Exhibit 10.2

 

 

MEZZANINE LOAN AGREEMENT

 

Dated as of March 6, 2020

 

between

 

PEACE COLISEUM MEZZANINE, LLC,
as Borrower

 

and

 

LOANCORE CAPITAL MARKETS LLC,
as Lender

 

 

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TABLE OF CONTENTS

 

1.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1

 

1.1

Specific Definitions

1

 

1.2

Index of Other Definitions

14

 

1.3

Principles of Construction

16

 

 

 

 

2.

GENERAL LOAN TERMS

17

 

2.1

The Loan

17

 

2.2

Interest; Monthly Payments

17

 

 

2.2.1

Generally

17

 

 

2.2.2

Default Rate

17

 

 

2.2.3

Taxes

18

 

 

2.2.4

New Payment Date

19

 

2.3

Prepayment

19

 

2.4

Release of Collateral

19

 

2.5

Payments and Computations

19

 

 

2.5.1

Making of Payments

19

 

 

2.5.2

Computations

20

 

 

2.5.3

Late Payment Charge

20

 

 

 

 

3.

CASH MANAGEMENT AND RESERVES

20

 

3.1

Cash Management Arrangements

20

 

3.2

Reserves

20

 

3.3

Grant of Security Interest; Application of Funds

20

 

3.4

Cash Flow Allocation

21

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

22

 

4.1

Organization; Special Purpose

22

 

4.2

Proceedings; Enforceability

22

 

4.3

No Conflicts

23

 

4.4

Litigation

23

 

4.5

Agreements

23

 

4.6

Title

23

 

4.7

No Bankruptcy Filing

24

 

4.8

Full and Accurate Disclosure

24

 

4.9

Tax Filings

25

 

4.10

ERISA; No Plan Assets

25

 

4.11

Compliance

25

 

4.12

Major Contracts

26

 

4.13

Federal Reserve Regulations; Investment Company Act; Bank Holding Company

26

 

4.14

Easements; Utilities and Public Access

26

 

4.15

Physical Condition

27

 

4.16

Leases

27

 

4.17

Fraudulent Transfer

28

 

4.18

Ownership of Borrower and Owner

28

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

4.19

Purchase Options

28

 

4.20

Management Agreement

28

 

4.21

Hazardous Substances

29

 

4.22

Name; Principal Place of Business

29

 

4.23

Other Debt

29

 

4.24

Pledged Collateral

29

 

4.25

Senior Loan

30

 

4.26

Perfection of Accounts

30

 

4.27

No Contractual Obligations

31

 

4.28

Insurance

31

 

4.29

FIRPTA

31

 

4.30

Fiscal Year

31

 

4.31

Intellectual Property/Websites

31

 

4.32

Operations Agreements

31

 

4.33

Illegal Activity

31

 

 

 

 

5.

COVENANTS

32

 

5.1

Existence

32

 

5.2

Property Taxes and Other Charges

32

 

5.3

Access to Property

33

 

5.4

Repairs; Maintenance and Compliance; Alterations

33

 

 

5.4.1

Repairs; Maintenance and Compliance

33

 

 

5.4.2

Alterations

33

 

5.5

Performance of Other Agreements

34

 

5.6

Cooperate in Legal Proceedings

34

 

5.7

Further Assurances

35

 

5.8

Environmental Matters

35

 

 

5.8.1

Hazardous Substances

35

 

 

5.8.2

Environmental Monitoring

35

 

 

5.8.3

O & M Program

37

 

5.9

Title to the Pledged Collateral

37

 

5.10

Leases

37

 

 

5.10.1

Generally

38

 

 

5.10.2

Material Leases

38

 

 

5.10.3

Minor Leases

39

 

 

5.10.4

Additional Covenants with respect to Leases

39

 

5.11

Estoppel Statement

40

 

5.12

Property Management

40

 

 

5.12.1

Management Agreement

40

 

 

5.12.2

Termination of Manager

41

 

5.13

Special Purpose Bankruptcy Remote Entity

42

 

5.14

Assumption in Non-Consolidation Opinion

42

 

5.15

Change in Business or Operation of Property

42

 

5.16

Debt Cancellation

42

 

5.17

Affiliate Transactions

42

 

ii

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

5.18

Zoning

43

 

5.19

No Joint Assessment

43

 

5.20

Principal Place of Business

43

 

5.21

Change of Name, Identity or Structure

43

 

5.22

Indebtedness

43

 

5.23

Licenses; Intellectual Property; Website

43

 

 

5.23.1

Licenses

43

 

 

5.23.2

Intellectual Property

44

 

 

5.23.3

Website

44

 

5.24

Compliance with Restrictive Covenants

44

 

5.25

ERISA

44

 

5.26

Prohibited Transfers

45

 

 

5.26.1

Generally

45

 

 

5.26.2

Intentionally Omitted

45

 

5.27

Liens

45

 

5.28

Dissolution

46

 

5.29

Incurrence of Expenses

46

 

5.30

Expenses

46

 

5.31

Indemnity

47

 

5.32

Patriot Act Compliance

48

 

5.33

Approval of Major Contracts

49

 

5.34

Intentionally Omitted

50

 

5.35

Intentionally Omitted

50

 

5.36

Limitation on Securities Issuances

50

 

5.37

Limitation on Distributions

50

 

5.38

Contractual Obligations

50

 

 

 

 

6.

NOTICES AND REPORTING

50

 

6.1

Notices

50

 

6.2

Borrower Notices and Deliveries

51

 

6.3

Financial Reporting

52

 

 

6.3.1

Bookkeeping

52

 

 

6.3.2

Annual Reports

52

 

 

6.3.3

Quarterly Reports

53

 

 

6.3.4

Intentionally Omitted

54

 

 

6.3.5

Other Reports

54

 

 

6.3.6

Annual Budget

54

 

 

6.3.7

Additional Operating Expenses

55

 

 

6.3.8

Intentionally Omitted

55

 

 

6.3.9

Breach

55

 

 

6.3.10

Inspection

56

 

 

 

 

7.

INSURANCE; CASUALTY; AND CONDEMNATION

57

 

7.1

Insurance

57

 

 

7.1.1

Coverage

57

 

iii

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

 

7.1.2

Policies

59

 

 

7.1.3

Overstock Insurance

60

 

7.2

Casualty

61

 

 

7.2.1

Notice; Restoration

61

 

 

7.2.2

Settlement of Proceeds

61

 

7.3

Condemnation

62

 

 

7.3.1

Notice; Restoration

62

 

 

7.3.2

Collection of Award

62

 

7.4

Application of Proceeds or Award

62

 

 

 

 

8.

DEFAULTS

63

 

8.1

Events of Default

63

 

8.2

Remedies

65

 

 

8.2.1

Acceleration

65

 

 

8.2.2

Remedies Cumulative

65

 

 

8.2.3

Severance

66

 

 

8.2.4

Delay

66

 

 

8.2.5

Lender’s Right to Perform

66

 

 

 

 

9.

SENIOR LOAN

67

 

9.1

Compliance with Senior Loan Documents

67

 

9.2

Senior Loan Defaults

67

 

9.3

Senior Loan Estoppels

68

 

9.4

No Amendments to Senior Loan Documents

69

 

9.5

Acquisition of the Senior Loan

69

 

9.6

Deed in Lieu of Foreclosure

69

 

9.7

Refinancing or Prepayment of the Senior Loan

69

 

9.8

Intercreditor Agreement

70

 

 

 

 

10.

SECONDARY MARKET PROVISIONS

70

 

10.1

Sale of Note and Secondary Market Transaction

70

 

 

10.1.1

General; Borrower Cooperation

70

 

 

10.1.2

Use of Information

71

 

 

10.1.3

Borrower Obligations Regarding Disclosure Documents

71

 

 

10.1.4

Borrower Indemnity Regarding Filings

72

 

 

10.1.5

Indemnification Procedure

72

 

 

10.1.6

Contribution

73

 

 

10.1.7

Survival

73

 

10.2

Severance of Loan

73

 

10.3

Costs and Expenses

74

 

 

 

 

11.

MISCELLANEOUS

74

 

11.1

Exculpation

74

 

11.2

1.1 Brokers and Financial Advisors

79

 

11.3

Retention of Servicer

79

 

11.4

Survival

79

 

iv

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

11.5

Lender’s Discretion; Rating Agency Review Waiver

80

 

11.6

Governing Law

80

 

11.7

Modification, Waiver in Writing

82

 

11.8

Trial by Jury

82

 

11.9

Headings/Schedules

82

 

11.10

Severability

82

 

11.11

Preferences

83

 

11.12

Waiver of Notice

83

 

11.13

Remedies of Borrower

83

 

11.14

Prior Agreements

83

 

11.15

Offsets, Counterclaims and Defenses

83

 

11.16

Publicity

84

 

11.17

No Usury

84

 

11.18

Conflict; Construction of Documents; Reliance

84

 

11.19

No Joint Venture or Partnership; No Third Party Beneficiaries

85

 

11.20

Intentionally Omitted

85

 

11.21

Assignments and Participations

85

 

11.22

Intentionally Omitted

85

 

11.23

Waiver of Marshalling of Assets

85

 

11.24

Joint and Several Liability

86

 

11.25

Creation of Security Interest

86

 

11.26

Proofs of Claim

86

 

11.27

Waiver of Stay

86

 

11.28

Certain Additional Rights of Lender

86

 

11.29

Set-Off

87

 

11.30

Certain Payments From Lender

87

 

11.31

Counterparts

88

 

11.32

Negation of Implied Right to Cure Events of Default

88

 

11.33

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

88

 

11.34

Registered Obligations

89

 

v

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TABLE OF CONTENTS

(continued)

 

Schedule 1

Exceptions to Representations and Warranties

Schedule 2

Rent Roll

Schedule 3

Organization of Borrower

Schedule 4

Definition of Special Purpose Bankruptcy Remote Entity

Schedule 5

Intellectual Property/Websites

Schedule 6

REA

Schedule 7

Intentionally Omitted

Schedule 8

Intentionally Omitted

Schedule 9

Intentionally Omitted

Schedule 10-1

Annual Reports Officer’s Certificate

Schedule 10-2

Monthly/Quarterly Reports Officer’s Certificate

 

vi

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MEZZANINE LOAN AGREEMENT

 

MEZZANINE LOAN AGREEMENT dated as of March 6, 2020 (as the same may be modified,
supplemented, amended or otherwise changed, this “Agreement”) between PEACE
COLISEUM MEZZANINE, LLC, a Delaware limited liability company (together with its
permitted successors and assigns, “Borrower”), and LOANCORE CAPITAL MARKETS LLC,
a Delaware limited liability company (together with its successors and assigns,
“Lender”).

 

1.                                      DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

1.1          Specific Definitions.  The following terms have the meanings set
forth below:

 

“Affiliate” shall mean, as to any Person (for purposes of this definition, the
“Subject Person”), any other Person:  (i) which, directly or indirectly, through
one or more intermediaries, Controls, is Controlled by, or is under common
Control with, the Subject Person; (ii) which, directly or indirectly,
beneficially owns or holds ten percent (10%) or more of any class of stock or
any other ownership interest in the Subject Person; (iii) ten percent (10%) or
more of the direct or indirect ownership of which is beneficially owned or held
by the Subject Person; (iv) which is a member of the family (as defined in
Section 267(c)(4) of the Code) of the Subject Person or which is a trust or
estate, the beneficial owners of which are members of the family (as defined in
Section 267(c)(4) of the Code) of the Subject Person; or (v) which, directly or
indirectly, is a general partner, controlling shareholder, managing member,
officer, director, trustee or employee of the Subject Person.

 

“Approved Leasing Expenses” shall mean the actual out-of-pocket expenses
incurred by Owner and payable to third parties that are not Affiliates of Owner,
Borrower or Guarantor in leasing space at the Property pursuant to Leases
entered into in accordance with the Loan Documents and the Senior Loan
Documents, including brokerage commissions and tenant improvements, which
expenses (i) are (a) specifically approved by Lender and Senior Lender in
connection with approving the applicable Lease, (b) incurred in the ordinary
course of business and on market terms and conditions in connection with Leases
which do not require Lender’s or Senior Lender’s approval under the Loan
Documents or the Senior Loan Documents, and Lender and Senior Lender shall have
received (and approved, if applicable) a budget for such tenant improvement
costs and a schedule of leasing commission payments payable in connection
therewith, or (c) otherwise approved by Lender, which approval shall not be
unreasonably withheld, conditioned or delayed, and (ii) are substantiated by
executed documents and contracts evidencing the same, including Lease documents
and brokerage agreements.

 

“Approved Operating Expenses” shall mean operating expenses incurred by Owner
which (i) are included in the Approved Operating Budget for the current calendar
month (which, for so long as the Overstock Lease remains in effect and Overstock
is operating at the Property, are not more than ten percent (10%) in excess of
the applicable budgeted line items), (ii) are for Real Estate Taxes, Insurance
Premiums, snow removal, electric, gas, oil, water, sewer or other utility
service to the Property, (iii) are Emergency Expenditures or (iv) have been
approved by Lender.

 

1

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

 

“Business Day” shall mean any day other than a Saturday, Sunday or any day on
which commercial banks in New York, New York are authorized or required to
close.

 

“Capital Expenses” shall mean expenses that are capital in nature or required
under GAAP to be capitalized.

 

“Cash Management Bank” shall have the meaning set forth in the Senior Loan
Agreement.

 

“Closing Date” shall mean the date hereof.

 

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

 

“Construction Consultant” shall mean one or more third party construction
consultants, construction loan administration or servicing firms or comparable
firms as may be retained by Lender, at Borrower’s sole cost and expense, from
time to time to monitor the scope and status of any Material Alteration or
Restoration.

 

“Collateral” shall mean all collateral securing or intended to secure the Debt,
including the Pledged Collateral.

 

“Contractual Obligation” shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control” shall mean, with respect to any Person, either (i) ownership directly
or indirectly of forty-nine percent (49%) or more of all equity interests in
such Person or (ii) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, by contract or otherwise, and the
terms Controlled, Controlling and Common Control shall have correlative
meanings, provided that the mere granting of commercially typical major decision
consent rights to a third party direct or indirect owner in Borrower shall not,
in and of itself, be deemed to constitute Control of Borrower by such third
party owner.

 

“Debt” shall mean the unpaid Principal, all interest accrued and unpaid thereon,
all transaction costs, all late fees and all other sums due to Lender in respect
of the Loan or under any Loan Document.

 

“Debt Service” shall mean, with respect to any particular period, the scheduled
interest payments due under the Note and the Senior Note in such period.

 

2

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“Default” shall mean the occurrence of any event under any Loan Document which,
with the giving of notice or passage of time, or both, would be an Event of
Default.

 

“Default Rate” shall mean a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law, or (ii) five percent (5%) above the
Interest Rate, compounded monthly.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (i) an account or accounts
(or subaccounts thereof) (a) maintained with a federal or state-chartered
depository institution or trust company which complies with the definition of
Eligible Institution or (b) if a Securitization has occurred, as to which Lender
has received a Rating Comfort Letter from each of the applicable Rating Agencies
with respect to holding funds in such account, or (ii) a segregated trust
account or accounts (or subaccounts thereof) maintained with the corporate trust
department of a federal depository institution or state chartered depository
institution subject to regulations regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations §9.10(b), having in either case
corporate trust powers, acting in its fiduciary capacity, and a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authorities.  An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.

 

“Eligible Institution” shall mean a depository institution insured by the
Federal Deposit Insurance Corporation the short term unsecured debt obligations
or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s and
F-1+ by Fitch, in the case of accounts in which funds are held for thirty (30)
days or less or, in the case of Letters of Credit or accounts in which funds are
held for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least (i) “AA” by S&P, (ii) “AA” and/or “F1+” (for
securities) and/or “AAAmmf” (for money market funds), by Fitch and (iii) “Aa2”
by Moody’s.

 

“Emergency Expenditures” shall mean expenses that are necessary in order (i) to
avoid imminent bodily injury, harm or damage to individuals or the Property,
(ii) to avoid the suspension of any necessary service to the Property, or
(iii) to comply with Legal Requirements, and, in each such case, with respect to
which it would be impractical, in Borrower’s reasonable judgment, under the
circumstances, to obtain Lender’s prior written consent; provided that Borrower
shall give Lender notice of such Emergency Expenditures as soon as practicable.

 

“Environmental Site Assessment” shall mean that certain Phase I Environmental
Site Assessment with respect to the Property, prepared by EBI Consulting, and
dated as of February 20, 2020.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
which is a member of the same controlled group of corporations or group of
trades or businesses under common control with Borrower, Owner and/or Guarantor,
or is treated as a single

 

3

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employer together with Borrower, Owner and/or Guarantor under Section 414 of the
Code or Title IV of ERISA.

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with
respect to Lender or required to be withheld or deducted from a payment to
Lender, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of Lender being organized under the laws of, or having its principal office or
its applicable lending office located in, the jurisdiction imposing such Tax (or
any political subdivision thereof) or (ii) that are Other Connection Taxes,
(b) U.S. federal withholding Taxes imposed on amounts payable to or for the
account of Lender with respect to an applicable interest in the Loan pursuant to
a law in effect on the date on which (i) Lender acquires such interest in the
Loan or (ii) Lender changes its lending office, except in each case to the
extent that, pursuant to Section 2.2.3, amounts with respect to such Taxes were
payable either to Lender’s assignor immediately before Lender became a party
hereto or to Lender immediately before it changed its lending office, (c) Taxes
attributable to Lender’s failure to comply with Section 2.2.3(e) and (d) any
U.S. federal withholding Taxes imposed under FATCA.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof and any agreement entered
into pursuant to Section 1471(b)(1) of the Code.

 

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

 

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

 

“Governmental Authority” shall mean the government of the United States of
America or any other nation, or of any political subdivision thereof, any court,
board, agency, commission, office or authority of any nature whatsoever for any
governmental unit (federal, state, commonwealth, county, district, municipal,
city or otherwise) now or hereafter in existence.

 

“Guarantor” shall mean Overstock.com, Inc., a Delaware corporation, or any other
Person that now or hereafter guarantees any of Borrower’s obligations hereunder
or any other Loan Document.

 

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

“Institutional Controls and Restrictions” means the institutional controls,
protective covenants, conditions, requirements, restrictions and others similar
terms and the grants of easement and access applicable to the Property as
imposed by (i) the Remedial Design/Remedial Action Consent Decree entered in the
matter of United States v. Littleson, Inc.,

 

4

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Civ. No. 2:99CV0757 ST (U.S. District Court, Utah, 2004), recorded with the Salt
Lake County Recorder on December 8, 2004 as Entry 9243601, Book 9070,
pages 3938-4038; (ii) the Agreement, Grant of Access to UDEQ, and Covenant Not
to Sue by and between the State of Utah, Department of Environmental Quality and
Littleson, Inc., as amended, recorded with the Salt Lake County Recorder on
March 10, 2006 as Entry 9659804, Book 9265, pages 4877-4962, and on May 1, 2008
as Entry 10415892, Book 9601, pages 8611-8623; (iii) Ordinance No. 06/26/2007
O-8 of Midvale City, Utah, Section 8.10 in Chapter 8 of the Midvale City
Municipal Code; (iv) the Declaration and Establishment of Protective Covenants,
Conditions and Restrictions and Grant of Easements by Arbor Gardner Bingham
Junction Office 3, L.C., a Utah limited liability company and Arbor Gardner
Bingham Junction Office 4, L.C., a Utah limited liability company, recorded with
the Salt Lake County Recorder on April 26, 2016 as Entry 12266951, Book 10424,
pages 7958-7995; and (v) any amendments to the foregoing or similar controls,
covenants, conditions, requirements and restrictions that may be adopted,
enacted or agreed to with respect to the Property.

 

“Interest Period” shall mean (i) the period from the date hereof through the
first day thereafter that is the 5th day of a calendar month and (ii) each
period thereafter from the 6th day of each calendar month through the 5th day of
the following calendar month (except that the Interest Period, if any, that
would otherwise commence before and end after the Maturity Date shall end on the
Maturity Date).  Notwithstanding the foregoing, if Lender exercises its right to
change the Payment Date to a New Payment Date in accordance with Section 2.2.4
hereof, then from and after such election, each Interest Period shall be the
period from the New Payment Date in each calendar month through the day in the
next succeeding calendar month immediately preceding the New Payment Date in
such calendar month.

 

“Interest Rate” shall mean, a rate of interest equal to 5.0020% per annum (or,
when  applicable pursuant to this Agreement or any other Loan Document, the
Default Rate).

 

“IRS” means the United States Internal Revenue Service.

 

“Lease Termination Payments” shall mean (i) all fees, penalties, commissions or
other payments made to Owner in connection with or relating to the rejection,
buy-out, termination, surrender or cancellation of any Lease (including in
connection with any bankruptcy proceeding), (ii) any security deposits or
proceeds of letters of credit held by Owner in lieu of cash security deposits,
which Owner is permitted to retain pursuant to the applicable provisions of any
Lease and (iii) any payments made to Owner relating to unamortized tenant
improvements and leasing commissions under any Lease.

 

“Leases” shall mean all leases and other agreements or arrangements heretofore
or hereafter entered into affecting the use, enjoyment or occupancy of, or the
conduct of any activity upon or in, the Property or the Improvements, including
any guarantees, extensions, renewals, modifications or amendments thereof and
all additional remainders, reversions and other rights and estates appurtenant
thereunder.

 

“Legal Requirements” shall mean statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
(including those regarding fire, health, handicapped access, sanitation,
ecological, historic, zoning, environmental

 

5

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protection, wetlands and building laws and the Americans with Disabilities Act
of 1990, Pub. L. No. 89-670, 104 Stat. 327 (1990), as amended, and all
regulations promulgated pursuant thereto) affecting Borrower, Owner, any Loan
Document or all or part of the Collateral or of the Property or the
construction, ownership, use, alteration or operation 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 instrument, either of record or known to Borrower
or the Owner, at any time in force affecting all or part of the Property or the
Collateral.

 

“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, easement, restrictive covenant, preference, assignment,
security interest, PACE Loan or any other encumbrance, charge or transfer of, or
any agreement to enter into or create any of the foregoing, on or affecting
(i) all or any part of the Property or any interest therein, (ii) any direct or
indirect interest in Owner, Borrower or Sole Member, or (iii) all or part of the
Collateral, 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.

 

“Liquidation Event” shall mean (i) any Casualty to the Property or any material
portion thereof, (ii) any Condemnation of the Property or any material portion
thereof, (iii) a Transfer of the Property in connection with realization thereon
following an Event of Default under the Senior Loan, including without
limitation a foreclosure sale, or (iv) any refinancing or payoff of the Property
or the Senior Loan permitted hereunder (including any refund of reserves on
deposit with Senior Lender (but not disbursements therefrom)).

 

“LoanCore” shall mean LoanCore Capital Markets LLC, a Delaware limited liability
company.

 

“Loan Documents” shall mean this Agreement and all other documents, agreements
and instruments now or hereafter evidencing, securing or delivered to Lender in
connection with the Loan, including the following, each of which is dated as of
the date hereof:  (i) the Mezzanine Promissory Note made by Borrower to Lender
in the aggregate principal amount equal to the Loan (the “Note”); (ii) the
Pledge and Security Agreement (the “Pledge”) made by Borrower in favor of Lender
which creates a security interest in 100% of the ownership interest of Borrower
in Owner (the “Pledged Collateral”), and (iii) the Mezzanine Guaranty of
Recourse Obligations made by Guarantor, as each of the foregoing may be (and
each of the foregoing defined terms shall refer to such documents as they may
be) amended, restated, replaced, severed, split, supplemented or otherwise
modified from time to time (including pursuant to Section 10.2 hereof).

 

“Major Contract” shall mean (i) any management, brokerage or leasing agreement,
(ii) any cleaning, maintenance, service or other contract or agreement of any
kind (other than Leases) which are not terminable on thirty (30) days or less
notice and are of a material nature (materiality for these purposes to include
contracts which extend beyond one year (unless cancelable on thirty (30) days or
less notice without requiring the payment of termination fees or payments of any
kind)) and which require the payment of more than $100,000 or more on an annual
basis, in either case, to which Borrower or Owner is a party,

 

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relating to the ownership, leasing, management, use, operation, maintenance,
repair or restoration of the Property, whether written or oral or (iii) any
management, brokerage, leasing, cleaning, maintenance, service or other contract
or agreement of any kind (other than Leases) that is between Borrower and an
Affiliate of Borrower.

 

“Management Agreement” shall mean any management agreement entered into between
Owner and Manager, pursuant to which Manager is to manage the Property, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time in accordance with Section 5.12 hereof.

 

“Manager” shall mean any management company appointed by Borrower in accordance
with Section 5.12 hereof.

 

“Material Adverse Effect” shall mean a material adverse effect on (i) the
Property, (ii) the business, profits, prospects, management, operations or
condition (financial or otherwise), taken as a whole, of Borrower, Owner,
Guarantor or the Property, (iii) the enforceability, validity, perfection or
priority of the lien of the Pledge or the other Loan Documents, (iv) the ability
of Borrower to perform its obligations under the Loan Documents, or (v) the
ability of Guarantor to perform its obligations under the Guaranty.

 

“Material Alteration” shall mean (i) any individual alteration affecting
(a) structural elements of the Property, (b) a roof of the Property (excluding
installations of satellite dishes, antennae or solar panels) or (c) any building
system of the Property or (ii) any non-structural alteration the cost of which
exceeds $500,000; provided, however, that in no event shall any of the following
constitute a Material Alteration: (1) any Required Repairs, (2) any tenant
improvement work performed or required to be performed pursuant to any Lease
existing on the date hereof or entered into hereafter in accordance with the
provisions of this Agreement, or (3) alterations performed as part of a
Restoration.

 

“Material Lease” shall mean all Leases which (i) individually or in the
aggregate with respect to the same tenant and its Affiliates (a) cover more than
50,000 square feet of the Improvements, (b)  have a gross annual rent of more
than ten percent (10%) of the total annual Rents of the Property or (c) demise
at least one (1) full floor of the Improvements, (ii) provide the tenant
thereunder with an option or other preferential right to purchase all or any
portion of the Property, or (iii) are entered into with a tenant who is an
Affiliate of Borrower or Owner.

 

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

 

“Mezzanine Account” shall mean an account of Lender designated by Lender into
which all payments made to Lender pursuant to Section 3.12 of the Senior Loan
Agreement shall be deposited.

 

“Minor Lease” shall mean any Lease that is not a Material Lease.

 

“Net Liquidation Proceeds After Debt Service” shall mean, with respect to any
Liquidation Event, all amounts paid to or received by or on behalf of Owner in
connection with

 

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such Liquidation Event, including, without limitation, proceeds of any sale,
refinancing or other disposition or liquidation, less (i) Lender’s and/or Senior
Lender’s reasonable, actual out-of-pocket costs incurred in connection with the
recovery thereof, (ii) in the case of Casualty or Condemnation, the costs
incurred by Owner in connection with a restoration of the Property made in
accordance with the Senior Loan Documents, (iii) amounts required or permitted
to be deducted therefrom and amounts paid pursuant to the Senior Loan Documents
to Senior Lender, (iv) in the case of a foreclosure sale, disposition or
Transfer of the Property in connection with the realization thereon, following
an Event of Default under the Senior Loan, such reasonable and customary actual
out-of-pocket costs and expenses of sale or other disposition (including
attorneys’ fees and brokerage commissions), (v) in the case of a foreclosure
sale such costs and expenses incurred by Senior Lender under the Senior Loan
Documents as Senior Lender shall be entitled to receive reimbursement for under
the terms of the Senior Loan Documents, and (vi) in the case of a refinancing of
the Senior Loan, such costs and expenses (including reasonable attorneys’ fees)
of such refinancing shall be reasonably approved by Lender.

 

“Net Operating Income” shall mean for any period, the net operating income of
the Property determined by Lender in its sole but reasonable discretion and on a
cash basis of accounting, after deducting therefrom, without duplication,
(i) deposits to (but not withdrawals from) any reserves required under this
Agreement or the Senior Loan Agreement, (ii) any Rents from tenants operating
under bankruptcy protection or from tenants that are not open for business
(i.e., have “gone dark”), and (iii) non-recurring extraordinary items of income.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender which is
signed by an authorized senior officer or authorized representative of the
Person on behalf of whom the certificate is delivered, in such capacity as
officer, manager or other representative, which officer or representative is
knowledgeable with respect to the subject matter set forth in the applicable
Officer’s Certificate.

 

“Operations Agreements” shall mean the REA, and any other covenants,
restrictions, easements, declarations or agreements of record relating to the
construction, operation or use of the Property, together with all amendments,
modifications or supplements thereto.

 

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

 

“Other Connection Taxes” shall mean, with respect to Lender, Taxes imposed as a
result of a present or former connection between Lender and the jurisdiction
imposing such Tax (other than connections arising from Lender having executed,
delivered, become a party to, performed its obligations under, received payments
under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, or sold or assigned an
interest in any Loan or Loan Document).

 

“Other Taxes” shall mean all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the

 

8

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execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment.

 

“Owner” shall mean PEACE COLISEUM, LLC, a Delaware limited liability company.

 

“PACE Loan” shall mean (i) any “Property-Assessed Clean Energy loan” or (ii) any
other indebtedness, without regard to the name given to such indebtedness, which
is (a) incurred for improvements to the Property for the purpose of increasing
energy efficiency, increasing use of renewable energy sources, resource
conservation, or a combination of the foregoing, and (b) repaid through
multi-year assessments against the Property.

 

“Payment Date” shall mean the 6th day of each calendar month or, upon Lender’s
exercise of its right to change the Payment Date in accordance with
Section 2.2.4 hereof, the New Payment Date (in either case, if such day is not a
Business Day, the Payment Date shall be the first Business Day thereafter).  The
first Payment Date hereunder shall be April 6, 2020.

 

“Permitted Encumbrances” shall mean:  (i) the Liens created by the Loan
Documents; (ii) the Liens created by the Senior Loan Documents; (iii) all Liens
and other matters disclosed in the Title Insurance Policy; (iii) Liens, if any,
for Real Estate Taxes or Other Charges not yet due and payable and not
delinquent; (iv) any workers’, mechanics’ or other similar Liens on the Property
provided that any such Lien is bonded or discharged within thirty (30) days
after Borrower or Owner first receives notice of such Lien: and (v) such other
title and survey exceptions as Lender approves in writing.

 

“Permitted Open Prepayment Date” shall mean the Payment Date that occurs in
December, 2029.

 

“Permitted Transfers” shall mean:

 

(i)            a Lease entered into in accordance with the Loan Documents and
the Senior Loan Documents, or

 

(ii)           a Permitted Encumbrance; or

 

(iii)          a Transfer and Assumption; or

 

(iv)          provided that no Event of Default shall then exist, a Transfer of
a direct or indirect interest in Sole Member to any Person provided that:

 

(A)          such Transfer shall not (y) cause the transferee (which is not
Guarantor), together with its Affiliates, to acquire Control of Borrower or Sole
Member or to increase its direct or indirect interest in Borrower or in Sole
Member to an amount which equals or exceeds forty-nine percent (49%) or
(z) result in Borrower or Sole Member no longer being Controlled by Guarantor;

 

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(B)          after giving effect to such Transfer, Guarantor shall continue to
Control the day to day operations of Borrower and shall continue to own at least
fifty-one percent (51%) of all equity interests (direct or indirect) of
Borrower;

 

(C)          if such Transfer would cause the transferee (which is not
Guarantor) to increase its direct or indirect interest in Borrower or in Sole
Member to an amount which equals or exceeds ten percent (10%), Lender shall have
approved in its reasonable discretion such proposed transferee, which approval
shall be based upon Lender’s satisfactory determination as to the reputable
character and creditworthiness of such proposed transferee, as evidenced by
credit and background checks performed by Lender and such other financial
statements and other information reasonably requested by Lender;

 

(D)          Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days
prior to the date of such Transfer (other than a Transfer by devise or descent
or by operation of law upon the death or as a result of the legal incapacity of
a natural person of such Person’s interest in Borrower to the person or persons
lawfully entitled thereto, provided Borrower delivers written notice to Lender
as soon as practicable thereafter);

 

(E)           the legal and financial structure of Borrower and its members and
the single purpose nature and bankruptcy remoteness of Borrower and its members
after such Transfer, shall satisfy Lender’s then current applicable underwriting
criteria and requirements; and

 

(F)           such Transfer is permitted under the Senior Loan; or

 

(v)           the Transfer (but not the pledge) of the direct or indirect
interest of Owner, Borrower or Guarantor which is the result of the issuance,
sale or other Transfer of shares of common stock in Guarantor, which is a
publicly traded entity, provided such shares of common stock are listed on the
New York Stock Exchange or another nationally recognized stock exchange,
provided, (a) there is no change of Control of the direct interests in Owner or
Borrower as a result of the transfers permitted under this clause, and (b) as a
result of any such Transfer, Guarantor does not breach any of the financial
covenants set forth in Section 6 of the Guaranty; provided, however, Guarantor
shall, as a publicly-traded company, not be prohibited from permitting its
shareholders from pledging their shares; or

 

(vi)          a foreclosure on the Property pursuant to the Senior Loan
Documents.

