s
knowledge,” between “or” and “Guarantor”.

12.1.20 Environmental Representations and Warranties. The third line of
Section 4.1.37 is hereby modified by inserting “or caused to be delivered to”
between “to” and “Lender”.

 

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Section 4.1.37(a) is hereby deleted and the following is substituted therefor:
“(a) there are no Hazardous Substances or underground storage tanks in, on, or
under any Individual Property and no Hazardous Substances have been handled,
manufactured, generated, stored, processed, or disposed of on or released or
discharged from any Individual Property, except those that are (i) in compliance
with Environmental Laws and with permits issued pursuant thereto (to the extent
such permits are required under Environmental Law), or (ii) de-minimis amounts
necessary to operate the Property for the purposes set forth in the Loan
Agreement which will not result in an environmental condition in, on or under
the Property and which are otherwise permitted under and used in compliance with
Environmental Law;”.

The first line of Section 4.1.37(b) is hereby modified by inserting “, to
Borrower’s knowledge,” between “or” and “threatened”. The second line of
Section 4.1.37(b) is hereby modified by inserting “in violation of Environmental
Law” between “Substances” and “in”.

Section 4.1.37(c) is hereby modified by adding the following to the beginning
thereof: “to Borrower’s knowledge,”. The second line of Section 4.1.37(c) is
hereby modified by inserting “in violation of Environmental Law” between
“Substances” and “migrating”.

The third line of Section 4.1.37(e) is hereby modified by inserting “reputable”
between “any” and “Person”.

Notwithstanding any provision herein to the contrary, the term “Environmental
Law” as used in Section 4.1.37 shall be deemed to refer to those Environmental
Laws in effect as of the date hereof (for clarification, the defined term
“Environmental Law” shall not be modified except for its use in Section 4.1.37).

Notwithstanding any provision herein to the contrary, the term “Hazardous
Substances” as used in Section 4.1.37 shall be deemed to exclude Hazardous
Substances under any future Environmental Laws (for clarification, the defined
term “Hazardous Substances” shall not be modified except for its use in
Section 4.1.37).

12.1.21 Cash Management Account. Section 4.1.38(a) is hereby deleted and the
following is substituted therefor: “This Agreement, together with a valid and
fully executed and delivered control agreement with the depository institution
holding the Lockbox Account and the other Loan Documents, create a valid and
continuing security interest (as defined in the Uniform Commercial Code) in the
Lockbox Account in favor of Lender, which security interest is prior to all
other Liens, other than Permitted Encumbrances, and is enforceable, subject to
principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’ obligations.
Other than in connection with the Loan Documents and except for Permitted
Encumbrances, Borrower has not sold, pledged, transferred or otherwise conveyed
the Lockbox Account;”.

The first line of Section 4.1.38(b) is hereby modified by deleting “Each of the
Lockbox Account and Cash Management Account” and substituting therefor: “The
Lockbox Account”.

Section 4.1.38(d) is hereby deleted and the following is substituted therefor:
“The Lockbox Account is not in the name of any Person other than Borrower, as
pledgor, or Lender, as pledgee. Borrower has not consented to the Lockbox Bank
and Agent complying with instructions with respect to the Lockbox Account and
Cash Management Account from any Person other than Lender.”

 

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12.1.21.1 Survival of Representations. Section 4.2 is hereby modified by adding
the following to the end thereof: “; provided, however, if any investigation by
Lender or on its behalf discloses any event or condition that does or will
result in a breach of any representation, warranty, covenant or agreement,
Lender shall use reasonable efforts to notify Borrower of the same.”

12.1.21.2 Affirmative Covenants. The parenthetical phrase in Section 5.1 is
hereby modified in its entirety as follows “(and all related obligations,
excluding obligations arising from inchoate claims)”.

12.1.21.3 Existence; Compliance with Legal Requirements. The third line of
Section 5.1.1 is hereby modified by inserting “in all material respects” between
“comply” and “with”. The sixth line of Section 5.1.1 is hereby modified by
inserting “knowingly” between “never” and “permit”. The tenth line of
Section 5.1.1 is hereby modified by deleting “, permit” and substituting “or
knowingly permit” therefor. The 13th line of Section 5.1.1 is hereby modified by
inserting “or cause each Individual Property to be kept” between “Property” and
“in”. The 16th line of Section 5.1.1 is hereby modified by inserting “or cause
to be kept” between “keep” and “each” and by inserting “or cause each Individual
Property to be insured” between “insured” and “at”. The 20th line of
Section 5.1.1 is hereby modified by inserting “in all material respects” between
“complies” and “with”. The second line of Section 5.1.1(i) is hereby modified by
deleting “Default or”. The second line of Section 5.1.1(ii) is hereby modified
by inserting “(other than the Loan Documents)” between “instrument” and “to”.
The second line of Section 5.1.1(vi) is hereby modified by inserting
“reasonably” between “be” and “requested”. The last sentence of Section 5.1.1 is
hereby modified by adding the following to the beginning thereof: “If Borrower
does not diligently pursue a resolution within 15 days of Lender’s written
notice,”.

12.1.21.4 Taxes and Other Charges. The first line of Section 5.1.2 is hereby
modified by inserting “or cause to be paid” between “pay” and “all”. The second
sentence of Section 5.1.2 is hereby modified by deleting “ten (10) days prior to
the date on which the Taxes and/or Other Charges would otherwise be delinquent
if not paid” and substituting “fifteen (15) days after their due date” therefor.
The third sentence of Section 5.1.2 is hereby deleted and the following is
substituted therefor: “Borrower shall furnish to Lender receipts for the payment
of the Taxes and the Other Charges fifteen (15) days after their due date
(provided, however, Borrower is not required to furnish such receipts for
payment of Taxes if such Taxes have been paid by Lender pursuant to Section 7.2
hereof and Lender has received receipts from the relevant taxing authority).”
The fourth sentence of Section 5.1.2 is hereby modified by adding the following
to the beginning thereof: “Except for Permitted Encumbrances,”. The second line
of Section 5.1.2(i) is hereby modified by deleting “Default or”. The second line
of Section 5.1.2(ii) is hereby modified by inserting “(other than the Loan
Documents)” between “instrument” and “to”. The second line of Section 5.1.2(vii)
is hereby modified by inserting “reasonably” between “be” and “requested”. The
last sentence of Section 5.1.2 is hereby modified by adding the following to the
beginning thereof: “If Borrower does not diligently pursue a resolution within
15 days of Lender’s written notice,”.

