Exhibit 10.2

 

 

 

LOAN AGREEMENT

Dated as of November 17, 2006

Between

NORTHERN CALIFORNIA INDUSTRIAL PORTFOLIO, INC.,

as Borrower

and

LASALLE BANK NATIONAL ASSOCIATION,

as Lender

 

 

 

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

TABLE OF CONTENTS

 

            Page  

I.            DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     1   

Section 1.1

     Definitions      1   

Section 1.2

     Principles of Construction      16   

I1.          THE LOAN

     17   

Section 2.1

     The Loan      17   

2.1.1

     Agreement to Lend and Borrow      17   

2.1.2

     Single Disbursement to Borrower      17   

2.1.3

     The Note      17   

2.1.4

     Use of Proceeds      17   

Section 2.2

     Interest Rate      17   

2.2.1

     Applicable Interest Rate      17   

2.2.2

     Default Rate      17   

2.2.3

     Interest Calculation      17   

2.2.4

     Usury Savings      18   

Section 2.3

     Loan Payments      18   

2.3.1

     Payment Before Maturity Date      18   

2.3.2

     Payment on Maturity Date      18   

2.3.3

     Late Payment Charge      18   

2.3.4

     Method and Place of Payment      18   

Section 2.4

     Prepayments      19   

2.4.1

     Voluntary Prepayments      19   

2.4.2

     Mandatory Prepayments      19   

2.4.3

     Prepayments After Default      19   

Section 2.5

     Defeasance      19   

2.5.1

     Conditions to Defeasance      19   

2.5.2

     Defeasance Collateral Account      21   

2.5.3

     Successor Borrower      22   

2.5.4

     Partial Defeasance      22   

Section 2.6

     Substitution of Property      23   

Section 2.7

     Release of Individual Properties      29   

III.         REPRESENTATIONS AND WARRANTIES

     31   

Section 3.1

     Borrower Representations      31   

3.1.1

     Organization.      31   

3.1.2

     Proceedings      32   

3.1.3

     No Conflicts      32   

3.1.4

     Litigation      32   

3.1.5

     Agreements      32   

3.1.6

     Consents      32   

3.1.7

     Title      32   

3.1.8

     No Plan Assets      33   

3.1.9

     Compliance      33   

 

i

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

3.1.10

     Financial Information      33   

3.1.11

     Condemnation      34   

3.1.12

     Utilities and Public Access      34   

3.1.13

     Separate Lots      34   

3.1.14

     Assessments      34   

3.1.15

     Enforceability      34   

3.1.16

     Assignment of Leases      34   

3.1.17

     Insurance      34   

3.1.18

     Licenses      34   

3.1.19

     Flood Zone      35   

3.1.20

     Physical Condition      35   

3.1.21

     Boundaries      35   

3.1.22

     Leases      35   

3.1.23

     Filing and Recording Taxes      35   

3.1.24

     Single Purpose      36   

3.1.25

     Tax Filings      40   

3.1.26

     Solvency      40   

3.1.27

     Federal Reserve Regulations      41   

3.1.28

     Organizational Chart      41   

3.1.29

     Bank Holding Company      41   

3.1.30

     No Other Debt      41   

3.1.31

     Investment Company Act      41   

3.1.32

     No Bankruptcy Filing      41   

3.1.33

     Full and Accurate Disclosure      41   

3.1.34

     Foreign Person      42   

3.1.35

     No Change in Facts or Circumstances; Disclosure      42   

3.1.36

     Management Agreement      42   

3.1.37

     Perfection of Accounts      42   

3.1.38

     No Customer Identification - USA Patriot Act Notice; OFAC      42   

Section 3.2

     Survival of Representations      43   

IV.         BORROWER COVENANTS

     43   

Section 4.1

     Borrower Affirmative Covenants      43   

4.1.1

     Existence; Compliance with Legal Requirements      43   

4.1.2

     Taxes and Other Charges      43   

4.1.3

     Litigation      44   

4.1.4

     Access to Property      44   

4.1.5

     Further Assurances; Supplemental Mortgage Affidavits      44   

4.1.6

     Financial Reporting      44   

4.1.7

     Title to the Property      46   

4.1.8

     Estoppel Statement      46   

4.1.9

     Leases      47   

4.1.10

     Alterations      48   

4.1.11

     Material Agreements      49   

4.1.12

     Performance by Borrower      49   

4.1.13

     Costs of Enforcement Remedying Defaults      49   

4.1.14

     Business and Operations      49   

 

ii

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

4.1.15

     Loan Fees      49   

Section 4.2

     Borrower Negative Covenants      49   

4.2.1

     Due on Sale and Encumbrance; Transfers of Interests      49   

4.2.2

     Liens      50   

4.2.3

     Dissolution      50   

4.2.4

     Change in Business      50   

4.2.5

     Debt Cancellation      50   

4.2.6

     Affiliate Transactions      50   

4.2.7

     Zoning      50   

4.2.8

     Assets      50   

4.2.9

     No Joint Assessment      50   

4.2.10

     Principal Place of Business      50   

4.2.11

     ERISA      51   

4.2.12

     Material Agreements      51   

V.          INSURANCE, CASUALTY AND CONDEMNATION

     52   

Section 5.1

     Insurance      52   

5.1.1

     Insurance Policies      52   

5.1.2

     Insurance Company      55   

Section 5.2

     Casualty and Condemnation      56   

5.2.1

     Casualty      56   

5.2.2

     Condemnation      56   

5.2.3

     Casualty Proceeds      57   

Section 5.3

     Delivery of Net Proceeds      57   

5.3.1

     Minor Casualty or Condemnation      57   

5.3.2

     Major Casualty or Condemnation      57   

VI.         RESERVE FUNDS

     60   

Section 6.1

     Required Repairs      60   

6.1.1

     Required Repairs      60   

Section 6.2

     Tax Funds      61   

6.2.1

     Deposits of Tax Funds      61   

6.2.2

     Release of Tax Funds      61   

Section 6.3

     Insurance Funds      61   

6.3.1

     Deposits of Insurance Funds      61   

6.3.2

     Release of Insurance Funds      62   

Section 6.4

     Capital Expenditure Funds      62   

6.4.1

     Deposits of Capital Expenditure Funds      62   

6.4.2

     Release of Capital Expenditure Funds      63   

Section 6.5

     Rollover Funds      64   

6.5.1

     Deposits of Rollover Funds      64   

6.5.2

     Release of Rollover Funds      64   

Section 6.6

     Lease Termination Rollover Funds      65   

6.6.1

     Deposits of Rollover Funds      65   

6.6.2

     Release of Lease Termination Rollover Funds      65   

Section 6.7

     Application of Reserve Funds      66   

Section 6.8

     Security Interest in Reserve Funds      67   

 