 

“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
person or entity, and 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.

 

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“Physical Conditions Report” shall mean that certain Property Condition Report,
prepared by EBI Consulting and dated as of February 20, 2020.

 

“Plan” shall mean an employee benefit or other plan established or maintained by
Borrower, Guarantor or any ERISA Affiliate or to which Borrower, Guarantor or
any ERISA Affiliate makes or is obligated to make contributions and which is
subject to Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

 

“Pooling and Servicing Agreement” shall mean any pooling and servicing agreement
or similar agreement entered into as a result of a Secondary Market Transaction.

 

“Principal” shall mean the unpaid principal balance of the Loan at the time in
question.

 

“Property” shall mean the parcel of real property and Improvements thereon owned
by Owner and encumbered by the Mortgage, together with all rights pertaining to
such real property and Improvements, and all other collateral for the Senior
Loan as more particularly described in the Granting Clauses of the Mortgage and
referred to therein as the Trust Property.  The Property is located in Midvale,
Utah.

 

“Property Taxes” shall mean all (i) real estate taxes, assessments, water rates
or sewer rents, maintenance charges, impositions, vault charges and license fees
(“Real Estate Taxes”), or (ii) personal property taxes, in each case, now or
hereafter levied or assessed or imposed against all or part of the Property.  In
no event shall any PACE Loan be considered a Property Tax for purposes of this
Agreement.

 

“Rating Agency” shall mean, prior to the final Securitization of the Loan (or if
a Securitization has not occurred), each of Standard & Poor’s, a division of The
McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc.
(“Moody’s”), Fitch, Inc., a division of Fitch Ratings Ltd. (“Fitch”),
DBRS, Inc., Morningstar, Inc., Kroll Bond Rating Agency or any other
nationally-recognized statistical rating organization which has been designated
by Lender, and after the final Securitization of the Loan, any of the foregoing
that have rated any of the securities issued in connection with the
Securitization.

 

“Rating Comfort Letter” shall mean a letter issued by each of the applicable
Rating Agencies which confirms that the taking of the action referenced to
therein will not result in any qualification, withdrawal or downgrading of any
existing ratings of Securities created in a Secondary Market Transaction.

 

“REA” shall mean collectively, those certain agreements more particularly
described on Schedule 6 attached hereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms of this Agreement.

 

“Rents” shall mean all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a Bankruptcy
Proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment

 

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and consideration of whatever form or nature received by or paid to or for the
account of or benefit of Owner, Manager or any of their agents or employees from
any and all sources arising from or attributable to the Property and the
Improvements, including all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of the Property or rendering of services by
Owner, Manager or any of their agents or employees and proceeds, if any, from
business interruption or other loss of income insurance.

 

“Security Documents” shall mean, collectively:  (i) the Pledge, (ii) a notice of
pledge to Owner, (iii) all Uniform Commercial Code financing statements required
by this Agreement to be filed with respect to the security interest in personal
property created pursuant to the Security Documents, (iv) the Pledged Securities
and (v) all other documents and agreements executed or delivered to Lender by
Borrower in connection with any of the foregoing documents.

 

“Senior Cash Management Account” shall mean the Cash Management Account
established pursuant to the terms of the Senior Loan Agreement (as such term is
defined in Section 3.1 of the Senior Loan Agreement).

 

“Senior Cash Management Agreement” shall mean the Cash Management Agreement
dated as of the date hereof among Owner, Senior Lender and the Cash Management
Bank.

 

“Senior Lender” shall mean LoanCore Capital Markets LLC, a Delaware limited
liability company, or any successor holder of the Senior Loan.

 

“Senior Loan” shall mean the $34,500,000.00 mortgage loan made by Senior Lender
to Owner in accordance with the Senior Loan Agreement.

 

“Senior Loan Agreement” shall mean the Loan Agreement dated as of the date
hereof between Senior Lender and Owner, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, with the consent
of Lender.

 

“Senior Loan Documents” shall mean the Loan Documents as defined in the Senior
Loan Agreement.

 

“Senior Note” shall mean the Note as defined in the Senior Loan Agreement.

 

“Servicer” shall mean a servicer selected by Lender to service the Loan,
including any “master servicer” or “special servicer” appointed under the terms
of any Pooling and Servicing Agreement.

 

“Sole Member” shall mean Overstock.com, Inc., a Delaware corporation, the sole
member of Borrower.

 

“State” shall mean the state in which the Property is located.

 

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“Stated Maturity Date” shall mean March 6, 2030, as such date may be changed in
accordance with Section 2.2.4 hereof.

 

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

 

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

 

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

 

“Transfer” shall mean:

 

(i)            any sale, conveyance, transfer, encumbrance, pledge,
hypothecation, lease or assignment, or the entry into any agreement to sell,
convey, transfer, encumber, pledge, hypothecate, lease or assign, whether by law
or otherwise, of, on, in or affecting (w) all or part of Owner’s interest in the
Property (including any legal or beneficial direct or indirect interest
therein), (x) all or any part of the Collateral, (y) any direct or indirect
interest in Borrower or Owner (including any profit interest or rights to
distributions of cash), or (z) any direct or indirect interest in Sole Member;

 

(ii)           entering into or subjecting the Property to a PACE Loan;

 

(iii)          Intentionally Omitted;

 

(iv)          with respect to Borrower or Owner or any Person that has a direct
or indirect interest in Borrower or Owner, the division of any assets and
liabilities of such entity amongst one or more new or existing entities; or

 

(v)           any change of Control of Borrower or Owner.

 

For purposes hereof, (A) a Transfer of an interest in Borrower or Owner shall be
deemed to include (y) with respect to a corporation, the voluntary or
involuntary sale, conveyance or transfer of such corporation’s stock (or the
stock of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock in one
or a series of transactions by which an aggregate of more than ten percent (10%)
of such corporation’s stock shall be vested in a party or parties who are not
now stockholders or any change in the control of such corporation and (z) with
respect to a limited or general partnership, joint venture or limited liability
company, the change, removal, resignation or addition of a general partner,
managing partner, limited partner, joint venturer or member or the transfer of
the partnership interest of any general partner, managing partner or limited
partner or the transfer of the interest of any joint venturer or member and
(B) a change of Control of Borrower or Owner shall be deemed to have occurred if
(y) there is any change in the identity of any individual or entity or any group
of individuals or entities who have the right, by virtue of any partnership

 

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agreement, articles of incorporation, by-laws, articles of organization,
operating agreement or any other agreement, with or without taking any formative
action, to cause Borrower or Owner to take some action or to prevent, restrict
or impede Borrower from taking some action which, in either case, Borrower or
Owner could take or could refrain from taking were it not for the rights of such
individuals or (z) the individual or entity or group of individuals or entities
that Control Borrower or Owner as described in clause (y) ever cease to Control
the day to day operations of Borrower or own at least fifty-one percent (51%) of
all equity interests (direct or indirect) in Borrower or Owner.

 

“UCC” shall mean the Uniform Commercial Code as in effect in the State of
formation of Borrower.

 

“U.S. Obligations” shall mean obligations that are “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, that are not subject to prepayment, call or early redemption and that
are acceptable to the applicable Rating Agencies.

 

“Welfare Plan” shall mean an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.

 

1.2          Index of Other Definitions.  The following terms are defined in the
sections or Loan Documents indicated below:

 

“Acceptable Blanket Policy” — 7.1.2

“Additional Operating Expense” - 6.3.7(a)

“Annual Budget” - 6.3.6

“Approved Additional Operating Expense” - 6.3.7(a)

“Approved Annual Budget” - 6.3.6

“Approved Capital Expense Budget” - 6.3.6

“Approved Operating Budget” - 6.3.6

“Award” - 7.3.2

“Bankruptcy Proceeding” - 4.7

“Borrower Obligation” - 11.34(c)

“Borrower’s Recourse Liabilities” - 11.1

“Broker” - 11.2

“Cash Management Accounts” - 3.3

“Cash Management System Accounts” - 3.14

“Casualty” - 7.2.1

“Cause” - Schedule 4

“Clearing Account Agreement” - Senior Loan Agreement

“Condemnation” - 7.3.1

“Delaware Act” - Schedule 4

“Disclosure Document” - 10.1.2

“Easements” - 4.14

“Embargoed Person” - 5.32(c)

“Environmental Laws” - 4.21

“Equipment” - Mortgage

 

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“Equity Collateral Enforcement Action” - 11.1(s)

“Equity Collateral Transfer Date” - 11.1(s)

“Event of Default” - 8.1

“Exchange Act” - 10.1.2

“Fitch” - 1.1 (Definition of Rating Agency)

“Government Lists” - 5.32

“Guaranty” — 1.1 (Definition of Loan Documents)

“Hazardous Substances” - 4.21

“Improvements” - Mortgage

“Indemnified Liabilities” - 5.31

“Indemnified Party” - 5.31

“Independent Director” - Schedule 4

“Insurance Premiums” - 7.1.2

“Insurance Subaccount” - Senior Loan Agreement

“Insured Casualty” - 7.2.2

“Intellectual Property” - 4.28

“Intercreditor Agreement” - 9.8

“Issuer” - 10.1.3

“Late Payment Charge” - 2.5.3

“Lender Group” - 10.1.3

“Lender’s Consultant” - 5.8.1

“Liabilities” - 10.1.3

“Licenses” - 4.11

“Loan” - 2.1

“Management Fee Cap” — Senior Loan Agreement

“Monthly Interest Payment Amount”- 2.2.1

“Moody’s” - 1.1 (Definition of Rating Agency)

“Mortgage” - Senior Loan Agreement

“Nationally Recognized Service Company” - Schedule 4

“New Payment Date” - 2.2.4

“Note” - 1.1 (Definition of Loan Documents)

“Notice” - 6.1

“O & M Program” - 5.8.3

“OFAC” - 5.32

“Participant Register” - 11.34(c)

“Patriot Act” - 5.32

“Patriot Act Offense” - 5.32

“Permitted Indebtedness” - 5.22

“Pledge” - Section 1.1 (Definition of Loan Documents)

“Pledged Collateral” - Section 1.1 (Definition of Loan Documents)

“Pledged Securities” - Pledge

“Policies” - 7.1.2

“Proceeds” - 7.2.2

“Proposed Material Lease” - 5.10.2

“Provided Information” - 10.1.1

“Qualified Carrier” - 7.1.1

 

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“Real Estate Taxes” - 1.1 (Definition of Property Taxes)

“Register” - 11.34(c)

“Registration Statement” - 10.1.3

“Remedial Work” - 5.8.2

“Rent Roll” - 4.16

“Required Records” - 6.3.9

“Required Repairs” - Senior Loan Agreement

“Restoration” - Senior Loan Agreement

“Review Waiver” - 11.5

“S&P” - 1.1 (Definition of Rating Agency)

“Secondary Market Transaction” - 10.1.1

“Securities” - 10.1.1

“Securities Act” - 10.1.2

“Securitization” - 10.1.1

“Servicing Agreement” - 11.3

“Single Member Bankruptcy Remote LLC” - Schedule 4

“Special Member”- Schedule 4

“Special Purpose Bankruptcy Remote Entity” - 5.13

“Springing Recourse Event” - 11.1

“Subaccounts” - 3.1

“Subject Person” - 1.1 (Definition of Affiliate)

“Successor Borrower” - 2.3.3

“Tax Subaccount” - Senior Loan Agreement

“Title Insurance Policy” - Senior Loan Agreement

“Toxic Mold” - 4.21

“Underwriter Group” - 10.1.3

“Underwriters” - 10.1.3

 

1.3          Principles of Construction.

 

(a)           Unless otherwise specified, (i) all references to sections and
schedules are to those in this Agreement, (ii) the words “hereof,” “herein” and
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision, (iii) all definitions are equally applicable to
the singular and plural forms of the terms defined, (iv) the word “including”
means “including but not limited to,” (v) accounting terms not specifically
defined herein shall be construed in accordance with GAAP and (vi) all
references to the Senior Loan Agreement, the Senior Note or any other Senior
Loan Document shall mean the Senior Loan Agreement, the Senior Note or such
other Senior Loan Document as in effect on the date hereof, as each of the same
may hereafter be amended, restated, replaced, supplemented or otherwise
modified, but only to the extent that Lender has consented to the foregoing
pursuant to Section 9.4 of this Agreement.  With respect to terms defined by
cross-reference to the Senior Loan Documents, such defined terms shall have the
definitions set forth in the Senior Loan Documents as of the date hereof, and no
modification to the Senior Loan Documents shall have the effect of changing such
definitions for the purposes of this Agreement unless Lender expressly agrees
that such definitions as used in this Agreement have been revised.

 

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(b)           Borrower and Lender hereby acknowledge and agree that, as to any
clauses or provisions contained in this Agreement or any of the other Loan
Documents to the effect that (i) Borrower represents or warrants on behalf of,
or covenants on behalf of, Owner, or with respect to the Property or other
related matters, (ii) Borrower shall cause Owner to act or to refrain from
acting, to comply with, to permit, to perform, to pay, to furnish, to cure, to
remove, to observe, to deliver, to suffer, to initiate, to provide, to furnish
in any manner or (iii) Borrower shall or Borrower shall cause to occur or to not
occur, or otherwise be obligated in any manner with respect to, or any matters
pertaining to Owner or the Property or other related matters, such clause or
provision is intended to mean, and shall be construed as meaning, that Borrower
has undertaken to act and is obligated only in Borrower’s capacity as the member
of Owner and not directly with respect to Owner or the Property or in any other
manner which would violate any of the representations, warranties or covenants
contained in Sections 4.1 and 5.13 and Schedule 4 of this Agreement, any other
similar separateness covenants contained in Borrower’s or Owner’s organizational
documents, or any other similar separateness covenants contained in the Senior
Loan Documents.

 

2.                                      GENERAL LOAN TERMS

 

2.1          The Loan.  Subject to and upon the terms and conditions set forth
herein, Lender is making a loan (the “Loan”) to Borrower on the date hereof, in
the original principal amount of $13,000,000.00, which shall mature on the
Stated Maturity Date.  Borrower acknowledges receipt of the Loan which proceeds
may be used for any lawful purpose.  Borrower shall receive only one borrowing
hereunder in respect of the Loan and no amount repaid in respect of the Loan may
be reborrowed.  The Loan shall be evidenced by the Note and shall be repaid in
accordance with the terms of this Agreement, the Note and the other Loan
Documents.

 

2.2          Interest; Monthly Payments.

 

2.2.1       Generally.

 

(a)           From and after the date hereof, interest on the unpaid Principal
shall accrue at the Interest Rate and be due and payable as hereinafter
provided.

 

(b)           On April 6, 2020 and each Payment Date thereafter through and
including February 6, 2030, Borrower shall pay interest on the unpaid Principal
accrued at the Interest Rate during the Interest Period immediately preceding
such Payment Date (collectively, the “Monthly Interest Payment Amount”).

 

(c)           All accrued and unpaid interest shall be due and payable on the
Maturity Date.  If the Loan is repaid on any date other than on a Payment Date
(whether prior to or after the Stated Maturity Date), Borrower shall also pay
interest that would have accrued on such repaid Principal at the Interest Rate
to but not including the next Payment Date.

 

2.2.2       Default Rate.  After the occurrence and during the continuance of an
Event of Default, the entire unpaid Debt shall bear interest at the Default
Rate, calculated from the date such payment was due or such underlying Default
shall have occurred without regard to any grace or cure periods contained
herein, and shall be payable upon demand from time to time, to the extent
permitted by applicable law.

 

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2.2.3       Taxes.

 

(a)           Any and all payments by or on account of any obligation of
Borrower or Guarantor hereunder and under the other Loan Documents shall be made
free and clear of and without deduction or withholding for any Taxes, except as
required by applicable law.  If any applicable law requires the deduction or
withholding of any Tax from any such payment by Borrower or Guarantor, then
Borrower or Guarantor, as applicable, shall be entitled to make such deduction
or withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower or Guarantor shall
be increased as necessary so that after such deduction or withholding has been
made (including such deductions and withholdings applicable to additional sums
payable under this Section) Lender receives an amount equal to the sum it would
have received had no such deduction or withholding been made.

 

(b)           Borrower shall timely pay to the relevant Governmental Authority
in accordance with applicable law, or at the option of Lender timely reimburse
it for the payment of, any Other Taxes.

 

(c)           Borrower shall indemnify Lender, within 10 days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section) payable or paid by Lender or required to be withheld or deducted from a
payment to Lender and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority.  A certificate as to the
amount of such payment or liability delivered to Borrower by a Lender shall be
conclusive absent manifest error.

 

(d)           As soon as practicable after any payment of Taxes by Borrower or
Guarantor to a Governmental Authority pursuant to this Section 2.2.3, Borrower
or Guarantor, as applicable, shall deliver to Lender the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Lender.

 

(e)           If Lender is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document, Lender
shall deliver to Borrower, at the time or times reasonably requested by
Borrower, such properly completed and executed documentation reasonably
requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, if reasonably
requested by Borrower, Lender shall deliver such other documentation prescribed
by applicable law or reasonably requested by Borrower as will enable Borrower to
determine whether or not Lender is subject to backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation shall not be required if in Lender’s reasonable judgment such
completion, execution or submission would subject Lender to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of Lender.

 

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(f)            Each party’s obligations under this Section 2.2.3 shall survive
any assignment of rights by, or the replacement of, Lender, and the repayment,
satisfaction or discharge of all obligations under any Loan Document.

 

2.2.4       New Payment Date.  Lender shall have the right, to be exercised not
more than once during the term of the Loan, to change the Payment Date to a date
not earlier than the sixth (6th) day of each month (a “New Payment Date”), on
thirty (30) days’ written notice to Borrower; provided, however, that any such
change in the Payment Date:  (i) shall not modify the amount of regularly
scheduled monthly principal and interest payments, except that the first payment
of principal and interest payable on the New Payment Date shall be accompanied
by interest at the interest rate herein provided for the period from the Payment
Date in the month in which the New Payment Date first occurs to the New Payment
Date, and (ii) shall change the Stated Maturity Date to the New Payment Date
occurring in the month set forth in the definition of Stated Maturity Date.

 

2.3          Prepayment.  The Loan may be prepaid in whole or in part at any
time without payment of any prepayment premium, penalty or yield maintenance
costs.

 

2.4          Release of Collateral.  Lender shall, upon the written request and
at the expense of Borrower, upon payment in full of the Debt in accordance
herewith, release the Liens of the Pledge and other Security Documents if not
theretofore released.  In connection with the release of the Lien, Borrower
shall submit to Lender, not less than thirty (30) days prior to the date of
repayment (or such shorter time as is acceptable to Lender in its reasonable
discretion), a release of Lien (and related Loan Documents) for execution by
Lender.  Such release shall be in a form appropriate in the jurisdiction in
which the Collateral is located and contain standard provisions 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 (a) is in compliance with all Legal Requirements, and
(b) will effect such release in accordance with the terms of this Agreement. 
Borrower shall pay all actual out-of-pocket costs, Taxes and expenses associated
with the release of the Lien of the Pledge, including Lender’s reasonable
attorneys’ fees.

 

2.5          Payments and Computations.

 

2.5.1       Making of Payments.  Each payment by Borrower shall be made in funds
settled through the New York Clearing House Interbank Payments System or other
funds immediately available to Lender by 11:00 a.m., New York City time, on the
date such payment is due, to Lender by deposit to such account as Lender may
designate by written notice (which notice may be sent by email) to Borrower. 
Whenever any such payment shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the first Business Day thereafter
(notwithstanding such adjustment of due dates, Borrower shall not be entitled to
any deduction of interest due under this Agreement, the Note or any of the other
Loan Documents).  All such payments shall be made irrespective of, and without
any deduction, set-off or counterclaim whatsoever and are payable without relief
from valuation and appraisement laws and with all costs and charges incurred in
the collection or enforcement thereof, including attorneys’ fees and court
costs.

 

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2.5.2       Computations.  Interest payable under the Loan Documents shall be
computed on the basis of the actual number of days elapsed over a 360-day year.

 

2.5.3       Late Payment Charge.  If any Principal, interest or other sum due
under any Loan Document is not paid by Borrower on the date on which it is due
(other than the payment due on the Maturity Date (including any acceleration of
the Maturity Date)) (except to the extent sufficient funds to pay the same have
been deposited into the Clearing Account or Cash Management Account to pay the
same on the date due and Lender or Servicer fails, in bad faith, to pay the
same), Borrower shall pay to Lender upon demand an amount equal to the lesser of
five percent (5%) of such unpaid sum or the maximum amount permitted by
applicable law (the “Late Payment Charge”), in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment.  Such
amount shall be secured by the Loan Documents.

 

3.                                      CASH MANAGEMENT AND RESERVES

 

3.1          Cash Management Arrangements.  Borrower shall cause Owner to cause
all Rents to be deposited and applied in accordance with the Senior Loan
Documents.  All funds deposited by the Deposit Bank into the Mezzanine Account
shall be deemed to be a distribution from Owner to Borrower and shall be applied
and disbursed in accordance with this Agreement.  The Mezzanine Account and all
subaccounts established by Lender therein (which may be ledger or book entry
accounts and not actual accounts) shall at all times be Eligible Accounts (such
subaccounts are referred to herein as “Subaccounts”).  The Mezzanine Account and
any Subaccount will be under the sole control and dominion of Lender, and
Borrower shall have no right of withdrawal therefrom.  Borrower shall pay for
all expenses of opening and maintaining all of the above accounts.  If, at any
time during the Term, Senior Lender is not requiring Owner to comply with the
cash management arrangements set forth in Section 3.1 of the Senior Loan
Agreement, the Clearing Account Agreement and the Senior Cash Management
Agreement (or the Senior Loan has been refinanced or otherwise repaid in full in
accordance with the terms of this Agreement), then Lender shall have the right,
at its option, to require such cash management arrangements, substantially in
accordance with the provisions of the foregoing.

 

3.2          Reserves.  If, at any time during the Term, Senior Lender is not
requiring Owner to make the required deposits required under Article 3 of the
Senior Loan Agreement (or the Senior Loan has been refinanced or otherwise
repaid in full in accordance with the terms of this Agreement), including
pursuant to Sections 3.3, 3.4, 3.5 and 3.6 of the Senior Loan Agreement, then
Lender shall have the right, at its option, to require Borrower to make such
required deposits to Lender, in which case such deposits shall be made by
Borrower and held in Subaccounts and disbursed by Lender substantially in
accordance with the provisions of such applicable sections of the Senior Loan
Agreement (including Section 3.12(a) of the Senior Loan Agreement governing
priority and order of application).

 

3.3          Grant of Security Interest; Application of Funds.  As security for
payment of the Debt and the performance by Borrower of all other terms,
conditions and provisions of the Loan Documents, Borrower hereby pledges and
assigns to Lender, and grants to Lender a security interest in, all of
Borrower’s right, title and interest in and to all payments to or monies held in
the Mezzanine Account and all Subaccounts created pursuant to this Agreement

 

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(collectively, the “Cash Management Accounts”).  Borrower shall not, without
obtaining the prior written consent of Lender, further pledge, assign or grant
any security interest in any Cash Management Account, or permit any Lien to
attach thereto, or any levy to be made thereon, or any UCC Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.  This Agreement is, among other things, intended by the parties to be a
security agreement for purposes of the UCC.  Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account in any order and in any manner as Lender shall elect without
seeking the appointment of a receiver and without adversely affecting the rights
of Lender to foreclose the Lien of the Security Documents or exercise its other
rights under the Loan Documents.  Cash Management Accounts shall not constitute
trust funds and may be commingled with other monies held by Lender.  All
interest which accrues on the funds in any Cash Management Account shall accrue
for the benefit of Borrower and shall be taxable to Borrower and shall be added
to and disbursed in the same manner and under the same conditions as the
principal sum on which said interest accrued.  Upon repayment in full of the
Debt, all remaining funds in the Subaccounts, if any, shall be promptly
disbursed to Borrower.

 

3.4          Cash Flow Allocation.

 

(a)           All amounts deposited into the Mezzanine Account during the
immediately preceding Interest Period shall be applied on each Payment Date as
follows in the following order of priority:

 

(i)            First, to Lender to pay the interest due on such Payment Date
(plus, if applicable, interest at the Default Rate and all other amounts, other
than those described under other clauses of this Section 3.4(a), then due to
Lender under the Loan Documents);

 

(ii)           Second, to Lender, for purposes of funding any reserves, if
required under Section 3.2;

 

(iii)          Third, for so long as the Loan shall remain outstanding, to
Lender, all remaining amounts to Lender to be applied toward the repayment in
full of the Principal; and

 

(iv)          Lastly, to the extent the Loan has been paid in full pursuant to
the terms of this Agreement, payments to Borrower of any remaining amounts.

 

(b)           The failure of Borrower to make all of the payments required under
clauses (i) and (ii) Section 3.4(a) hereof in full on each Payment Date shall
constitute an Event of Default under this Agreement; provided, however, if
adequate funds are available in the Clearing Account (as defined in the Senior
Loan Agreement), the Cash Management Account or the Mezzanine Account for such
payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.

 

(c)           Notwithstanding anything to the contrary contained in this
Agreement, the Loan Documents, and/or the Senior Loan Documents, the parties
hereto acknowledge and agree that, as to any clause or provision contained in
this Agreement, the other Loan Documents, including the Senior Cash Management
Agreement, and/or the Senior Loan Documents to the effect that payments,
distributions, or other similar effect are to be made by or on behalf of

 

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Borrower to Senior Lender or applied to the Senior Loan, such clause or
provision shall be deemed to mean, and shall be construed as meaning, that
Lender shall pay to Borrower, and Borrower shall then immediately contribute to
Owner pursuant to and in accordance with the organizational documents of
Borrower and applicable law, which contribution shall be immediately payable to
Senior Lender, and any such clause or provision shall not be construed as
meaning that Borrower is acting on behalf of, holding out its credit for, or
paying the obligations of, Owner, directly or in any other manner that would
violate any of the special purpose entity covenants contained in the Loan
Agreement or other similar covenants contained in Borrower’s organizational
documents.

 

(d)           Notwithstanding anything to the contrary contained in this
Section 3.4 or elsewhere in the Loan Documents, after the occurrence of an Event
of Default, Lender may apply all amounts deposited into the Mezzanine Account
and other proceeds of repayment in such order and in such manner as Lender shall
elect.  Lender’s right to withdraw and apply any of the foregoing funds shall be
in addition to all other rights and remedies provided to Lender under the Loan
Documents.

 

4.                                      REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Lender as of the date hereof that, except to
the extent (if any) disclosed on Schedule 1 attached hereto with reference to a
specific Section of this Article 4:

 

4.1          Organization; Special Purpose.

 

(a)           Each of Borrower, Owner and Sole Member is duly organized, validly
existing and in good standing under the laws of the state of its formation, with
requisite power and authority, and all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to own its properties and
to transact the business in which it is now engaged.  Each of Borrower, Owner
and Sole Member is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, business and operations.

 

(b)           Each of Borrower, and Owner has at all times since its formation
been, and as of the date hereof is, a Special Purpose Bankruptcy Remote Entity.

 

4.2          Proceedings; Enforceability.  Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents to which Borrower is a party by it, and has the power and authority to
execute, deliver and perform under the Loan Documents and all the transactions
contemplated thereby.  The Loan Documents to which it is a party have been duly
authorized, executed and delivered by 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 bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).  The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower or Guarantor, including
the defense

 

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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,
and none of Borrower or Guarantor have asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.

 

4.3          No Conflicts.  The execution, delivery and performance of the Loan
Documents by Borrower and the transactions contemplated hereby will not conflict
with any provision of any law or regulation to which Borrower is subject, or
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
(other than pursuant to the Loan Documents) upon any of the property of Borrower
or Owner pursuant to the terms of, any agreement or instrument to which Borrower
or Owner is a party or by which its property 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
Owner or any of their respective properties.  Owner’s rights under the Licenses
and the Management Agreement will not be materially adversely affected by the
execution and delivery of the Loan Documents, Borrower’s performance thereunder,
or the exercise of any remedies by Lender in accordance with applicable law. 
Any consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, the Loan Documents
or the consummation of the transactions contemplated hereby, has been obtained
and is in full force and effect.

 

4.4          Litigation.  There are no actions, suits or other proceedings at
law or in equity by or before any Governmental Authority now pending or, to
Borrower’s knowledge, threatened against or affecting Borrower, Owner,
Guarantor, Manager or the Property, in any court or by or before any other
Governmental Authority, which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.

 

4.5          Agreements.  Neither Borrower nor Owner is a party to any agreement
or instrument or subject to any restriction which could reasonably be expected
to have a Material Adverse Effect.  Neither Borrower nor Owner is in default
with respect to any order or decree of any court or any order, regulation or
demand of any Governmental Authority, which default could reasonably be expected
to have a Material Adverse Effect.  Neither Borrower nor Owner is in default, or
has received notice of any event or condition that with the giving of notice or
the passage of time would constitute a default, in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which Borrower or Owner is a party or by which Borrower, Owner,
the Collateral or the Property is bound, and to Borrower’s knowledge, there are
no defaults under any such agreement by any other party thereto.

 

4.6          Title.  Owner has good, marketable and indefeasible title in fee to
the real property and good title to the balance of the Property, free and clear
of all Liens except the Permitted Encumbrances.  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 in
connection with the transfer of the Property to Owner have been paid or are
being paid simultaneously herewith.  The Pledge, together with any UCC Financing
Statements required to be filed in connection therewith, will create a valid,
perfected first priority lien on

 

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Borrower’s interest in the Pledged Collateral, all in accordance with the terms
thereof.  All Taxes and governmental assessments due and owing in respect of the
Property have been paid, or an escrow of funds in an amount sufficient to cover
such payments has been established under the Senior Loan Agreement or are
insured against by the Title Insurance Policy.  The Permitted Encumbrances,
individually or in the aggregate, do not (i) materially interfere with the
benefits of the security intended to be provided by the Pledge and this
Agreement, (ii) materially and adversely affect the value, operation or use of
the Property taken as a whole, or (iii) materially impair Borrower’s ability to
repay the Loan.  No Condemnation or other proceeding has been commenced or, to
Borrower’s knowledge, is contemplated with respect to all or any portion of the
Property or for the relocation of roadways providing access to the Property. 
There are no mechanics’, materialman’s or other similar Liens or claims which
have been filed for work, labor or materials affecting the Property which are or
may become a Lien on the Property.  There are no outstanding options to purchase
or rights of first refusal affecting all or any portion of the Property.  To
Borrower’s knowledge, the Survey does not fail to reflect any material matter
affecting the Property or the title thereto.  All of the Improvements which were
included in determining the appraised value of the Property lie wholly within
the boundaries and building restriction lines of the Property, and no
improvements on adjoining properties encroach upon the Property, and no
easements or other encumbrances affecting the Property encroach upon any of the
Improvements, so as to affect the value or marketability of the Property, except
those which are set forth on the Survey and insured against by the Title
Insurance Policy.  Each parcel comprising the Property is a separate tax lot and
is not a portion of any other tax lot that is not a part of the Property.  There
are no pending or, to Borrower’s knowledge, proposed special or other
assessments for public improvements or otherwise affecting the Property, nor, to
Borrower’s knowledge, are there any contemplated improvements to the Property
that may result in such special or other assessments.

 

4.7          No Bankruptcy Filing.  None of Owner, Borrower nor Guarantor are
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency law or the liquidation of all or a major portion of its
assets or properties (a “Bankruptcy Proceeding”), and Borrower has no knowledge
of any Person contemplating the filing of any such petition against Borrower,
Owner or Guarantor.  In addition, neither Borrower, Owner nor Guarantor  has
been a party to, or the subject of a Bankruptcy Proceeding for the past ten
(10) years.