 

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12.1.21.5 Litigation. Section 5.1.3 is hereby deleted and the following is
substituted therefor: “Borrower shall give prompt written notice to Lender of
any litigation or governmental proceedings pending or, to its knowledge,
threatened against Borrower which would reasonably be expected to materially
adversely affect Borrower’s condition (financial or otherwise) or business or
the Property (or any portion thereof).”

12.1.22 Access to Property. Section 5.1.4 is hereby modified by adding the
following to the beginning thereof: “Subject to the rights of tenants,”.

12.1.22.1 Notice of Default. The second line of Section 5.1.5 is hereby modified
by deleting “or Guarantor’s”.

12.1.22.2 Award and Insurance Benefits. The third line of Section 5.1.8 is
hereby modified by inserting “in excess of the Availability Threshold” between
“thereof)” and “, and”. The fourth line of Section 5.1.8 is hereby modified by
inserting “reasonable, out of pocket” between “any” and “expenses”. The
penultimate line of Section 5.1.8 is hereby modified by inserting “material”
between “any” and “part”. The following is hereby added to the end of
Section 5.1.8: “which are in excess of the Availability Threshold.”

12.1.23 Further Assurances. The second line of Section 5.1.9(b) is hereby
modified by inserting “reasonably” between “or” and “desirable”.

12.1.24 Financial Reporting. The sixth line of Section 5.1.11 is hereby modified
by deleting “at all times”.

The ninth line of Section 5.1.11(a) is hereby modified by inserting “and during
the continuation” between “occurrence” and “of”.

The third line of Section 5.1.11(b) is hereby modified by deleting: “audited by
an independent certified public accountant acceptable to Lender”.

The first and second lines of Section 5.1.11(c) are hereby modified by deleting
“twenty (20)” and substituting “forty-five (45)” therefor. The third line of
Section 5.1.11(c) is hereby modified by inserting “in all material respects”
between “complete” and “and”.

The second line of Section 5.1.11(d) is hereby modified by deleting “twenty
(20)” and substituting “thirty (30)” therefor. The fifth line of
Section 5.1.11(d) is hereby modified by inserting “in all material respects”
between “complete” and “and”.

Section 5.1.11(e) is hereby deleted in its entirety.

Section 5.1.11(f) is hereby deleted in its entirety.

The fourth line of Section 5.1.11(g) is hereby modified by inserting “which
approval shall not be unreasonably withheld, delayed or conditioned” between
“approval” and “(each”.

The first line of Section 5.1.11(h) is hereby modified by inserting “in excess
of $50,000.00 and” between “capital expense” and “not”. The last line of
Section 5.1.11(h) is

 

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hereby modified by adding the following to the beginning thereof: “reasonable”.
The last line of Section 5.1.11(h) is hereby modified by adding the following to
the end thereof: “and shall not be unreasonably conditioned or delayed.”

Section 5.1.11(l) is hereby modified by adding the following to the end thereof:
“Notwithstanding the foregoing, so long as securities of the Guarantor are
publicly traded, Lender shall not disclose financial information relating to the
Guarantor to the extent that such information is not generally available to the
public.”

12.1.24.1 Business and Operations. Section 5.1.12 is hereby modified by adding
the following to the end thereof: “by Borrower.”

12.1.25 Title to the Property. The next to last line of Section 5.1.13 is hereby
modified by deleting “the” and substituting “any Individual” therefor.

12.1.26 Estoppel Statement. The first line of Section 5.1.15(a) is hereby
modified by deleting “ten (10)” and substituting “thirty (30)” therefor. The
second line of Section 5.1.15(vii) is hereby modified by inserting “by Borrower
or Guarantor” between “modified and “or”. The first line of
Section 5.1.15(a)(viii) is hereby modified by inserting “of Borrower or
Guarantor” between “defenses” and “exist”.

Section 5.1.15(a)(ix) is hereby deleted and the following is substituted
therefor: “that all Leases are in full force and effect and (provided the
applicable Individual Property is not a residential multifamily property) have
not been materially modified (or if materially modified, setting forth all such
modifications),”.

The last line of Section 5.1.15(b) is hereby modified by deleting “two
(2) times” and substituting “once” therefor.

12.1.26.1 Confirmation of Representations. The last line of Section 5.1.18(a) is
hereby modified by inserting: “(except for representations that specifically
relate to an earlier date and cannot, by their nature, be brought forward to the
date of the closing of such Securitization)” between “jurisdictions” and “,
and”.

12.1.27 Environmental Covenants. The first line of Section 5.1.19(a) is hereby
modified by inserting “for so long as Borrower owns, manages, is in possession
of, or otherwise controls the operation of the Property” between “that” and “:”.
The third line of Section 5.1.19(a) is hereby modified by inserting “in all
material respects” between “compliance” and “with”.

Section 5.1.19(a)(ii) is hereby modified by adding the following to the end
thereof: “in violation of Environmental Law.”