iii

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

6.8.1

     Grant of Security Interest      67   

6.8.2

     Income Taxes      67   

6.8.3

     Prohibition Against Further Encumbrance      67   

VII.        PROPERTY MANAGEMENT

     67   

Section 7.1

     The Management Agreement      67   

Section 7.2

     Prohibition Against Termination or Modification      67   

Section 7.3

     Replacement of Manager      68   

VIII.       PERMITTED TRANSFERS

     68   

Section 8.1

     Permitted Transfer of the Property      68   

Section 8.2

     Permitted Transfers of Interest in Borrower      70   

IX.         SALE AND SECURITIZATION OF MORTGAGE

     71   

Section 9.1

     Sale of Mortgage and Secondary Market Transactions      71   

9.1.1

     General      71   

9.1.2

     Borrower’s Cooperation      71   

9.1.3

     Regulation AB      72   

9.1.4

     Costs      73   

Section 9.2

     Securitization Indemnification      73   

9.2.1

     Use of Information      73   

9.2.2

     Borrower Obligations Regarding Disclosure Documents      74   

9.2.3

     Borrower’s Additional Indemnity      75   

9.2.4

     Indemnification Procedure      75   

9.2.5

     Contribution      76   

9.2.6

     Survival      76   

Section 9.3

     Rating Surveillance      76   

Section 9.4

     Component Notes      76   

X.           DEFAULTS

     77   

Section 10.1

     Event of Default      77   

Section 10.2

     Remedies      79   

Section 10.3

     Right to Cure Defaults      80   

Section 10.4

     Remedies Cumulative      81   

XI.         MISCELLANEOUS

     81   

Section 11.1

     Successors and Assigns      81   

Section 11.2

     Lender’s Discretion      81   

Section 11.3

     Governing Law      81   

Section 11.4

     Modification, Waiver in Writing      82   

Section 11.5

     Delay Not a Waiver      82   

Section 11.6

     Notices      82   

Section 11.7

     Trial by Jury      83   

Section 11.8

     Headings      84   

Section 11.9

     Severability      84   

Section 11.10

     Preferences      84   

Section 11.11

     Waiver of Notice      84   

 

iv

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

Section 11.12

     Remedies of Borrower      84   

Section 11.13

     Expenses; Indemnity      85   

Section 11.14

     Schedules and Exhibits Incorporated      86   

Section 11.15

     Offsets, Counterclaims and Defenses      86   

Section 11.16

     No Joint Venture or Partnership; No Third Party Beneficiaries      86   

Section 11.17

     Publicity      87   

Section 11.18

     Waiver of Marshalling of Assets      87   

Section 11.19

     Waiver of Offsets/Defenses/Counterclaims      87   

Section 11.20

     Conflict; Construction of Documents; Reliance      87   

Section 11.21

     Brokers and Financial Advisors      88   

Section 11.22

     Exculpation      88   

Section 11.23

     Prior Agreements      90   

Section 11.24

     Servicer      90   

Section 11.25

     Joint and Several Liability      91   

Section 11.26

     Creation of Security Interest      91   

Section 11.27

     Assignments and Participations      91   

Section 11.28

     Set-Off      91   

Section 11.29

     Provisions Regarding Letters of Credit      92   

 

v

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

SCHEDULES

 

Schedule I   –      Location of Properties Schedule II   –      Rent Roll and
Schedule of Exceptions Schedule III   –      Required Repairs Schedule IV   –
     Organizational Chart Schedule V   –      Form of Subordination,
Non-Disturbance and Attornment Agreement ScheduleVI   –      Allocated Loan
Amounts Schedule VII   –      Management Agreements Schedule VIII   –      Form
of Alterations Guaranty

 

vi

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

LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of November     , 2006 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between LASALLE BANK NATIONAL ASSOCIATION, a national banking
association having an address at 135 South LaSalle Street, Suite 3410, Chicago,
Illinois 60603, together with its successors and assigns (“Lender”), and
NORTHERN CALIFORNIA INDUSTRIAL PORTFOLIO, INC., a Maryland corporation, having
an address at c/o RREEF America L.L.C., 101 California Street, 26th Floor, San
Francisco, CA 94111, together with its permitted successors and permitted
assigns (“Borrower”).

All capitalized terms used herein shall have the respective meanings set forth
in Article I hereof.

W I T N E S S E T H:

WHEREAS, Borrower desires to obtain the Loan from Lender; and

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the conditions and terms of this Agreement and the other Loan
Documents.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree, represent and warrant
as follows:

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1 Definitions.

For all purposes of this Agreement, except as otherwise expressly provided:

“Accounts” shall have the meaning specified in the Cash Management Agreement.

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, owns more than forty percent (40%) of, is in control of, is
controlled by or is under common ownership or control with such Person or is a
director or officer of such Person or of an Affiliate of such Person. As used in
this definition, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise.

“Agent” shall mean LaSalle Bank National Association, a national banking
association, in its capacity as agent under the Cash Management Agreement, and
any successor Eligible Institution thereto.

“Agreement” shall have the meaning specified in the first paragraph of this
Agreement.

“Allocated Loan Amount” shall mean, with respect to each Individual Property,
the amount set forth with respect to such Property on Schedule VI.

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

“ALTA” shall mean American Land Title Association, or any successor thereto.

“Alteration Threshold” shall mean ten percent (10%) of the Loan Amount.