 

4.8          Full and Accurate Disclosure.  No statement of fact made by
Borrower in any Loan Documents contains any untrue statement of a material fact
or omits to state any material fact presently known to Borrower necessary to
make statements contained therein not misleading.  There is no material fact
presently known to Borrower that has not been disclosed to Lender which
materially adversely affects, or could reasonably be expected to have a Material
Adverse Effect.  All historical financial data, including the statements of cash
flow and income and operating expense, that have been delivered to Lender in
respect of Borrower, Guarantor, Owner, the Collateral and the Property (a) are
true, complete and correct in all material respects, (b) accurately represent
the financial condition of Borrower, Guarantor, Owner and the Property as of the
date of such reports, and (c) to the extent prepared by an independent certified
public accounting firm, have been prepared in accordance with GAAP consistently
applied throughout the periods covered, except as disclosed therein.  Neither
Borrower nor Owner has any contingent liabilities, liabilities for Taxes,
unusual forward or long-term commitments,

 

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unrealized or anticipated losses from any unfavorable commitments or any
liabilities or obligations not expressly permitted by this Agreement and the
Senior Loan Agreement.  Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or
business of Borrower, Guarantor, Owner and the Property from that set forth in
said financial statements.

 

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

 

4.10        ERISA; No Plan Assets.  As of the date hereof and throughout the
Term (a) neither Borrower, Owner, Guarantor nor any ERISA Affiliate are
themselves an “employee benefit plan,” as defined in Section 3(3) of ERISA or a
“plan” as defined in Section 4975 of the Code, (b) none of the assets of
Borrower, Owner or Guarantor constitutes or will constitute “plan assets” of one
or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as
modified in operation by Section 3(42) of ERISA, (c) neither Borrower, Owner nor
Guarantor are or will be a “governmental plan” within the meaning of
Section 3(32) of ERISA, and (d) transactions by or with Borrower, Guarantor or
Owner are not and will not be subject to state statutes regulating investment
of, and fiduciary obligations with respect to, governmental plans.  As of the
date hereof, neither Borrower, Guarantor nor Owner nor any ERISA Affiliate
maintains, sponsors or contributes to or has any obligation with respect to a
“defined benefit plan” (within the meaning of Section 3(35) of ERISA) or a
“multiemployer pension plan” (within the meaning of Section 3(37)(A) of ERISA). 
Neither Borrower, Guarantor nor Owner has engaged in any transaction in
connection with which it could be subject to either a material civil penalty
assessed pursuant to the provisions of Section 502 of ERISA or a material Tax
imposed under the provisions of Section 4975 of the Code.

 

4.11        Compliance.  To Borrower’s knowledge, Borrower, Owner and the
Property (including the Improvements) and the use thereof comply in all material
respects with all applicable Legal Requirements (including with respect to
parking, building and applicable zoning and land use laws, codes, regulations
and ordinances).  Neither Borrower nor Owner is in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which could reasonably be expected to have a Material Adverse
Effect.  Neither Borrower nor Owner has committed any act which may give any
Governmental Authority the right to cause Borrower or Owner to forfeit the
Collateral or the Property or any part thereof or any monies paid in performance
of Borrower’s obligations under any of the Loan Documents.  The Property is used
exclusively for office and commercial use and other appurtenant and related
uses.  In the event that all or any part of the Improvements are destroyed or
damaged, said Improvements can be legally reconstructed to their condition prior
to such damage or destruction, and thereafter exist for the same use without
violating any zoning or other ordinances applicable thereto and without the
necessity of obtaining any variances or special permits.  No legal proceedings
are pending or, to the knowledge of Borrower, threatened with

 

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respect to the zoning of the Property.  Neither the zoning nor any other right
to construct, use or operate the Property is in any way dependent upon or
related to any property other than the Property.  All certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required of Owner for the legal use, occupancy and operation of the
Property for its current use (collectively, the “Licenses”), have been obtained
and are in full force and effect.  The use being made of the Property is in
conformity with the certificate of occupancy issued for the Property and all
other restrictions, covenants and conditions affecting the Property.

 

4.12        Major Contracts.  Neither Borrower nor Owner has entered into, or is
not bound by, any Major Contract which continues in existence, except those
previously disclosed in writing to Lender.  Each of the Major Contracts is in
full force and effect, there are no monetary or other material defaults by
Borrower or Owner thereunder and, to the knowledge of Borrower, there are no
monetary or other material defaults thereunder by any other party thereto.  None
of Borrower, Owner, Manager or any other Person acting on Borrower’s or Owner’s
behalf has given or received any written notice of default under any of the
Major Contracts that remains uncured or in dispute.  Borrower has delivered (or
has caused Owner to deliver) true, correct and complete copies of the Major
Contracts (including all amendments and supplements thereto) to Lender.  No
Major Contract has as a party an Affiliate of Borrower or Owner.

 

4.13        Federal Reserve Regulations; Investment Company Act; Bank Holding
Company.  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
that would be inconsistent with such Regulation U or any other regulation of
such Board of Governors, or for any purpose prohibited by Legal Requirements or
any Loan Document.  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 or (b) subject to any other federal or state law
or regulation which purports to restrict or regulate its ability to borrow
money.  Borrower is not a “bank holding company” or a direct or indirect
subsidiary of a “bank holding company” as defined in the Bank Holding Company
Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors
of the Federal Reserve System.

 

4.14        Easements; Utilities and Public Access.  All easements, cross
easements, licenses, air rights and rights-of-way or other similar property
interests (collectively, “Easements”), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained,
are described in the Title Insurance Policy and are in full force and effect
without default thereunder.  The Property has rights of access to public ways
and is served by water, sewer, sanitary sewer and storm drain facilities
adequate to service the Property for its intended uses.  All public utilities
necessary or convenient to the full use and enjoyment of the Property as an
office property are located in the public right-of-way abutting the Property,
and all such utilities are connected so as to serve the Property without passing
over other property absent a valid irrevocable easement.  All roads necessary
for the use of the Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities.

 

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4.15        Physical Condition.  Except as may be expressly set forth in the
Physical Conditions Report, the Property, including all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages to the Property,
whether latent or otherwise.  Neither Borrower nor Owner has received written
notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would materially and
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or any termination or threatened
termination of any policy of insurance or bond.  No portion of the Property is
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 7.1.1 hereof is in full force and effect with
respect to the Property.  The Improvements have suffered no material casualty or
damage which has not been fully repaired and the cost thereof fully paid.

 

4.16        Leases.  The rent roll attached hereto as Schedule 2 (the “Rent
Roll”) is true, complete and correct in all material respects and the Property
is not subject to any Leases other than the Leases described in the Rent Roll. 
Except as set forth on the Rent Roll:  (a) each Lease is in full force and
effect; (b) the tenants under the Leases have accepted possession of and are in
occupancy of all of their respective demised premises, have commenced the
payment of rent under the Leases, and there are no offsets, claims or defenses
to the enforcement thereof; (c) all rents due and payable under the Leases have
been paid and no portion thereof has been paid for any period more than thirty
(30) days in advance; (d) the rent payable under each Lease is the amount of
fixed rent set forth in the Rent Roll, and there is no claim or basis for a
claim by the tenant thereunder for an adjustment to the rent; (e) no tenant has
made any written claim against the landlord under any Lease which remains
outstanding, to Borrower’s knowledge, there are no defaults on the part of the
landlord under any Lease, and to Borrower’s knowledge, no event has occurred
which, with the giving of notice or passage of time, or both, would constitute
such a default; (f) to Borrower’s knowledge, there is no present material
default by the tenant under any Lease; (g) all security deposits under Leases
are as set forth on the Rent Roll and are held consistent with Section 3.9 of
the Senior Loan Agreement; (h) Owner is the sole owner of the entire lessor’s
interest in each Lease; (i) each Lease is the valid, binding and enforceable
obligation of Owner and the applicable tenant thereunder; (j) no Person has any
possessory interest in, or right to occupy, the Property except under the terms
of the Leases; (k) intentionally omitted; (l) all work to be performed by Owner
under each Lease has been performed as required and has been accepted by the
applicable tenant under such Lease; (m) any payments, free rent, partial rent,
rebate of rent or other payments, credits, allowances or abatements required to
be given by Owner to any tenant under any Lease has already been received by
such tenant; (n) intentionally omitted; (o) all tenants under the Leases are
open for business and paying full, unabated rent; (p) there are no brokerage
fees or commissions due and payable in connection with the leasing of space at
the Property, and no such fees or commissions will become due and payable in the
future in connection with the Leases, including by reason of any extension of
such Lease or expansion of the space leased thereunder; (q) no tenant under any
Lease 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, to Borrower’s knowledge, does anyone except such tenant and its
employees occupy such leased premises; and (r) no tenant under any

 

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Lease has any right or option for additional space in the Improvements.  The
copies of the Leases delivered to Lender are true, complete and accurate in all
respects, and there are no oral agreements with respect thereto.  None of the
Leases contains any option to purchase or right of first refusal to purchase the
Property or any part thereof.  Neither the Leases nor the Rents have been
assigned or pledged except to Senior Lender in accordance with the Senior Loan
Documents, and no other Person has any interest therein except the tenants
thereunder.

 

4.17        Fraudulent Transfer.  Borrower has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor,
and Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents.  Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total probable liabilities, including subordinated,
unliquidated, disputed or contingent liabilities.  The fair saleable value of
Borrower’s assets is, and immediately following the making of the Loan, will be,
greater than Borrower’s probable liabilities, including the maximum amount of
its contingent liabilities on its debts as such debts become absolute and
matured.  Borrower’s assets do not and, immediately following the execution and
delivery of the Loan Documents 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 debts and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of the obligations of Borrower).

 

4.18        Ownership of Borrower and Owner.  Borrower’s exact legal name is:
Peace Coliseum Mezzanine, LLC.  Borrower is of the following organizational type
(e.g., corporation, limited liability company): limited liability company, and
the jurisdiction in which Borrower is organized is: Delaware.  Borrower’s U.S.
federal tax I.D. number is 84-4717013 and Borrower’s Delaware Organizational
I.D. number is 7848564.  Borrower is the owner of 100% of the issued and
outstanding ownership interests in Owner, free and clear of all Liens and
encumbrances.  No other ownership interests in Owner have been issued or are
issuable.  All of the ownership interests in Owner have been duly and validly
issued, have been fully paid for and are non-assessable.  There are no options
or rights to acquire any ownership interests in Owner.  The sole managing member
of Borrower is Sole Member.  The membership interests in Borrower are owned free
and clear of all Liens, warrants, options and rights to purchase, except for
Liens in favor of Lender.  Borrower has no obligation to any Person to purchase,
repurchase or issue any ownership interest in it.  The organizational chart
attached hereto as Schedule 3 is true, complete and accurate in all respects and
illustrates all Persons who have a direct ownership interest in Borrower.

 

4.19        Purchase Options.  Neither the Property nor any part thereof is
subject to any purchase options, rights of first refusal, rights of first offer
or other similar rights in favor of third parties.

 

4.20        Management Agreement.  No Management Agreement is in place with
respect to the Property.

 

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4.21        Hazardous Substances.  Except for information disclosed in the
Environmental Site Assessment (a) to Borrower’s knowledge, the Property is not
in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean
Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes (including with respect to Toxic Mold), any local law
requiring related permits and licenses and all amendments to and regulations in
respect of the foregoing laws (collectively, “Environmental Laws”); (b) the
Property is not subject to any private or governmental Lien or to Borrower’s
knowledge judicial or administrative notice or action or inquiry, investigation
or claim relating to hazardous, toxic and/or dangerous substances, toxic mold or
fungus of a type that could reasonably be expected to pose a risk to human
health or the environment or would materially adversely impact the value of the
Property (“Toxic Mold”) or any other substances or materials which are included
under or regulated by Environmental Laws (collectively, “Hazardous Substances”);
(c) to Borrower’s knowledge, no Hazardous Substances are or have been (including
the period prior to Owner’s acquisition of the Property), discharged, generated,
treated, disposed of or stored on, incorporated in, or removed or transported
from the Property other than in compliance with all Environmental Laws; (d) to
Borrower’s knowledge, no Hazardous Substances are present in, on or under any
nearby real property which could reasonably be expected to migrate to or
otherwise affect the Property; (e) to Borrower’s knowledge, no Toxic Mold is on
or about the Property which requires remediation; (f) no underground storage
tanks exist on the Property and the Property has never been used as a landfill;
and (g) there have been no environmental investigations, studies, audits,
reviews or other analyses conducted by or on behalf of Borrower or Owner, which
are in Borrower’s or Owner’s possession which have not been provided to Lender. 
Without limiting the generality of the foregoing, Lender acknowledges that the
Property consists of a portion of real property commonly known as the Midvale
Slag Superfund Site and that the Institutional Controls and Restrictions include
procedures and requirements intended to prevent human exposure to Hazardous
Substances that remain at the Property.

 

4.22        Name; Principal Place of Business.  Borrower does not use and will
not use any trade name and has not done and will not do business under any name
other than its actual name set forth herein.  Owner does not use and Borrower
will cause Owner not to use any trade name or do any business under any name
other than its actual name set forth in the Senior Loan Agreement.  The
principal place of business of Borrower and Owner is the primary address for
notices as set forth in Section 6.1 hereof, and neither Borrower nor Owner has
any other place of business.

 

4.23        Other Debt.  There is no indebtedness with respect to Borrower,
Owner or the Property or any excess cash flow or any residual interest therein,
whether secured or unsecured, other than Permitted Encumbrances, the Senior
Loan, Permitted Indebtedness and with respect to Owner, “Permitted Indebtedness”
(as such term is defined in the Senior Loan Agreement).

 

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4.24        Pledged Collateral.

 

(a)           Borrower is the sole beneficial owner of the Pledged Collateral
and no Lien exists or will exist (except the Permitted Encumbrances) upon the
Pledged Collateral at any time (and no right or option to acquire the same
exists in favor of any other Person).

 

(b)           The Pledged Collateral is not and will not be subject to any
contractual restriction upon the transfer thereof (except for any such
restriction contained in the Pledge or the Senior Loan Documents).

 

(c)           The chief place of business of Borrower and the office where
Borrower keeps its records concerning the Pledged Collateral will be located at
all times at the address specified as Borrower’s address in Section 6.1.

 

(d)           The Pledged Securities have been duly authorized and validly
issued and are fully paid and non-assessable and are not subject to any options
to purchase or similar rights of any Person.

 

(e)           The Pledge, together with Lender’s possession of the Certificate,
will create a valid, perfected first priority lien on Borrower’s interest in the
Pledged Collateral, all in accordance with the terms thereof.  Upon the proper
exercise of its rights and remedies under the Pledge, Lender will succeed to all
of the rights, titles and interest of Borrower in Owner without the consent of
any other Person and will, without the consent of any other Person, be admitted
as the sole member of Owner.

 

4.25        Senior Loan.  The Senior Loan has been fully funded in the amount of
$34,500,000.00.  The outstanding principal balance of the Senior Loan, as of the
date hereof, is $34,500,000.00.  No default, breach, violation or event of
default has occurred under any Senior Loan Document which remains uncured or
unwaived and, to Borrower’s knowledge, no circumstance, event or condition has
occurred or exists which, with the giving of notice and/or the expiration of the
applicable period would constitute an Event of Default under the Senior Loan
Documents.  Each and every representation and warranty of Owner, made to Senior
Lender contained in any one or more of the Senior Loan Documents is true,
correct, complete and accurate in all material respects as of the date hereof
and are hereby incorporated into this Agreement and deemed made hereunder as and
when made thereunder and shall remain incorporated without regard to any waiver,
amendment or other modification thereof by the Senior Lender or to whether the
related Senior Loan Document has been repaid, defeased or otherwise terminated,
unless otherwise consented to in writing by Lender.

 

4.26        Perfection of Accounts.  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 Mezzanine Account and the Subaccounts 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 or otherwise conveyed the
Mezzanine Account or any of the Subaccounts;

 

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(b)           To Borrower’s knowledge, the Mezzanine Account and the Subaccounts
constitute “deposit accounts” or “securities accounts” within the meaning of the
Uniform Commercial Code; and

 

(c)           None of the Mezzanine Account or any of the Subaccounts are in the
name of any Person other than Borrower, as pledgor, or Lender, as pledgee. 
Borrower has not consented to the Deposit Bank’s complying with instructions
with respect to the Mezzanine Account or any of the Subaccounts from any Person
other than Lender.

 

4.27        No Contractual Obligations.  Other than the Senior Loan Documents,
the Loan Documents and the organizational documents of Owner and Borrower, as of
the date of this Agreement, Borrower is not subject to any Contractual
Obligations and has not entered into any agreement, instrument or undertaking by
which it or its assets are bound.

 

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

 

4.29        FIRPTA.  Neither Borrower nor Owner is a “foreign person” within the
meaning of Sections 1445 or 7701 of the Code.

 

4.30        Fiscal Year.  Each fiscal year of Borrower and Owner commences on
January 1.

 

4.31        Intellectual Property/Websites.  Other than as set forth on Schedule
5 attached hereto, neither Borrower nor Owner (a) has or holds any tradenames,
trademarks, servicemarks, logos, copyrights, patents or other intellectual
property (collectively, “Intellectual Property”) with respect to the Property or
the use or operations thereof or (b) is the registered holder of any website
with respect to the Property (other than tenant websites).  The foregoing shall
not apply to any Intellectual Property of Guarantor.

 

4.32        Operations Agreements.  Each Operations Agreement is in full force
and effect and neither Borrower nor Owner nor, to Borrower’s knowledge, any
other party to any Operations Agreement, is in material default thereunder, and
to Borrower’s knowledge, there are no conditions which, with the passage of time
or the giving of notice, or both, would constitute a material default
thereunder.  Except as described herein, the REA has not been modified, amended
or supplemented.

 

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

 

All of the representations and warranties in this Article 4 and elsewhere in the
Loan Documents (i) shall survive for so long as any portion of the Debt remains
owing to Lender and (ii) shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf, provided, however, that the representations, warranties and
covenants set forth in Section 4.21 above shall survive in perpetuity.

 

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5.                                      COVENANTS

 

Until the end of the Term, Borrower hereby covenants and agrees with Lender
that:

 

5.1          Existence.  Each of Borrower and Sole Member shall (and Borrower
shall cause Owner to) (a) do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights, and
franchises, (b) continue to engage in the business presently conducted by it,
(c) obtain and maintain all Licenses and all applicable governmental
authorizations which, in not obtained, could reasonably be expected to result in
a Material Adverse Effect, and (d) qualify to do business and remain in good
standing under the laws of each jurisdiction, in each case as and to the extent
required for the ownership, maintenance, management and operation of the
Property, except where the failure to so qualify could not reasonably be
expected to result in a Material Adverse Effect.

 

5.2          Property Taxes and Other Charges.  Borrower shall (or shall cause
Owner to) pay all Property Taxes and Other Charges prior to delinquency, and
deliver to Lender receipts for payment or other evidence satisfactory to Lender
that the Property Taxes and the Other Charges have been so paid no later than
thirty (30) days before they would be delinquent if not paid (provided, however,
that Borrower need not pay (or cause Owner to pay) such Real Estate Taxes nor
furnish (nor cause Owner to furnish) such receipts for payment of Real Estate
Taxes paid by Senior Lender pursuant to the Senior Loan Documents).  Subject to
the contest rights of Owner set forth in the Senior Loan Documents or Borrower
hereunder, Borrower shall promptly pay (or cause Owner or a tenant to pay) for
all franchise fees, income Taxes and other impositions and Taxes imposed by
Governmental Authorities on Owner, Borrower and Sole Member.  Subject to the
contest rights of Owner set forth in the Senior Loan Documents or Borrower
hereunder, Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien or charge against the Property, and shall promptly pay (or
cause Owner to pay) for all utility services provided to the Property.  After
prior notice to Lender, Borrower may cause Owner, at Owner’s expense, or permit
any tenant, at such tenant’s expense, to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application of any Property Taxes or Other
Charges, provided that (a) no Event of Default has occurred and is continuing,
(b) such proceeding shall be permitted under and be conducted in accordance with
all applicable statutes, laws and ordinances, (c) such proceeding shall suspend
the collection of the applicable Property Taxes or such Other Charges, (d) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or Owner is subject Senior
Loan Documents, and shall not constitute a default thereunder, (e) no part of or
interest in the Property will be in imminent danger of being sold, forfeited,
terminated, canceled or lost, (f) unless Borrower, Owner or a tenant shall have
paid such taxes under protest, Borrower or Owner shall have furnished such
security as may be required in the proceeding, or as may be requested by Lender,
to insure the payment of any such Property Taxes or Other Charges, together with
all interest and penalties thereon, which shall not be less than 125% of the
Property Taxes and Other Charges being contested (provided, however, that no
such security will be required if Owner has provided adequate security for the
same to Senior Lender in accordance with the Senior Loan Documents),
(g) Borrower shall promptly upon final determination thereof pay (or cause Owner
to pay) the amount of such Property Taxes or Other Charges, together with all
costs, interest and penalties, (h) such contest shall not affect the ownership,
use or occupancy of the Property, and

 

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(i) Borrower shall (or shall cause Owner to), upon request by Lender, give
Lender prompt notice of the status of such proceedings and/or confirmation of
the continuing satisfaction of the conditions set forth in clauses (a) through
(h) of this Section 5.2.  Lender may pay over any such security 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
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.  Lender acknowledges that
Borrower is currently contesting Borrower’s Real Estate Taxes payable for
calendar year 2019.  As Borrower has paid such Real Estate Taxes under protest
to the applicable taxing authority, Borrower will not be required to make any
additional deposits of such Real Estate Taxes for calendar year 2019 under the
Senior Loan Agreement, it being understood, however, that Lender will escrow for
Real Estate Taxes pursuant to Section 3.3 of the Senior Loan Agreement.

 

5.3          Access to Property.  Subject to the rights of tenants in possession
of the Property, Borrower shall permit (or cause Owner to permit) agents,
representatives, consultants and employees of Lender to inspect the Property or
any part thereof at reasonable hours upon reasonable advance notice (which may
be given verbally).  Lender or its agents, representatives, consultants and
employees as part of any inspection may take soil, air, water, building material
and other samples from the Property, subject to the rights of tenants under
Leases.  Lender shall use commercially reasonable efforts to not disrupt the
operations of the Property and, if requested by Borrower, any such inspection
shall be accompanied by a representative of Borrower or Owner.  Notwithstanding
the foregoing (i) any request by Lender to perform environmental testing shall
be subject to Section 5.8 hereof and (ii) Lender shall not order a property
condition report more than one (1) time in any two (2) year period or more than
three (3) times during the Term unless there is an Event of Default or Lender,
in its reasonable discretion, shall have determined that the Property is not
being maintained in accordance with Section 5.4.1 hereof.

 

5.4          Repairs; Maintenance and Compliance; Alterations.

 

5.4.1       Repairs; Maintenance and Compliance.  Borrower shall, subject to the
provisions of Section 7.2 and 7.3 of the Senior Loan Agreement, cause Owner to
at all times maintain, preserve and protect all franchises and trade names of
Owner, and Borrower shall cause Owner to maintain the Property in a good and
safe condition and repair and shall not (and shall not permit Owner to) remove,
demolish or alter the Improvements or Equipment (except for Capital Expenses and
alterations performed in accordance with Section 5.4.2 hereof and normal
replacement of Equipment with Equipment of equivalent value and functionality or
which is worn-out, damaged or obsolete).  Borrower shall promptly comply with
all Legal Requirements and promptly cure (or cause Owner to cure) properly any
violation of a Legal Requirement.  Borrower shall notify Lender in writing
within Five (5) Business Days after Borrower first receives notice of any such
non-compliance.  Borrower shall (or shall cause Owner to) promptly repair,
replace or rebuild any part of the Property that becomes damaged, worn or
dilapidated and shall (or shall cause Owner to) complete and pay for any
Improvements at any time in the process of construction or repair.

 

5.4.2       Alterations.  Borrower may, without Lender’s consent, perform (or
shall cause Owner to perform) alterations to the Improvements and Equipment
which are expressly

 

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permitted pursuant to Section 5.4.2 of the Senior Loan Agreement.  Borrower
shall not perform (or allow Owner to perform) any Material Alteration without
Lender’s prior written consent, which consent shall not be unreasonably withheld
or delayed; provided, however, that Lender may withhold consent to any
alteration the cost of which is reasonably estimated to exceed $1,000,000 or
which is likely to result in a decrease of Net Operating Income by two and
one-half percent (2.5%) or more for a period of thirty (30) days or longer.  In
connection with any Material Alteration:  (i) at Lender’s election, if the
aggregate cost for the Material Alteration is expected to exceed $500,000,
(A) Lender shall have received and approved (which approval shall not be
unreasonably withheld or delayed), any general contractor’s agreement,
architect’s agreement and the plans and specifications for such work prepared by
a licensed architect, in such instances where it is customary to have such plans
and specifications prepared by a licensed architect (e.g., work of a structural
nature) and (B) Lender shall have approved (which approval, including as to any
reasonable list of proposed general contractors or architects submitted by
Borrower, shall not be unreasonably withheld or delayed) the general contractor
and architect retained for such work; (ii) Lender has the right to retain a
Construction Consultant to monitor the work in question, and upon the completion
of such Material Alteration Lender shall have received a report from
Construction Consultant that all of the work completed has been done
substantially in compliance with the approved plans and specifications and
applicable Legal Requirements; and (iii) Lender may, as a condition to giving
its consent to a Material Alteration, require that Borrower deliver to Lender
security for payment of the cost of such Material Alteration in an amount equal
to 115% of the cost of the Material Alteration as estimated by Lender (provided,
however, that no such security will be required if Owner has provided adequate
security for the same to Senior Lender in accordance with the Senior Loan
Documents).  Upon substantial completion of the Material Alteration, Borrower
shall provide evidence satisfactory to Lender that (A) the Material Alteration
was constructed in accordance with applicable Legal Requirements and
substantially in accordance with plans and specifications approved by Lender
(which approval shall not be unreasonably withheld or delayed), (B) all
contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of liens and (C) all material
Licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued.  Borrower shall reimburse Lender upon demand
for all out-of-pocket costs and expenses (including the reasonable fees of
Construction Consultant and any architect, engineer or other professional
engaged by Lender) incurred by Lender in reviewing plans and specifications or
in making any determinations necessary to implement the provisions of this
Section 5.4.2.

 

5.5          Performance of Other Agreements.  Borrower shall observe and
perform and cause Owner to observe and perform each and every term required to
be observed or performed by it pursuant to the terms of any agreement or
instrument affecting or pertaining to the Collateral or the Property, including
the Loan Documents.

 

5.6          Cooperate in Legal Proceedings.  Borrower shall cooperate fully
with Lender with respect to, and permit Lender, at its option, and at Borrower’s
sole cost and expense, to participate in, any proceedings before any
Governmental Authority which may in any way affect the rights of Lender under
any Loan Document.

 

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5.7          Further Assurances.  Borrower shall, at Borrower’s sole cost and
expense:  (a) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary,
to evidence, preserve and/or protect the Collateral and/or for the better and
more effective carrying out of the intents and purposes of the Loan Documents,
as Lender may reasonably require from time to time; (b) provide all such
information as Lender may reasonably require to ensure Borrower’s ongoing
compliance with Sections 5.26 and 5.32 hereof, including ensuring compliance
with all “know your customer” procedures as Lender may from time-to-time
institute with respect to loans that are of a similar size and nature as the
Loan; and (c) upon Lender’s request therefor given from time to time after the
occurrence and during the continuance of an Event of Default pay for (i) reports
of UCC, federal tax lien, state tax lien, judgment and pending litigation
searches with respect to Owner, Borrower and Sole Member and (ii) searches of
title to the Property, each such search to be conducted by search firms
reasonably designated by Lender in each of the locations reasonably designated
by Lender.

 

5.8          Environmental Matters.

 

5.8.1       Hazardous Substances.  So long as Owner owns or is in possession of
the Property, Borrower shall (or shall cause Owner to) (i) keep the Property
free from Hazardous Substances and in compliance with all Environmental Laws
(except those typically used in properties similar to the Property, provided the
same are used, held and stored in accordance with Environmental Laws and those
identified in the Environmental Report and in compliance with the Institutional
Controls and Restrictions), (ii) promptly notify Lender if Borrower shall become
aware that (A) any Hazardous Substance is on or near the Property (except those
identified in the Environmental Report and in compliance with the Institutional
Controls and Restrictions), (B) the Property is in violation of any
Environmental Laws or (C) any condition on or near the Property shall pose a
threat to the health, safety or welfare of humans and (iii) remove such
Hazardous Substances (except those identified in the Environmental Report and in
compliance with the Institutional Controls and Restrictions) and/or cure such
violations and/or remove such threats, as applicable, as required by law (or as
shall be required by Lender in the case of removal which is not required by law,
but in response to the opinion of a licensed hydrogeologist, licensed
environmental engineer or other qualified environmental consulting firm engaged
by Lender (“Lender’s Consultant”)), promptly after Borrower becomes aware of
same, at Borrower’s sole expense.  Nothing herein shall prevent Borrower from
recovering such expenses from any other party that may be liable for such
removal or cure.

 

5.8.2       Environmental Monitoring.

 

(a)           Borrower shall give prompt written notice to Lender of (i) any
proceeding or written inquiry by any party (including any Governmental
Authority) with respect to the presence of any Hazardous Substance on, under,
from or about the Property, (ii) all claims made or threatened in writing by any
third party (including any Governmental Authority) against Borrower, Owner or
the Property or any party occupying the Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) Borrower’s or Owner’s
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Property that could reasonably be expected to cause the
Property to be subject to any investigation or cleanup pursuant to any
Environmental Law (except those identified in the Environmental Report and in

 

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compliance with the Institutional Controls and Restrictions).  Upon becoming
aware of the presence of mold or fungus at the Property, Borrower shall (or
shall cause Owner to) (A) undertake an investigation to identify the
source(s) of such mold or fungus and shall develop and implement an appropriate
remediation plan to eliminate the presence of any Toxic Mold, (B) perform or
cause to be performed all acts reasonably necessary for the remediation of any
Toxic Mold (including taking any action necessary to clean and disinfect any
portions of the Property affected by Toxic Mold, including providing any
necessary moisture control systems at the Property), and (C) provide evidence
reasonably satisfactory to Lender of the foregoing.  Borrower shall permit (and
shall cause Owner to permit) Lender to join and participate in, as a party if
Lender so elects, any legal or administrative proceedings or other actions
initiated with respect to the Property in connection with any Environmental Law
or Hazardous Substance, and Borrower shall pay (or shall cause Owner to pay) all
actual, out of pocket reasonable attorneys’ fees and disbursements incurred by
Lender in connection therewith.

 

(b)           If an Event of Default exists of if Lender reasonably believes
that Hazardous Materials exist on the Property in violation of Environmental
Laws (excluding those disclosed in the Institutional Controls and Restrictions),
Borrower shall (or shall cause Owner to) provide an inspection or audit of the
Property prepared by a licensed hydrogeologist, licensed environmental engineer
or qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near the Property, and if
an Event of Default has occurred and is continuing, or if Lender in its good
faith judgment determines that reasonable cause exists for the performance of
such environmental inspection or audit, then the actual, out of pocket cost and
expense of such audit or inspection shall be paid by Borrower.  Such inspections
and audit may include soil borings and ground water monitoring.  If Borrower (or
Owner) fails to provide any such inspection or audit within thirty (30) days
after such request, Lender may order same, and Borrower hereby grants to Lender
and its employees and agents access to the Property and a license to undertake
such inspection or audit, provided, any such inspection or audit shall comply
with the Institutional Controls and Restrictions.