Section 5.1.19(a)(iii) is hereby deleted and the following is substituted
therefor: “(iii) there shall be no Hazardous Substances in, on, or under any
Individual Property, except those that are (A) in compliance with all
Environmental Laws and with permits issued pursuant thereto (to the extent such
permits are required by Environmental Law), or (B) de-minimis amounts necessary
to operate the applicable Individual Property for the purposes set forth in the
Loan

 

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Agreement which will not result in an environmental condition in, on or under
the applicable Individual Property and which are otherwise permitted under and
used in compliance with Environmental Law;”.

Section 5.1.19(a)(vi) is hereby modified by deleting “reason to believe” and
substituting “a good faith reasonable belief” therefore and by inserting “in
violation of Environmental Law” between “exists” and “on”.

The second and third lines of Section 5.1.19(a)(vii) are hereby modified by
deleting “reason to believe” and substituting “a good faith reasonable belief”
therefor. Section 5.1.19(a)(vii)(A) is hereby modified by adding “required by
Environmental Law” to the end thereof. Section 5.1.19(a)(vii)(D) is hereby
modified by adding the following to the end thereof: “the failure of which would
violate Environmental Law”. Section 5.1.19(a)(viii) is hereby deleted and the
following is substituted therefor: “(viii) with respect to environmental
conditions, Borrower shall not do and shall use commercially reasonable efforts
not to allow any Tenant or other user of the Property to do any act that
materially increases the dangers to human health or the environment and is in
violation of Environmental Law;”. The second line of Section 5.1.19(a)(ix) is
hereby modified by inserting “, upon obtaining knowledge thereof,” between
“writing” and “of”. The second line of Section 5.1.19(a)(ix)(A) is hereby
modified by inserting “in violation of Environmental Law” between “Substances”
and “in”. The second line of Section 5.1.19(a)(ix)(E) is hereby modified by
inserting “reputable” between “any” and “source”. The second line of
Section 5.1.19(a)(x) is hereby modified by inserting “knowingly” between “nor”
and “permit”. The sixth line of Section 5.1.19(a)(x) is hereby modified by
deleting the first occurrence of “and” and substituting “or” therefor.

The first line of Section 5.1.19(b) is hereby modified by deleting “reason to
believe” and substituting “a good faith, reasonable belief” and by inserting “in
violation of Environmental Law” between “exists” and “on”. The second line of
Section 5.1.19(b) is hereby modified by inserting “reasonable” between
“Lender’s” and “discretion”. The third line of Section 5.1.19(b) is hereby
modified by deleting “may” and substituting “is reasonably likely to” therefor.
The fifth line of Section 5.1.19(b) is hereby modified by inserting “reasonably”
between “consultant” and “satisfactory”. The seventh line of Section 5.1.19(b)
is hereby modified by inserting “reasonable” between “Lender’s” and
“discretion”. The eighth line of Section 5.1.19(b) is hereby modified by
inserting “reasonably” between “testing” and “requested”. The tenth line of
Section 5.1.19(b) is hereby modified by deleting “reason to believe” and
substituting “a good faith reasonable belief” therefor. The 11th line of
Section 5.1.19(b) is hereby modified by inserting “in violation of Environmental
Law” between “exists” and “on” and by deleting “sole” and substituting
“reasonable” therefor. The 12th line of Section 5.1.19(b) is hereby modified by
deleting “may” and substituting “is reasonably likely to” therefor. The 16th
line of Section 5.1.19(b) is hereby modified by inserting “, subject to the
rights of tenant,” between “Property” and “at”. The 16th line of
Section 5.1.19(b) is hereby modified by inserting “, subject to the rights of
tenants,” between “times” and “to”. The last sentence of Section 5.1.19(b) is
hereby modified by adding the following to the beginning thereof: “Subject to
the rights of tenants,”.

Section 5.1.19(e) is hereby modified by adding the following to the beginning
thereof: “To the extent required by Environmental Law,”. The seventh line of
Section 5.1.19(e) is hereby modified by deleting “$100,000” and substituting
“$500,000” therefore. The ninth line of

 

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Section 5.1.19(e) is hereby modified by inserting “, conditioned,” between
“withheld” and “or”. The 12th line of Section 5.1.19(e) is hereby modified by
inserting “reasonable,” between “the” and “good”. The 13th line of
Section 5.1.19(e) is hereby modified by deleting “the remedial” and substituting
“such remedial” therefor. The penultimate sentence of Section 5.1.19(e) is
hereby modified by inserting “within thirty (30) days of demand” between “same”
and “shall” and by deleting “event of default” and substituting “Event of
Default” therefor. The last sentence of Section 5.1.19(e) is hereby modified by
adding the following to the end thereof: “, excluding any liability caused by
the gross negligence or willful misconduct or Lender or its agents.”

12.1.28 Leasing Matters. The fifth line of Section 5.1.20 is hereby modified by
inserting “not subject to Lender review and approval” between “Leases” and
“shall”. The fourth line of Section 5.1.20(ii) is hereby modified by inserting
“material” between “any” and “portion”. The next to last sentence of
Section 5.1.20 is hereby modified by adding the following to the end thereof: “,
which consent shall not be unreasonably conditioned, withheld, or delayed.”

12.1.29 Alterations. The first line of Section 5.1.21 is hereby modified by
adding “material” to the end thereof. The second line of Section 5.1.21 is
hereby modified by inserting “for any Individual Property” between
“Improvements” and “, which”. The second line of Section 5.1.21 is hereby
further modified by inserting “, conditioned,” between “withheld” and “or”. The
third line of Section 5.1.21 is hereby modified by deleting “may” and
substituting “could reasonably be expected to” therefor. The second sentence of
Section 5.1.21 is hereby modified by adding the following to the end thereof: “,
or (d) any alteration costing less than $450,000 to complete.” The 17th line of
Section 5.1.21 is hereby modified by deleting “$100,000.00” and substituting
“$450,000.00” therefor.