“Alterations Guaranty” shall mean a guaranty from RREEF in substantially the
same form as the Alterations Guaranty attached hereto as Schedule VI.

“Annual Budget” shall mean the operating and capital budget for the Property
setting forth Borrower’s good faith estimate of Gross Revenue, Operating
Expenses, Net Operating Income and Capital Expenditures for the applicable
Fiscal Year.

“Anti-Money Laundering Laws” means BSA, 31 U.S.C. §5311, et seq. or any federal
or state laws, rules, regulations or executive orders, including, but not
limited to, 18 U.S.C. §§1956, 1957 and 1960, prohibiting money laundering and
terrorist financing.

“Applicable Interest Rate” shall mean a rate per annum equal to five and
4515/10,000 percent (5.4515%).

“Approved Annual Budget” shall have the meaning specified in Section 4.1.6(e).

“Approved Bank” shall mean a bank or other financial institution which has a
minimum long-term unsecured debt rating of at least “A” by S&P and its
equivalent by Moody’s and Fitch (if either of the foregoing have rated the
Securities), and short-term unsecured debt rating of at least “A-1” by S&P and
its equivalent by Moody’s and Fitch (if either of the foregoing have rated any
of the Securities).

“Assignment of Leases” shall mean, collectively, each first priority Assignment
of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Assignment of Management Agreement” shall mean that certain Assignment of
Management Agreement dated the date hereof by Borrower in favor of Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time and, if applicable, any Replacement Assignment of Leases.

“Assumption” shall have the meaning specified in Section 8.1.

“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.

“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.

“Basic Carrying Costs” shall mean the sum of the following costs associated with
the Property for the relevant Fiscal Year or payment period: (i) Taxes and
(ii) Insurance Premiums.

 

2

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

“Borrower” shall have the meaning specified in the first paragraph of this
Agreement.

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in (i) the
State of Illinois, (ii) the State of California, (iii) the state where the
corporate trust office of the Trustee is located, or (iv) the state where the
servicing offices of the Servicer are located.

“Capital Expenditures” for any period shall mean amounts expended for
replacements and alterations to the Property and required to be capitalized
according to GAAP.

“Capital Expenditure Funds” shall have the meaning set forth in Section 6.4.1.

“Capital Expenditures Work” shall mean any labor performed or materials
installed in connection with any Capital Expenditure.

“Cash Management Agreement” shall mean that certain Cash Management Agreement of
even date herewith among Lender, Borrower and Agent.

“Cash Management Period” shall have the meaning specified for such term in the
Cash Management Agreement.

“Cash Management Period Termination Event” shall have the meaning specified for
such term in the Cash Management Agreement.

“Casualty” shall mean the occurrence of any casualty, damage or injury, by fire
or otherwise, to the Property or any part thereof

“Casualty Consultant” shall have the meaning set forth in Section 5.3.2(c).

“Casualty Retainage” shall have the meaning set forth in Section 5.3.2(d).

“Clearing Account” shall mean, collectively, the accounts defined as the
“Restricted Accounts” in the Clearing Account Agreement.

“Clearing Account Agent” shall mean Wells Fargo Bank, N.A., in its capacity as
bank under the Clearing Account Agreement, and any successor thereto.

“Clearing Account Agreement” shall mean that certain Restricted Account
Agreement (Access Restricted After Instructions) of even date herewith among
Lender, Borrower and Clearing Account Agent.

“Closing Date” shall mean the date of the initial funding of the Loan.

“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.

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or

 

3

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

eminent domain, of all or any part of the Property, or any interest therein or
right accruing thereto, including any right of access thereto or any change of
grade affecting the Property or any part thereof.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of management, policies or activities of a person or
entity, whether through ownership of voting securities, by contract or
otherwise.

“Covered Disclosure Information” shall have the meaning specified in
Section 9.2.2.

“Debt” shall mean the outstanding principal amount of the Loan together with all
interest accrued and unpaid thereon and all other sums (including the Prepayment
Consideration or Default Prepayment Consideration, as applicable) due to Lender
in respect of the Loan under the Note, this Agreement, the Mortgage, the
Environmental Indemnity or any other Loan Document.

“Debt Service” shall mean, with respect to any particular period of time,
scheduled interest payments under the Note.

“Debt Service Coverage Ratio” shall mean the ratio of (i) Underwritable Cash
Flow for the twelve (12) calendar month period immediately preceding the date of
calculation to (ii) the projected Debt Service that would be due for the twelve
(12) calendar month period immediately following such calculation.

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

“Default Prepayment Consideration” shall mean an amount equal to the greater of
(i) three percent (3%) of the outstanding principal balance of the Loan at the
time the prepayment is received by Lender, and (ii) the Yield Maintenance
Premium.

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (i) the maximum rate permitted by applicable law, or (ii) three
percent (3%) above the Applicable Interest Rate.

“Defeasance Collateral” shall mean U.S. Obligations, which provide, without
reinvestment, payments (i) on or prior to, but as close as possible to, the
Business Day immediately preceding all Monthly Payment Dates and other scheduled
payment dates, if any, under the Note after the Defeasance Date and up to and
including the Maturity Date, and (ii) in amounts equal to or greater than the
Scheduled Defeasance Payments relating to such Monthly Payment Dates and other
scheduled payment dates, as certified by an independent certified public
accountant satisfactory to Lender.

“Defeasance Collateral Account” shall have the meaning set forth in
Section 2.5.2.

“Defeasance Date” shall have the meaning set forth in Section 2.5.1(a)(i).

“Defeasance Event” shall have the meaning set forth in Section 2.5.1(a).

 

4

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

“Defeasance Security Agreement” shall mean a security agreement in form and
substance that would be reasonably satisfactory to a prudent lender pursuant to
which Borrower grants Lender a perfected, first priority security interest in
the Defeasance Collateral Account and the Defeasance Collateral.

“Defeased Note” shall have the meaning set forth in Section 2.5.4.

“Disclosure Document” shall have the meaning set forth in Section 9.2.1.

“Disclosure Indemnified Parties” shall have the meaning set forth in
Section 9.2.2.