 

(c)           If any environmental site assessment report prepared in connection
with such inspection or audit recommends that an operations and maintenance plan
be implemented for any Hazardous Substance, whether such Hazardous Substance
existed prior to the ownership of the Property by Owner, or presently exists or
is reasonably suspected of existing, Borrower shall cause (or shall cause Owner
to cause) such operations and maintenance plan to be prepared and implemented at
its expense, and with respect to any Toxic Mold, Borrower shall (or shall cause
Owner to) take all action necessary to clean and disinfect any portions of the
Improvements affected by Toxic Mold in or about the Improvements, including
providing any necessary moisture control systems at the Property.  If any
investigation, site monitoring, containment, cleanup, removal, restoration or
other work of any kind is reasonably necessary under an applicable Environmental
Law (“Remedial Work”), Borrower shall commence (or shall cause Owner to
commence) all such Remedial Work within thirty (30) days after becoming aware of
the same and thereafter diligently prosecute to completion all such Remedial
Work within such period of time as may be required under applicable law.  All
Remedial Work shall be performed by licensed contractors approved in advance by
Lender and under the supervision of a consulting engineer approved by Lender. 
All costs of such Remedial Work shall be paid by Borrower, including Lender’s
out-of-pocket reasonable attorneys’ fees and disbursements incurred in
connection with the monitoring or review of such Remedial Work.  If Borrower
does

 

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not (or does not cause Owner to) timely commence and diligently prosecute to
completion the Remedial Work, Lender may (but shall not be obligated to) cause
such Remedial Work to be performed at Borrower’s expense.  Notwithstanding the
foregoing, Borrower shall not be required to commence (or cause Owner to
commence) such Remedial Work within the above specified time period: (i) if
prevented from doing so by any Governmental Authority, (ii) if commencing such
Remedial Work within such time period would result in Borrower or Owner or such
Remedial Work violating any Environmental Law or the Institutional Controls and
Restrictions, or (iii) if Borrower or Owner, at its expense and after prior
written notice to Lender, is contesting by appropriate legal, administrative or
other proceedings, conducted in good faith and with due diligence, the need to
perform Remedial Work.  Owner shall have the right to contest the need to
perform such Remedial Work, provided that, (A) Owner is permitted by the
applicable Environmental Laws to delay performance of the Remedial Work pending
such proceedings, (B) neither the Property nor any part thereof or interest
therein will be sold, forfeited or lost if Owner fails to promptly perform the
Remedial Work being contested, and if Owner fails to prevail in such contest,
Borrower or Owner would thereafter have the opportunity to perform such Remedial
Work, (C) Lender would not, by virtue of such permitted contest, be exposed to
any risk of any civil liability for which Borrower or Owner has not furnished
additional security as provided in clause (D) below, or to any risk of criminal
liability, and neither the Property nor any interest therein would be subject to
the imposition of any Lien for which Borrower or Owner has not furnished
additional security as provided in clause (D) below, as a result of the failure
to perform such Remedial Work and (D) Borrower or Owner shall have furnished to
Lender additional security in respect of the Remedial Work being contested and
the loss or damage that may result from Borrower’s or Owner’s failure to prevail
in such contest in such amount as may be reasonably requested by Lender but in
no event more than 125% of the cost of such Remedial Work as estimated by Lender
or Lender’s Consultant and any loss or damage that may result from Borrower’s or
Owner’s failure to prevail in such contest (provided, however, that no such
security will be required if Owner has provided adequate security for the same
to Senior Lender in accordance with the Senior Loan Documents).

 

(d)           Borrower shall not install or permit to be installed on the
Property any underground storage tank.

 

5.8.3       O & M Program.  In the event any environmental report delivered to
Lender in connection with the Loan recommends the development of or continued
compliance with an operation and maintenance program for the Property (including
with respect to the presence of asbestos and/or lead-based paint) (“O & M
Program”), Borrower shall (or shall cause Owner to) develop (or continue to
comply with, as the case may be) such O & M Program and shall, during the term
of the Loan, including any extension or renewal thereof, comply in all material
respects with the terms and conditions of the O & M Program.

 

5.9          Title to the Pledged Collateral.  Borrower will warrant and defend
the title to the Collateral (and shall cause Owner to warrant and defend the
title to the Property), and the validity and priority of all Liens granted or
otherwise given to Lender under the Loan Documents, subject only to Permitted
Encumbrances, against the claims of all Persons not claiming under Permitted
Encumbrances.

 

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5.10        Leases.

 

5.10.1     Generally.  Upon request, Borrower shall furnish (or shall cause
Owner to furnish) Lender with executed copies of all Leases then in effect.  All
renewals of Leases and all proposed leases for which terms are not already set
forth in the respective leases shall provide for rental rates and terms
comparable to existing local market rates and shall be arm’s-length transactions
with bona fide, independent third-party tenants.

 

5.10.2     Material Leases.

 

(a)           Borrower shall not permit Owner to enter into a proposed Material
Lease or a proposed renewal, extension or modification of an existing Material
Lease (other than confirmatory amendments entered into to confirm the occurrence
of an event contemplated by the Material Lease or a unilateral tenant extension
rights) without the prior written consent of Lender, which consent shall not, so
long as no Event of Default is continuing, be unreasonably withheld, conditioned
or delayed.  Prior to seeking Lender’s consent to any Material Lease, Borrower
shall deliver (or cause Owner to deliver) to Lender a copy of such proposed
lease (a “Proposed Material Lease”), together with any information reasonably
requested by Lender relating to the proposed tenant and lease guarantor (if
applicable), including any credit and background checks performed by Owner
relating to such tenant and lease guarantor.  Lender shall approve or disapprove
each Proposed Material Lease or proposed renewal, extension or modification of
an existing Material Lease for which Lender’s approval is required under this
Agreement within fifteen (15) Business Days of the submission by Borrower to
Lender of a written request for such approval, accompanied by a final copy of
the Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease.  If requested by Borrower, Lender will grant
conditional approvals of Proposed Material Leases or proposed renewals,
extensions or modifications of existing Material Leases at any stage of the
leasing process, from initial “term sheet” through negotiated lease drafts,
provided that Lender shall retain the right to disapprove any such Proposed
Material Lease or proposed renewal, extension or modification of an existing
Material Lease, if subsequent to any preliminary approval material changes are
made to the terms previously approved by Lender, or additional material terms
are added that had not previously been considered and approved by Lender in
connection with such Proposed Material Lease or proposed renewal, extension or
modification of an existing Material Lease.

 

(b)           Provided that no Event of Default is then continuing, to the
extent, if any, that Lender’s prior written approval is required pursuant to
this Section 5.10.2, such request for approval shall be deemed approved if
(i) Lender shall have failed to notify Borrower of its approval or disapproval
within fifteen (15) Business Days following Lender’s receipt of Borrower’s
written request together with any and all required material information and
documentation relating thereto reasonably required by Lender to reach a
decision, (ii) Borrower shall have delivered or caused to be delivered to Lender
each of the written notices of Lender’s failure to respond to Borrower’s request
within such period in the manner as set forth below, and (iii) Lender shall have
failed to notify Borrower of its approval or disapproval within such fifteen
(15) Business Day period following Lender’s receipt of the second notice
provided for below; provided, however, that if such request is of such nature
that it cannot reasonably be approved within such fifteen (15) Business Day
period, and Lender is diligently pursuing such approval, Lender shall have such
additional time as is reasonably necessary to complete such approval upon notice
to Borrower of the need for such additional time, it being agreed that no such

 

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extension shall be for a period in excess of an additional ten (10) Business
Days.  Borrower shall be required to provide Lender, upon Lender’s request, with
such material information and documentation as may be reasonably required by
Lender, in its reasonable discretion, including lease comparables and other
market information as reasonably required by Lender to reach a decision.  In
order to be effective for the purposes of triggering the time periods set forth
above for Lender to respond, all requests by Borrower must contain the
aforementioned information together with a written notice sent in accordance
with Section 6.1 hereof to Lender marked “PRIORITY” and shall conspicuously
state in a font size that is not less than fourteen (14) point bold type
“PURSUANT TO SECTION 5.10.2 OF THE MEZZANINE LOAN AGREEMENT, THIS IS BORROWER’S
FIRST NOTICE OF REQUEST FOR APPROVAL OF THE LEASE HEREIN PROVIDED.  IF LENDER
DOES NOT DECLINE APPROVAL IN WRITING OR REQUEST ADDITIONAL REASONABLE
INFORMATION IN WRITING WITHIN FIFTEEN (15) BUSINESS DAYS OF ITS RECEIPT OF THIS
LETTER SUCH LEASE SHALL BE DEEMED APPROVED” and if Lender has failed to so
respond by the tenth (10th) Business Day, Borrower shall send a second notice
also marked “PRIORITY” and conspicuously stating in a font size that is not less
than fourteen (14) point bold type “PURSUANT TO SECTION 5.10.2 OF THE MEZZANINE
LOAN AGREEMENT, THIS IS BORROWER’S SECOND AND FINAL NOTICE OF REQUEST FOR
APPROVAL OF THE LEASE HEREIN PROVIDED.  IF LENDER DOES NOT DECLINE APPROVAL IN
WRITING OR REQUEST ADDITIONAL REASONABLE INFORMATION IN WRITING WITHIN FIVE
(5) BUSINESS DAYS OF ITS RECEIPT OF THIS LETTER SUCH LEASE SHALL BE DEEMED
APPROVED.”

 

5.10.3     Minor Leases.  Notwithstanding the provisions of Section 5.10.2
hereof, provided that no Event of Default is continuing, renewals, amendments
and modifications of existing Leases and proposed leases, shall not be subject
to the prior approval of Lender provided (i) the proposed lease would be a Minor
Lease or the existing Lease as amended or modified or the renewal Lease is a
Minor Lease, (ii) the proposed lease shall be written substantially in
accordance with the standard form of Lease which shall have been approved by
Lender, (iii) the proposed Lease shall be with a tenant that is creditworthy, as
reasonably determined by Borrower, (iv)  the Lease as amended or modified or the
renewal Lease or series of leases or proposed lease or series of leases:
(A) shall provide for net effective rental rates comparable to existing local
market rates, (B) shall have an initial term (together with all renewal options)
of not less than three (3) years or greater than ten (10) years (including all
extension options), (C) intentionally omitted, and (D) shall not contain any
option to purchase, any right of first refusal to purchase, any right to
terminate (except in the event of the destruction or condemnation of
substantially all of the Property), or any other provision which could
reasonably be expected to adversely affect the rights of Lender under the Loan
Documents in any material respect.  Borrower shall deliver (or cause Owner to
deliver) to Lender copies of all Leases which are entered into pursuant to the
preceding sentence together with Borrower’s certification that it (or Owner) has
satisfied all of the conditions of the preceding sentence within ten (10) days
after the execution of the Lease.

 

5.10.4     Additional Covenants with respect to Leases.  Borrower shall cause
Owner to (a) observe and perform the material obligations imposed upon the
lessor under the Leases and shall not do or permit anything to materially
adversely impair the value of the Leases as security for the Debt; (b) promptly
send copies to Lender of all notices of default that Owner

 

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shall send or receive under any Lease; (c) enforce, in accordance with
commercially reasonable practices for properties similar to the Property, the
terms, covenants and conditions in the Leases to be observed or performed by the
lessees, short of termination thereof; (d) not collect any of the Rents more
than one (1) month in advance (other than security deposits); (e) not execute
any other assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents and the Senior Loan Documents); (f) not
modify any Lease in a manner inconsistent with the Loan Documents; (g) not
convey or transfer or suffer or permit a conveyance or transfer of the Property
so as to effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, lessees under Leases; (h) not consent to any
assignment of or subletting under any Lease unless required in accordance with
its terms without the prior consent of Lender, which, with respect to a
subletting, may not, so long as no Event of Default is continuing, be
unreasonably withheld or delayed; and (i) not cancel or terminate any Lease or
accept a surrender thereof (except in the exercise of Owner’s commercially
reasonable judgment in connection with a tenant default under a Minor Lease)
without the prior consent of Lender, which consent shall not, so long as no
Event of Default is continuing, be unreasonably withheld, conditioned or
delayed.

 

5.11        Estoppel Statement.  (1)  After request by Lender, Borrower shall
within ten (10) days furnish Lender with a statement addressed to Lender, its
successors and assigns, duly acknowledged and certified, setting forth (i) the
unpaid Principal, (ii) the Interest Rate, (iii) the date installments of
interest were last paid, (iv) any offsets or defenses to the payment of the
Debt, and (v) that the Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification.

 

(a)           Borrower shall (or shall cause Owner to) use commercially
reasonable efforts to deliver to Lender, upon request, estoppel certificates
from each party under any Operations Agreement, in form and substance reasonably
satisfactory to Lender; provided, that Borrower (or Owner) shall not be required
to deliver such certificates more than three (3) times during the Term and not
more frequently than once per calendar year (or twice during any calendar year
in which a Securitization occurs).

 

5.12        Property Management.

 

5.12.1     Management Agreement.

 

(a)           As of the date hereof, Owner has not engaged any manager to manage
the Property and pays no property management fee to any manager.  In the event
that Owner enters into a Management Agreement with a Manager, Manager and Owner
shall, as a condition of Lender’s consent, execute a subordination of the
Management Agreement in a form reasonably acceptable to Lender.  Borrower
shall:  (a) cause Owner to cause the Property to be managed pursuant to the
Management Agreement; (b) cause Owner to promptly perform and observe all of the
covenants required to be performed and observed by it under the Management
Agreement and do all things necessary to preserve and to keep unimpaired its
rights thereunder; (c) promptly notify (or cause Owner to notify) Lender of any
default beyond all applicable notice and cure periods under the Management
Agreement of which it is aware; (d) promptly deliver (or cause Owner to deliver)
to Lender a copy of each financial statement, business plan, capital expenditure
plan, and property improvement plan and any other notice, report and estimate

 

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received by Owner under the Management Agreement; and (e) cause Owner to
promptly enforce in a commercially reasonable manner the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement.  If Owner shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Owner to be performed or observed beyond all
applicable notice and cure periods, then, without limiting Lender’s other rights
or remedies under this Agreement or the other Loan Documents, and without
waiving or releasing Borrower from any of its obligations hereunder or under the
Management Agreement, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act as may be appropriate to
cause all the material terms, covenants and conditions of the Management
Agreement on the part of Owner to be performed or observed.  Without Lender’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, Borrower shall not permit Owner to: (i) surrender,
terminate, cancel, extend or renew the Management Agreement or otherwise replace
Manager or enter into any other management agreement (except pursuant to
Section 5.12.2 hereof); (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; (iv) otherwise modify,
change, supplement, alter or amend in any material respect, or waive or release
any of its material rights and remedies under, the Management Agreement; or
(v) suffer or permit the occurrence and continuance of a default beyond any
applicable cure period under the Management Agreement (or any successor
management agreement) if such default permits Manager to terminate the
Management Agreement (or such successor management agreement).

 

(b)           Lender acknowledges that, as of the date hereof, there is no
Management Agreement in place between Owner and a third party for the management
of the Property.  In the event the Overstock Lease is terminated, Borrower
acknowledges that Lender reserves the right to require Owner to employ an
affiliate or third party manager to manage the Property after the date hereof. 
In the event that the Owner should ever elect to employ an affiliate or third
party management company for the management of the Property, the Borrower agrees
(A) that such management company must be approved by Lender and any rating
agency subject to the terms of this Agreement, and the Management Agreement
shall be subject to the prior written approval of the Lender, which approval may
be granted or denied in Lender’s sole and absolute discretion, (B) that such
management company shall not receive a management fee greater than three and
one-half percent (3.5%) of Rents, and (C) to execute (and to cause such
management company to execute) a Manager Consent in accordance with the Senior
Loan Documents.

 

5.12.2     Termination of Manager.  If Owner has entered into a Property
Management Agreement and:  (a) an Event of Default shall be continuing;
(b) Manager is in default under the Management Agreement beyond any applicable
notice and cure periods; (c) Manager shall become a debtor in any bankruptcy or
insolvency proceeding; or (d) upon the gross negligence, malfeasance or willful
misconduct of Manager with respect to the Property, Borrower shall, at the
request of Lender (subject, however, to the rights of Senior Lender under the
Senior Loan Documents), cause Owner to terminate the Management Agreement, and,
subject to the rights of Senior Lender under the Senior Loan Documents, replace
Manager with a replacement manager acceptable to Lender and, if a Securitization
has occurred, the applicable Rating Agencies, on terms and conditions
satisfactory to Lender and, if a Securitization has

 

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occurred, the applicable Rating Agencies.  Borrower’s failure to cause Owner to
appoint an acceptable manager within thirty (30) days after Lender’s request of
Borrower to terminate the Management Agreement shall constitute an immediate
Event of Default.  Borrower may from time to time cause Owner to appoint a
successor manager to manage the Property, provided that such successor manager
and Management Agreement shall be approved in writing by Lender and, if a
Securitization has occurred, the applicable Rating Agencies (and Lender’s
approval may be conditioned upon Borrower delivering a Rating Comfort Letter if
the Loan, by itself or together with other loans, has been the subject of a
Secondary Market Transaction, and if required pursuant to a Pooling and
Servicing Agreement from and after the occurrence of a Secondary Market
Transaction).  If at any time Lender consents to the appointment of a new
manager, such new manager and Borrower shall, as a condition of Lender’s
consent, execute a consent of management agreement in form and substance
satisfactory to Lender (subject to the rights of the Senior Lender under the
Senior Loan Documents).

 

5.13        Special Purpose Bankruptcy Remote Entity.  Each of Borrower and
Owner shall at all times be a Special Purpose Bankruptcy Remote Entity.  Neither
Borrower nor Owner shall directly or indirectly make any change, amendment or
modification to Borrower’s or Owner’s organizational documents, or otherwise
take any action which could result in Borrower or Owner not being a Special
Purpose Bankruptcy Remote Entity.  A “Special Purpose Bankruptcy Remote Entity”
shall have the meaning set forth on Schedule 4 hereto.

 

5.14        Assumption in Non-Consolidation Opinion.  Borrower shall conduct its
business so that the assumptions of fact (with respect to Borrower) made in that
certain substantive non-consolidation opinion letter dated the date hereof
delivered by Borrower’s counsel in connection with the Loan and material to such
counsel’s opinion, shall be true and correct in all respects to the extent
specified in such opinion letter.

 

5.15        Change in Business or Operation of Property.  Borrower shall not
enter into any line of business other than the ownership of Owner.  Borrower
shall not permit Owner to purchase or own any real property other than the
Property or to enter into any line of business other than the ownership and
operation of the 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 or otherwise cease
to operate the Property as an office property or terminate such business for any
reason whatsoever (other than temporary cessation in connection with renovations
to the Property) or cessation as a result of a casualty or Condemnation or a
result of an event of force majeure.

 

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

 

5.17        Affiliate Transactions.  Except with respect to the Overstock Lease
(as defined in the Senior Loan Agreement), Borrower shall not enter into, or be
a party to, any transaction with an Affiliate of Borrower or Owner or any of the
direct or indirect legal or beneficial owners of Borrower or Owner without the
prior written consent of Lender, which consent shall not be

 

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unreasonably withheld if the terms are no less favorable to Borrower or Owner or
such Affiliate than would be obtained in a comparable arm’s-length transaction
with an unrelated third party.

 

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

 

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

 

5.20        Principal Place of Business.  Borrower shall not (and shall not
permit Owner to) change its principal place of business or chief executive
office from the address set forth in Section 6.1 hereof without first giving
Lender thirty (30) days’ prior written notice.

 

5.21        Change of Name, Identity or Structure.  Borrower shall not (and
shall not permit Owner to) change its name, identity (including its trade name
or names) or Borrower’s or Owner’s corporate, partnership or other structure
without notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower’s or Owner’s structure, without first obtaining the prior written
consent of Lender, which consent, may be conditioned upon receipt of an updated
substantive non-consolidation opinion (if Lender reasonably determines that the
same is necessary as a result of Borrower’s new structure).  Borrower shall (and
shall cause Owner to) execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or
maintain the validity, perfection and priority of the security interest granted
herein.  At the request of Lender, Borrower shall execute a certificate in form
satisfactory to Lender listing the trade names under which Owner intends to
operate the Property, and representing and warranting that Owner does business
under no other trade name with respect to the Property.

 

5.22        Indebtedness.  Borrower shall not permit Owner to, directly or
indirectly create, incur or assume any indebtedness other than “Permitted
Indebtedness” (as such term is defined in the Senior Loan Agreement).  Borrower
shall not directly or indirectly create, incur or assume any indebtedness other
than the Debt and unsecured trade payables incurred in the ordinary course of
business relating to the ownership and operation of the Collateral which do not
exceed, at any time, a maximum amount of $10,000 and are paid within sixty (60)
days of the date incurred (collectively, “Permitted Indebtedness”).

 

5.23        Licenses; Intellectual Property; Website.

 

5.23.1     Licenses.  Borrower shall not permit Owner to Transfer any License
owned by Owner and required for the operation of the Property.

 

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5.23.2     Intellectual Property.  Borrower shall keep and maintain (and shall
cause Owner to keep and maintain) all Intellectual Property owned by Owner and
relating to the use or operation of the Property and all Intellectual Property
shall be held by and (if applicable) registered in the name of Borrower or
Owner.  Borrower shall not (and shall not permit Owner to) Transfer or let lapse
any Intellectual Property without Lender’s prior consent.  The foregoing shall
not in any way apply to any Intellectual Property owned by Guarantor.

 

5.23.3     Website.  Any website maintained by Owner with respect to the
Property (other than tenant websites) shall be maintained by or on behalf of
Borrower or Owner and any such website shall be registered in the name of
Borrower or Owner.  Borrower shall not (and shall not permit Owner to) Transfer
any such website without Lender’s prior consent.

 

5.24        Compliance with Restrictive Covenants.  Borrower shall at all times
comply (and shall cause Owner to comply) in all material respects with all
Operations Agreements.  Borrower will not permit Owner to enter into, modify,
waive in any material respect or release any Easements, Operations Agreements or
other Permitted Encumbrances, or suffer, consent to or permit the foregoing,
without Lender’s prior written consent.

 

5.25        ERISA.

 

(a)           Neither Borrower nor Guarantor shall engage or permit Owner to in
any transaction which would cause any obligation, or action taken or to be
taken, hereunder (or the exercise by Lender or any assignee 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 or Section 4975 of the Code.

 

(b)           Borrower’s and Guarantor’s covenant in clause (a) above is based
on the assumption that no portion of the assets used by Lender in connection
with the transactions contemplated under this Agreement and the other Loan
Documents constitutes assets of a “benefit plan investor” as defined in
Section 3(42) of ERISA and with respect to which Borrower or Guarantor is a
party in interest (as defined in Section 3(14) of ERISA) or a disqualified
person (as defined in Section 4975 of the Code) unless the conditions of an
available prohibited transaction exemption are satisfied.

 

(c)           Neither Borrower nor Guarantor shall (and shall not cause Owner
to) maintain, sponsor, contribute to or become obligated to contribute to, or
suffer or permit any ERISA Affiliate of Borrower or Owner to, maintain, sponsor,
contribute to or become obligated to contribute to, any Plan or any Welfare Plan
or permit the assets of Borrower or Guarantor or Owner to become “plan assets,”
within the meaning of 29 C.F.R. 2510.3-101, as modified in application by
Section 3(42) of ERISA.

 

(d)           Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the Term, as requested by Lender, that: 
(i) neither Borrower, Owner nor Guarantor is or maintains an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(ii) neither Borrower, Owner nor Guarantor is subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii)

 

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neither the assets of Borrower, Owner nor Guarantor constitute “plan assets”
within the meaning of 29 C.F.R. Section 2510.3-101, as modified in application
by Section 3(42) of ERISA of any “benefit plan investor” as defined in
Section 3(42) of ERISA.

 

5.26        Prohibited Transfers.

 

5.26.1     Generally. Borrower shall not directly or indirectly (or allow Owner
to directly or indirectly) make, suffer or permit the occurrence of any Transfer
other than a Permitted Transfer.  Borrower shall provide Lender with copies of
all organizational documents (if any) relating to any Permitted Transfer of the
direct interests in Borrower or Owner.  Borrower shall pay on demand all of the
actual, out-of-pocket reasonable costs and expenses incurred by Lender,
including reasonable attorneys’ fees and expenses, and, if a Securitization has
occurred, including the fees and expenses of Rating Agencies and other outside
entities, in connection with considering any proposed Transfer, whether or not
the same is permitted or occurs.

 

5.26.2     Intentionally Omitted.

 

5.27        Liens.  Without Lender’s prior written consent, Borrower shall not
create, incur, assume, permit or suffer to exist any Lien on all or any portion
of the Collateral or the Property or any direct legal or beneficial ownership
interest in Borrower or Owner, except Liens in favor of Lender and Permitted
Encumbrances, unless with respect to a Lien on the Property, such Lien is bonded
or discharged within thirty (30) days after Borrower or Owner first receives
notice of such Lien.  In lieu of bonding over such Lien, after prior notice to
Lender, Owner or Overstock, at their respective expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity of such Lien, provided that (i) no
Event of Default has occurred and is continuing, (ii) such proceeding shall be
permitted under and be conducted in accordance with all Legal Requirements,
(iii) such proceeding shall suspend the foreclosure of such Lien and the
collection of the amount of such Lien, (iv) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Borrower or Owner is subject and shall not constitute a default
thereunder, (v) no part of or interest in the applicable Property will be in
imminent danger of being sold, forfeited, terminated, canceled or lost,
(vi) Borrower shall cause Owner, promptly upon final determination thereof, pay
the amount of such Lien, if found valid, together with all costs, interest and
penalties, (vii) such contest shall not affect the ownership, use or occupancy
of the Property, (viii) Borrower or Owner shall have furnished such security as
may be required in the proceeding, or as may be reasonably requested by Lender
(provided that in no event shall such security be in an amount more than one
hundred ten percent (110%) of the applicable amount, plus all interest and
penalties thereon), (ix) Borrower shall, upon request by Lender, give Lender
prompt notice of the status of such proceedings and/or confirmation of the
continuing satisfaction of the conditions set forth in clauses (i) through
(ix) of this Section 5.27.  Lender may apply such security to satisfy the Lien
if (x) an Event of Default then exists, (y) if, in the judgment of Lender, the
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost or (z) the applicable Lienor
commences the enforcement of such Lien

 

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5.28        Dissolution.  Borrower shall not (and shall not permit Owner to)
(a) engage in any dissolution, liquidation or consolidation, division or merger
with or into any one or more other business entities, (b) engage in any business
activity not related to the ownership and operation of the Collateral or the
Property, or (c) transfer, lease or sell, in one transaction or any combination
of transactions, all or substantially all of the property or assets of Borrower
or Owner except to the extent expressly permitted by the Loan Documents and the
Senior Loan Documents.

 

5.29        Incurrence of Expenses.  Borrower shall cause Owner not to incur any
operating expense, Capital Expense, leasing expense or other expense unless it
is an Approved Operating Expense, Approved Capital Expense or Approved Leasing
Expense.

 

5.30        Expenses.

 

(a)           Except as otherwise limited in this Agreement or the other Loan
Documents, Borrower shall pay or, if Borrower fails to pay, reimburse Lender
within five (5) days of receipt of written notice from Lender for all reasonable
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender or Servicer in connection with the Loan,
including:  (i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby and all
the costs of furnishing all opinions by counsel for Borrower; (ii) Borrower’s
and Lender’s ongoing performance under and compliance with the Loan Documents,
including confirming compliance with environmental and insurance requirements;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Borrower; (iv) filing
and recording of any Loan Documents; (v) title insurance with respect to the
Pledged Collateral, inspections and appraisals; (vi) the creation, perfection or
protection of Lender’s Liens in the Collateral and the Mezzanine Account
(including fees and expenses for title and lien searches, intangibles Taxes,
personal property Taxes, due diligence expenses, travel expenses, accounting
firm fees, costs of appraisals, environmental reports and Lender’s Consultant,
surveys and engineering reports); (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, the Loan Documents, the Collateral, or any other security given for
the Loan; (viii) investigating, preparing, defending, settling, compromising,
responding to, or enforcing or preserving any rights in response to any claim,
action, suit, proceeding, investigation, prosecution, subpoena, or request for
documents or other evidence under or affecting Borrower, the Loan Documents, the
Collateral, or any other security given for the Loan, whether or not in
connection with an action in which Borrower is the named party; (ix) fees
charged by Servicer or, if a Securitization has occurred, the Rating Agencies in
connection with the Loan or any modification thereof requested by Borrower; and
(x) enforcing any obligations of or collecting any payments due from Borrower
under any Loan Document or with respect to the Collateral or in connection with
any refinancing or restructuring of the Loan in the nature of a “work-out”, or
any insolvency or bankruptcy proceedings.

 

(b)           In addition, in connection with any Rating Comfort Letter, Review
Waiver or other Rating Agency consent, approval or review requested or required
hereunder (other than the initial review of the Loan by the Rating Agencies in
connection with a Securitization),

 

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Borrower shall pay all of the reasonable actual out-of-pocket costs and expenses
of Lender and Servicer and the costs and expenses of each Rating Agency in
connection therewith, and, if applicable, shall pay any fees imposed by any
Rating Agency in connection therewith.

 

(c)           Any costs and expenses due and payable by Borrower hereunder which
are not paid by Borrower within ten (10) days after written demand may be paid
from any amounts in the Mezzanine Account, with notice thereof to Borrower.  The
obligations and liabilities of Borrower under this Section 5.30 shall survive
the Term and the exercise by Lender of any of its rights or remedies under the
Loan Documents, including the acquisition of the Collateral by foreclosure or a
conveyance in lieu of foreclosure.

 

5.31        Indemnity.  Borrower shall defend, indemnify and hold harmless
Lender (and for purposes of this Section 5.31, Lender shall include LoanCore,
its Affiliates, successors and assigns, and their respective officers and
directors) and each of its Affiliates and their respective successors and
assigns, including the directors, officers, partners, members, shareholders,
participants, employees, professionals and agents of any of the foregoing
(including any Servicer) and each other Person, if any, who Controls Lender, its
Affiliates or any of the foregoing (each, an “Indemnified Party”), from and
against any and all actual, out of pocket liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the actual, out of
pocket reasonable fees and disbursements of counsel for an Indemnified Party in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be designated a party
thereto, court costs and costs of appeal at all appellate levels, investigation
and laboratory fees, consultant fees and litigation expenses), that may be
imposed on, incurred by, or asserted against any Indemnified Party
(collectively, the “Indemnified Liabilities”) in any manner, relating to or
arising out of or by reason of the Loan, including: (a) any breach by Borrower
of its obligations under, or any misrepresentation by Borrower contained in, any
Loan Document; (b) the use or intended use of the proceeds of the Loan; (c) any
information provided by or on behalf of Borrower, or contained in any
documentation approved by Borrower which is false or misleading in any material
respect; (d) the ownership of the Security Documents, the Collateral or any
interest therein, or receipt of any Rents by Owner or Borrower; (e) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (f) any use,
non-use or condition in, on or about the Property or on adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways;
(g) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property; (h) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance on, from or affecting the Property; (i) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Substance; (j) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Substance; (k) any violation of the Environmental Laws which is based upon or in
any way related to such Hazardous Substance, including the costs and expenses of
any Remedial Work; (l) any failure of the Property to comply with any Legal
Requirement; (m) any claim by brokers, finders or similar persons claiming by,
through or under Owner or Borrower to be entitled to a commission in connection
with any Lease or other transaction involving the Property or any part thereof,
or any liability asserted against Lender with respect thereto; (n) the claims of
any lessee of any portion

 

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of the Property or any Person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease; (o) 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, the Loan Documents, the Collateral, or any other security
given for the Loan; and (p) investigating, preparing, defending, settling,
compromising, responding to, or enforcing or preserving any rights in response
to any claim, action, suit, proceeding, investigation, prosecution, subpoena, or
request for documents or other evidence under or affecting Borrower, the Loan
Documents, the Collateral, or any other security given for the Loan, whether or
not in connection with an action in which Borrower is the named party; provided,
however, that Borrower shall not have any obligation to any Indemnified Party
hereunder to the extent that it is finally judicially determined that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of such Indemnified Party.  Any amounts payable to any
Indemnified Party by reason of the application of this paragraph shall be
payable on demand and shall bear interest at the Default Rate from the date loss
or damage is sustained by any Indemnified Party until paid.  The obligations and
liabilities of Borrower under this Section 5.31 shall survive the Term and the
exercise by Lender of any of its rights or remedies under the Loan Documents,
including the acquisition of the Collateral by foreclosure or a conveyance in
lieu of foreclosure.

 

5.32        Patriot Act Compliance.

 

(a)           Borrower shall comply (and cause Owner to comply) with the Patriot
Act (as defined below) and all applicable requirements of Governmental
Authorities having jurisdiction over Borrower, Owner, the Collateral and/or the
Property, including those relating to money laundering and terrorism.  Lender
shall have the right, from time to time, to audit Borrower’s compliance with the
Patriot Act and all applicable requirements of Governmental Authorities having
jurisdiction over Borrower and the Collateral and/or the Property, including
those relating to money laundering and terrorism.  In the event that Borrower
fails to comply with the Patriot Act or any such requirements of Governmental
Authorities, then Lender may, at its option, cause Borrower to comply therewith
and any and all actual, out-of-pocket reasonable costs and expenses incurred by
Lender in connection therewith shall be secured by the Pledge and the other Loan
Documents and shall be immediately due and payable.  For purposes hereof, the
term “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
ACT) of 2001, as the same was restored and amended by Uniting and Strengthening
America by Fulfilling Rights and Ensuring Effective Discipline Over Monitoring
Act (USA FREEDOM Act) of 2015 and as the same may be further amended, extended,
replaced or otherwise modified from time to time, and any corresponding
provisions of future laws.