12.1.30 Operation of Property. The fifth line of Section 5.1.22(a) is hereby
modified by inserting “material” between “or” and “modification”.

The eighth line of Section 5.1.22(b) is hereby modified by inserting “material”
between “the” and “covenants”.

12.1.30.1 Embargoed Person. The following is hereby added to the end of
Section 5.1.23: “, provided, however, the foregoing shall specifically exclude
any investments, interests, assets, or ownership in Guarantor while any
securities of the Guarantor are publicly traded.”

12.1.30.2 Operation of Property. The second line of Section 5.2.1(a) is hereby
modified by inserting “, conditioned, or delayed” between “withheld” and “):”.
The second line of Section 5.2.1(a)(i) is hereby modified by adding the
following to the beginning thereof: “materially”.

12.1.31 Liens. The second line of Section 5.2.2 is hereby modified by deleting
“portion of the” and substituting “Individual” therefor.

12.1.31.1 Dissolution. Section 5.2.3(d) is hereby modified by adding the
following to the beginning thereof: “materially”. Section 5.2.3(e)(ii) is hereby
modified by adding the following to the beginning thereof: “materially”.

 

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12.1.31.2 Change in Business. The second line of Section 5.2.4 is hereby
modified by inserting “or such other activities expressly permitted by the Loan
Documents” between “Property” and “, or”.

12.1.31.3 Zoning. Section 5.2.6 is hereby modified by adding the following to
the end thereof: “, which consent shall not be unreasonably conditioned,
delayed, or withheld.”

12.1.32 Transfers. The seventh line of Section 5.2.10(a) is hereby modified by
deleting “Borrower default” and substituting “an Event of Default exist”
therefor. The last sentence of Section 5.2.10(a) is hereby modified by adding
the following to the end thereof: “in accordance with the terms of the Loan
Documents.”

The sixth line of Section 5.2.10(b) is hereby modified by deleting “the” and
substituting “any Individual” therefor. The final line of Section 5.2.10(b)(ii)
is hereby modified by inserting “or pursuant to a Lease of the entirety of an
Individual Property, both” between “Tenants” and “in”.

The 18th line of Section 5.2.10(c) is hereby modified by inserting “or” between
“;” and “(vi)”. Section 5.2.10(c)(vii) is hereby deleted in its entirety.

The first line of Section 5.2.10(e)(i) is hereby modified by deleting “to one
percent (1%) of the outstanding principal balance of the Loan at the time of
such transfer” and substituting the following therefor: “to either: (A) one-half
of one percent (.5%) of the outstanding principal balance of the Loan at the
time of such transfer for the first such transfer; or (B) one percent (1%) of
the outstanding principal balance of the Loan at the time of such transfer for
each subsequent transfer.”

The following is hereby added as Section 5.2.10(g): “Notwithstanding the
restrictions contained in this Section 5.2.10, the following securities
transfers shall be permitted without Lender’s consent: the sale, transfer,
pledge, or issuance of securities in any Restricted Party that is a publicly
traded entity, provided its securities are listed on the New York Stock Exchange
or another nationally recognized stock exchange (provided, that, the foregoing
provisions shall not be deemed to waive, qualify or otherwise limit Borrower’s
obligation to comply (or to cause the compliance with) the other covenants set
forth herein and in the other Loan Documents (including, without limitation, the
covenants contained herein relating to ERISA matters)). Notwithstanding the
foregoing, any transfer that results in any Person and its Affiliates owning in
excess of forty-nine percent (49%) of the ownership interests in a Restricted
Party and to the extent such transferee shall own twenty percent (20%) or more
of the direct or indirect ownership interests in Borrower immediately following
such transfer (provided such transferee owned less than twenty percent (20%) of
the direct or indirect ownership interests in Borrower as of the Closing Date),
Borrower shall deliver to Lender, at Borrower’s sole cost and expense, customary
searches (including without limitation credit, judgment, lien, litigation,
bankruptcy, criminal and watch list) reasonably acceptable to Lender with
respect to such transferee. If Borrower’s delivery of said searches is
accompanied by a letter which conspicuously states, in large bold type, that
“PURSUANT TO SECTION 5.2.10(g) OF THE LOAN AGREEMENT, THIS IS A DELIVERY OF THE
REQUIRED SEARCHES. SAID SEARCHES SHALL BE DEEMED ACCEPTABLE IF LENDER DOES NOT
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WITHIN THIRTY (30) DAYS’ OF LENDER’S RECEIPT OF THIS LETTER”, then Lender shall
be deemed to have accepted said searches if Lender fails to deliver notice to
Borrower that said searches are unacceptable within such thirty (30) day
period.”

12.1.32.1 Insurance. Section 6.1(a)(i)(C) is hereby amended in its entirety to
provide as follows: “providing for no deductible in excess of (1) $50,000 with
respect to the Individual Property located in Cumming, Georgia, and (2) $35,000
for all other Individual Properties, for all such insurance coverage; provided
however with respect to windstorm and earthquake coverage, providing for a
deductible satisfactory to Lender in its discretion; and”.

The fourth and fifth lines of Section 6.1(d) are hereby modified by deleting “a
so-called New York standard non-contributing mortgagee clause” and substituting
therefor: “an ISO mortgagee clause or a lender’s loss payable clause”.

Section 6.1(e)(i) is hereby deleted in its entirety. Section 6.1(e)(ii) is
hereby deleted in its entirety and the following is substituted therefor: “(ii)
the Policy shall not be (1) materially changed (other than to increase the
coverage provided thereby) without at least thirty (30) days written notice to
Lender and any other party named therein as an additional insured, or
(2) canceled without at least thirty (30) days written notice to Lender and any
other party named therein as an additional insured, except with respect to
cancellation due to the non-payment of any Policy covering the Individual
Property located in Cumming, Georgia which Policy shall require at least ten
(10) days written notice in said circumstance to Lender and any other party
named therein as an additional insured;”

12.1.32.2 Casualty. The second line of Section 6.2 is hereby modified by
deleting “in part” and substituting therefor “in material part (for which the
cost of the Restoration shall exceed the Availability Threshold)”. The eighth
line of Section 6.2 is hereby modified by inserting “after ten (10) days prior
written notice to Borrower” between “may” and “, but”. The 11th line of
Section 6.2 is hereby modified by inserting “, conditioned,” between “withheld”
and “or”.