“Disclosure Liabilities” shall have the meaning set forth in Section 9.2.2.

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

“Eligible Institution” shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody’s and F-1+ by Fitch in the case of accounts in which funds are held for
thirty (30) days or less or, in the case of 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 “AA” by Fitch and S&P and “Aa2” by
Moody’s.

“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrower in connection with
the Loan for the benefit of Lender, and, if applicable, any Replacement
Environmental Indemnity.

“ERISA” shall have the meaning set forth in Section 3.1.8.

“Event of Default” shall have the meaning set forth in Section 10.1.

“Exchange Act” shall have the meaning set forth in Section 9.2.1.

“Exchange Act Filing” shall have the meaning set forth in Section 9.1.3(a).

“Fiscal Year” shall mean each twelve month period commencing on January 1 and
ending on December 31 during each year of the term of the Loan.

“Fitch” shall mean Fitch, Inc.

 

5

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

“Full Replacement Cost” shall have the meaning set forth in Section 5.1.1(a)(i).

“GAAP” shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

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

“Gross Revenue” shall mean all revenue, derived from the ownership and operation
of the Property from whatever source, including, but not limited to, Rents, but
excluding sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, non-recurring revenues
as determined by Lender, proceeds from the sale or refinancing of the Property,
security deposits (except to the extent determined by Lender to be properly
utilized to offset a loss of Rent), refunds and uncollectible accounts, proceeds
of casualty insurance and Awards (other than business interruption or other loss
of income insurance related to business interruption or loss of income for the
period in question), and any disbursements to Borrower from the Reserve Funds or
any other fund established by the Loan Documents.

“Immediate Family Members” shall have the meaning set forth in Section 8.2.

“Improvements” shall have the meaning set forth in the granting clause of the
Mortgage.

“Indebtedness” shall mean, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
indebtedness guaranteed by such Person, directly or indirectly, (v) all
obligations under leases that constitute capital leases for which such Person is
liable, and (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.

“Indemnified Liabilities” shall have the meaning set forth in Section 11.13(b).

“Indemnified Party” shall have the meaning set forth in Section 11.13(b).

“Independent Person” shall mean a natural Person who is not at the time of
initial appointment, or at any time while serving as a manager (in the case of a
manager-managed limited liability company), member (in the case of a
member-managed limited liability

 

6

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

company), or a director (in the case of a corporation) of Borrower or any
Required SPE, and has not been at any time during the preceding five (5) years:
(a) a stockholder, manager, director, officer, employee, partner, member,
attorney or counsel of Borrower or such Required SPE, respectively, or any
Affiliate of Borrower or such Required SPE, respectively; (b) a creditor,
customer, supplier or other Person who derives any of its purchases or revenues
from its activities with Borrower or such Required SPE, respectively, or any
Affiliate of Borrower or such Required SPE, respectively; (c) a Person
controlling or under common control with any such stockholder, partner, member,
creditor, customer, supplier or other Person; or (d) a member of the immediate
family of any such stockholder, director, officer, employee, partner, member,
creditor, customer, supplier or other Person. A natural Person who otherwise
satisfies the foregoing shall not be disqualified from serving as an independent
director, member or manager of Borrower or any Required SPE if such individual
is at the time of initial appointment, or at any time while serving as an
Independent Person of Borrower or such Required SPE, respectively, an
independent director, member or manager of a “special purpose entity” affiliated
with Borrower or such Required SPE, respectively (other than any Person which
owns any direct or indirect equity interest in Borrower or such Required SPE,
respectively), if such individual is an Independent Person provided by a
nationally-recognized company that provides professional independent directors
or managers if the Person serving as such Independent Person does not derive
more than 5% of his or her annual income from serving as an independent
director, member or manager of Borrower or such Required SPE, respectively, or
any Affiliate of Borrower or such Required SPE, respectively. For purposes of
this paragraph, a “special purpose entity” is an entity, whose organizational
documents contain restrictions on its activities and impose requirements
intended to preserve a Person’s separateness that are substantially similar to
those of Borrower, and provide, inter alia, that it: (a) is organized for the
limited purpose of owning and operating one or more properties, being the
general partner or a member of a borrower or, in a securitization context, the
limited purpose of issuing mortgage or asset-backed securities; (b) has
restrictions on its ability to incur indebtedness, dissolve, liquidate,
consolidate, merge and/or sell assets; (c) may not file voluntarily a bankruptcy
petition on its own behalf or on behalf of a borrower without the consent of the
independent director, manager or member; and (d) shall conduct itself and cause
the borrower in question to conduct itself in accordance with certain
“separateness covenants,” including, but not limited to, the maintenance of its
and such borrower’s books, records, bank accounts and assets separate from those
of any other person or entity.

“Individual Property” shall mean each of the twenty-four (24) individual
properties comprising the Property. The location of each Property is identified
on Schedule 1.

“Insolvency Opinion” shall mean that certain bankruptcy nonconsolidation opinion
letter dated the date hereof delivered by Richards, Layton & Finger, P.A. in
connection with the Loan.

“Insurance Funds” shall have the meaning set forth in Section 6.3.1.

“Insurance Premiums” shall have the meaning set forth in Section 5.1.1(b).

“Lease” shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion

 

7

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

of any space in the Property, and every modification, amendment or other
agreement relating to such lease, sublease, subsublease, or other agreement
entered into in connection with such lease, sublease, subsublease, or other
agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto.

“Lease Termination Fee” shall have the meaning set forth in Section 6.6.1.

“Lease Termination Rollover Funds” shall have the meaning set forth in
Section 6.6.1.

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or the
Property or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to the
Property or any part thereof, or (ii) in any way limit the use and enjoyment
thereof.

“Lender” shall have the meaning set forth in the first paragraph of this
Agreement.

“Letter of Credit” shall mean an irrevocable, unconditional, transferable, clean
sight draft letter of credit acceptable to Lender and the Rating Agencies
(either an evergreen letter of credit or one which does not expire until at
least thirty (30) Business Days after the Maturity Date) in favor of Lender and
entitling Lender to draw thereon based solely on a statement purportedly
executed by an officer of Lender stating that it has the right to draw thereon,
in Chicago, Illinois, issued by a domestic Approved Bank or the U.S. agency or
branch of a foreign Approved Bank.