 

(b)           None of Borrower, Guarantor or Owner (i) is listed on any
Government Lists (as defined below), (ii) is a person who has been determined by
competent authority to be subject to the prohibitions contained in Presidential
Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions
contained in the rules and regulations of OFAC (as defined below) or in any
enabling legislation or other Presidential Executive Orders in respect thereof,
(iii) has been previously indicted for or convicted of any felony involving a
crime or crimes of moral turpitude or for any Patriot Act Offense (as defined
below), or (iv) is currently under investigation by any Governmental Authority
for alleged criminal activity.  For purposes hereof,

 

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the term “Patriot Act Offense” means any violation of the criminal laws of the
United States of America or of any of the several states, or that would be a
criminal violation if committed within the jurisdiction of the United States of
America or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under:  (A) the criminal laws
against terrorism; (B) the criminal laws against money laundering; (C) the Bank
Secrecy Act, as amended; (D) the Money Laundering Control Act of 1986, as
amended, or the (E) Patriot Act.  “Patriot Act Offense” also includes the crimes
of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act
Offense.  For purposes hereof, the term “Government Lists” means (1) the
Specially Designated Nationals and Blocked Persons Lists maintained by the
Office of Foreign Assets Control (“OFAC”), (2) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Lender notified Borrower in writing is
now included in “Government Lists”, or (3) any similar lists maintained by the
United States Department of State, the United States Department of Commerce or
any other government authority or pursuant to any Executive Order of the
President of the United States of America that Lender notified Borrower in
writing is now included in “Government Lists”.

 

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

 

5.33        Approval of Major Contracts.  Borrower shall not (or permit Owner
to), without Lender’s prior consent, which consent shall not be unreasonably
withheld, conditioned or delayed:  (a) enter into, surrender or terminate any
Major Contract to which Borrower or Owner is a party or to which Borrower, Owner
or the Property is subject (unless the other party thereto is in material
default and the termination of such agreement would be commercially reasonable);
(b) increase or consent to the increase of the amount of any charges under any
Major Contract to which Borrower or Owner is a party or to which Borrower, Owner
or the Property is subject, except as provided therein or on an arm’s-length
basis and commercially reasonable terms; or (c) otherwise modify, change,
supplement, alter or amend, or waive or release any of its material rights and
remedies under any Major Contract to which Borrower or Owner is a party or to
which Borrower, Owner or the Property is subject in any material respect, except
on an arm’s-length basis and commercially reasonable terms.

 

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5.34        Intentionally Omitted.

 

5.35        Intentionally Omitted.

 

5.36        Limitation on Securities Issuances.  None of Borrower or Owner shall
issue any membership interests or other securities other than those that have
been issued as of the date hereof.

 

5.37        Limitation on Distributions.  Following the occurrence and during
the continuance of an Event of Default, Borrower shall not make any
distributions to its members.

 

5.38        Contractual Obligations.  Other than the Loan Documents, the
organizational documents of Borrower (and the initial membership interests in
Borrower issued pursuant thereto) and Owner and the provisions of the Senior
Loan Documents, neither Borrower nor any of its assets shall be subject to any
Contractual Obligations, and Borrower shall not enter into any agreement,
instrument or undertaking by which it or its assets are bound, except for such
liabilities, not material in the aggregate, that are incidental to its
activities as a regular member of Owner.

 

6.                                      NOTICES AND REPORTING

 

6.1          Notices.  All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a “Notice”) shall be given
in writing (even if not specified herein) and shall only be effective for all
purposes if either hand delivered with receipt acknowledged, or by a nationally
recognized overnight delivery service (such as Federal Express), or by certified
or registered United States mail, return receipt requested, postage prepaid, or
by facsimile and confirmed by facsimile answer back, or e-mailed (with
confirmation of delivery thereof) to the e-mail addresses for Lender to the
extent set forth in this Section 6.1 with a subject line identifying the purpose
of such Notice and the name of the Property and Borrower;  in each case
addressed as follows (or to such other address or Person as a party shall
designate from time to time by notice to the other party):

 

If to Lender:

 

 

LoanCore Capital Markets LLC

 

c/o LoanCore Capital

 

55 Railroad Avenue, Suite 100

 

Greenwich, Connecticut 06830

 

Attention: Brett Kaplan

 

Facsimile No.: (203) 861-6006

 

E-mail: BKaplan@LoanCoreCapital.com

 

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with a copy to:

 

 

LoanCore Capital Markets LLC

 

c/o LoanCore Capital

 

55 Railroad Avenue, Suite 100

 

Greenwich, Connecticut 06830

 

Attention: Notices

 

E-mail: notices@loancorecapital.com

 

with a copy to:

 

 

Winstead PC

 

201 North Tryon Street, Suite 2000

 

Charlotte, North Carolina 28202

 

Attention: Christian G. Beltz, Esq.

 

Facsimile No.: (704) 339-1701

 

Email: cbeltz@winstead.com

 

If to Borrower:

 

 

Peace Coliseum Mezzanine, LLC

 

799 W. Coliseum Way

 

Midvale, Utah 84047

 

Attention: General Counsel

 

with a copy to:

 

 

Parr Brown Gee & Loveless

 

101 South 200 East

 

Suite 700

 

Salt Lake City, Utah 84111

 

Attention: Lamont Richardson, Esq.

 

Facsimile No.: (801) 532-7500

 

A notice shall be deemed to have been given:  (a) in the case of hand delivery,
at the time of delivery; (b) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (c) in the case of
overnight delivery, upon the first attempted delivery on a Business Day; (d) in
the case of facsimile, upon the confirmation of delivery of such facsimile
transmission; or (e) in the case of e-mail, upon the confirmation of delivery
such e-mail.

 

6.2          Borrower Notices and Deliveries.  Borrower shall (or shall cause
Owner to):  (a) give prompt written notice to Lender of: (i) any litigation,
governmental proceedings or claims or investigations pending or threatened in
writing against Borrower or Sole Member which could reasonably be expected to
have a Material Adverse Effect on the Property or the Collateral; (ii) any
Material Adverse Effect, or of the occurrence of any Default or Event of Default
of which Borrower has knowledge; and (b) furnish and provide to Lender: (i) any

 

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Securities and Exchange Commission or other public filings, if any, of Borrower,
Sole Member, Owner, Manager, or any Affiliate of any of the foregoing within two
(2) Business Days of such filing; and (ii) all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, reasonably
requested, from time to time, by Lender.  In addition, after request by Lender
(but no more frequently than twice in any year), Borrower shall furnish to
Lender (A) within ten (10) days, a certificate addressed to Lender, its
successors and assigns reaffirming all representations and warranties of
Borrower set forth in the Loan Documents as of the date requested by Lender or,
to the extent of any changes to any such representations and warranties, so
stating such changes, and (B) within thirty (30) days, tenant estoppel
certificates addressed to Lender, its successors and assigns from each tenant at
the Property substantially in the same form delivered to Lender in connection
with Lender’s underwriting of the Loan.

 

6.3          Financial Reporting.

 

6.3.1       Bookkeeping.  Borrower shall keep (and shall cause Owner to keep) on
a calendar year basis, in accordance with GAAP (provided that, in addition to
GAAP compliant statements, Borrower shall (or cause Owner to) prepare statements
adjusted to show actual rents as scheduled to be received and not
straight-lined), proper and accurate books, records and accounts reflecting all
of the financial affairs of Borrower and Owner and all items of income and
expense and any services, Equipment or furnishings provided in connection with
the operation of the Property.  Lender shall have the right from time to time
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or other Person maintaining them,
and to make such copies or extracts thereof as Lender shall desire.  After an
Event of Default, Borrower shall pay any costs incurred by Lender to examine
such books, records and accounts, as Lender shall determine to be necessary or
appropriate in the protection of Lender’s interest.

 

6.3.2       Annual Reports.  Borrower shall furnish to Lender annually, within
120 days after each calendar year, a complete copy of Borrower’s or Owner’s
annual financial statements audited by a “big four” accounting firm or another
independent certified public accountant (accompanied by an unqualified opinion
from such accounting firm or other independent certified public accountant)
reasonably acceptable to Lender, each in accordance with GAAP and containing
balance sheets and statements of profit and loss for Borrower, Owner and the
Property in such detail as Lender may request.  Such financial statements
(a) shall be in form and substance satisfactory to Lender, (b) shall set forth
the financial condition and the income and expenses for the Property for the
immediately preceding calendar year, including statements of annual Net
Operating Income as well as (i) a list of tenants, if any, occupying more than
twenty percent (20%) of the rentable space of the Property, (ii) a breakdown
showing (A) the year in which each Lease then in effect expires, (B) the
percentage of rentable space covered by such Lease and (C) the percentage of
base rent with respect to which Leases shall expire in each such year, expressed
both on a per year and a cumulative basis and (c) shall be accompanied by an
Officer’s Certificate (substantially in accordance with the form attached as
Schedule 10-1 hereto) certifying (i) that such statement is true, correct,
complete and accurate in all material respects and presents fairly the financial
condition of the Property as of the date of such report and has been prepared in
accordance with GAAP, (ii) to Borrower’s knowledge, whether there exists a
Default or Event of Default, and if so, the nature thereof, the period of

 

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time it has existed and the action then being taken to remedy it, (iii) that as
of the date of such Officer’s Certificate, no litigation exists involving
Borrower, Owner, the Collateral or the Property in which the amount involved is
$500,000 (in the aggregate) and is not covered by insurance, or, if so,
specifying such litigation and the actions being taken in relation thereto and
(iv) the amount by which operating expenses incurred by Borrower and Owner for
such period were greater than or less than the operating expenses reflected in
the applicable Annual Budget.  Notwithstanding the foregoing, the annual
reporting requirements of Borrower herein will be deemed satisfied upon
delivering to Lender copies of the Form 10-K of Guarantor within the timeframes
set forth in this Section 6.3.2, so long as:  (1) Guarantor is subject to the
reporting requirements of the Exchange Act, or any successor statute or statutes
thereto, and (2) Guarantor files its financial information with the U.S.
Securities and Exchange Commission as and when required by the Exchange Act and
such financial information of Guarantor is available to the public.

 

6.3.3       Quarterly Reports.  Borrower shall furnish (or shall cause Owner to
furnish) to Lender within forty-five (45) days after the end of each calendar
quarter the following items:  (a) year-to-date operating statements, noting Net
Operating Income and other information necessary and sufficient under GAAP to
fairly represent the financial position and results of operation of the Property
during such calendar quarter, all in form satisfactory to Lender; (b) a balance
sheet for such calendar quarter; (c) a comparison of the budgeted income and
expenses and the actual income and expenses year-to-date for the Property,
together with a detailed explanation of any variances of ten percent (10%) or
more between budgeted and actual amounts for such period and year-to-date; (d) a
statement of the actual Capital Expenses made by Borrower or Owner during each
calendar quarter as of the last day of such calendar quarter; (e) a statement
that neither Borrower nor Owner has not incurred any indebtedness other than
Permitted Indebtedness; (f) an aged receivables report; and (g) rent rolls
identifying the leased premises, names of all tenants, units leased, monthly
rental and all other charges payable under each Lease, date to which paid, term
of Lease, date of occupancy, date of expiration and a delinquency report for the
Property.  Each such statement shall be accompanied by an Officer’s Certificate
(substantially in accordance with the form attached as Schedule 10-2 hereto)
certifying, to the signer’s knowledge, (i) that such items are true, correct,
accurate, and complete in all material respects and fairly present the financial
condition and results of the operations of Borrower, Owner and the Property as
of the respective dates thereof in accordance with GAAP (subject to normal
year-end adjustments), (ii) to Borrower’s knowledge, whether there exists a
Default or Event of Default, and if so, the nature thereof, the period of time
it has existed and the action then being taken to remedy it, (iii) that as of
the date of such Officer’s Certificate, no litigation exists involving Borrower,
Owner, the Collateral or the Property in which the amount involved is $500,000
(in the aggregate) or more or in which all or substantially all of the potential
liability is not covered by insurance, or, if so, specifying such litigation and
the actions being taken in relation thereto and (iv) the amount by which
operating expenses incurred by Borrower and Owner for such period were greater
than or less than the operating expenses reflected in the applicable Annual
Budget.  Such financial statements shall contain such other information as shall
be reasonably requested by Lender for purposes of calculations to be made by
Lender pursuant to the terms hereof.  Notwithstanding the foregoing, the
quarterly reporting requirements set forth herein (other than those requirements
set forth in subsections (a) and (g) herein which shall remain an obligation of
Borrower) will be deemed satisfied by Borrower upon  delivering to Lender copies
of the Form 10-Q, as applicable of Guarantor within the timeframes

 

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set forth in this Section 6.3.3, so long as:  (1) Guarantor is subject to the
reporting requirements of the Exchange Act, or any successor statute or statutes
thereto, and (2) Guarantor files its financial information with the U.S.
Securities and Exchange Commission as and when required by the Exchange Act and
such financial information of Guarantor is available to the public.

 

6.3.4       Intentionally Omitted.

 

6.3.5       Other Reports.  Borrower shall furnish (or shall cause Owner to
furnish)  to Lender, within ten (10) Business Days after request, such further
detailed information with respect to the operation of the Property and the
financial affairs of Borrower, Sole Member, Owner or Manager as may be
reasonably requested by Lender or, if a Securitization has occurred, any
applicable Rating Agency.

 

6.3.6       Annual Budget.

 

(a)           Borrower shall prepare and submit (or shall cause Owner or Manager
to prepare and submit) to Lender by November 30th of each year during the Term,
for approval by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed, a proposed pro forma budget for the Property for the
succeeding calendar year (the “Annual Budget”, and each Annual Budget approved
by Lender is referred to herein as the “Approved Annual Budget”), and, promptly
after preparation thereof, any revisions to such Annual Budget.  The Annual
Budget shall consist of (i) an operating expense budget showing, on a
month-by-month basis, in reasonable detail, each line item of Borrower’s
anticipated operating income and operating expenses (on a cash and accrual
basis), including amounts required to establish, maintain and/or increase any
monthly payments required hereunder (and once such Annual Budget has been
approved by Lender (or deemed approved), such operating expense budget shall be
referred to herein as the “Approved Operating Budget”); and (ii) a Capital
Expense budget showing, on a month-by-month basis, in reasonable detail, each
line item of anticipated Capital Expenses (and once such Annual Budget has been
approved by Lender (or deemed approved by Lender pursuant to the terms of
Section 6.3.6 hereof), such Capital Expense budget shall be referred to herein
as the “Approved Capital Expense Budget”).  Until such time that any Annual
Budget has been approved by Lender, the prior Approved Annual Budget shall apply
for all purposes hereunder (with such adjustments as reasonably determined by
Lender (including increases for any non-discretionary expenses)).  In no event
will Lender or Servicer be permitted to charge a fee in connection with Lender’s
or Servicer’s review of an Annual Budget.

 

(b)           Lender’s failure to deny any written request by Borrower for
Lender’s approval of the Annual Budget required under this Section 6.3.6 shall
be deemed to constitute Lender’s consent to such Annual Budget provided Borrower
has sent written request to Lender as provided in the following sentence and
Lender has failed to respond to each of the notices required therein in the
time-frame specified therein.  In order to comply with the foregoing notice
requirements to obtain Lender’s deemed approval of the Annual Budget, Borrower
shall provide a copy of such Annual Budget together with a written notice sent
in accordance with Section 6.1 hereof to Lender marked “PRIORITY” and shall
conspicuously state in 14 point or larger bold type “PURSUANT TO SECTION 6.3.6
OF THE LOAN AGREEMENT, THIS IS BORROWER’S FIRST NOTICE OF REQUEST FOR APPROVAL
OF THE ANNUAL BUDGET HEREIN PROVIDED.  IF LENDER DOES NOT DECLINE APPROVAL IN

 

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WRITING OR REQUEST ADDITIONAL INFORMATION IN WRITING WITHIN THIRTY (30) DAYS OF
ITS RECEIPT OF THIS LETTER THE ANNUAL BUDGET SHALL BE DEEMED APPROVED” and if
Lender has failed to so respond by the twentieth (20) day, Borrower shall send a
second notice also marked “PRIORITY” and conspicuously stating in 14 point or
larger bold type “PURSUANT TO SECTION 6.3.6 OF THE LOAN AGREEMENT, THIS IS
BORROWER’S SECOND AND FINAL NOTICE OF REQUEST FOR APPROVAL OF THE ANNUAL BUDGET
HEREIN PROVIDED.  IF LENDER DOES NOT DECLINE APPROVAL IN WRITING OR REQUEST
ADDITIONAL INFORMATION IN WRITING WITHIN TEN (10) DAYS OF ITS RECEIPT OF THIS
LETTER THE ANNUAL BUDGET SHALL BE DEEMED APPROVED.”

 

6.3.7       Additional Operating Expenses.

 

(a)           In the event that Owner incurs or will incur any operating
expense, including Emergency Expenditures, that is not in the Approved Annual
Budget but is otherwise an Approved Operating Expense (each an “Additional
Operating Expense”), then Borrower shall promptly (but in no event shall
Borrower be required to do so more frequently than monthly) deliver (or cause
Owner to deliver) to Lender a reasonably detailed explanation of such Additional
Operating Expense(s) or, with respect to any such item that is subject to
Lender’s approval, such proposed Additional Operating Expense.  Any Additional
Operating Expense submitted to Lender (and, if required, approved by Lender,
which approval shall not be unreasonably withheld, conditioned or delayed) in
accordance with this Agreement is referred to herein as an “Approved Additional
Operating Expense”.  In no event shall management fees in excess of the
Management Fee Cap be part of the Approved Additional Operating Expense unless
expressly approved by Lender in advance in its sole discretion.

 

(b)           Borrower shall cause any funds distributed to Owner for the
payment of Approved Additional Operating Expenses (including any distribution to
Borrower pursuant to Section 3.12(a)(viii) of the Senior Loan Agreement) to be
used by Owner only to pay for Approved Additional Operating Expenses or
reimburse Owner for Approved Additional Operating Expenses, as applicable.

 

6.3.8       Intentionally Omitted.

 

6.3.9       Breach.  If Borrower fails to provide (or cause Owner to provide) to
Lender or its designee any of the financial statements, certificates, reports or
information (the “Required Records”) required by this Article 6 within thirty
(30) days after the date upon which such Required Record is due, Borrower shall
pay to Lender, at Lender’s option and in its discretion (and without limiting
any other rights or remedies of Lender hereunder), an amount equal to (i) $1,000
with respect to the first instance a Required Record is not delivered,
(ii) $2,000 with respect to the second instance a Required Record is not
delivered, and (iii) thereafter, $2,500 for each Required Record that is not
delivered; provided Lender has given Borrower at least thirty (30) days prior
notice of such failure.  In addition, thirty (30) days after Borrower’s failure
to deliver (or cause Owner to deliver) any Required Records, Lender shall have
the option (and without limiting any other rights or remedies of Lender
hereunder), upon thirty (30) days’ notice to Borrower to gain access to
Borrower’s and Owner’s books and records

 

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and prepare or have prepared at Borrower’s expense, any Required Records not
delivered by Borrower or Owner.

 

6.3.10     Inspection.  Borrower shall permit and shall cause Owner to permit
any authorized representatives designated by Lender to visit, examine, audit,
and inspect, upon reasonable notice and during normal business hours, the
Property including Borrower’s financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and their affairs,
finances and business with its and their officers and independent public
accountants (with Borrower’s representative(s) present in all instances), at
such reasonable times during normal business hours and as often as may be
reasonably requested.  Borrower shall cause its Affiliates to make all books of
account and records so available at the office where the same are regularly
maintained.  Lender shall have the right to copy, duplicate and make abstracts
from such books and records as Lender may require.  During the continuance of an
Event of Default, Borrower shall pay any costs incurred by Lender to examine
such books, records and accounts.  Borrower acknowledges and agrees that (i) all
of such audits, inspections and reports shall be made for the sole benefit of
Lender, and not for the benefit of Borrower or any third party, and neither
Lender nor Lender’s auditors or inspectors or any of Lender’s representatives,
agents or contractors assumes any responsibility or liability (except to Lender)
by reason of such audits, inspections or reports, (ii) Borrower will not rely
upon any of such audits, inspections or reports for any purpose whatsoever, and
(iii) the performance of such audits, inspections and reports will not
constitute a waiver of any of the provisions of this Agreement or any other Loan
Document or any of the obligations of Borrower hereunder or thereunder. 
Borrower further acknowledges and agrees that neither Lender nor Lender’s
inspector, representatives, agents or contractors shall be deemed to be in any
way responsible for any matters related to design or construction of the
Improvements or any construction work.  At any time during the term of the Loan,
Borrower shall cooperate with Lender and use reasonable efforts to assist Lender
in obtaining an appraisal of the Property.  Such cooperation and assistance from
Borrower shall include but not be limited to the obligation to provide (or cause
Owner to provide) Lender or Lender’s appraiser with the following:
(i) reasonable access to the Property, (ii) a current certified rent roll for
the Property in form and substance satisfactory to Lender, including current
asking rents and a history of change in asking rents and historical vacancy for
the past three years, (iii) current and budgeted income and expense statements
for the prior three years, (iv) the then existing site plan and survey of the
Property, (v) the building plans and specifications, including typical elevation
and floor plans, to the extent in Borrower’s possession or reasonably available
to Borrower; (vi) the current and prior year Real Estate Tax bills, (vii) a
detailed list of past and scheduled capital improvements and the costs thereof,
(viii) all environmental reports and other applicable information relating to
the Property, and (ix) copies of all recent appraisals/property description
information or brochures, including descriptions of amenities and services
relating to the Property to the extent in Borrower’s or Owner’s possession or
reasonably available to Borrower or Owner.  The appraiser performing any such
appraisal shall be engaged by Lender and Borrower shall be responsible for any
fees payable to said appraiser in connection with an appraisal of the Property. 
Borrower shall cooperate with Lender with respect to any proceedings before any
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the Loan Documents and,
in connection therewith, not prohibit Lender, at its election, from
participating in any such proceedings.

 

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7.                                      INSURANCE; CASUALTY; AND CONDEMNATION

 

7.1          Insurance.

 

7.1.1       Coverage.  Borrower, at its sole cost (or at Owner’s sole cost), for
the mutual benefit of Borrower, Owner and Lender, shall cause Owner to obtain
and maintain, or cause Overstock to obtain and maintain, during the Term the
following policies of insurance:

 

(a)           Property insurance insuring against loss or damage customarily
included under so called “all risk” or “special form” policies including but not
limited to fire, lightning, windstorm(including named storm)/hail, vandalism,
and malicious mischief, boiler and machinery and subject to
Section 7.1.1(m) hereof, coverage for damage or destruction caused by the acts
of “Terrorists”, both foreign and domestic, (or such policies shall have no
exclusion from coverage with respect thereto) and such other insurable hazards
as, under good insurance practices, from time to time are insured against for
other property and buildings similar to the premises in nature, use, location,
height, and type of construction.  Such insurance policy shall also insure for
ordinance of law coverage, coverage for loss to the undamaged portion of the
building, costs of demolition and increased cost of construction in amounts
satisfactory to Lender.  Each such insurance policy shall (i) be in an amount
equal to 100% of the then replacement cost of the Improvements without deduction
for physical depreciation, (ii) have deductibles no greater than $25,000, except
for windstorm which shall be no greater than 5% of the total insurable value per
occurrence, (iii) be paid annually in advance and (iv) be on a replacement cost
basis and contain either no coinsurance or, if coinsurance, an agreed amount
endorsement, and shall cover, without limitation, all tenant improvements and
betterments that Owner is required to insure on a replacement cost basis. 
Senior Lender shall be named Mortgagee and Lender’s Loss Payable on a Standard
Mortgagee Endorsement.

 

(b)           Flood insurance if any part of the Property is located in an area
now or hereafter designated by the Federal Emergency Management Agency as a
Special Flood Hazard Area, or such other Zone if Lender so requires.  Such
coverage shall (i) be in an amount equal to the maximum limit available through
the National Flood Insurance Program, (ii) include such excess limits in an
amount equal to (A) 100% of the full replacement cost of the Improvements on the
Property (without any deduction for depreciation) or (B) such other amount as
agreed to by Lender and (iii) have deductibles acceptable to Lender.

 

(c)           Commercial general liability insurance, including coverage for
personal injury, bodily injury, death, accident and property damage, and excess
and/or umbrella liability coverage for personal injury, bodily injury, death,
accident and property damage, such insurance providing in combination no less
than containing minimum limits per occurrence of $1,000,000 and $2,000,000 in
the aggregate for any policy year with no deductible or self-insured retention;
together with at least $25,000,000 excess and/or umbrella liability insurance
for any and all claims.  Such excess and/or umbrella liability shall schedule
the auto liability, liquor liability and/or employer’s liability policies, to
the extent such coverages are required.  The policies described in this
subsection shall also include coverage for Terrorism, elevators, escalators,
independent contractors, and contractual liability for insured contracts
(covering, to the maximum extent permitted by law, Borrower’s obligation to
indemnify Lender as required under this Agreement and the other Loan Documents).

 

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(d)           Rental loss and/or business interruption insurance, including
terrorism, in an amount equal to 100% of the projected gross revenues and/or
Rents (less any non-continuing expenses) for a period of at least 18 months. 
The period of indemnification shall include the initial period of restoration,
which is the period of time required to rebuild the Property following a
casualty, and an extended period of indemnity endorsement for a period of 12
months, which provides that after the physical loss to the 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 until the limit for
such coverage as required above is exhausted, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period.  The
amount of such insurance shall be increased from time to time during the Term as
and when the estimated or actual gross revenues and/or Rents increase.

 

(e)           Comprehensive boiler and machinery insurance covering all
mechanical and electrical equipment against physical damage, rent loss and
improvements loss and covering, without limitation, all tenant improvements and
betterments that Owner is required to insure pursuant to the lease on a
replacement cost basis and in an amount equal to the full replacement cost of
the Improvements on the Property (without any deduction for depreciation) or
such other amount acceptable to Lender.

 

(f)            Worker’s compensation insurance with respect to any employees of
Owner, as required by any Legal Requirement and employer’s liability with
minimum limits of $1,000,000 each accident, $1,000,000 each disease per
employee, and $1,000,000 each disease policy limit.

 

(g)           During any period of repair or restoration, and only if the
property and liability coverage forms do not otherwise apply, (i) commercial
general liability and umbrella liability insurance covering claims related to
the repairs or restoration at the Property that are not covered by or under the
terms or provisions of the insurance provided for in Section 7.1.1(c) hereof and
(ii) the insurance provided for in Section 7.1.1(a) hereof, which shall, in
addition to the requirements set forth in such Section, (A) be written on a
builder’s “all-risk” insurance on a completed value, non-reporting form, in an
amount equal to not less than the full insurable value of the Property, against
such risks (including fire and extended coverage and collapse of the
Improvements to agreed limits) as Lender may request, in form and substance and
with deductibles acceptable to Lender and against all risks insured against
pursuant to clauses (a), (b), (d), (e), (h) and (m) of this Section 7.1.1 and
(B) include permission to occupy the Property.

 

(h)           If required by Lender, earthquake insurance (i) with minimum
coverage equivalent to the greater of 1.0x SUL (scenario upper loss) and 1.5x
SEL (scenario expected loss) multiplied by the full replacement cost of the
building plus business income, (ii) having a deductible not in excess of 5% of
the total insurable value of the Property, and (iii) if the Property is legally
nonconforming under applicable zoning ordinances and codes, containing ordinance
of law coverage in amounts as required by Lender.

 

(i)            Insurance against employee dishonesty in an amount acceptable to
Lender (if applicable);

 

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(j)            Commercial auto liability coverage for all owned, non-owned and
hired autos containing minimum limits per occurrence of $1,000,000  (if
applicable);

 

(k)           If liquor is sole from the Property, liquor liability coverage
containing minimum limits of $1,000,000 or in such greater amount as may be
required by applicable Legal Requirements (if applicable).

 

(l)            Such other insurance or higher limits (including environmental
liability insurance, earthquake insurance and mine subsidence insurance) as may
from time to time be reasonably required by Lender in order to protect its
interests.

 

(m)          Notwithstanding anything in Section 7.1.1(a) hereof to the
contrary, Borrower shall be required to cause Owner to obtain and maintain
coverage in its property insurance Policy (or by a separate Policy), its Loss of
Rents/Business Interruption coverage, and its Liability policies against loss or
damage by terrorist acts, both foreign and domestic, in an amount equal to 100%
of the “Full Replacement Cost” of the Property plus the rental loss and/or
business interruption insurance required in Section 7.1.1(d) hereof provided
that such coverage is available.  Borrower shall obtain (or cause Owner to
obtain) the coverage required under this Section 7.1.1(m) from a carrier which
otherwise satisfies the rating criteria specified in Section 7.1.2 hereof (a
“Qualified Carrier”) or in the event that such coverage is not available from a
Qualified Carrier, Borrower shall (or shall cause Owner to) obtain such coverage
from the highest rated insurance company providing such coverage.  In the event
that such coverage with respect to terrorist acts is not included as part of the
“all risk” property policy required by Section 7.1.1(a) hereof, Borrower shall
(or Owner shall), nevertheless be required to obtain coverage for terrorism (as
standalone coverage) in an amount equal to 100% of the “Full Replacement Cost”
of the Property plus the rental loss and/or business interruption coverage under
Section 7.1.1(d) hereof provided that such coverage is available.

 

7.1.2       Policies.  All policies of insurance (the “Policies”) required
pursuant to Section 7.1.1 hereof shall:  (a) be issued by companies approved by
Lender and authorized to do business in the State, with a claims paying ability
rating of “A” or better by S&P and “A2” or better by Moody’s (to the extent
Moody’s rates the Securities and rates the applicable insurance company), and a
rating of “A:X” or better in the current Best’s Insurance Reports; (b) name
(i) Owner as a named insured on all Policies, and (ii) Lender and Senior Lender
and its successors and/or assigns as their interest may appear as the
mortgagee/lender’s loss payable (in the case of property insurance and business
interruption/loss of rents coverage) and an additional insured (in the case of
liability insurance); (c) contain (in the case of property insurance) a
Non-Contributory Standard Mortgagee Clause/Lender’s Loss Payable Endorsement, or
their equivalents, naming Lender as the person to which all payments made by
such insurance company shall be paid; (d) with respect to property (including
business interruption/loss of rents), commercial general liability and
excess/umbrella liability policies, contain a waiver of subrogation in favor of
Lender; (e) with respect to property policies (including business
interruption/loss of rents), contain such provisions as Lender deems reasonably
necessary or desirable to protect its interest, including (i) endorsements
providing that neither Borrower, Owner, Lender nor any other party shall be a
co-insurer under the Policies, (ii) that Lender shall receive at least thirty
(30) days’ prior written notice of cancellation of any of the property Policies,
except ten (10) days’ notice for cancellation due to non-payment of premium;
provided that, with respect to liability Policies,

 

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such notice shall also be provided to the extent available; however, if not
available, Borrower shall provide the required notice to Lender, (iii) that such
policy shall not contain any provision that would make the Lender liable for any
premiums and commissions, provided that the policy need not waive the
requirement that the premium be paid in order to effect continuation of coverage
if the policy will be cancelled due to non-payment of premium and (iv) providing
that Lender is permitted to make payments to effect the continuation of such
policy upon notice of cancellation due to non-payment of premiums; (f) in the
event any property insurance policy shall contain breach of warranty provisions,
such policy shall provide that with respect to the interest of Lender, such
insurance policy shall not be invalidated by and shall insure Lender regardless
of (i) any act, failure to act or negligence of or violation of warranties,
declarations or conditions contained in such policy by any named insured,
(ii) the occupancy or use of the premises for purposes more hazardous than
permitted by the terms thereof, or (iii) any foreclosure or other action or
proceeding taken by Lender pursuant to any provision of the Loan Documents; and
(g) be satisfactory in form and substance to Lender and approved by Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds and complete
copies thereof delivered to Lender.  In the event of foreclosure or other
transfer of title, Borrower agrees that all proceeds payable thereunder
pertaining to the Property shall thereupon vest in the purchaser at such
foreclosure or in Lender or other transferee in the event of such other transfer
of title.  Borrower shall cause Owner to pay the premiums for such Policies (the
“Insurance Premiums”) as the same become due and payable and furnish to Lender
evidence of the renewal of each of the Policies together with (unless such
Insurance Premiums have been paid by Senior Lender pursuant to Section 3.4 of
the Senior Loan Agreement) receipts for or other evidence of the payment of the
Insurance Premiums reasonably satisfactory to Lender.  If Borrower does not
furnish such evidence and receipts at least thirty (30) days prior to the
expiration of any expiring Policy, then Lender may, but shall not be obligated
to, procure such insurance and pay the Insurance Premiums therefor, and Borrower
shall reimburse Lender for the cost of such Insurance Premiums promptly on
demand, with interest accruing at the Default Rate.  Borrower shall deliver (or
cause Owner to deliver) to Lender a complete copy of each Policy within thirty
(30) days after its effective date.  Within thirty (30) days after request by
Lender, Borrower shall obtain (or cause Owner to obtain) such increases in the
amounts of coverage required hereunder as may be reasonably requested by Lender,
taking into consideration changes in the value of money over time, changes in
liability laws, changes in prudent customs and practices, and the like.  Lender
agrees that the Policies may be in the form of a blanket policy provided that
(A) such policy otherwise meets the requirements set forth herein this
Section 7.1, (B) Lender shall be satisfied by evidence required by Lender that
the blanket policy provides the same protection as would a separate Policy
insuring only the Property in accordance with the terms of this Agreement and
(C) Borrower shall, upon written request of Lender, provide Lender with a
complete schedule of locations and values for properties associated with such
blanket policy (any such blanket policy that satisfies the foregoing conditions,
an “Acceptable Blanket Policy”).