12.1.33 Condemnation. The second line of Section 6.3 is hereby modified by
inserting “to Borrower’s knowledge” between “or” and “threatened”. The second
sentence of Section 6.3 is hereby deleted and the following is substituted
therefor: “Lender may participate in any such proceedings in which the amount of
Condemnation Proceeds is reasonably expected to be equal to or greater than the
Availability Threshold, and Borrower shall from time to time deliver to Lender
all instruments reasonably requested by it to permit such participation.” The
seventh line of Section 6.3 is hereby modified by inserting “, with respect to
any such proceedings in which the amount of Condemnation Proceeds is reasonably
expected to be equal to or greater than the Availability Threshold,” between
“shall” and “consult”. The 13th line of Section 6.3 is hereby modified by
inserting “reasonable” between “of” and “expenses”. The 27th line of Section 6.3
is hereby modified by deleting “sole” and substituting “reasonable” therefor.

12.1.34 Restoration. Section 6.4(a) is hereby deleted and the following is
substituted therefor: “(a) If the Net Proceeds shall be less than the
Availability Threshold and the costs of completing the Restoration, as
reasonably estimated by Borrower, shall be less than the Availability Threshold,
the Net Proceeds shall be disbursed by Lender to Borrower upon receipt, provided
that all of the conditions set forth in Sections 6.4(b)(i)(A), 6.4(b)(i)(B),
6.4(b)(i)(D), 6.4(b)(i)(G), 6.4(b)(i)(H), 6.4(b)(i)(I), and 6.4(b)(i)(J) hereof
are met.”

 

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The second line of Section 6.4(b)(i)(B)(1) is hereby modified by deleting
“twenty-five percent (25%)” and substituting “thirty percent (30%)” therefor.
The second line of Section 6.4(b)(i)(B)(2) is hereby modified by deleting “ten
percent (10%)” and substituting “fifteen percent (15%)” therefor.
Section 6.4(b)(i)(C) is hereby deleted and the following is substituted
therefor: “[Intentionally Deleted]”. The first line of Section 6.4(b)(i)(E) is
hereby modified by inserting “reasonably” between “be” and “satisfied”.

The first line of Section 6.4(b)(i)(F) is hereby modified by inserting
“reasonably” between “be” and “satisfied”.

The last line of Section 6.4(b)(i)(K) is hereby modified by inserting
“reasonable” between “Lender’s” and “approval”.

The second line of Section 6.4(b)(i)(L) is hereby modified by inserting
“reasonable” between “Lender’s” and “discretion”.

The 11th line of Section 6.4(b)(ii) is hereby modified by inserting “reasonable”
between “the” and “satisfaction”. The 12th line of Section 6.4(b)(ii) is hereby
modified by inserting “reasonable” between “the” and “satisfaction”.

The second line of Section 6.4(b)(iii) is hereby modified by inserting “(which
review and acceptance by Lender shall not be unreasonably withheld, conditioned,
or delayed)” between “acceptance” and ‘in”. The eighth line of
Section 6.4(b)(iii) is hereby modified by inserting “(which review and approval
by Lender shall not be unreasonably withheld, conditioned, or delayed)” between
“Lender” and “and”. The eighth line of Section 6.4(b)(iii) is hereby further
modified by inserting “reasonable” between “All” and “costs”.

The second line of Section 6.4(b)(vi) is hereby modified by inserting
“reasonable” between “the” and “opinion”.

The sixth and seventh lines of Section 6.4(b)(vii) is hereby modified by
deleting “deposited in the Cash Management Account to be disbursed in accordance
with this Agreement” and substituting “remitted to Borrower” therefor.

12.1.34.1 Intentionally Deleted

12.1.35 Tax and Insurance Escrow Fund. The first line of Section 7.2 is hereby
modified by inserting “or cause to be paid” between “pay” and “to”. The fifth
line of Section 7.2 is hereby modified by deleting “thirty (30)” and
substituting “ten (10)” therefor. The tenth line of Section 7.2 is hereby
modified by deleting “maintains blanket” and substituting “maintains or causes
to be maintained”. The eleventh line of Section 7.2 is hereby modified by
inserting “(blanket or otherwise)” between “insurance” and “in”.

Section 7.2 is hereby further modified by inserting the following between the
second and third sentences thereof: “Further, so long as: (i) no Event of
Default and no event which with the

 

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giving of notice, the passage of time or both would result in an Event of
Default shall have occurred; (ii) the Debt Service Coverage Ratio is not less
than 1.15 to 1.00 on a trailing three (3) month basis; and (iii) Borrower
provides evidence to Lender, satisfactory to Lender in its discretion, that all
Taxes and Other Charges have been paid prior to their due date, which evidence
shall be provided to Lender no later than 15 days after said due date, then the
provisions of this Section with regard to Taxes and Other Charges shall not be
applicable.”

Section 7.2(iv) is hereby deleted and the following is substituted therefor:
“(iv) during the continuance of any Event or Default.”

12.1.36 Replacement Reserve Fund. The eighth line of Section 7.3.1 is hereby
modified by inserting “, so long as no Cash Sweep Period shall be in existence,”
between “sentence” and “, the”. The 11th line of Section 7.3.1 is hereby
modified by inserting “or the occurrence of a Cash Sweep Event Cure” between
“Deposit” and “would”. The last sentence of Section 7.3.1 is hereby deleted and
the following inserted in lieu thereof: “Upon the occurrence of a Cash Sweep
Event Cure, Lender shall disburse to Borrower any amount in the Replacement
Reserve Account in excess of the Replacement Reserve Cap.”