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Property or any portion, thereof or Borrower, or any
interest therein, including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic’s, materialmen’s and other similar liens and encumbrances.

“Loan” shall mean the loan in the original principal amount of Two Hundred Fifty
Million and No/100 Dollars ($250,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing
Account Agreement, the Environmental Indemnity, the Assignment of Management
Agreement, the Manager’s Agreement, the Borrower Certification executed Borrower
in favor of Lender, the Authorization to Wire Funds/Interest Rate Confirmation
Letter executed by Borrower in favor of Lender, the Letter of Release executed
by Borrower, the Post-Closing Agreement executed by Borrower in

 

8

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

favor of Lender and all other documents or instruments now or hereafter executed
in connection with and/or securing or evidencing the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and, if applicable, any Replacement Loan Documents.

“Major Lease” shall mean any Lease (i) covering more than 100,000 square feet of
the Property, (ii) made with a Tenant that is a Tenant under another Lease at
the Property or that is an Affiliate of any other Tenant under a Lease at the
Property, if the Leases together cover more than 100,000 square feet of the
Property in the aggregate, or (iii) covering an. entire Individual Property;
provided, however, that so long as (A) RREEF owns, directly or indirectly, at
least fifty-one percent (51%) of the ownership interests in Borrower, and
(B) the property manager of the Property is a Qualified Manager, then (I) the
provisions of clause (ii) above shall not be applicable, and (II) a Lease which
covers an entire Individual Property (but does not meet the condition set forth
in clause (i) above) shall not be deemed to be a Major Lease so long as such
Lease does not contain any options to purchase, rights of first refusal to
purchase or tenant ownership of the building or other major improvements.

“Management Agreement” shall mean those certain management agreements by and
between Borrower and the Manager, pursuant to which the Manager is to provide
management and other services with respect to the Property, as set forth in
detail on Schedule VII attached hereto.

“Manager” shall mean RREEF Management Company, a Delaware corporation, or any
other property manager approved in accordance with the terms and conditions of
the Loan Documents.

“Manager’s Agreement” shall mean that certain Manager’s Agreement dated the date
hereof by Manager in favor of Lender, and consented to by Borrower, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“Material Action” means to (i) dissolve, merge, liquidate or consolidate and, as
to any Required SPE, permit Borrower (as applicable) to dissolve, merge,
liquidate, or consolidate; (ii) except as permitted herein, sell all or
substantially all of its assets or, as to any Required SPE, the assets of the
Borrower (as applicable); (iii) engage in any business activity other than as
set forth in Section 3.1.24, or amend its organizational documents with respect
to the matters set forth in Section 3.1.24 without the consent of the
Beneficiary; or (iv) file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or, as to any Required
SPE, with respect to itself or Borrower (as applicable), or consent to the
institution of bankruptcy or insolvency proceedings with respect to itself or,
as to any Required SPE, with respect to itself or Borrower (as applicable), or
file a petition seeking, or consent to, reorganization or relief with respect to
itself or, as to any Required SPE, with respect to itself or Borrower (as
applicable), under any applicable federal or state law relating to bankruptcy,
or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of itself or, as to any Required SPE,
of itself or Borrower (as applicable), or a substantial part of its property, or
make any assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or to take action in
furtherance of any such action.

 

9

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

“Material Agreements” means each contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Property, other than the Management Agreement and the
Leases, under which there is an obligation of Borrower to pay more than
$5,000,000.00 per annum.

“Maturity Date” shall mean December 1, 2016 or such other date on which the
final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.

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

“Minimum Disbursement Amount” shall mean Twenty-Five Thousand and No/100 Dollars
($25,000).

“Monthly Debt Service Payment Amount” shall mean a payment of interest only
accrued on the outstanding principal amount of the Loan during the calendar
month immediately prior to the Monthly Payment Date on which such payment is
due.

“Monthly Payment Date” shall mean the first (1st) day of every calendar month
occurring during the term of the Loan.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall mean, collectively, each first priority Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated the
date hereof, executed and delivered by Borrower as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, and, if applicable, any
Replacement Mortgage.

“Net Operating Income” for any period shall mean the amount obtained by
subtracting Operating Expenses for such period from Gross Revenue for such
period.

“Net Proceeds” shall mean: (i) the net amount of all insurance proceeds payable
as a result of a Casualty to the Property, after deduction of reasonable costs
and expenses (including, but not limited to, reasonable attorneys’ fees), if
any, in collecting such insurance proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys’ fees), if any, in collecting such Award.

“Net Proceeds Deficiency” shall have the meaning set forth in Section 5.3.2(f).

“Net Worth Period” shall have the meaning provided in Section 4.1.6(b).

“Note” shall have the meaning set forth in Section 2.1.3.

 

10

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

“Notice” shall have the meaning set forth in Section 11.6.

“OFAC List” means the Specially Designated Nationals and Blocked Persons List
maintained by the Office of Foreign Asset Control, U.S. Department of the
Treasury.

“OFAC Rules” shall have the meaning set forth in Section 3.1.38.

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

“Operating Expenses” shall mean all costs and expenses relating to the
operation, maintenance and management of the Property, including, without
limitation, utilities, repairs and maintenance, insurance, property taxes and
assessments, advertising expenses, payroll and related taxes, equipment lease
payments, a management fee equal to the greater of three percent (3%) of annual
rents or the actual management fee, $0.55 per rentable square foot of the
Improvements per annum with respect to capital costs and tenant rollover
expenses, but excluding actual Capital Expenditures, depreciation, amortization,
and deposits required to be made to the Reserve Funds; provided, however such
costs and expenses shall be subject to adjustment by Lender to normalize such
costs and expenses.

“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes, and any other charges, including, without limitation, 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.

“Otherwise Rated Insurer” shall have the meaning set forth in Section 5.1.2.