 

7.1.3       Overstock Insurance.  Notwithstanding the foregoing provisions of
this Section 7.1, and subject to the satisfaction of the conditions set forth
below, Borrower may rely on Overstock maintaining all or a portion of the
insurance coverage required by this Section to the extent (i) the Overstock
Lease is in full force and effect and no default has occurred thereunder,
(ii) Overstock has provided third-party insurance which satisfies the provisions
of this Section, (iii) the Overstock Lease provides it will remain in full force
and effect following a Casualty or to the extent such Overstock Lease is
terminated following any Casualty, the

 

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applicable insurance proceeds will be deposited with Borrower and/or Lender,
(iv) (A) Lender is named as a mortgagee and a loss payee, as required pursuant
to this Section, on Overstock’s property policies and as additional insured on
Overstock’s general liability and umbrella liability coverages required pursuant
to this Section, and (B) Borrower is named as an additional named insured on
each of the property, general liability and umbrella liability Policies
maintained by Overstock, and (v) Borrower shall have provided to Lender no less
frequently than annually prior to renewal of such coverage maintained by
Overstock evidence satisfactory to Lender in its sole discretion that Overstock
maintains insurance in accordance with this Section.  For purposes of
clarification, if the conditions above are not satisfied, Borrower shall, at its
sole cost and expense, promptly procure and maintain either (x) “primary”
insurance coverage in the event that Overstock, under the Overstock Lease does
not provide the applicable insurance coverage required herein this Section or
(y) “excess and contingent” insurance coverage, in the event that Overstock
under the Overstock Lease does not have sufficient insurance coverage to meet
the requirements in this Section, in each case, over and above any other valid
and collectible coverage then in existence, as shall be necessary to bring the
insurance coverage for the Property into full compliance with all of the terms
and conditions of this Section.  In evaluating the sufficiency of all insurance
provided with respect to the requirements of this Section, whether such
insurance is provided by Borrower or Overstock, Lender (or the loan servicer)
shall have the discretion, but not the obligation, to allow that Borrower only
maintain “excess and contingent” insurance coverage over and above any other
valid and collectible coverage then-in existence.

 

7.2          Casualty.

 

7.2.1       Notice; Restoration.  If the Property is damaged or destroyed, in
whole or in part, by fire or other casualty (a “Casualty”), Borrower shall give
prompt notice thereof to Lender.  Following the occurrence of a Casualty,
subject to the requirements of the Senior Loan Documents, Borrower, regardless
of whether insurance proceeds are available, shall promptly proceed to restore,
repair, replace or rebuild (or shall cause Owner to promptly proceed to restore,
repair, replace or rebuild) the Property in accordance with Legal Requirements
to be of at least equal value and of substantially the same character as prior
to such damage or destruction.  Concurrently with the delivery to Senior Lender
of any of the items required under Section 7.4.3 of the Senior Loan Agreement in
connection with a Restoration by Owner, Borrower shall cause such items to be
concurrently delivered to Lender for Lender’s prior approval which approval
shall not be unreasonably withheld, conditioned or delayed.

 

7.2.2       Settlement of Proceeds.  If a Casualty covered by any of the
Policies (an “Insured Casualty”) occurs where the loss does not exceed the
Restoration Threshold (as defined in the Senior Loan Agreement), provided no
Event of Default has occurred and is continuing, Borrower may cause Owner to
settle and adjust any claim without the prior consent of Lender provided that
such adjustment is carried out in a competent and timely manner, and Borrower is
hereby authorized to permit Owner to collect and receipt for the insurance
proceeds (the “Proceeds”).  In the event of an Insured Casualty where the loss
equals or exceeds the Restoration Threshold (a “Significant Casualty”), Lender
may, in its reasonable discretion but subject to the rights of the Senior
Lender, settle and adjust any claim without the consent of Borrower or Owner and
agree with the insurer(s) on the amount to be paid on the loss, and the Proceeds
shall, if required by Senior Lender, be due and payable solely to Senior Lender
and

 

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held by Senior Lender in accordance with the terms of the Senior Loan
Agreement.  If Borrower, Owner or any party other than Lender is a payee on any
check representing Proceeds with respect to a Significant Casualty, Borrower
shall immediately endorse (or shall cause Owner to endorse), and cause all such
third parties to endorse, such check payable to the order of Lender, subject to
the rights of Senior Lender.  Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to endorse such check payable to the
order of Lender.   The actual, out of pocket reasonable expenses incurred by
Lender in the settlement, adjustment and collection of the Proceeds shall become
part of the Debt and shall be reimbursed by Borrower to Lender upon demand.

 

7.3          Condemnation.

 

7.3.1       Notice; Restoration.  Borrower shall promptly give Lender notice of
the actual or written threat of the commencement of any condemnation or eminent
domain proceeding affecting the Property (a “Condemnation”) and shall deliver to
Lender copies of any and all papers served in connection with such
Condemnation.  Following the occurrence of a Condemnation, Borrower, regardless
of whether an Award is available, shall promptly proceed to restore, repair,
replace or rebuild (or cause Owner to promptly proceed to restore, repair,
replace or rebuild) the Property in accordance with Legal Requirements to be as
nearly as possible restored to the same condition that existed prior to such
Condemnation.

 

7.3.2       Collection of Award.  Subject to the rights of Senior Lender, Lender
is hereby irrevocably appointed as Borrower’s attorney-in-fact, coupled with an
interest, with exclusive power on behalf of Owner to collect, receive and retain
any award or payment in respect of a Condemnation (an “Award”) and to make any
compromise, adjustment or settlement in connection with such Condemnation;
provided that, with respect to any Condemnation where the Award is less than the
Restoration Threshold, so long as no Event of Default shall be continuing,
Borrower may make any compromise, adjustment or settlement in connection with
such Condemnation with the prior consent of Lender, which consent shall not be
unreasonably withheld, conditioned, or delayed.  Notwithstanding any
Condemnation (or any transfer made in lieu of or in anticipation of such
Condemnation), Borrower shall continue to pay the Debt at the time and in the
manner provided for in the Loan Documents, and the Debt shall not be reduced
unless and until any Award shall have been actually received and applied by
Lender to expenses of collecting the Award and to 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
Interest Rate.  If the Property is sold, through foreclosure or otherwise, prior
to the receipt by Lender of such Award, Lender shall have the right, subject to
the rights of Senior Lender and whether or not a deficiency judgment on the Note
shall be recoverable or shall have been sought, recovered or denied, to receive
all or a portion of the Award sufficient to pay the Debt.  Borrower shall cause
any Award that is payable to Borrower pursuant to Owner’s operating agreement to
be paid directly to Lender, to be applied as provided in this Agreement, subject
to the rights of the Senior Lender under the Senior Loan Documents.  The
expenses incurred by Lender in the adjustment and collection of the Proceeds
shall become part of the Debt and shall be reimbursed by Borrower to Lender upon
demand.

 

7.4          Application of Proceeds or Award.  If, pursuant to the terms of the
Senior Loan Documents, Owner is ever entitled to receive any portion of any
Proceeds or Awards (i.e., such

 

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amounts are not required to be used for Restoration or to be applied to
repayment of the Senior Loan), Borrower shall cause such portion of such
Proceeds or Award to be deposited into the Mezzanine Account and all such
amounts shall then be applied to the payment of the Debt in accordance with
Section 2.3.2.

 

8.                                      DEFAULTS

 

8.1          Events of Default.  An “Event of Default” shall exist with respect
to the Loan if any of the following shall occur:

 

(a)           any portion of the Debt is not paid when due; provided, however,
if adequate funds are available in the Cash Management Account or Collection
Account for any payments required hereunder, and funds are failed to be
transferred from the Collection Account to the Cash Management Account or Senior
Lender is otherwise obligated to (and has the right to) apply such amounts on
deposit in the Cash Management Account to payment pursuant to Section 3.12(a) of
the Senior Loan Agreement or to the appropriate Subaccounts, the failure by
Collections Bank to transfer funds to the Cash Management Bank, or the Cash
Management Bank to allocate such funds for such payment pursuant to
Section 3.12(a) of the Senior Loan Agreement or into the appropriate
Subaccounts, in either case, shall not constitute an Event of Default hereunder;
provided, not more than three (3) times during the Term of the Loan, a default
under this Section 8.1(a) shall not be an Event of Default unless Borrower has
failed to cure such default within three (3) Business Days of Lender delivering
written notice to Borrower of such default;

 

(b)           any of the Property Taxes are not paid prior to delinquency
(unless, (i) with respect to Real Estate Taxes, Senior Lender is paying such
Real Estate Taxes pursuant to the Senior Loan Agreement, sufficient funds are in
the Tax Subaccount or the Cash Management Account to make such payment, Senior
Lender is otherwise obligated to (and has the right to) make such payments, and
Senior Lender has failed to make such payments), (ii) sufficient funds exist in
the Collection Account and Collection Bank has failed to make transfers to the
Cash Management Account subject to Borrower’s and Owner’s right to contest
Property Taxes in accordance with Section 5.2 hereof and the Senior Loan
Documents, as applicable;

 

(c)           the Policies are (i) not kept in full force and effect (unless,
(x) with respect to Insurance Premiums, Senior Lender is paying such Insurance
Premiums pursuant to the Senior Loan Agreement, sufficient funds are in the
Insurance Subaccount or the Cash Management Account to make such payment, Senior
Lender is otherwise obligated to (and has the right to) pay for such Insurance
Premiums, and Senior Lender has failed to make such payments or (y) or
(ii) sufficient funds exist in the Collection Account and Collection Bank has
failed to make transfers to the Cash Management Account) or (ii) not delivered
to Lender upon request;

 

(d)           a Transfer other than a Permitted Transfer occurs;

 

(e)           any certification, representation or warranty made by Borrower or
Guarantor herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished by
Borrower or Guarantor in connection

 

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with any Loan Document, shall be false or misleading in any material respect as
of the date the representation or warranty was made;

 

(f)            Borrower, Owner or Guarantor shall make an assignment for the
benefit of creditors;

 

(g)           a receiver, liquidator or trustee shall be appointed for Borrower,
Owner or Guarantor; or Borrower, Owner or Guarantor shall be adjudicated a
bankrupt or insolvent; or any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by, Borrower,
Owner or Guarantor, as the case may be; or any proceeding for the dissolution or
liquidation of Borrower, Owner or Guarantor shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, Owner or Guarantor, as the case
may be, only upon the same not being discharged, stayed or dismissed within
sixty (60) days;

 

(h)           Borrower breaches any covenant contained in
(i) Sections 5.12.1(i) through (v), 5.15, 5.22, 5.25, 5.27 or 5.28 hereof, or
(ii) Section 5.13 hereof (provided, however, with respect to a breach of any
covenant in Section 5.13 hereof, such breach shall not constitute an Event of
Default if such breach (A) was inadvertent, immaterial and non-recurring and
(B) is curable and Borrower promptly cures same within ten (10) Business Days
after the earlier to occur of (x) the discovery of such breach by Borrower or
(y) receipt of notice from Lender);

 

(i)            except as expressly permitted hereunder, the alteration,
improvement, demolition or removal of all or any portion of the Improvements
without the prior written consent of Lender;

 

(j)            an Event of Default as defined or described elsewhere in this
Agreement or in any other Loan Document occurs; or any other event shall occur
or condition shall exist, if the effect of such event or condition is to
accelerate or to permit Lender to accelerate the maturity of any portion of the
Debt;

 

(k)           an Event of Default as defined or described in the Senior Loan
Documents occurs; or any other event shall occur or condition shall exist, if
the effect of such event or condition is to accelerate or permit Senior Lender
to accelerate the maturity of any portion of the Senior Loan;

 

(l)            a default occurs under any term, covenant or provision set forth
herein or in any other Loan Document which specifically contains a notice
requirement or grace period and such notice has been given and such grace period
has expired;

 

(m)          any of the assumptions contained in any substantive
non-consolidation opinion, delivered to Lender by Borrower’s counsel in
connection with the Loan or otherwise hereunder, were not true and correct in a
material respect as of the date of such opinion or thereafter became untrue or
incorrect in any material respect;

 

(n)           Guarantor breaches any of the financial covenants set forth in
Section 6 of the Guaranty;

 

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(o)           a breach by Owner of the “special purpose entity” covenants
contained the applicable Senior Loan Documents; or

 

(p)           a default shall be continuing under any of the other terms,
covenants or conditions of this Agreement or any other Loan Document not
otherwise specified in this Section 8.1, for ten (10) days after notice to
Borrower (and Guarantor, if applicable) from Lender, in the case of any default
which can be cured by the payment of a sum of money, or for thirty (30) days
after notice from Lender in the case of any other default; provided, however,
that if such non-monetary default is susceptible of cure but cannot reasonably
be cured within such thirty (30)-day period, and Borrower (or Guarantor, if
applicable) 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 an additional period of
time as is reasonably necessary for Borrower (or Guarantor, if applicable) in
the exercise of due diligence to cure such default, such additional period not
to exceed ninety (90) days.

 

8.2          Remedies.

 

8.2.1       Acceleration.  Upon the occurrence and during the continuance of an
Event of Default (other than an Event of Default described in Sections 8.1(f) or
(g) hereof), in addition to any other rights or remedies available to it
pursuant to the Loan Documents or at law or in equity, Lender may take such
action, without notice or demand (and Borrower hereby expressly waives any such
notice or demand), that Lender deems advisable to protect and enforce its rights
against Borrower and in and to the Collateral; including declaring the Debt to
be immediately due and payable (including unpaid interest, Default Rate
interest, Late Payment Charges, and any other amounts owing by Borrower),
without notice or demand; and upon any Event of Default described in
Sections 8.1(f) or (g) hereof, the Debt (including unpaid interest, Default Rate
interest, Late Payment Charges, and any other amounts owing by Borrower) shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained in any Loan Document to the contrary notwithstanding.

 

8.2.2       Remedies Cumulative.  Upon the occurrence and during the continuance
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 the Loan Documents
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, or be
automatically, 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.  Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine, 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 in the Loan Documents.  Without limiting the
generality of the foregoing, Borrower agrees that if an Event of Default is
continuing, (a) to the extent permitted by applicable law, Lender is not subject
to any “one action” or “election of remedies” law or rule, and (b) 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
Collateral, the Pledge and other Security Documents have been

 

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foreclosed, the Collateral has been sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.  To the extent
permitted by applicable law, nothing contained in any Loan Document shall be
construed as requiring Lender to resort to any portion of the Collateral for the
satisfaction of any of the Debt in preference or priority to any other portion,
and Lender may seek satisfaction out of all or less than all of the Collateral,
in its discretion.

 

8.2.3       Severance.

 

(a)           During the continuance of an Event of Default, Lender shall have
the right from time to time to partially foreclose the Pledge in any manner and
for any amounts secured by the Pledge then due and payable as determined by
Lender, including the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of Principal and interest, Lender may foreclose the Pledge 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 the Pledge to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the Pledge as
Lender may elect.  Notwithstanding one or more partial foreclosures, the
Collateral shall remain subject to the Pledge to secure payment of the sums
secured by the Pledge and not previously recovered.

 

(b)           During the continuance of an Event of Default, Lender shall have
the right from time to time to sever the Note and the other Loan Documents into
one or more separate notes, pledge and security agreements and other security
documents in such denominations and priorities of payment and liens as Lender
shall determine 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; provided any such modifications shall not materially increase Borrower’s
obligations nor decrease Borrower’s rights under the Loan Documents.  Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect such severance in accordance with
the provisions hereof, Borrower ratifying all that such attorney shall do by
virtue thereof.

 

8.2.4       Delay.  No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
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 shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon.  Notwithstanding any other provision of this Agreement,
Lender reserves the right to seek a deficiency judgment or preserve a deficiency
claim in connection with the foreclosure of the Collateral to the extent
necessary to foreclose on all or less than all of any portion of such
Collateral.

 

8.2.5       Lender’s Right to Perform.  If Borrower fails to perform any
covenant or obligation contained herein and such failure shall continue beyond
all applicable notice and

 

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cure periods, without in any way limiting Lender’s right to exercise any of its
rights, powers or remedies as provided hereunder, or under any of the other Loan
Documents, Lender may, but shall have no obligation to, perform, or cause
performance of, such covenant or obligation, and all costs, expenses,
liabilities, penalties and fines of Lender incurred or paid in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Debt (and to the extent permitted under applicable laws,
secured by the Pledge and other Loan Documents) and shall bear interest
thereafter at the Default Rate.  Notwithstanding the foregoing, Lender shall
have no obligation to send notice to Borrower of any such failure.

 

9.                                      SENIOR LOAN

 

9.1          Compliance with Senior Loan Documents.  Borrower shall (or shall
cause Owner to):  (a) pay all principal, interest and other sums required to be
paid by Owner under and pursuant to the provisions of the Senior Loan Documents;
(b) diligently perform and observe all of the terms, covenants and conditions of
the Senior Loan Documents on the part of Owner to be performed and observed,
unless such performance or observance shall be waived in writing by Senior
Lender; (c) promptly notify Lender of the giving of any notice by Senior Lender
to Owner or Borrower of any default by Owner in the performance or observance of
any of the terms, covenants or conditions of the Senior Loan Documents on the
part of Owner to be performed or observed and deliver to Lender a true copy of
each such notice; (d) deliver a true, correct and complete copy of all notices,
demands, requests or material correspondence (including electronically
transmitted items) given or received by Owner or Guarantor to or from the Senior
Lender or its agent; and (e) not enter into or be bound by any Senior Loan
Documents that are not approved by Lender (except for amendments which Borrower
is required to execute in accordance with the Senior Loan Documents.  Without
limiting the foregoing, Borrower shall cause Owner to fund all reserves required
to be funded pursuant to the Senior Loan Documents.  In the event of a
refinancing of the Senior Loan permitted by the terms of this Agreement,
Borrower will cause all reserves on deposit with Senior Lender to be utilized by
Owner to reduce the amount due and payable to the Senior Lender or alternatively
shall be remitted to Lender as a mandatory prepayment of the Loan.

 

9.2          Senior Loan Defaults.

 

(a)           Without limiting the generality of the other provisions of this
Agreement, and without waiving or releasing Borrower from any of its obligations
hereunder, if there shall occur any default beyond all applicable notice and
cure periods under the Senior Loan Documents, Borrower hereby expressly agrees
that Lender shall have the immediate right, without prior notice to Borrower,
but shall be under no obligation:  (i) to pay all or any part of the Senior Loan
and any other sums that are then due and payable, and to perform any act or take
any action on behalf of Borrower and/or Owner as may be appropriate, to cause
all of the terms, covenants and conditions of the Senior Loan Documents on the
part of Owner to be performed or observed thereunder to be promptly performed or
observed; and (ii) to pay any other amounts and take any other action as Lender,
in its sole and absolute discretion, shall deem advisable to protect or preserve
the rights and interests of Lender in the Loan and/or the Collateral.  All sums
so paid and the actual out-of-pocket costs and expenses incurred by Lender in
exercising rights under this Section 9.2 (including reasonable attorneys’ fees)
(i) shall constitute additional advances of the Loan to Borrower, (ii) shall
increase the then unpaid Principal, (iii) shall bear

 

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interest at the Default Rate for the period from the date that such costs or
expenses were incurred to the date of payment to Lender, (iv) shall constitute a
portion of the Debt, and (v) shall be secured by the Pledge.

 

(b)           Borrower hereby indemnifies Lender from and against all
liabilities, obligations, losses, damages, penalties, assessments, actions, or
causes of action, judgments, suits, claims, demands, costs, expenses (including
attorneys’ and other professional fees, whether or not suit is brought, and
settlement costs) and disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against Lender as a result of the
foregoing actions, except to the extent arising out of Lender’s gross
negligence, willful misconduct, bad faith or illegal acts.  Lender shall have no
obligation to Borrower, Sole Member, Owner or any other party to make any such
payment or performance.  Borrower shall not impede, interfere with, hinder or
delay, and shall not permit Owner to impede, interfere with, hinder or delay,
any effort or action on the part of Lender to cure any default or asserted
default under the Senior Loan, or to otherwise protect or preserve Lender’s
interests in the Loan and the Collateral following a default or asserted default
under the Senior Loan.

 

(c)           Any default or breach by Owner under the Senior Loan Documents
which is not cured prior to the expiration of any applicable grace, notice or
cure period afforded to Owner under the Senior Loan Documents shall constitute
an Event of Default, without regard to any subsequent payment or performance of
any such obligations by Lender.  Borrower hereby grants Lender and any person
designated by Lender the right to enter upon the Property at any time following
the occurrence and during the continuance of any Event of Default, or the
assertion by Senior Lender that an Event of Default has occurred under the
Senior Loan Documents, for the purpose of taking any such action or to appear
in, defend or bring any action or proceeding to protect Borrower’s, Owner’s
and/or Lender’s interest.  Lender may take such action as Lender deems
reasonably necessary or desirable to carry out the intents and purposes of this
subsection (including communicating with Senior Lender with respect to any
Senior Loan defaults), without prior notice to, or consent from, Borrower. 
Lender shall have no obligation to complete any cure or attempted cure
undertaken or commenced by Lender.

 

(d)           If Lender shall receive a copy of any notice of default under the
Senior Loan Documents sent by Senior Lender to Owner, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender, in good faith, in reliance thereon.  As a material inducement to
Lender’s making the Loan, Borrower hereby absolutely and unconditionally
releases and waives all claims against Lender arising out of Lender’s exercise
of its rights and remedies provided in this Section 9.2, except for Lender’s
gross negligence, bad faith, illegal acts or willful misconduct.  In the event
that Lender makes any payment in respect of the Senior Loan, Lender shall be
subrogated to all of the rights of Senior Lender under the Senior Loan Documents
against the Property, in addition to all other rights it may have under the Loan
Documents.

 

9.3          Senior Loan Estoppels.  Borrower shall (or shall cause Owner to),
from time to time, use reasonable efforts to obtain from Senior Lender such
certificates of estoppel with respect to compliance by Owner with the terms of
the Senior Loan Documents as may be reasonably requested by Lender.  In the
event or to the extent that Senior Lender is not legally obligated to deliver
such certificates of estoppel and is unwilling to deliver the same, or is
legally

 

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obligated to deliver such certificates of estoppel but breaches such obligation,
then Borrower shall not be in breach of this provision so long as Borrower 
furnishes to Lender an estoppel executed by Borrower and Owner expressly
representing to Lender the information requested by Lender regarding compliance
by Owner with the terms of the Senior Loan Documents.  Borrower hereby
indemnifies Lender from and against all liabilities, obligations, losses,
damages, penalties, assessments, actions, or causes of action, judgments, suits,
claims, demands, costs, expenses (including attorneys’ and other professional
fees, whether or not suit is brought and settlement costs) and disbursements of
any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Lender based in whole or in part upon any fact, event, condition, or
circumstances relating to the Senior Loan which was misrepresented in, or which
warrants disclosure and was omitted from such estoppel executed by Borrower and
Owner.

 

9.4          No Amendments to Senior Loan Documents.  Without obtaining the
prior written consent of Lender, Borrower shall not cause or permit Owner to
(i) enter into any amendment or modification of any of the Senior Loan Documents
(except as may be required by the Senior Loan), or (ii) grant to Senior Lender
any consent or waiver.  Borrower shall cause Owner to provide Lender with a copy
of any amendment or modification to the Senior Loan Documents within five days
after the execution thereof.

 

9.5          Acquisition of the Senior Loan.  Neither Borrower, Sole Member or
Owner or any Affiliate of any of them shall acquire or agree to acquire the
Senior Loan, or any portion thereof or any interest therein, or any direct or
indirect ownership interest in the holder of the Senior Loan, via purchase,
transfer, exchange or otherwise, and any breach or attempted breach of this
provision shall constitute an Event of Default hereunder.  If, solely by
operation of applicable subrogation law, Borrower, Sole Member or Owner or any
Affiliate of any of them shall have failed to comply with the foregoing, then
Borrower:  (i) shall immediately notify Lender of such failure; (ii) shall cause
any and all such prohibited parties acquiring any interest in the Senior Loan
Documents:  (A) not to enforce the Senior Loan Documents; and (B) upon the
request of Lender, to the extent any of such prohibited parties has or have the
power or authority to do so, to promptly:  (1) cancel the promissory note
evidencing the Senior Loan, (2) re-convey and release the lien securing the
Senior Loan and any other collateral under the Senior Loan Documents, and
(3) discontinue and terminate any enforcement proceeding(s) under the Senior
Loan Documents.

 

9.6          Deed in Lieu of Foreclosure.  Without the express prior written
consent of Lender, Borrower shall not, and Borrower shall not cause, suffer or
permit Owner to, enter into any deed-in-lieu or consensual foreclosure with or
for the benefit of Senior Lender or any of its affiliates.  Without the express
prior written consent of Lender, Borrower shall not, and Borrower shall not
cause, suffer or permit Owner to, enter into any consensual sale or other
transaction in connection with the Senior Loan which could diminish, modify,
terminate, impair or otherwise adversely affect the interests of Lender or
Borrower, the Collateral or any portion thereof or any interest therein or of
Owner in the Property or portion thereof or any interest therein.

 

9.7          Refinancing or Prepayment of the Senior Loan.  Neither Borrower,
nor Sole Member nor Owner shall make any voluntary partial or full prepayments
of amounts owing

 

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under the Senior Loan or refinance the Senior Loan without the prior written
consent of Lender, unless such refinancing results in the concurrent payment in
full of the Debt.

 

9.8          Intercreditor Agreement.  Borrower hereby acknowledges and agrees
that any intercreditor agreement entered into between Lender and Senior Lender
(the “Intercreditor Agreement”) will be solely for the benefit of Lender and
Senior Lender, and that Borrower and Owner shall not be intended third-party
beneficiaries of any of the provisions therein, shall have no rights thereunder
and shall not be entitled to rely on any of the provisions contained therein. 
Lender and Senior Lender shall have no obligation to disclose to Borrower the
contents of the Intercreditor Agreement.  Borrower’s obligations hereunder are
and will be independent of such Intercreditor Agreement and shall remain
unmodified by the terms and provisions thereof.

 

10.                               SECONDARY MARKET PROVISIONS

 

10.1        Sale of Note and Secondary Market Transaction.

 

10.1.1     General; Borrower Cooperation.  Lender shall have the right at any
time and from time to time (a) to sell or otherwise transfer the Loan or any
portion thereof or the Loan Documents or any interest therein to one or more
investors, (b) to sell participation interests in the Loan to one or more
investors or (c) to securitize the Loan or any portion thereof in a single asset
securitization or a pooled loan securitization of rated single or multi-class
securities (the “Securities”) secured by or evidencing ownership interests in
the Note and the Collateral (each such sale, assignment, participation and/or
securitization is referred to herein as a “Secondary Market Transaction”, and
the transactions referred to in clause (c) shall be referred to herein as a
“Securitization”).  In connection with any Secondary Market Transaction,
Borrower shall, use all reasonable efforts and cooperate fully and in good faith
with Lender and otherwise assist Lender in satisfying the market standards to
which Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with any such Secondary
Market Transactions, including:  (i) to (A) provide such financial and other
information with respect to the Collateral, the Property, Borrower and Owner and
their Affiliates, Guarantor, Manager and any tenants of the Property, to the
extent Borrower has rights or access thereof, (B)  provide business plans and
budgets relating to the Property and (C)  perform or permit or cause to be
performed or permitted such site inspection, appraisals, surveys, market
studies, environmental reviews and reports, engineering reports and other due
diligence investigations of the Property, as may be reasonably requested from
time to time by Lender or, if applicable, the Rating Agencies or as may be
necessary or appropriate in connection with a Secondary Market Transaction or
Exchange Act requirements (the items provided to Lender pursuant to this clause
(i) being called the “Provided Information”), together, if customary, with
appropriate verification of and/or consents to the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and, if applicable, the Rating Agencies; (ii) cause counsel to render
opinions as to non-consolidation and any other opinion customary in
securitization transactions with respect to the Collateral, the Property,
Borrower and Owner and their Affiliates, which counsel and opinions shall be
reasonably satisfactory to Lender and, if applicable, the Rating Agencies;
(iii) make such representations and warranties as of the date hereof of any
Secondary Market Transaction with respect to the Collateral, the Property,
Borrower, Owner and the Loan Documents as are customarily provided in such
transactions and as may be reasonably requested by Lender or, if applicable, the
Rating

 

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Agencies and consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the representations and
warranties made in the Loan Documents; (iv) provide current certificates of good
standing and qualification with respect to Borrower and Sole Member from
appropriate Governmental Authorities; and (v) execute such amendments to the
Loan Documents and Borrower’s organizational documents, as may be requested by
Lender or, if applicable, the Rating Agencies or otherwise to effect a Secondary
Market Transaction, provided that nothing contained in this clause (v) shall
result in a material economic change in the transaction at any time during the
Term nor materially increase Borrower’s obligations nor decrease Borrower’s
rights under the Loan Documents.  Borrower’s cooperation obligations set forth
herein shall continue until the Loan has been paid in full.

 

10.1.2     Use of Information.  Borrower understands that all or any portion of
the Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (each, a “Disclosure Document”) and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market Transaction.  If the Disclosure Document is required to
be revised, Borrower shall cooperate with Lender in updating the Provided
Information or Required Records for inclusion or summary in the Disclosure
Document or for other use reasonably required in connection with a Secondary
Market Transaction by providing all current information pertaining to Borrower,
Owner, Manager, the Collateral and the Property necessary to keep the Disclosure
Document accurate and complete in all material respects with respect to such
matters.

 

10.1.3     Borrower Obligations Regarding Disclosure Documents.  In connection
with a Disclosure Document, Borrower shall:  (a) if requested by Lender, certify
in writing that Borrower has examined those portions of such Disclosure
Document, pertaining to Borrower, Owner, the Collateral, the Property, Manager
and the Loan, and that, as to factual matters related to Borrower, the Property
or the Loan, such portions do not contain any untrue statement of a material
fact or omit to state a material fact known to Borrower necessary in order to
make the statements made, in the light of the circumstances under which they
were made, not misleading; and (b) indemnify (in a separate instrument of
indemnity, if so requested by Lender) (i) any underwriter, syndicate member or
placement agent (collectively, the “Underwriters”) retained by Lender or its
issuing company affiliate (the “Issuer”) in connection with a Secondary Market
Transaction, (ii) Lender (and for purposes of this Section 10.1, Lender shall
include LoanCore, its Affiliates, successors and assigns, and their respective
officers and directors) and (iii) the Issuer that is named in the Disclosure
Document or registration statement relating to a Secondary Market Transaction
(the “Registration Statement”), and each of the Issuer’s directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within clause
(iii), the “Lender Group”), and each of its directors and each person who
controls each of the Underwriters, within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any losses, claims, damages or liabilities (the
“Liabilities”) to which Lender, the Lender Group or the Underwriter Group may
become subject (including reimbursing

 

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all of them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon (A) any untrue statement or alleged untrue statement of any
material fact related to Borrower, the Property or Guarantor contained in any of
the Provided Information which Borrower has reviewed and approved or in any of
the applicable portions of such sections of the Disclosure Document applicable
to Borrower, Owner, Manager, Guarantor, the Collateral, the Property or the
Loan, or (B) the omission or alleged omission to state therein a material fact
related to Borrower, Guarantor or the Property and known by Borrower required to
be stated in the applicable portions of such sections or necessary in order to
make the statements in the applicable portions of such sections which have been
reviewed and approved by Borrower in light of the circumstances under which they
were made, not misleading; provided, however, that Borrower shall not be
required to indemnify Lender for any Liabilities relating to untrue statements
or omissions which Borrower identified to Lender in writing at the time of
Borrower’s examination of such Disclosure Document or for any projections,
illegal acts, fraud or intentional misrepresentations made by the Lender Group,
the Issuer or the Underwriter Group or for any information which Borrower has
not received.