12.1.37 Disbursements from Replacement Reserve Account. The second line of
Section 7.3.2(c) is hereby modified by inserting “in its reasonable discretion”
between “Lender” and “and”. The third line of Section 7.3.2(c) is hereby
modified by inserting “or to be purchased” between “purchased” and “, if”. The
eighth line of Section 7.3.2(c) is hereby modified by inserting “, in all
material respects,” between “made” and “in”. The 14th line of Section 7.3.2(c)
is hereby modified by deleting “7.3.2(e)” and substituting “7.3.2(d) or
7.3.2(e)” therefor.

The second line of Section 7.3.2(e)(D) is hereby modified by inserting
“reasonable” between “Lender’s” and “judgment”.

The last line of Section 7.3.2(f) is hereby modified by deleting “$25,000.00”
and substituting “$20,000.00” therefor.

12.1.38 Performance of Replacements. The first line of Section 7.3.3(b) is
hereby modified by adding the following to the end thereof: “in excess of
$450,000.00”.

The first line of Section 7.3.3(c) is hereby modified by inserting “reasonable”
between “its” and “discretion”. The fourth line of Section 7.3.3(c) is hereby
modified by inserting “, after not less than 10 days written notice to
Borrower,” between “to” and “proceed”. The sixth and seventh lines of
Section 7.3.3(c) are hereby modified by deleting “without providing any prior
notice to Borrower” therefrom.

The second line of Section 7.3.3(d) is hereby modified by inserting “, subject
to the rights of tenants,” between “right” and “to”. The third sentence of
Section 7.3.3(d) is hereby modified by adding the following to the end thereof:
“in accordance with Section 7.3.3(c).”

The fourth line of Section 7.3.3(f) is hereby modified by inserting “and upon
reasonable advance notice” between “Leases” and “)”. The seventh line of
Section 7.3.3(f) is hereby modified by inserting “use commercially reasonable
efforts to” between “shall” and “cause”.

 

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The seventh line of Section 7.3.3(g) is hereby modified by inserting
“reasonable” between “the” and “expense”. Section 7.3.3(g) is hereby modified by
adding the following to the end thereof: “Notwithstanding the foregoing, Lender
shall not require more than two (2) such inspections for each Individual
Property in any calendar year.”

The first sentence of Section 7.3.3(i) is hereby modified by adding the
following to the beginning thereof: “To the extent commercially reasonable to do
so,”.

The first line of Section 7.3.3(j) is hereby modified by inserting “in all
material respects” between “comply” and “with”.

The last sentence of Section 7.3.3(k) is hereby modified by deleting “Certified”
and substituting “Upon request, certified” therefor.

12.1.39 Withdrawal of Rollover Reserve Funds. The second sentence of
Section 7.4.2 is hereby modified by adding the following to the end thereof: “,
such approval not to be unreasonably withheld, conditioned, or delayed.”

The following is hereby inserted between the third and fourth sentences of
Section 7.4.2: “Alternatively, at the request of Borrower, Lender shall issue
joint checks, payable to Borrower and the contractor, supplier, materialman,
mechanic, subcontractor or other party to whom payment is due in connection with
a tenant improvement. In the case of payments made by joint check, Lender may
require a waiver of lien from each Person receiving payment prior to Lender’s
disbursement from the Rollover Reserve Account.”

The following is hereby added as the penultimate sentence of Section 7.4.2:
“Lender shall make disbursements for leasing commissions upon receipt from
Borrower of: (i) evidence reasonably satisfactory to Lender that such leasing
commissions are then due and payable or have been properly paid; (ii) an
executed estoppel certificate from the new tenant for which the leasing
commission is being claimed; and (iii) evidence satisfactory to Lender that such
leasing commissions are market rate.”

12.1.40 Reserve Funds Generally. The first line of Section 7.6(b) is hereby
modified by deleting “Upon the occurrence” and substituting “During the
continuance” therefor.

The second sentence of Section 7.6(e) is hereby modified by adding the following
to the end thereof: “(excluding any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses arising from
Lender’s gross negligence or willful misconduct).”

12.1.40.1 Letters of Credit. The third line of Section 7.7(b)(iv) is hereby
modified by deleting “fifteen (15)” and substituting “thirty (30)” therefor.

12.1.41 Event of Default. Section 8.1(a)(i) is hereby deleted and the following
is substituted therefor: “(i) (a) Borrower fails to make full and punctual
payment of any Monthly Payment or any other amount payable on a monthly basis
under the Note, this Loan Agreement or any other Loan Document within five
(5) days of the date on which such payment was due;

 

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(b) Borrower fails to make full payment of the Debt when due, whether on the
Maturity Date (as defined in the Note), upon acceleration or prepayment, or
otherwise;

(c) Borrower fails to make full and punctual payment of any Late Charges (as
defined in the Note), costs and expenses due hereunder, or any other sum of
money required to be paid to Lender under this Note, the Security Instrument or
under any other Loan Document (other than any payment described in subclauses
(a) and (b) immediately above), which failure is not cured on or before the
fifth (5th) day after Lender’s written notice to Borrower that such payment is
required;”.

Section 8.1(a)(ii) is hereby modified by adding the following to the end
thereof: “, as required by this Loan Agreement.”

The fourth line of Section 8.1(a)(vii)(B) is hereby modified by deleting “thirty
(30)” and substituting “sixty (60)” therefor. Section 8.1(a)(vii)(B) is hereby
further modified by adding the following to the end thereof: “, and, with
respect to Guarantor, a replacement guarantor satisfactory to Lender is not
provided within sixty (60) days of filing”.