“Patriot Act” the USA Patriot Act (Title III of Pub. L. 107-56, signed into law
October 26, 2001), as amended.

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, and, if applicable, the Replacement
Loan Documents, (ii) all Liens, encumbrances and other matters disclosed in the
Title Insurance Policy, (iii) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, (iv) such other title and
survey exceptions as Lender has reasonably approved or may approve in writing in
Lender’s reasonable discretion.

“Permitted Investments” shall have the meaning set forth in the Cash Management
Agreement.

“Permitted Prepayment Date” shall mean June 1, 2016.

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

 

11

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

“Plan Assets Regulation” shall have the meaning set forth in Section 3.1.8.

“Policies” shall have the meaning set forth in Section 5.1.1(b).

“Prepayment Date” shall mean the date on which the Loan is prepaid in accordance
with the terms hereof.

“Prescribed Laws” shall mean, collectively, (a) the Patriot Act, (b) Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001, and
relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, (c) the International
Emergency Economic Power Act, 50 U.S.C. §1701 et seq., (d) Anti-Money Laundering
Laws, and (e) all other Legal Requirements relating to money laundering or
terrorism.

“Prohibited Person” shall have the meaning specified in Section 3.1.38.

“Property” shall mean, collectively, the parcels of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by the Mortgage, together with all rights pertaining to such property and
Improvements, all as more particularly described in the Granting Clauses of the
Mortgage. The location of each Individual Property comprising the Property is
identified on Schedule I.

“Qualified Manager” shall mean a property manager which (a) is a reputable
property management company having at least five (5) years experience, prior to
its engagement as property manager for the Property, in the management of
commercial properties with similar uses as the Property and in the jurisdiction
in which the Property is located, (b) has for at least five (5) years prior to
its engagement as property manager for the Property managed at least five
(5) properties of the same type as the Property totaling at least 1,000,000
square feet (exclusive of the Property); and (c) is not the subject of a
bankruptcy or similar insolvency proceeding.

“Qualified Transferee” shall mean any Person who (a) is not a Prohibited Person,
(b) is not and has not been subject to any adverse litigation, bankruptcy or
insolvency proceedings or criminal investigations or indictment, who does not
have a conduit loan in special servicing, and who has not defaulted on any debt
or loan, or any guaranty, indemnity or other agreement with a lender, and (c) is
a Person who meets the requirements and definition for a “qualified transferee”
set out in Appendix VI to the S&P U.S. CMBS Legal and Structured Finance
Criteria that also (i) immediately prior to such Transfer has total assets of at
least $750,000,000.00 excluding the Property, (ii) has a net worth, calculated
as of a date no more than three (3) months prior to such Transfer, of at least
$350,000,000.00, excluding the Property, and (iii) is regularly engaged in the
business of owning interests (either directly or through funds under management)
in industrial properties. No Person shall qualify as a Qualified Transferee
without delivering to Lender a certificate which is signed by an authorized
representative of such Person, certifying that such Person meets the definition
of a Qualified Transferee set forth herein and providing financial statements
confirming such certification, which financial statements shall be prepared in
accordance with GAAP or otherwise reasonably acceptable to Lender.

“Rating Agencies” shall mean, prior to the final Securitization of the Loan,
each of S&P, Moody’s and Fitch, or any other nationally recognized statistical
rating agency which has been designated by Lender and, after the final
Securitization of the Loan, shall mean any of the foregoing that have rated any
of the Securities.

 

12

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

“Rating Agency Confirmation” shall mean a written affirmation from each of the
Rating Agencies that the credit rating of the Securities by such Rating Agency
immediately prior to the occurrence of the event with respect to which such
Rating Agency Confirmation is sought will not be qualified, downgraded or
withdrawn as a result of the occurrence of such event, which affirmation may be
granted or withheld in such Rating Agency’s sole and absolute discretion.

“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation
AB), 17 C.F.R. §.§ 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as may have been provided
by the Securities and Exchange Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506-1,531 (Jan.
7, 2005)) or by the staff of the Securities and Exchange Commission, or as may
be provided by the Securities and Exchange Commission or its staff from time to
time.

“Regulation S-X” means Regulation S-X of the Securities Act.

“Related Loan” shall mean a loan made to an Affiliate of Borrower or secured by
a Related Property, that is included in a Securitization with the Loan.

“Related Property” shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is “related”,
within the meaning of the definition of Significant Obligor, to the Property.

“Release Amount” shall mean 115% of the Allocated Loan Amount for such
Individual Property.

“Release Date” shall mean the earlier to occur of (i) the third anniversary of
the Closing Date and (ii) the date that is two (2) years from the “startup day”
(within the meaning of Section 860G(a)(9) of the Code) of the REMIC Trust
established in connection with the last Securitization involving any portion of
this Loan.

“Remaining Carriers” shall have the meaning set forth in Section 5.1.2.

“Remaining Property” shall have the meaning set forth in Section 2.7(e).

“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note.

“Rent Deficiency” shall have the meaning set forth in Section 6.6.2.

“Rents” shall mean all rents, moneys payable as damages or in lieu of rent,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Property.

 

13

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

“Replacement Assignment of Leases” shall have the meaning set forth in
Section 2.6(1).

“Replacement Environmental Indemnity” shall have the meaning set forth in
Section 2.6(1).

“Replacement Financing Statement” shall have the meaning set forth in
Section 2.6(1).

“Replacement Lease” shall have the meaning set forth in Section 6.6.2.

“Replacement Loan Documents” shall have the meaning set forth in Section 2.6(1).

“Replacement Mortgage” shall have the meaning set forth in Section 2.6(1).

“Replacement Title Policy” shall have the meaning set forth in Section 2.6(m).

“Required Repairs” shall have the meaning set forth in Section 6.1.1.

“Required SPE” shall have the meaning set forth in Section 3.1.24.

“Reserve Funds” shall mean, collectively, Capital Expenditure Funds, the
Insurance Funds, the Tax Funds, the Rollover Funds and the Lease Termination
Rollover Funds.

“Restoration” shall have the meaning set forth in Section 5.2.1.

“Restoration Threshold” shall ten percent (10%) of the Loan Amount.