 

10.1.4     Borrower Indemnity Regarding Filings.  In connection with filings
under the Exchange Act, Borrower shall (a) indemnify Lender, the Lender Group
and the Underwriter Group for any Liabilities to which Lender, the Lender Group
or the Underwriter Group may become subject insofar as the Liabilities arise out
of or are based upon the actual omission to state in the Provided Information,
which was provided to and approved by Borrower, a material fact required to be
stated in the Provided Information in order to make the statements in the
Provided Information related to Borrower, Owner, Guarantor or the Property, and
which has been provided to Borrower for review, in light of the circumstances
under which they were made not misleading and (b) reimburse Lender, the Lender
Group or the Underwriter Group for any legal or other expenses actually incurred
by Lender, Lender Group or the Underwriter Group in connection with defending or
investigating the Liabilities which are incurred as a result of the actual
omission to state in the Provided Information, which was provided to and
approved by Borrower, of a material fact known to Borrower required to be stated
in the Provided Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made not
misleading, except, in each case, arising out of the fraud, illegal acts, or
intentional misrepresentations of the Lender, Lender Group or Underwriter Group.

 

10.1.5     Indemnification Procedure.  Promptly after receipt by an indemnified
party under Section 10.1.3 above or Section 10.1.4 above of notice of the
commencement of any action for which a claim for indemnification is to be made
against Borrower, such indemnified party shall notify Borrower in writing of
such commencement, but the omission to so notify Borrower will not relieve
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to Borrower.  If
any action is brought against any indemnified party, and it notifies Borrower of
the commencement thereof, Borrower will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it (or they)
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice of commencement, to assume the defense thereof
with counsel satisfactory to such indemnified party in its reasonable
discretion.  After notice from Borrower to such indemnified party under this
Section 10.1.5, Borrower shall not be responsible for any legal or other
expenses subsequently incurred by such indemnified party in

 

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connection with the defense thereof other than reasonable out-of-pocket costs of
investigation; provided, however, if the defendants in any such action include
both Borrower and an indemnified party, and any indemnified party shall have
reasonably concluded that there are any legal defenses available to it and/or
other indemnified parties that are different from or additional to those
available to Borrower, then the indemnified party or parties shall have the
right to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.  Borrower shall not be liable for the expenses of more than one
separate counsel unless there are legal defenses available to it that are
different from or additional to those available to another indemnified party. 
Without the prior written consent of Lender (which consent shall not be
unreasonably withheld or delayed), Borrower shall not settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not Borrower is an actual or potential party to such claim, action,
suit or proceeding) unless Borrower shall have given Lender reasonable prior
written notice thereof and shall have obtained an unconditional release of each
indemnified party hereunder from all liability arising out of such claim,
action, suit or proceedings.

 

10.1.6     Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 above or Section 10.1.4 above is for any reason held to be
unenforceable by an indemnified party in respect of any Liabilities (or action
in respect thereof) referred to therein which would otherwise be indemnifiable
under Section 10.1.3 above or Section 10.1.4 above, Borrower shall contribute to
the amount paid or payable by the indemnified party as a result of such
Liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person not guilty
of such fraudulent misrepresentation.  In determining the amount of contribution
to which the respective parties are entitled, the following factors shall be
considered:  (a) the Lender Group’s and Borrower’s relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted; (b) the opportunity to correct and prevent any statement or omission;
and (c) any other equitable considerations appropriate in the circumstances. 
Lender and Borrower hereby agree that it may not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation.

 

10.1.7     Survival.  The liabilities and obligations of both Borrower and
Lender under this Section 9.1 shall survive the termination of this Agreement
and the satisfaction and discharge of the Debt.

 

10.2        Severance of Loan.  Lender, without in any way limiting Lender’s
other rights hereunder, shall have the right, at any time (whether prior to, in
connection with, or after any Secondary Market Transaction), with respect to all
or any portion of the Loan, to modify, split and/or sever all or any portion of
the Loan as hereinafter provided.  Without limiting the foregoing, Lender may
(a) cause the Note and the Pledge to be split into a first and second loan,
(b) create one or more senior and subordinate notes (i.e., an A/B or A/B/C
structure), (c) create multiple components of the Note (and allocate or
reallocate the principal balance of the Loan among such components),
(d) otherwise sever the Loan into two (2) or more loans secured by a pledge of
partnership or membership interests (directly or indirectly) in Borrower (i.e.,
a senior

 

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mezzanine loan/junior mezzanine loan structure), in each such case described in
clauses (a) through (d) above, in whatever proportion and whatever priority
Lender determines, and (e) modify the Loan Documents with respect to the newly
created notes or components of the Note such that the pricing and marketability
of the Securities and the size of each class of Securities and the rating
assigned to each such class by the Rating Agencies shall provide the most
favorable rating levels and achieve the optimum rating levels for the Loan. 
Notwithstanding the foregoing, no such amendment described above shall
(i) modify or amend any material economic term of the Loan, or (ii) materially
increase the obligations, or decrease the rights, of Borrower under the Loan
Documents; provided, however, in each such instance the outstanding principal
balance of all the notes evidencing the Loan (or components of such notes)
immediately after the effective date of such modification equals the outstanding
principal balance of the Loan immediately prior to such modification and the
weighted average of the interest rates for all such note(s) (or components
thereof) immediately after the effective date of such modification equals the
Interest Rate immediately prior to such modification (provided, however, that it
is agreed that partial prepayments of principal, including resulting from a
Liquidation Event may cause the weighted average Interest Rate to change over
time due to the non-pro rata allocation of such prepayments between any such
separate notes, participations or counterparts).  If requested by Lender,
Borrower (and Borrower’s constituent members, if applicable, and Guarantor)
shall execute within two (2) Business Days after such request, such
documentation as Lender may reasonably request to evidence and/or effectuate any
such modification or severance.  At Lender’s election, each note comprising the
Loan may be subject to one or more Securitizations.  Lender shall have the right
to modify the Note and/or Notes and any components in accordance with this
Section 10.2 and, provided that such modification shall comply with the terms of
this Section 10.2, it shall become immediately effective.

 

10.3        Costs and Expenses.  Notwithstanding anything to the contrary
contained in this Article 9, Borrower shall not be required to incur any
out-of-pocket costs or expenses in the performance of its obligations under
Sections 10.1 or 10.2 hereof (excluding the indemnity obligations set forth in
each such section) in excess of $10,000, other than fees and expenses of
Borrower’s legal counsel, accountants and consultants.

 

11.                               MISCELLANEOUS

 

11.1        Exculpation.  Subject to the qualifications below, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the 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 and rights under the Loan Documents, or in all or any portion of
the Collateral; 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 Collateral.  The
provisions of this Section 11.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by any Loan
Document, (ii) impair the right of Lender to name Borrower as a party defendant
in any action or suit for foreclosure and sale under any of the Security
Documents, (iii) affect the validity or enforceability of any of the Loan
Documents or any guaranty made in connection with the Loan or any of the rights
and remedies of Lender thereunder, (iv) impair the right of Lender to obtain the
appointment of a

 

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receiver, (v) constitute a prohibition against Lender to commence any other
appropriate action or proceeding in order for Lender to fully realize the
security granted by the Pledge or the other Security Documents or to exercise
its remedies against all or any portion of the Collateral, or (vi) constitute a
waiver of the right of Lender to enforce the liability and obligation of
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys’ fees and costs reasonably incurred) arising out of or in
connection with the following (all such liability and obligation of Borrower for
any or all of the following being referred to herein as “Borrower’s Recourse
Liabilities”):

 

(a)           fraud, willful misconduct, misrepresentation or failure to
disclose a material fact by or on behalf of Borrower, Owner or Guarantor or any
Affiliate of Borrower, Owner or Guarantor, or any of their respective agents or
representatives in connection with the Loan, including by reason of any claim
under the Racketeer Influenced and Corrupt Organizations Act (RICO);

 

(b)           the forfeiture by Borrower of the Collateral, (or any portion
thereof) or by Owner of the Property, or any portion thereof, because of the
conduct or purported conduct of criminal activity by Borrower, Owner or
Guarantor or any of their respective agents or representatives in connection
therewith;

 

(c)           intentional physical waste of the Property or any portion thereof
(including the abandonment of the Property), or, after an Event of Default, the
removal or disposal of any material portion of the Property by Borrower or its
Affiliates;

 

(d)           any Proceeds paid by reason of any Insured Casualty or any Award
received in connection with a Condemnation or other sums or payments
attributable to the Property not applied in accordance with the provisions of
the Loan Documents and the Senior Loan Documents (except to the extent that
Borrower or Owner did not have the legal right, because of a bankruptcy,
receivership or similar judicial proceeding, to direct disbursement of such sums
or payments);

 

(e)           all Rents of the Property received or collected by or on behalf of
Borrower or Owner after an Event of Default (but not those collected by the
Senior Lender) and not applied to payment of the obligations under the Senior
Loan Document or Principal and interest due under the Note, and to the payment
of actual and reasonable operating expenses of the Property, as they become due
or payable (except to the extent that such application of such funds is
prevented by bankruptcy, receivership, or similar judicial proceeding in which
Borrower or Owner is legally prevented from directing the disbursement of such
sums);

 

(f)            misappropriation or conversion by or on behalf of Borrower or
Owner (including, subject to the rights of the Senior Lender, failure to turn
over to Lender on demand following an Event of Default) of any gross revenues
(including Rents, advance deposits, any other deposits, rents collected in
advance, funds held by Borrower or Owner for the benefit of another party and
Lease Termination Payments);

 

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(g)           the failure to pay Property Taxes (unless, with respect to Real
Estate Taxes, Senior Lender is paying such Real Estate Taxes pursuant to
Section 3.3 of the Senior Loan Agreement, sufficient funds are in the Collection
Account, Cash Management Account, or Tax Subaccount to make such payment, Senior
Lender is otherwise obligated to (and has the right to) make such payments, and
Senior Lender has failed to make such payments), except to the extent gross
revenues from the Property are sufficient to pay the same;

 

(h)           the breach of any representation, warranty, covenant or
indemnification in any Loan Document concerning Environmental Laws or Hazardous
Substances, including Sections 4.21 and 5.8 hereof, and clauses (h) through
(l) of Section 5.31 hereof;

 

(i)            the failure to pay (or cause Owner to pay) any charges for labor
or materials or other charges that can create Liens on any portion of the
Property, except to the extent the same are being contested as permitted herein;

 

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

 

(k)           the failure to obtain and maintain (or cause Owner to obtain and
maintain) the fully paid for Policies in accordance with Section 7.1.1 hereof
(unless, with respect to Insurance Premiums, Senior Lender is paying such
Insurance Premiums pursuant to Section 3.4 of the Senior Loan Agreement,
sufficient funds are in the Collection Account, Cash Management Account or
Insurance Subaccount to make such payment, Senior Lender is otherwise obligated
to (and has the right to) pay for such Insurance Premiums, and Senior Lender has
failed to make such payments), except to the extent gross revenues from the
Property are sufficient to pay the same;

 

(l)            Borrower’s indemnification of Lender set forth in Sections 5.30,
10.1 and 10.2 hereof;

 

(m)          the failure by Borrower to cause Owner to deposit with Senior
Lender all Rents, as required under Article 3 of the Senior Loan Agreement;

 

(n)           the failure by Borrower to cause Owner to use any funds released
by Senior Lender from any subaccount provided for in the Senior Loan Agreement
for Approved Capital Expenses (as defined in such Senior Loan Agreement),
Approved Leasing Expenses, Approved Operating Expenses, as applicable, or for
any other intended use therefor, as more particularly provided for in the Senior
Loan Agreement;

 

(o)           intentionally omitted;

 

(p)           a breach of the representation set forth in Section 4.1(b) hereof
or a breach in the covenants set forth in Section 5.13 hereof or a breach by
Owner of the “special purpose entity” covenants contained the applicable Senior
Loan Documents, which failure or breach does not result in the substantive
consolidation of Borrowers’ assets with the assets of any other Person;

 

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(q)           any obligation of Borrower or Owner to indemnify any Person that,
immediately prior to any acquisition of title of the Collateral pursuant to a
UCC foreclosure sale, a UCC strict foreclosure, an assignment in lieu of
foreclosure or other enforcement action under the Loan Documents (collectively,
an “Equity Collateral Enforcement Action”; and the date on which an Equity
Collateral Enforcement Action is consummated, an “Equity Collateral Transfer
Date”), was an Affiliate of Borrower or Owner, to the extent such obligation
continues to be the obligation of the transferee at such Equity Collateral
Enforcement Action and is not expressly waived in writing by the Persons covered
by such indemnification obligation and (B) any obligation of Borrower or Owner
accruing prior to, on or after the Equity Collateral Transfer Date to pay
(1) legal fees to legal counsel engaged by Borrower or Owner prior to the Equity
Collateral Transfer Date, (2) amounts due under any contract between Borrower or
Owner, on the one hand, and any of Borrower, Owner, any Guarantor or any
Affiliate of any of them, on the other hand (unless such contract is assumed in
writing by the Person acquiring the Collateral on or after the Equity Collateral
Transfer Date), or (3) amounts due under any contract between any of Borrower,
Owner, any Guarantor or any Affiliate of any of them, on the one hand, and any
Person not Affiliated with any of Borrower, Owner, any Guarantor or any
Affiliate of any of them, on the other hand, that has been entered into without
the prior written approval of Lender to the extent such prior written approval
was required under the Loan Documents (unless such contract was assumed in
writing by the Person acquiring the Collateral on or after the Equity Collateral
Transfer Date) and/or following the completion of any Equity Collateral
Enforcement Action, any accounts payable of any of Borrower, Owner, any
Guarantor or any Affiliate of any of them or any income tax or indemnity
liability of any of Borrower, Owner, any Guarantor or any Affiliate of any of
them to third parties or to any other of Borrower, Owner, any Guarantor or any
Affiliate of any of them; and/or

 

(r)            if Guarantor, Borrower or any Affiliate of any of the foregoing,
in connection with any enforcement action or exercise or assertion of any right
or remedy by or on behalf of Lender under or in connection with the Note, the
Pledge or any other Loan Document, seeks a defense, judicial intervention or
injunctive or other equitable relief of any kind or asserts in a pleading filed
in connection with a judicial proceeding any defense against Lender or any right
in connection with any security for the Loan which the court in any such action
or proceeding determines that Borrower’s defense is without merit or such
request for judicial intervention or injunctive or other equitable relief is
unwarranted.

 

Notwithstanding anything to the contrary in this Agreement or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender
may have under Section 506(a), 506(b), 1111(b) or any other provisions of the
Bankruptcy Code to file a claim for the full amount of the Debt or to require
that all collateral shall continue to secure all of the Debt in accordance with
the Loan Documents, and (B) Lender’s agreement not to pursue personal liability
of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no
further force and effect, and the Debt shall be fully recourse to Borrower in
the event that one or more of the following occurs (each, a “Springing Recourse
Event”):

 

(i)            an Event of Default described in Section 8.1(d) hereof shall have
occurred (other than with respect to entering into of Leases, easements,
restrictive covenants, licenses or occupancy agreements expressly permitted
pursuant to the terms of the Loan Documents);

 

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(ii)           a breach of the representation set forth in Section 4.1(b) hereof
or a breach in the covenants set forth in Section 5.13 hereof or a breach by
Owner of the “special purpose entity” covenants contained the applicable Senior
Loan Documents, and such failure results in the substantive consolidation of
Borrowers’ assets with the assets of any other Person;

 

(iii)          Borrower or Owner files a voluntary petition under the Bankruptcy
Code or files a petition for bankruptcy, reorganization or similar proceeding
pursuant to any other Federal or state bankruptcy, insolvency or similar law;

 

(iv)          Borrower or Owner is substantively consolidated with any other
Person; unless such consolidation was involuntary and not consented to by
Borrower, Owner or Guarantor and is discharged, stayed or dismissed within sixty
(60) days following the occurrence of such consolidation;

 

(v)           the filing of an involuntary petition against Borrower and/or
Owner under the Bankruptcy Code or an involuntary petition for bankruptcy,
reorganization or similar proceeding pursuant to any other Federal or state
bankruptcy, insolvency or similar law by any other Person (other than Lender or
Servicer) in which (x) Borrower, Owner or any Affiliate, officer, director or
representative which, directly or indirectly, Controls Borrower and/or Owner
colludes with or otherwise assists such Person, and/or (y) Borrower and/or Owner
or any Affiliate, officer, director or representative which, directly or
indirectly, Controls Borrower and/or Owner solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower and/or Owner
by any Person;

 

(vi)          Borrower or Owner or any Affiliate, officer, director or
representative which, directly or indirectly, Controls Borrower and/or Owner
files an answer consenting to, or otherwise acquiescing in, or joining in, any
involuntary petition filed against it by any other Person (other than Lender or
Servicer) under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law;

 

(vii)         Borrower, Owner or any Affiliate, officer, director or
representative which, directly or indirectly, Controls Borrower and/or Owner
consents to, or acquiesces in, or joins in, an application for the appointment
of a custodian, receiver, liquidator, trustee or examiner for Borrower and/or
Owner or any portion of the Property (other than Lender or Servicer);

 

(viii)        Borrower or Owner makes an assignment for the benefit of creditors
or admits, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due;

 

(ix)          Any of Borrower, Owner, Guarantor or any Affiliate of any of them
causes Owner to amend or otherwise modify its organizational documents in order
to amend or repeal its election to be governed by Article 8 of the UCC, or any
termination or cancellation of the limited liability company membership
certificate evidencing Borrower’s one hundred percent (100%) ownership interest
in Owner, as delivered to Lender in connection with the origination of the Loan
in connection with the Pledge Agreement; and/or

 

(x)           if the Overstock Lease is amended, modified or terminated

 

 

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without Lender’s prior written consent.

 

11.2        Brokers and Financial Advisors.

 

(a)           Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the Loan other than Northmarq Capital (“Broker”) whose fees
shall be paid by Borrower pursuant to a separate agreement.  Borrower shall
indemnify and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses (including attorneys’ fees, whether incurred in
connection with enforcing this indemnity or defending claims of third parties)
of any kind in any way relating to or arising from a claim by any Person
(including Broker) that such Person acted on behalf of Borrower in connection
with the transactions contemplated herein.  The provisions of this Section 11.2
shall survive the expiration and termination of this Agreement and the repayment
of the Debt.

 

(b)           Notwithstanding anything in Section 11.2(a) hereof to the
contrary, Borrower hereby acknowledges that (i) at Lender’s sole discretion,
Broker may receive further consideration from Lender relating to the Loan or any
other matter for which Lender may elect to compensate Broker pursuant to a
separate agreement between Lender and Broker and (ii) Lender shall have no
obligation to disclose to Borrower the existence of any such agreement or the
amount of any such additional consideration paid or to be paid to Broker whether
in connection with the Loan or otherwise.

 

11.3        Retention of Servicer.

 

(a)           At the option of Lender, the Loan may be serviced by the Servicer
and Lender may delegate all or any portion of its responsibilities under this
Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the “Servicing Agreement”) between Lender and the Servicer.  Borrower
shall not be responsible for any set-up fees or any other initial costs relating
to or arising under the Servicing Agreement.  Borrower shall not be responsible
for payment of the regular ongoing master servicing fee due to the Servicer
under the Servicing Agreement.

 

(b)           Subject to the limitations set forth in the Loan Documents,
Borrower shall pay any fees and expenses of the Servicer and any actual out of
pocket third-party fees and expenses in connection with a prepayment, release of
the Property, approvals under the Loan Documents requested by Borrower,
defeasance, assumption of Borrower’s obligations or modification of the Loan, as
well as any fees and expenses in connection with the special servicing or
work-out of the Loan or enforcement of the Loan Documents, including, special
servicing fees, operating or trust advisor fees (if the Loan is a specially
serviced loan or in connection with a workout), work-out fees, liquidation fees,
reasonable attorneys’ fees and expenses and other fees and expenses in
connection with the modification or restructuring of the Loan.

 

11.4        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

 

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in full force and effect so long as any of the Debt is unpaid or such longer
period if expressly set forth in this Agreement.  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 of
Borrower’s covenants and agreements in this Agreement shall inure to the benefit
of the respective legal representatives, successors and assigns of Lender.

 

11.5        Lender’s Discretion; Rating Agency Review Waiver.

 

(a)           Whenever pursuant to this Agreement or any other Loan Document,
Lender exercises any right given to it to request, approve or disapprove, or
consent or withhold consent, or any arrangement or term is to be satisfactory to
Lender or is to be in Lender’s discretion, the decision of Lender to request,
approve or disapprove, to consent or withhold consent, or to decide whether
arrangements or terms are satisfactory or not satisfactory, or acceptable or
unacceptable or in Lender’s discretion shall (except as is otherwise
specifically herein provided) be in the sole and absolute discretion of Lender
and shall be final and conclusive.  Additionally, whenever in this Agreement or
any other Loan Document, Lender exercises any right given to it to approve or
disapprove, or consent or withhold consent, or any arrangement or term is to be
satisfactory to Lender in Lender’s reasonable discretion, or Lender agrees to
not withhold, condition or delay its consent, the decision of Lender to approve
or disapprove, to consent, condition, delay or withhold consent, or to decide
whether arrangements or terms are satisfactory or not satisfactory, or
acceptable or unacceptable or in Lender’s discretion shall (except as is
otherwise specifically herein provided) be in the sole and absolute discretion
of Lender while an Event of Default is continuing unless otherwise specifically
herein provided.

 

(b)           Whenever, pursuant to this Agreement or any other Loan Documents,
a Rating Comfort Letter is required from each applicable Rating Agency, in the
event that any applicable Rating Agency “declines review”, “waives review” or
otherwise indicates in writing or otherwise to Lender’s or Servicer’s
satisfaction that no Rating Comfort Letter will or needs to be issued with
respect to the matter in question (each, a “Review Waiver”), then the Rating
Comfort Letter requirement with respect to such Rating Agency shall be deemed to
be satisfied with respect to such matter.  It is expressly agreed and
understood, however, that receipt of a Review Waiver (i) from any one Rating
Agency shall not be binding or apply with respect to any other Rating Agency and
(ii) with respect to one matter shall not apply or be deemed to apply to any
subsequent matter for which Rating Comfort Letter is required.

 

(c)           Whenever pursuant to this Agreement Lender has an approval or
consent right, Borrower agrees and understands that such approval or consent may
be conditioned upon Owner’s receipt of all applicable Senior Lender consents
(including any required Rating Agency Confirmations).

 

(d)           Prior to a Securitization or in the event that there is a Review
Waiver, if Lender does not have a separate and independent approval right with
respect to the matter in question, then the term Rating Agency Confirmation
shall be deemed instead to require the prior written consent of Lender.

 

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11.6        Governing Law.

 

(a)           THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER 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 CONFLICT OF LAWS) AND
ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.  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
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 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 SHALL BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN NEW YORK COUNTY, NEW YORK  AND BORROWER WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  BORROWER DOES
HEREBY DESIGNATE AND APPOINT CT CORPORATION SYSTEMS, 111 EIGHTH AVENUE, 13TH
FLOOR, NEW YORK, NEW YORK 10005, AS ITS AUTHORIZED AGENT TO RECEIVE AND FORWARD
ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK,
AND BORROWER AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER
(i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.  NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE
THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT
OR FORECLOSURE OF ANY LIEN ON ANY

 

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COLLATERAL FOR THE LOAN IN ANY FEDERAL OR STATE COURT IN ANY
JURISDICTION(S) THAT LENDER MAY ELECT IN ITS SOLE AND ABSOLUTE DISCRETION, AND
BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.

 

11.7        Modification, Waiver in Writing.  No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party or parties against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given.  Except as otherwise expressly provided herein, no
notice to or demand on Borrower shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.  Neither any
failure nor any delay on the part of Lender in insisting upon strict performance
of any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege hereunder, or under any other Loan Document, shall operate
as or constitute a waiver thereof, nor shall a single or partial exercise
thereof preclude any other future exercise, or the exercise of any other right,
power, remedy or privilege.  In particular, and not by way of limitation, by
accepting payment after the due date of any amount payable under any 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 the Loan Documents, or to
declare an Event of Default for failure to effect prompt payment of any such
other amount.  Lender shall have the right to waive or reduce any time periods
that Lender is entitled to under the Loan Documents in its sole and absolute
discretion.

 

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

 

11.9        Headings/Schedules.  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.  The Schedules attached hereto, are hereby incorporated by reference as
a part of this Agreement with the same force and effect as if set forth in the
body hereof.

 

11.10      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

 

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ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

11.11      Preferences.  Upon the occurrence and continuance of an Event of
Default, 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
Debt.  To the extent Borrower makes a payment to Lender, or Lender receives
proceeds of any collateral, which is in whole or part 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 Debt 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.  This provision shall survive the expiration or
termination of this Agreement and the repayment of the Debt.

 

11.12      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 any other Loan Document specifically and expressly requires 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 no Loan
Document specifically and expressly requires the giving of notice by Lender to
Borrower.

 

11.13      Remedies of Borrower.  If a claim or adjudication is made that Lender
or any of its agents, including Servicer, has acted unreasonably or unreasonably
delayed acting in any case where by law or under any Loan Document, Lender or
any such agent, as the case may be, has an obligation to act reasonably or
promptly, Borrower agrees that neither Lender nor its agents, including
Servicer, shall be liable for any monetary damages, and Borrower’s sole remedy
shall be to commence an action seeking injunctive relief or declaratory
judgment.  Any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment. 
Borrower specifically waives any claim against Lender and its agents, including
Servicer, with respect to actions taken by Lender or its agents on Borrower’s
behalf.  Additionally, and without limiting any of the other provisions
contained herein, Borrower hereby unconditionally and irrevocably waives, to the
maximum extent permitted by applicable law, any rights it may have to claim or
recover against Lender in any legal action or proceeding any special, exemplary,
punitive or consequential damages.

 

11.14      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,
understandings and negotiations among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents.

 

11.15      Offsets, Counterclaims and Defenses.  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, including
Servicer, or otherwise offset any obligations to make payments required under
the Loan Documents.  Any assignee of Lender’s interest in and to the Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses

 

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which Borrower may otherwise have against any assignor of such documents, and no
such offset, 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 offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.

 

11.16      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, the Loan, Lender or any member of the Lender
Group, a Loan purchaser, the Servicer or the trustee in a Secondary Market
Transaction, shall be subject to the prior written approval of Lender.  Lender
shall have the right to issue any of the foregoing without Borrower’s approval.

 

11.17      No Usury.  Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.17 shall
control every other agreement in the Loan Documents.  If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender’s
exercise of the option to accelerate the maturity of the Loan or any prepayment
by Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower’s and Lender’s express intent
that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to Borrower), and the provisions of the
Loan Documents immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
new document, so as to comply with applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder.  All sums paid
or agreed to be paid to Lender for the use, forbearance or detention of 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 Debt does not
exceed the maximum lawful rate from time to time in effect and applicable to the
Debt for so long as the Debt is outstanding.  Notwithstanding anything to the
contrary contained in any Loan Document, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.

 

11.18      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 each is represented by separate counsel in connection with the
negotiation, drafting, execution and delivery of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their meaning
against the party that drafted them.  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

 

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ownership by it or any parent, subsidiary or affiliate of Lender of any equity
interest any of them may acquire in Borrower, and Borrower hereby irrevocably
waives the right to raise any defense or take any action on the basis of the
foregoing with respect to Lender’s exercise of any such rights or remedies. 
Borrower acknowledges that Lender engages in the business of real estate
financings and other real estate transactions and investments which may be
viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

11.19      No Joint Venture or Partnership; No Third Party Beneficiaries.

 

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

 

(b)           The Loan Documents are solely for the benefit of Lender and
Borrower and nothing contained in any Loan Document 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
therein.

 

11.20      Intentionally Omitted.

 

11.21      Assignments and Participations.  In addition to any other rights of
Lender hereunder, the Loan, the Note, the Loan Documents and/or Lender’s rights,
title, obligations and interests therein may be sold, assigned, participated or
otherwise transferred by Lender and any of its successors and assigns to any
Person at any time in its sole and absolute discretion, in whole or in part,
whether by operation of law (pursuant to a merger or other successor in
interest) or otherwise without notice to or consent from Borrower or any other
Person.  Upon such assignment, all references to Lender in this Agreement and in
any Loan Document shall be deemed to refer to such assignee or successor in
interest and such assignee or successor in interest shall thereafter stand in
the place of Lender in all respects.  Except as expressly permitted herein,
Borrower may not assign its rights, title, interests or obligations under this
Agreement or under any of the Loan Documents.

 

11.22      Intentionally Omitted.

 

11.23      Waiver of Marshalling of Assets.  To the fullest extent permitted by
law, Borrower, for itself and its successors and assigns, waives all rights to a
marshalling of the assets of Borrower, Borrower’s members or partners, as
applicable, and others with interests in Borrower, and of the Collateral, and
shall not assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Collateral 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 Collateral in preference to every other claimant
whatsoever.

 

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

 

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

 

11.26      Proofs of Claim.  In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other
proceedings affecting Borrower, Owner, Sole Member or Guarantor, or any of their
respective creditors or property, Lender, to the extent permitted by law, shall
be entitled to file such proofs of claim and other documents as may be necessary
or advisable in order to have the claims of Lender allowed in such proceedings
for the entire Debt at the date of the institution of such proceedings and for
any additional amount which may become due and payable by Borrower hereunder
after such date.

 

11.27      Waiver of Stay.  Borrower agrees (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury or other law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive Borrower from paying all or any portion
of the Debt or which may affect the covenants or the performance of this
Agreement; and Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the holders, but will suffer and permit the execution of every such power as
though no such law had been enacted.

 

11.28      Certain Additional Rights of Lender.  Notwithstanding anything to the
contrary which may be contained in this Agreement, Lender shall have:

 

(a)           the right to routinely consult with Borrower’s management
regarding the significant business activities and business and financial
developments of Borrower or Owner, 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;

 

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

 

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

 

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(d)           the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict financing to be
obtained with respect to the Collateral so long as any portion of the Debt
remains outstanding;

 

(e)           the right, without restricting any other right of Lender under
this Agreement or the other Loan Documents (including any similar right), to
restrict, upon the occurrence of an Event of Default, Borrower’s or Owner’s
payments of management, consulting, director or similar fees to Affiliates of
Borrower or Owner from the Rents;

 

(f)            the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to approve any acquisition by
Borrower or Owner of any other significant property (other than personal
property required for the day to day operation of the Property or the
Collateral); and

 

(g)           the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to restrict the transfer of
interests in Borrower held by its members, and the right to restrict the
transfer of interests in such member, except for any transfer that is a
Permitted Transfer.

 

The rights described above may be exercised directly or indirectly by any Person
that owns substantially all of the ownership interests in Lender.  The
provisions of this Section are intended to satisfy the requirement of management
rights for purposes of the Department of Labor “plan assets” regulation 29
C.F.R., Section 2510.3-101.

 

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

 

11.30      Certain Payments From Lender.  Lender has advised Borrower that,
pursuant to the Intercreditor Agreement, Lender may be required in certain
circumstances to turn over to Senior Lender certain payments received by Lender
from Borrower or from Guarantor (or out of the Collateral).  If Lender turns
over any such payments to Senior Lender, then, (a) upon notice to Borrower of
any such turn over and the amount thereof, the amount of such payments shall be
deemed to have been contributed as a capital contribution from Borrower to Owner
and then paid by Owner to Senior Lender on account of the Senior Loan,
(b) Senior Lender shall apply such amount as an optional prepayment in
accordance with the Section 2.3.3of the Senior Loan Agreement and (c) amounts
owing by Borrower to Lender pursuant to the Loan Documents shall be computed as
if such amounts had not been paid to Lender.

 

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

 

11.32      Negation of Implied Right to Cure Events of Default.  Notwithstanding
anything contained in this Agreement or any of the other Loan Documents
providing that certain rights, remedies or privileges are only available to
Lender during the “continuance” of an Event of Default (or words of similar
import), Borrower expressly acknowledges and agrees that it does not have the
right to cure an Event of Default once the same has occurred under this
Agreement or any other Loan Document and Lender has delivered Borrower written
notice of such Event of Default, in each case without the consent of Lender,
which consent may be withheld, delayed or denied by Lender in its sole and
absolute discretion.