Section 8.1(a)(xi) is hereby deleted and the following is substituted therefor:
“[Intentionally Deleted]”.

Section 8.1(a)(xii) is hereby modified by adding the following to the end
thereof: “and Borrower fails to either replace said Manager or indicate that it
will self-manage within 60 days of the date of said default in accordance with
the terms of this Agreement.”

The last line of Section 8.1(a)(xiii) is hereby modified by deleting “days” and
substituting “Business Days” therefor.

The second line of Section 8.1(b) is hereby modified by inserting “while such
Event of Default continues” between “thereafter” and “, in”.

12.1.42 Remedies. The first line of Section 8.2(a) is hereby modified by
inserting “and during the continuation” between “occurrence” and “of”.

Section 8.2(b)(i) is hereby modified by deleting: “Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest” and substituting “an Event of Default exists” therefor.

The sixth line of Section 8.2(c) is hereby modified by inserting “reasonably”
between “shall” and “request”.

The 14th line of Section 8.2(c) is hereby modified by inserting “reasonable”
between “any” and “costs”.

12.1.42.1 Sale of Notes and Securitization. The first line of Section 9.1.1(b)
is hereby modified by inserting “it does not result in the incurrence of any
additional liability on the part of the Borrower and” between “extent” and
“not”. The 13th line of Section 9.1.1(b) is hereby modified by inserting
“reasonable” between “Lender’s” and “request” and by deleting

 

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“its” and substituting “Lender’s” therefor. The next to last line of
Section 9.1.1(b) is hereby modified by inserting “taken as a whole,” between
“made” and “in”. The last line of Section 9.1.1(b) is hereby modified by
inserting “materially” between “not” and “misleading”.

Section 9.1.1(c) is hereby modified by adding the following to the beginning
thereof: “Provided the following is at Lender’s sole cost and expense and any
such changes do not result in the incurrence of additional liability by
Borrower, Guarantor or Principal,”.

The eighth line of Section 9.1.1(e) is hereby modified by deleting “five (5)”
and substituting “ten (10)” therefor. The ninth line of Section 9.1.1(e) is
hereby modified by inserting: “to use commercially reasonable efforts” between
“failure” and “to”. The 11th line of Section 9.1.1(e) is hereby modified by
deleting “ten (10)” and substituting “fifteen (15)” therefor.

12.1.42.2 Securitization Costs. The last line of Section 9.1.2 is hereby
modified by deleting “Borrower” and substituting “Lender” therefor.

12.1.42.2 Right to Release Information. The first sentence of Section 9.2 is
hereby modified by adding the following to the end thereof: “; provided,
however, in no event shall Lender disclose any information relating to the
financial condition of Guarantor that is not generally available to the public.”

12.1.43 Exculpation. The fourth line of Section 9.3(a) is hereby modified by
inserting “, any member of Borrower or general partner of Borrower,” between
“Borrower” and “, except”. The 13th line of Section 9.3(a) is hereby modified by
inserting “or any member or general partner of Borrower” between “ Borrower” and
“in”. The second line of Section 9.3(a)(vi) is hereby modified by inserting “or
any member or general partner of Borrower” between “Borrower” and “in”.

The second line of Section 9.3(b)(i) is hereby modified by deleting “or any
agent, employee”.

The second line of Section 9.3(b)(ii) is hereby modified by deleting “agent, or
employee”.

Section 9.3(b)(iii) is hereby modified by adding the following to the end
thereof: “, provided that for the purposes of this Section 9.3(b)(iii), waste
shall not include the failure to pay any taxes or assessments assessed against
the Property or to pay any premiums payable with respect to any insurance policy
covering the Property (or to pay to Lender any amounts owing hereunder), but
such exclusion shall not impact Lender’s rights under any other provision of
Section 9.3 hereof, including, but not limited to, Section 9.3(b)(vii) hereof”.

The third line of Section 9.3(b)(vii) is hereby modified by inserting “to the
extent that Borrower, Principal or Guarantor has received Rents or other funds
for the payment of the foregoing items and fails to use such funds for such
purposes” between “Property” and “(unless”. The last parenthetical in
Section 9.3(b)(vii) is hereby deleted and the following is substituted therefor:
“(unless Lender is escrowing funds therefor and fails to make such payments or
has received all Rents from the Property applicable to the period for which such
insurance, taxes or other items are due, is directed, pursuant to the Loan
Documents, to apply said Rents to the foregoing items, and thereafter fails to
make such payments)”.

 

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Section 9.3(b)(ix) is hereby deleted and the following is substituted therefor:
“[Intentionally Deleted].”

The second line of Section 9.3(b)(x) is hereby modified by deleting “.” and
substituting “;” therefor.

The following are hereby added as Sections 9.3(b)(xi) and 9.3(b)(xii):

 

  a. “(xi) any failure of Borrower to maintain its status as a Special Purpose
Entity or comply with any representation, warranty or covenant set forth in
Section 4.1.30 hereof (notwithstanding the foregoing, Borrower’s failure to
satisfy a specific subsection of the definition of Special Purpose Entity due
solely to inadequate cash flow from the Property shall not constitute a failure
of Borrower to maintain its status as a Special Purpose entity contemplated by
this subsection) as required by, and in accordance with, the terms and
provisions of this Agreement or the Security Instrument; or”

 

  b. “(xii) any failure of Borrower to appoint a new property manager upon the
request of Lender as permitted under this Agreement each as required by, and in
accordance with, the terms and provisions of this Agreement or the Security
Instrument.”

Sections 9.3(c)(i)(B) and (D) are each hereby deleted and the following is
substituted therefor: “[Intentionally Deleted]”.