“Rollover Funds” shall have the meaning set forth in Section 6.5.1.

“RREEF” shall mean RREEF America REIT II, a Maryland corporation.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.

“Scheduled Defeasance Payments” shall mean scheduled payments of interest and
principal under the Note for all Monthly Payment Dates occurring after the
Defeasance Date and up to and including the Maturity Date (including the
outstanding principal balance on the Note as of the Maturity Date), and all
payments required after the Defeasance Date, if any, under the Loan Documents
for servicing fees, and other similar charges.

“Secondary Market Transaction” shall have the meaning set forth in
Section 9.1.1.

“Securities” shall have the meaning set forth in Section 9.1.1.

“Securities Act” shall have the meaning set forth in Section 9.1.1.

“Securitization” shall have the meaning set forth in Section 9.1.1.

 

14

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

“Servicer” shall have the meaning set forth in Section 11.24(a).

“Servicing Agreement” shall have the meaning set forth in Section 11.24(a).

“Severed Loan Documents” shall have the meaning set forth in Section 10.2(c).

“Significant Obligor” shall have the meaning set forth in Item 1101(k) of
Regulation AB.

“Special Purpose Entity” shall mean a limited partnership, limited liability
company or corporation which, at all times until the Debt is paid and all
obligations under the Loan Documents are satisfied, meets all of the
requirements of Section 3.1.24.

“SPC Party” shall have the meaning set forth in Section 3.1.24(o).

“State” shall mean the State or Commonwealth in which the Property or any part
thereof is located.

“Substitute Property” shall have the meaning set forth in Section 2.6.

“Substituted Property” shall have the meaning set forth in Section 2.6.

“Successor Borrower” shall have the meaning set forth in Section 2.5.3.

“Survey” shall mean, collectively, one or more a surveys of the Property
prepared by surveyor(s) licensed in the State and satisfactory to Lender and the
company or companies issuing the Title Insurance Policy, and containing a
certification of such surveyor satisfactory to Lender.

“Tax Funds” shall have the meaning set forth in Section 6.2.1.

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against the Property or part thereof, together with all interest and penalties
thereon.

“Tenant” shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now
or hereafter affecting all or any part of the Property.

“Termination Space” shall have the meaning set forth in Section 6.6.1.

“Title Insurance Policy” shall mean, collectively, one or more ALTA mortgagee
title insurance policies in the form acceptable to Lender issued with respect to
the Property and insuring the lien of the Mortgage and, if applicable any
Replacement Title Insurance Policy.

“Transfer” shall have the meaning provided in the Mortgage.

“Transferee” shall have the meaning specified in Section 8.1.

 

15

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

“Trustee” shall mean any trustee holding the Loan in a Securitization.

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State.

“Undefeased Note” shall have the meaning set forth in Section 2.5.4.

“Underwritable Cash Flow” shall mean the excess of Gross Revenue over Operating
Expenses. Lender’s calculation of Underwritable Cash Flow (including
determination of items that do not qualify as Gross Revenue or Operating
Expenses) shall be calculated by Lender based upon Lender’s determination of
Rating Agency criteria and shall be final absent manifest error.

“Updated Information” shall have the meaning set forth in Section 9.1.2(a).

“U.S. Obligations” shall mean direct full faith and credit obligations of the
United States of America that are not subject to prepayment, call or early
redemption, which are government securities within the meaning of Treas. Reg.
1.860G-2(a)(8)(i) and which securities must comply (as determined by Lender in
its sole discretion) with REMIC Trust and Rating Agency requirements.

“Yield Maintenance Premium” shall mean an amount,, never less than zero, equal
to (a) the present value as of the Prepayment Date of the Calculated Payments
from the Prepayment Date through the originally scheduled Maturity Date
determined by discounting such payments at the Discount Rate, less (b) the
amount of the payment or proceeds received by Lender. As used in this
definition, the term “Prepayment Date” shall mean the date on which prepayment
is made. As used in this definition, the term “Calculated Payments” shall mean
the remaining scheduled monthly payments of interest and any balloon payment of
principal. As used in this definition, the term “Discount Rate” shall mean the
rate which, when compounded monthly, is equivalent to the Yield Maintenance
Treasury Rate, when compounded semi-annually. As used in this definition, the
term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender
by the linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading “U.S.
Government Securities/Treasury Constant Maturities” for the week ending prior to
the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer or one shorter) most nearly approximating the Maturity Date. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Yield Maintenance Treasury Rate. In no event,
however, shall Lender be required to reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise. All percentages shall be rounded to the
nearest one hundred thousandth percent and dollar amounts to the nearest whole
dollar.

Section 1.2 Principles of Construction. All references to sections and schedules
are to sections and schedules in or to this Agreement unless otherwise
specified. Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.

 

16

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

II. THE LOAN

 

Section 2.1 The Loan.

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

2.1.2 Single Disbursement to Borrower. Borrower shall receive only one borrowing
hereunder in respect of the Loan and any amount borrowed and repaid hereunder in
respect of the Loan may not be reborrowed.

2.1.3 The Note. The Loan shall be evidenced by that certain Promissory Note of
even date herewith, in the stated principal amount of Two Hundred Fifty Million
and No/100 Dollars ($250,000,000.00) executed by Borrower and payable to the
order of Lender in evidence of the Loan (as the same may hereafter be amended,
supplemented, restated, increased, extended or consolidated from time to time,
the “Note”) and shall be repaid in accordance with the terms of this Agreement
and the Note.

2.1.4 Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay and
discharge any existing loans relating to the Property, (ii) pay all past due
Basic Carrying Costs, if any, in respect of the Property, (iii) deposit the
Reserve Funds, (iv) pay costs and expenses incurred in connection with the
closing of the Loan, as reasonably approved by Lender, (v) fund any working
capital requirements of the Property, as reasonably approved by Lender and
(vi) retain the balance, if any.

 

Section 2.2 Interest Rate.

2.2.1 Applicable Interest Rate. Except as herein provided with respect to
interest accruing at the Default Rate, interest on the principal balance of the
Loan outstanding from time to time shall accrue from the Closing Date up to the
Maturity Date at the Applicable Interest Rate.