 

11.33      Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

 

(a)           Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among the respective
parties thereto, each party hereto acknowledges that any liability of any EEA
Financial Institution arising under any Loan Document, to the extent such
liability is unsecured, may be subject to the write-down and conversion powers
of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:

 

(i)            the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

 

(ii)           the effects of any Bail-in Action on any such liability,
including, if applicable:

 

(A)          a reduction in full or in part or cancellation of any such
liability;

 

(B)          a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

 

(C)          the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

 

(b)           As used in this Section 11.33 the following terms have the
following meanings ascribed thereto:

 

(i)            “Bail-In Action” means the exercise of any Write-Down and
Conversion Powers by the applicable EEA Resolution Authority in respect of any
liability of an

 

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EEA Financial Institution;

 

(ii)           “Bail-In Legislation” means, with respect to any EEA Member
Country implementing Article 55 of Directive 2014/59/EU of the European
Parliament and of the Council of the European Union, the implementing law for
such EEA Member Country from time to time which is described in the EU Bail-In
Legislation Schedule;

 

(iii)          “EEA Financial Institution” means (A) any credit institution or
investment firm established in any EEA Member Country which is subject to the
supervision of an EEA Resolution Authority; (B) any entity established in an EEA
Member Country which is a parent of an institution described in clause (A) of
this definition, or (C) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (A) or
(B) of this definition and is subject to consolidated supervision with its
parent;

 

(iv)          “EEA Member Country” means any of the member states of the
European Union, Iceland, Liechtenstein, and Norway;

 

(v)           “EEA Resolution Authority” means any public administrative
authority or any person entrusted with public administrative authority of any
EEA Member Country (including any delegee) having responsibility for the
resolution of any EEA Financial Institution;

 

(vi)          “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation
Schedule published by the Loan Market Association (or any successor person), as
in effect from time to time; and

 

(vii)         “Write-Down and Conversion Powers” means, with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

 

11.34      Registered Obligations.

 

(a)           Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, the Note is, and any other promissory
notes issued under the Loan Documents shall be, registered as to both principal
and any stated interest.

 

(b)           If Lender sells a participation interest in the Loan, Lender
shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each participant
and the principal amounts (and stated interest) of each participant’s interest
in the Loan or other obligations under the Loan Documents (the “Participant
Register”); provided that Lender shall not have any obligation to disclose all
or any portion of the Participant Register (including the identity of any
participant or any information relating to a participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation is
in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries

 

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in the Participant Register shall be conclusive absent manifest error, and
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

(c)           Lender or its designee, acting for this purpose solely as a
non-fiduciary agent of Borrower, shall maintain a register (the “Register”) for
the recordation of the name and address of each Lender, the outstanding
Principal, accrued and unpaid interest and other fees due it hereunder (any such
amount a “Borrower Obligation”) and whether such Lender is the original Lender
or an assignee pursuant to an assignment under Section 11.21.  The Register
shall be made available for inspection by Borrower or Lender at any reasonable
time and from time to time upon reasonable prior notice. The entries in the
Register shall be conclusive, absent manifest error, and Borrower and Lender
shall treat the Person whose name is recorded in the Register pursuant to the
terms hereof as the owner of any Borrower Obligation held by such holder, as
indicated in the Register, for all purposes of this Agreement.

 

[Remainder of Page Intentionally Left Blank; Signature Pages 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.

 

 

BORROWER:

 

 

 

PEACE COLISEUM MEZZANINE, LLC

 

a Delaware limited liability company

 

 

 

By:

OVERSTOCK.COM, INC.,

 

 

a Delaware corporation,

 

 

its manager

 

 

 

 

 

By:

/s/ E. Glen Nickle

 

 

Name:

E. Glen Nickle

 

 

Title:

Vice President, Legal and General Counsel

 

MEZZANINE LOAN AGREEMENT – Signature Page

 

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

 

 

LENDER:

 

 

 

LOANCORE CAPITAL MARKETS LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Jean Baker

 

 

Name: Jean Baker

 

 

Title: Managing Director

 

MEZZANINE LOAN AGREEMENT – Signature Page

 

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

 

Schedule 1

 

Exceptions to Representations and Warranties

 

None.

 

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Schedule 2

 

Rent Roll

 

[see attached page(s)]

 

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[g122861ku21i001.jpg]

 

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Schedule 3

 

Organization of Borrower

 

[see attached page(s)]

 

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

 

Schedule 4

 

Definition of Special Purpose Bankruptcy Remote Entity

 

(I)            A “Special Purpose Bankruptcy Remote Entity” means (x) a limited
liability company that is a Single Member Bankruptcy Remote LLC or (y) a
corporation, limited partnership or limited liability company which at all times
since its formation and at all times thereafter:

 

(i)            was and will be organized solely for the purpose of (A) owning
the Property or (B) acting as a general partner of the limited partnership that
owns the Property or member of the limited liability company that owns the
Property, and all activities incidental thereto;

 

(ii)           has not engaged and will not engage in any business unrelated to
(A) the ownership of the Property, (B) acting as general partner of the limited
partnership that owns the Property or (C) acting as a member of the limited
liability company that owns the Property, as applicable;

 

(iii)          has not had and will not have any assets other than those related
to the Property or its partnership or member interest in the limited partnership
or limited liability company that owns the Property, as applicable;

 

(iv)          (A) has not engaged, sought or consented to and will not engage
in, seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, asset sale (except as expressly permitted by this Agreement), transfer
of partnership or membership interests or the like, or amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement (as applicable) and (B) has not
been the product of, the subject of or otherwise involved in, in each case, any
limited liability company division (whether pursuant to a plan of division or
otherwise);

 

(v)           if such entity is a limited partnership, has and will have, as its
only general partners, Special Purpose Bankruptcy Remote Entities that are
corporations;

 

(vi)          if such entity is a corporation, has and will have at least two
(2) Independent Directors, and has not caused or allowed and will not cause or
allow the board of directors of such entity to take any action requiring the
unanimous affirmative vote of 100% of the members of its board of directors
unless all of the directors and all Independent Directors shall have
participated in such vote, and the organizational documents of such entity shall
provide that no Independent Director may be removed or replaced without Cause
and unless such entity provides Lender with not less than three (3) Business
Days’ prior written notice of (a) any proposed removal of an Independent
Director, together with a statement as to the reasons for such removal, and
(b) the identity of the proposed replacement Independent Director, together with
a certification that such replacement satisfies the requirements set forth in
the organizational documents for an Independent Director;

 

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(vii)         if such entity is a limited liability company, has and will have
at least one member that has been and will be a Special Purpose Bankruptcy
Remote Entity that has been and will be a corporation and such corporation is
the managing member of such limited liability company;

 

(viii)        if such entity is a limited liability company, has and will have
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, providing that (A) such entity will dissolve only upon
the bankruptcy of the managing member, (B) the vote of a majority-in-interest of
the remaining members is sufficient to continue the life of the limited
liability company in the event of such bankruptcy of the managing member, (C) if
the vote of a majority-in-interest of the remaining members to continue the life
of the limited liability company following the bankruptcy of the managing member
is not obtained, the limited liability company may not liquidate the Property or
the Pledged Collateral, as applicable, without the consent of the applicable
Rating Agencies for as long as the Loan is outstanding and (D) such entity shall
be prohibited from effectuating a division (whether pursuant to Section 18-217
of the Act or otherwise);

 

(ix)          has not, and without the unanimous consent of all of its partners,
directors or members (including all Independent Directors), as applicable, will
not, with respect to itself or to any other entity in which it has a direct or
indirect legal or beneficial ownership interest (A) file a bankruptcy,
insolvency or reorganization petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally, (B) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such entity or for all or any portion of
such entity’s properties, (C) make any assignment for the benefit of such
entity’s creditors or (D) take any action that could reasonably be expected to
cause such entity to become insolvent;

 

(x)           has remained and intends to remain solvent and has maintained and
intends to maintain adequate capital in light of its contemplated business
operations so long as the Property is producing sufficient income; provided, the
foregoing will not require any member or manager to contribute additional funds
to Borrower or Sole Member;

 

(xi)          has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;

 

(xii)         has maintained and will maintain its accounts, books and records
separate from any other Person and will file its own Tax returns, except to the
extent Borrower is a disregarded entity for tax purposes;

 

(xiii)        has maintained and will maintain its books, records, resolutions
and agreements as official records;

 

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(xiv)        has not commingled and will not commingle its funds or assets with
those of any other Person, except as otherwise contemplated by the Loan
Documents;

 

(xv)         has held and will hold its assets in its own name, except as
otherwise contemplated by the Loan Documents;

 

(xvi)        has conducted and will conduct its business in its name,

 

(xvii)       has maintained and will maintain its financial statements,
accounting records and other entity documents separate from any other Person
except as permitted by GAAP or tax basis accounting; provided, however, that any
such consolidated financial statement shall contain a note indicating that its
separate assets and liabilities are neither available to pay the debts of the
consolidated Person nor constitute obligations of the consolidated Person;

 

(xviii)      has paid and will pay its own liabilities, including the salaries
of its own employees, out of its own funds and assets;

 

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

 

(xx)         has maintained and will maintain an arm’s-length relationship with
its Affiliates;

 

(xxi)        has not and will not have any indebtedness other than Permitted
Indebtedness;

 

(xxii)       has not and will not assume or guarantee or become obligated for
the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person and has not and will not permit any
Affiliate to assume or guarantee or become obligated for its debts other than,
with respect to Borrower, the Guarantor in connection with the Loan;

 

(xxiii)      has not and will not acquire obligations or securities of its
partners, members or shareholders;

 

(xxiv)     has allocated and will allocate fairly and reasonably shared
expenses, including shared office space, and uses separate stationery, invoices
and checks;

 

(xxv)      except in connection with the Loan, has not pledged and will not
pledge its assets for the benefit of any other Person;

 

(xxvi)     has held itself out and identified itself and will hold itself out
and identify itself as a separate and distinct entity under its own name and not
as a division or part of any other Person;

 

3

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

 

(xxviii)   has not made and will not make loans to any Person and has not
permitted and will not permit any Affiliate to make any loans to it;

 

(xxix)     has not identified and will not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it;

 

(xxx)      has not entered into or been a party to, and will not enter into or
be a party to, any transaction with its partners, members, shareholders or
Affiliates except in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party;

 

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

 

(xxxii)    has and will have an express acknowledgment in its organizational
documents that Lender is an intended third-party beneficiary of the “special
purpose” provisions of such organizational documents; and

 

(xxxiii)   will consider the interests of its creditors in connection with all
corporate, partnership or limited liability company actions, as applicable.

 

(II)          “Single Member Bankruptcy Remote LLC” means a limited liability
company organized under the laws of the State of Delaware which at all times
since its formation and at all times thereafter:

 

(i)    was and will be organized solely for the purpose of (A) owning the
Property or (B) acting as a general partner of the limited partnership that owns
the Property or member of the limited liability company that owns the Property;

 

(ii)           has not engaged and will not engage in any business unrelated to
(A) the ownership of the Property, (B) acting as general partner of the limited
partnership that owns the Property or (C) acting as a member of the limited
liability company that owns the Property, as applicable;

 

(iii)          has not had and will not have any assets other than those related
to the Property or its partnership or member interest in the limited partnership
or limited liability company that owns the Property, as applicable;

 

(iv)          (A) has not engaged, sought or consented to and will not engage
in, seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, asset sale (except as expressly permitted by this Agreement), transfer
of partnership or

 

4

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membership interests or the like, or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable) and (B) has not been the
produce of, the subject of or otherwise involved in, in each case, any limited
liability company division (whether pursuant to a plan of division or
otherwise);

 

(v)           has not, and without the unanimous consent of all of directors
(including all Independent Directors), as applicable, will not, with respect to
itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest (A) file a bankruptcy, insolvency or
reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally, (B) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for such entity or for all or any portion of such entity’s properties,
(C) make any assignment for the benefit of such entity’s creditors or (D) take
any action that could reasonably be expected to cause such entity to become
insolvent;

 

(vi)          has remained and intends to remain solvent and has maintained and
intends to maintain adequate capital in light of its contemplated business
operations so long as the Property is producing sufficient income; provided, the
foregoing will not require any member or manager to contribute additional funds
to Borrower or Sole Member;

 

(vii)         has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;

 

(viii)        has maintained and will maintain its books, records, resolutions
and agreements as official records;

 

(ix)          has not commingled and will not commingle its funds or assets with
those of any other Person, except as otherwise contemplated by the Loan
Documents;

 

(x)           has held and will hold its assets in its own name, except as
otherwise contemplated by the Loan Documents;

 

(xi)          has conducted and will conduct its business in its name,

 

(xii)         has maintained and will maintain its financial statements,
accounting records and other entity documents separate from any other Person
except as permitted by GAAP or tax basis accounting; provided, however, that any
such consolidated financial statement shall contain a note indicating that its
separate assets and liabilities are neither available to pay the debts of the
consolidated Person nor constitute obligations of the consolidated Person;

 

(xiii)        has paid and will pay its own liabilities, including the salaries
of its own employees, out of its own funds and assets;

 

5

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(xiv)        has observed and will observe all limited liability company
formalities;

 

(xv)         has maintained and will maintain an arm’s-length relationship with
its Affiliates;

 

(xvi)        (a) if such entity owns the Property, has no and will not have any
indebtedness other than “Permitted Indebtedness” (as defined in the Senior Loan
Agreement), or (b) if such entity acts as the general partner of a limited
partnership which owns the Property, has not and will not have any indebtedness
other than unsecured trade payables in the ordinary course of business relating
to acting as general partner of the limited partnership which owns the Property
which (1) do not exceed, at any time, $10,000 and (2) are paid within thirty
(30) days of the date incurred, or (c) if such entity acts as a managing member
of a limited liability company which owns the Property, has and will have no
indebtedness other than unsecured trade payables in the ordinary course of
business relating to acting as a member of the limited liability company which
owns the Property which (1) do not exceed, at any time, $10,000 and (2) are paid
within thirty (30) days of the date incurred;

 

(xvii)       has not and will not assume or guarantee or become obligated for
the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person and will not permit any Affiliate to
assume or guarantee or become obligated for its debts, except as otherwise
contemplated by the Loan Documents;

 

(xviii)      has not and will not acquire obligations or securities of its
partners, members or shareholders;

 

(xix)        has allocated and will allocate fairly and reasonably shared
expenses, including shared office space, and uses separate stationery, invoices
and checks;

 

(xx)         except in connection with the Loan, has not pledged and will not
pledge its assets for the benefit of any other Person;

 

(xxi)        has held itself out and identified itself and will hold itself out
and identify itself as a separate and distinct entity under its own name and not
as a division or part of any other Person;

 

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

 

(xxiii)      has not made and will not make loans to any Person and has not
permitted and will not permit any Affiliate to make any loans to it;

 

(xxiv)     has not identified and will not identify its members or any Affiliate
of any of them, as a division or part of it;

 

6

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(xxv)      has not entered into or been a party to, and will not enter into or
be a party to, any transaction with its partners, members, shareholders or
Affiliates except in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party;

 

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

 

(xxvii)    has and will have an express acknowledgment in its organizational
documents that Lender is an intended third-party beneficiary of the “special
purpose” provisions of such organizational documents;

 

(xxviii)   will consider the interests of its creditors in connection with all
limited liability company actions;

 

(xxix)     has maintained and will maintain its accounts, books and records
separate from any other person;

 

(xxx)      has and will have an operating agreement which provides that the
business and affairs of Borrower shall be managed by or under the direction of a
board of one or more directors designated by Sole Member, and at all times there
shall be at least two (2) duly appointed Independent Directors on the board of
directors, and the board of directors will not take any action requiring the
unanimous affirmative vote of 100% of the members of its board of directors
unless, at the time of such action there are at least two (2) members of the
board of directors who are Independent Directors, and all of the directors and
all Independent Directors shall have participated in such vote;

 

(xxxi)     has and will have an operating agreement which provides that, as long
as any portion of the Debt remains outstanding, (A) upon the occurrence of any
event that causes Sole Member to cease to be a member of Borrower (other than
(x) upon an assignment by Sole Member of all of its limited liability company
interest in Borrower and the admission of the transferee, if permitted pursuant
to the organizational documents of Borrower and the Loan Documents, or (y) the
resignation of Sole Member and the admission of an additional member of
Borrower, if permitted pursuant to the organizational documents of Borrower and
the Loan Documents), the person acting as an Independent Director of Borrower
shall, without any action of any Person and simultaneously with Sole Member
ceasing to be a member of Borrower, automatically be admitted as the sole member
of Borrower (the “Special Member”) and shall preserve and continue the existence
of Borrower without dissolution or division, (B) no Special Member may resign or
transfer its rights as Special Member unless (x) a successor Special Member has
been admitted to Borrower as a Special Member, and (y) such successor Special
Member has also accepted its appointment as an Independent Director, (C) no
Independent Director may be removed or replaced without Cause and unless the
company provides Lender with not less than three (3) Business Days’ prior
written notice

 

7

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of (a) any proposed removal of an Independent Director, together with a
statement as to the reasons for such removal, and (b) the identity of the
proposed replacement Independent Director, together with a certification that
such replacement satisfies the requirements set forth in the organizational
documents for an Independent Director except in the event of death or legal
incapacity of an Independent Director, (D) to the greatest extent permitted by
law, except for duties to Borrower (including duties to the members of Borrower
solely to the extent of their respective economic interest in Borrower and to
Borrower’s creditors), such Independent Director shall not owe any fiduciary
duties to, and shall not consider, in acting or otherwise voting on any matter
for which their approval is required, the interests of (i) the members of
Borrower, (ii) other Affiliates of Borrower, or (iii) any group of Affiliates of
which Borrower is a part; provided, however, the foregoing shall not eliminate
the implied contractual covenant of good faith and fair dealing and (E) except
as expressly permitted pursuant to the terms of this Agreement, Sole Member may
not resign and no additional member shall be admitted to Borrower; and

 

(xxxii)    has and will have an operating agreement which provides that, as long
as any portion of the Debt remains outstanding, (A) Borrower shall be dissolved,
and its affairs shall be wound up only upon the first to occur of the following:
(x) the termination of the legal existence of the last remaining member of
Borrower or the occurrence of any other event which terminates the continued
membership of the last remaining member of Borrower in Borrower unless the
business of Borrower is continued in a manner permitted by its operating
agreement or the Delaware Limited Liability Company Act (as the same may be
amended, modified or replaced, the “Delaware Act”) or (y) the entry of a decree
of judicial dissolution under Section 18-802 of the Delaware Act; (B) upon the
occurrence of any event that causes the last remaining member of Borrower to
cease to be a member of Borrower or that causes Sole Member to cease to be a
member of Borrower (other than (x) upon an assignment by Sole Member of all of
its limited liability company interest in Borrower and the admission of the
transferee, if permitted pursuant to the organizational documents of Borrower
and the Loan Documents, or (y) the resignation of Sole Member and the admission
of an additional member of Borrower, if permitted pursuant to the organizational
documents of Borrower and the Loan Documents), to the fullest extent permitted
by law, the personal representative of such member shall be authorized to, and
shall, within 90 days after the occurrence of the event that terminated the
continued membership of such member in Borrower, agree in writing to continue
the existence of Borrower and to the admission of the personal representative or
its nominee or designee, as the case may be, as a substitute member of Borrower,
effective as of the occurrence of the event that terminated the continued
membership of such member in Borrower; (C) the bankruptcy of Sole Member or a
Special Member shall not cause such member or Special Member, respectively, to
cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution; (D) in the event of
dissolution of Borrower, Borrower shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of Borrower
in an orderly manner), and the assets of Borrower shall be applied in the
manner, and in the order of priority, set forth in Section 18-804 of the
Delaware Act; (E) to the fullest extent permitted by law, each of Sole Member
and the Special Members shall irrevocably waive any right or power that

 

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they might have to cause Borrower or any of its assets to be partitioned, to
cause the appointment of a receiver for all or any portion of the assets of
Borrower, to compel any sale of all or any portion of the assets of Borrower
pursuant to any applicable law or to file a complaint or to institute any
proceeding at law or in equity to cause the dissolution, division, liquidation,
winding up or termination of Borrower and (F) such entity shall be prohibited
from effectuating a division (whether pursuant to Section 18-217 of the Act or
otherwise).

 

(III)        “Cause” shall mean, with respect to an Independent Director or
Independent Manager, (i) acts or omissions by such Independent Director or
Independent Manager, as applicable, that constitute willful disregard of, or
gross negligence with respect to such Independent Director’s or Independent
Manager’s, as applicable, duties, (ii) such Independent Director or Independent
Manager, as applicable, has engaged in or has been charged with or has been
indicted or convicted for any crime or crimes of fraud or other acts
constituting a crime under any law applicable to such Independent Director or
Independent Manager, as applicable, (iii) such Independent Director or
Independent Manager, as applicable, has breached its fiduciary duties of loyalty
and care as and to the extent of such duties in accordance with the terms of the
Borrower’s organizational documents, (iv) there is a material increase in the
fees charged by such Independent Director or Independent Manager, as applicable,
or a material change to such Independent Director’s or Independent Manager’s, as
applicable, terms of service, (v) such Independent Director or Independent
Manager, as applicable, is unable to perform his or her duties as Independent
Director or Independent Manager, as applicable, due to death, disability or
incapacity, (vi) such Person no longer meets the criteria provided in the
definition of Independent Director or Independent Manager, as applicable or
(vii) the death or legal incapacity of such Independent Director or Independent
Manager.

 

(IV)         “Independent Director” or “Independent Manager” means a natural
person selected by Borrower (a) with prior experience as an independent
director, independent manager or independent member, (b) with at least three
(3) years of employment experience, (c) who is provided by a Nationally
Recognized Service Company (defined below), (d) who is duly appointed as an
Independent Director or Independent Manager and is not, will not be while
serving as Independent Director or Independent Manager (except pursuant to an
express provision in Borrower’s operating agreement providing for the
appointment of such Independent Director or Independent Manager to become a
“special member” upon Sole Member ceasing to be a member of Borrower) and shall
not have been at any time during the preceding five (5) years, any of the
following:

 

(i)            a stockholder, director (other than as an Independent Director),
officer, employee, partner, attorney or counsel of Borrower, any Affiliate of
Borrower or any direct or indirect parent of Borrower;

 

(ii)           a customer, supplier or other Person who derives any of its
purchases or revenues from its activities with Borrower or any Affiliate of
Borrower;

 

(iii)          a Person or other entity Controlling or under Common Control with
any such stockholder, partner, customer, supplier or other Person; or

 

9

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(iv)          a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other Person.

 

A natural person who otherwise satisfies the foregoing definition and satisfies
subparagraph (i) by reason of being the Independent Director or Independent
Manager of a “special purpose entity” affiliated with Borrower shall be
qualified to serve as an Independent Director or Independent Manager of
Borrower, provided that the fees that such individual earns from serving as
Independent Director or Independent Manager of affiliates of Borrower 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 clause
(ii) shall not be disqualified from serving as an Independent Director or
Independent Manager of Borrower if such individual is an independent director,
independent manager or special manager provided by a Nationally Recognized
Service Company that provides professional independent directors, independent
managers and special managers and also provides other corporate services in the
ordinary course of its business.

 

(V)          “Nationally Recognized Service Company” means any of CT
Corporation, Corporation Service Company, National Registered Agents, Inc.,
Wilmington Trust Company, National Corporate Research, Ltd. or such other
nationally recognized company that provides independent director, independent
manager or independent member services and that is reasonably satisfactory to
Lender, in each case that is not an Affiliate of Borrower and that provides
professional independent directors and other corporate services in the ordinary
course of its business.

 

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Schedule 5

 

Intellectual Property/Websites

 

None.

 

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Schedule 6

 

REA

 

1.             Declaration for Bingham Junction recorded March 10, 2006 as Entry
No. 9659801 in Book 9265 at Page 4714, as affected by Assignment of Founder
Development Rights executed by Littleson, Inc., a Delaware corporation in favor
of Mercer Bingham Junction, LLC, a Utah limited liability company and Arbor
Gardner Bingham Junction Holdings, L.C., a Utah limited liability company, dated
November 20, 2007 and recorded November 20, 2007 as Entry No. 10281121 in Book
9539 at Page 6908 and as amended by Amended and Restated Declaration for Bingham
Junction, recorded November 20, 2007 as Entry No. 10281123 in Book 9539 at
Page 6921.

 

2.             Amended & Restated Declaration of Covenants, Restrictions and
Easements recorded July 11, 2014 as Entry No. 11879615 in Book 10244 at
Page 8362.

 

3.             Declaration and Grant of Reciprocal Access Easements by and
between O.com Land, LLC, a Utah limited liability company and Arbor Gardner
Bingham Junction Holdings, L.C., a Utah limited liability company, dated
September 19, 2014 and recorded September 22, 2014 as Entry No. 11916667 in Book
10261 at Page 6933.

 

4.             Declaration of Easements, Covenants and Restrictions (View
Corridor Easements) recorded September 22, 2014 as Entry No. 11916665 in Book
10261 at Page 6919.

 

5.             Easement Agreement by O.com Land, LLC, a Utah limited liability
company in favor of Midvale City Corporation, a Utah municipal corporation,
dated February 19, 2015 and recorded March 13, 2015 as Entry No. 12009654 in
Book 10304 at Page 3792, as amended by Amendment to Easement Agreement, dated
June 3, 2016 and recorded October 14, 2016 as Entry No. 12389444 in Book 10487
at Page 9367.

 

6.             Public Easement Agreement by and between O.Com Land, LLC, a Utah
limited liability company and the City of Midvale, Utah, a political subdivision
of the State of Utah, dated June 3, 2016 and recorded October 14, 2016 as Entry
No. 12389443 in Book 10487 at Page 9357.

 

7.             Notice and Grant of Easement executed by Littleson, Inc., a
Delaware corporation, dated December 7, 2004 and recorded December 8, 2004 as
Entry No. 9243601 in Book 9070 at Page 3938 and of that certain Consent Decree
entered by the United States District Court for the District of Utah on
November 6, 2004, in the matter of ‘‘Littleson, Inc. v. Metals Reserve Company,
et. al., Case No. 2:99CV0757TS and United States v. Littleson, Inc., et. al.,
consolidated’’, which Consent Decree (excluding Appendices) is attached to and
made part of said Notice and Grant of Easement.

 

8.             Master Development Agreement for the Bingham Junction Project
recorded March 10, 2006 as Entry No. 9659803 in Book 9265 at Page 4838.

 

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9.             Agreement, Grant of Access to UDEQ, and Covenant Not to Sue,
recorded March 10, 2006 as Entry No. 9659804 in Book 9265 at Page 4877, as
amended by Amendment to Agreement a Memorandum of which is recorded May 1, 2008
as Entry No. 10415892 in Book 9601 at Page 8611.

 

10.          Declaration for South Bingham Junction recorded November 20, 2007
as Entry No. 10281127 in Book 9539 at Page 7037.

 

11.          Closing Agreement by and between Littleson, Inc., a Delaware
corporation, Arbor Gardner, L.C. and Arbor Gardner Bingham Junction Holdings,
L.C., dated November 20, 2007 and recorded March 14, 2008 as Entry No. 10373379
in Book 9582 at Page 2582.

 

12.          Development Agreement for The Junction at Midvale Project by and
between Midvale City Corporation, a Utah municipal corporation and Arbor Gardner
Bingham Junction Holdings, L.C., a Utah limited liability company, dated
November 14, 2007 and recorded March 16, 2012 as Entry No. 11351482 in Book 9999
at Page 8618; Amendment to the Open Space Exhibits in the Development Agreement
for The Junction at Midvale Project, recorded October 12, 2012 as Entry
No. 11490167 in Book 10065 at Page 5397; Second Amendment to the Open Space
Exhibits in the Development Agreement for The Junction at Midvale Project,
recorded September 26, 2014 as Entry No. 11919579 in Book 10262 at Page 9657;
Resolution 2015-R-23 Authorizing the Mayor to Enter Into an Agreement to Amend
the Development Agreement for The Junction at Midvale Project, recorded June 4,
2015 as Entry No. 12064265 in Book 10330 at Page 9370; Fourth Amendment to the
Open Space Exhibits in the Development Agreement for The Junction at Midvale
Project, recorded September 26, 2019 as Entry No. 13084029 in Book 10836 at
Page 6167.

 

13.          Restated Development Agreement for View 72 Retail Project by and
among Arbor Gardner Bingham Junction Retail, L.C., a Utah limited liability
company, its successors and assigns and Midvale City Corporation, a Utah
municipal corporation, dated June 27, 2012 and recorded October 12, 2012 as
Entry No. 11490166 in Book 10065 at Page 5376.

 

14.          Development Agreement (Overstock Project) by and between O.com
Land, LLC, a Utah limited liability company and Midvale City Corporation, a Utah
municipal corporation, dated February 19, 2015 and recorded March 13, 2015 as
Entry No. 12009653 in Book 10304 at Page 3731.

 

2

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Schedule 7

 

Intentionally Omitted

 

1

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Schedule 8

 

Intentionally Omitted

 

1

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Schedule 9

 

Intentionally Omitted

 

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Schedule 10-1

 

Annual Reports Officer’s Certificate

 

[Borrower Letterhead]

 

OFFICER’S CERTIFICATE

 

Date:

To:

From:     Name, Title

Re:          [Loan Name and Loan Number Dated xx/xx/xx)]

 

Dear [Servicer Name]:

 

Reference is hereby made for all purposes to that certain Mezzanine Loan
Agreement (the “Agreement”) dated as of March 6, 2020, between [Lender]
(“Lender”) and [Borrower Name] (“Borrower”).  Capitalized terms used herein and
not otherwise defined shall have the definition attributed to such term in the
Agreement.

 

Borrower hereby submits certain financial reports required under the terms and
conditions set forth in Agreement.

 

Borrower certifies that financial reports delivered herewith to Lender pursuant
to Section 6.3.2 of the Agreement (collectively, the “Financial Reports”) are
satisfactory to Borrower and each of the following conditions are true, correct
and complete:

 

1.               The Financial Reports are true, correct, accurate and complete
in all material respects and fairly present the financial condition and results
of the operations of Borrower, the Owner the Collateral and the Property as of
the respective dates thereof in accordance with GAAP.

 

2.               [No Default or Event of Default exists or remains uncured as of
this date][The following Defaults and/or Events of Default exist as of the date
hereof and attached hereto is a description of the nature thereof, the period of
time it has existed and the action then being taken to remedy it];

 

3.               As of the date hereof, no litigation exists involving Borrower,
the Owner the Collateral or any Property in which the amount involved is
$500,000 (in the aggregate) or more in which all or substantially all of the
potential liability is not covered by insurance[, or, if so, specifying such
litigation and the actions being taken in relation];

 

4.               Operating expenses incurred by Owner for the period covered by
this certificate were [greater than] [less than] the operating expenses
reflected in the applicable Annual Budget in the amount of $[        ].

 

5.               All representations and warranties of Borrower as set forth in
the Loan Documents remain true and complete as of this date except as follows: 
[      ];

 

6.               Each vendor has been paid in full as of this date; and

 

7.               No indebtedness has been incurred other than an indebtedness
permitted under the terms and conditions set forth in the Agreement.

 

1

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Please contact the undersigned if you have any questions regarding this matter.

 

[Borrower’s Signature Block]

 

2

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Schedule 10-2

 

Monthly/Quarterly Reports Officer’s Certificate

 

[Borrower Letterhead]

 

OFFICER’S CERTIFICATE

 

Date:

To:

From:     Name, Title

Re:          [Loan Name and Loan Number Dated xx/xx/xx)]

 

Dear [Servicer Name]:

 

Reference is hereby made for all purposes to that certain Mezzanine Loan
Agreement (the “Agreement”) dated as of March 6, 2020, between [Lender]
(“Lender”) and [Borrower Name] (“Borrower”).  Capitalized terms used herein and
not otherwise defined shall have the definition attributed to such term in the
Agreement.

 

Borrower hereby submits certain financial reports as required under the terms
and conditions set forth in Agreement.

 

Borrower certifies that financial reports delivered herewith to Lender pursuant
to Section 6.3.3 of the Agreement (collectively, the “Financial Reports”) are
satisfactory to Borrower and each of the following conditions are true, correct
and complete:

 

1.              To Borrower’s knowledge, The Financial Reports are true,
correct, accurate and complete in all material respects and fairly present the
financial condition and results of the operations of Borrower, the Owner the
Collateral and the Property as of the respective dates thereof in accordance
with GAAP (subject to normal year-end adjustments).

 

2.              [No Default or Event of Default exists or remains uncured as of
this date][The following Defaults and/or Events of Default exist as of the date
hereof and attached hereto is a description of the nature thereof, the period of
time it has existed and the action then being taken to remedy it];

 

3.              As of the date hereof, no litigation exists involving Borrower,
the Owner the Collateral or any Property in which the amount involved is
$500,000 (in the aggregate) or more in which all or substantially all of the
potential liability is not covered by insurance[, or, if so, specifying such
litigation and the actions being taken in relation];

 

4.              Operating expenses incurred by Owner for the period covered by
this certificate were [greater than] [less than] the operating expenses
reflected in the applicable Annual Budget in the amount of $[        ].

 

5.              All representations and warranties of Borrower as set forth in
the Loan Documents remain true and complete as of this date except as follows: 
[      ];

 

6.              Each vendor has been paid in full as of this date; and

 

7.              No indebtedness has been incurred other than an indebtedness
permitted under the terms and conditions set forth in the Agreement.

 

1

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Please contact the undersigned if you have any questions regarding this matter.

 

[Borrower’s Signature Block]

 

2

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