The sixth line of Section 9.3(c)(i)(G) is hereby modified by inserting
“knowingly and intentionally” between “Principal” and “colludes” and by deleting
“or otherwise assists”.

Section 9.3(c)(i)(H)(2) is hereby modified by adding the following to the end
thereof: “and in which Borrower or Guarantor or any Principal has knowingly and
intentionally colluded with in connection with such filing.”

12.1.44 Matters Concerning Manager. Section 9.4(c) is hereby modified by
inserting “which default is not cured within any applicable grace or cure
period” between “Agreement” and “, or”.

The second line of Section 9.4(d) is hereby modified by inserting “the
applicable” between “Event,” and “Borrower”.

12.1.44.1 Servicer. The eighth line of Section 9.5 is hereby modified by
inserting “not” between “shall” and “be”. The 16th line of Section 9.5 is hereby
modified by inserting “related” between “and” and “special”. The last sentence
of Section 9.5 is hereby modified by adding the following to the beginning
thereof: “While the Loan is in special servicing,”. The 23rd line of Section 9.5
is hereby modified by inserting “reasonably” between “Servicer” and
“determines”.

 

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Section 12.1.44.2 Preferences. The second line of Section 10.10 is hereby
modified by inserting “, during the existence of an Event of Default,” between
“or” and “reverse”.

12.1.44.3 Expenses; Indemnity. Section 10.13(a)(ii) is hereby modified by adding
the following to the end thereof: “in accordance with the terms hereof.”

The last sentence of Section 10.13(a) is hereby deleted and the following is
substituted therefor: “Any cost and expenses due and payable to Lender may be
paid from any amounts in the Cash Management Account or, during a Cash Sweep
Period, the Lockbox Account.”

The following is hereby added to the end of Section 10.13(a): “Provided no Event
of Default exists, fees and expenses related solely to origination and
administration of the Loan shall be limited as follows: (i) if Lender is acting
upon a request of Borrower or in response to a notice relating to the Property,
Borrower, any guarantor or indemnitor or as a result of failure of any party to
perform its obligations under the Loan Documents, such fees and expenses shall
be limited to reasonable and customary fees and expenses; (ii) otherwise, such
fees and expenses shall be limited to reasonable, out of pocket fees and
expenses. Notwithstanding the foregoing, charges of rating agencies,
governmental entities or other third parties that are outside of the control of
Lender shall not be subject to the reasonableness standard.”

The 13th line of Section 10.13(b) is hereby modified by deleting “such” and
substituting “any” therefor.

12.1.45 Publicity. The last line of Section 10.17 is hereby modified by deleting
“in their discretion” and substituting “which approval shall not be
unreasonably, withheld, delayed or conditioned” therefor.

12.1.46 Brokers and Financial Advisors. The sixth and seventh lines of
Section 10.21 are hereby modified by deleting “or Lender” therefrom.

12.1.46.1 Certain Additional Rights of Lender (VCOC). The second line of
Section 10.24 is hereby modified by deleting “Lender” and substituting “any
Lender that intends its investment to qualify as a venture capital operating
company under ERISA” therefor.

The penultimate line of Section 10.24(a) is hereby modified by deleting “less”
and substituting “more” therefor. The last line of Section 10.24(a) is hereby
modified by adding the following to the end thereof: “(no more frequently than
quarterly)”.

Section 10.24(c) is hereby deleted and the following is substituted therefor:
“the right to receive financial statements in accordance with the terms of
Section 5.1.11 hereof (so long as securities of the Guarantor are publicly
traded, Lender shall not release or forward financial information relating to
the Guarantor to the extent that such information is not available to the
public);.”

12.1.46.2 (OFAC). The tenth line of Section 10.25 is hereby modified by
inserting “(with respect to Guarantor, such information shall be public
information)” between “information” and “that”.

 

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[NO FURTHER TEXT; SIGNATURES TO FOLLOW]

 

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

 

NH10 CUMMING GA LLC,

a Delaware limited liability company

By:  

 

  Its Vice President

D08 MARIETTA OH LLC,

a Delaware limited liability company

By:  

 

  Its Vice President

MPI06 MASON OH LLC,

a Delaware limited liability company

By:  

 

  Its Vice President

SRFF08 READING PA, L.P.,

a Delaware limited partnership

By:   SRFF08 READING PA GP LLC, a Delaware limited liability company, its
general partner   By:  

 

    Its Vice President

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

RPT08 PINEVILLE NC, L.P., a Delaware limited partnership By:   RPT08 PINEVILLE
NC GP LLC, a Delaware limited liability company, its general partner   By:  

 

    Its Vice President

IPA12 ASHBURN VA SPE LLC,

a Delaware limited liability company

By:  

 

  Its Vice President

FTCHI07 GRAND RAPIDS MI LLC,

a Delaware limited liability company

By:  

 

  Its Vice President

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

KEYBANK NATIONAL ASSOCIATION, a national banking association By:  

 

Name:  

 

Title:  

 

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

SCHEDULE I

(RENT ROLL)

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

SCHEDULE II

[Intentionally Deleted]

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

SCHEDULE III

(ORGANIZATIONAL CHART OF BORROWER)

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

SCHEDULE IV

ALLOCATED LOAN AMOUNTS

 

     Individual Property (common name)    Allocated Loan Amount   1.   

Dimex

   $ 5,930,000.00    2.   

Rutland

   $ 2,430,000.00    3.   

Sun Rich Fresh Foods

   $ 4,180,000.00    4.   

Independent Project Analysis

   $ 7,580,000.00    5.   

Northside Medical Office

   $ 3,300,000.00    6.   

Fishbeck

   $ 6,120,000.00    7.   

MedPlus

   $ 4,460,000.00   

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

SCHEDULE V

PROPERTY MANAGERS

 

Individual Property    Manager

MedPlus (Mason, Ohio)

  

Duke Realty Services Limited Partnership