2.2.2 Default Rate. In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal balance of the
Loan and, to the extent permitted by law, overdue interest in respect of the
Loan, shall accrue interest at the Default Rate, calculated from the date the
Default occurred which led to such an Event of Default without regard to any
grace or cure periods contained herein.

2.2.3 Interest Calculation. Interest on the outstanding principal balance of the
Loan shall be calculated by multiplying (a) the actual number of days elapsed in
the period for which the calculation is being made by (b) a daily rate based on
a three hundred sixty (360) day year (that is, the Applicable Interest Rate or
the Default Rate, as then applicable, expressed as an annual rate divided by
360) by (c) the outstanding principal balance. The accrual period for
calculating interest due on each Monthly Payment Date shall be the calendar
month immediately prior to such Monthly Payment Date.

 

17

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

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

 

Section 2.3 Loan Payments.

2.3.1 Payment Before Maturity Date. Borrower shall make a payment to Lender of
interest only on the Closing Date for the period from the Closing Date through
the last day of the month in which the Closing Date occurs (unless the Closing
Date is the first day of a calendar month, in which case no such separate
payment of interest shall be due). Borrower shall make a payment to Lender of
interest only accrued on the outstanding principal balance of the Loan from time
to time on the Monthly Payment Date occurring in January, 2007 and on each
Monthly Payment Date thereafter to and including the Maturity Date.

2.3.2 Payment on Maturity Date. Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgage
and the other Loan Documents.

2.3.3 Late Payment Charge. If any principal, interest or any other sum due under
the Loan Documents, other than the payment of principal due on the Maturity
Date, is not paid by Borrower on the date on which it is due, Borrower shall pay
to Lender upon demand an amount equal to the lesser of four percent (4%) of such
unpaid sum or the maximum amount permitted by applicable law 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. Any such amount shall be secured by the Mortgage and the other Loan
Documents.

2.3.4 Method and Place of Payment.

(a) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 1:00 P.M., Chicago, Illinois time, on the date when due and shall be made
in lawful money of the United States of America in immediately available funds
at Lender’s office, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

 

18

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

(b) Whenever any payment to be made hereunder or under any other Loan Document
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be the preceding Business Day.

(c) All payments required to be made by Borrower hereunder or under the Note or
the other Loan Documents shall be made irrespective of, and without deduction
for, any setoff, claim or counterclaim and shall be made irrespective of any
defense thereto.

 

Section 2.4 Prepayments.

2.4.1 Voluntary Prepayments. Except as otherwise provided herein, Borrower shall
not have the right to prepay the Loan in whole or in part. On and after the
Permitted Prepayment Date, Borrower may, provided no Event of Default has
occurred, at its option and upon thirty (30) days prior notice to Lender (or
such shorter period of time if permitted by Lender in its sole discretion),
prepay the Debt in whole but not in part on any date without payment of any
prepayment fee or premium and without defeasance. Any prepayment received by
Lender on a date other than a Monthly Payment Date shall include interest which
would have accrued thereon to, but excluding, the next Monthly Payment Date. If
the Loan has been defeased pursuant to Section 2.5, it may not be prepaid prior
to the Maturity Date.

2.4.2 Mandatory Prepayments. On each date on which Lender actually receives a
distribution of Net Proceeds, and if Lender does not make such Net Proceeds
available to Borrower for a Restoration, Lender shall prepay the outstanding
principal balance of the Note in an amount equal to one hundred percent
(100%) of such Net Proceeds together with interest that would have accrued on
such amounts through the next Monthly Payment Date. No prepayment fee or premium
shall be due in connection with any prepayment made pursuant to this
Section 2.4.2.

2.4.3 Prepayments After Default. If after an Event of Default, payment of all or
any part of the principal of the Loan is tendered by Borrower, a purchaser at
foreclosure or any other Person, such tender shall be deemed an attempt to
circumvent the prohibition against prepayment set forth in Section 2.4.1 and
Borrower, such purchaser at foreclosure or other Person shall pay the Default
Prepayment Consideration, in addition to the outstanding principal balance, all
accrued and unpaid interest and other amounts payable under the Loan Documents.

 

Section 2.5 Defeasance.

2.5.1 Conditions to Defeasance.

(a) Provided no Event of Default shall have occurred and remain uncured,
Borrower shall have the right at any time after the Release Date and prior to
the Permitted Prepayment Date to voluntarily defease the entire Loan and obtain
a release of the lien of the Mortgage by providing Lender with the Defeasance
Collateral (hereinafter, a “Defeasance Event”), subject to the satisfaction of
the following conditions precedent:

(i) Borrower shall provide Lender not less than thirty (30) days notice (or such
shorter period of time if permitted by Lender in its sole discretion) specifying
a date (the “Defeasance Date”) on which the Defeasance Event is to occur;
provided, however, that notwithstanding anything to the contrary herein, the
Loan may not be defeased during the last one hundred eighty (180) days of the
loan term if the Loan has not previously been defeased;

 

19

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

(ii) Borrower shall pay to Lender (A) all payments of principal and interest due
on the Loan to and including the Defeasance Date and (B) all other sums, then
due under the Note, this Agreement, the Mortgage and the other Loan Documents,
including the defeasance processing fee charged by Servicer pursuant to
Section 2.5.3. If for any reason the Defeasance Date is not a Monthly Payment
Date, Borrower shall also pay interest that would have accrued on the Note
through the next Monthly Payment Date;

(iii) Borrower shall deposit the Defeasance Collateral into the Defeasance
Collateral Account and otherwise comply with the provisions of Sections 2.5.2
and 2.5.3 hereof;

(iv) Borrower shall execute and deliver to Lender a Defeasance Security
Agreement in respect of the Defeasance Collateral Account and the Defeasance
Collateral;

(v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is
standard in commercial lending transactions, issued by counsel reasonably
satisfactory to the Rating Agencies and Lender, and subject only to customary
qualifications, assumptions and exceptions opining, among other things, that
(A) Lender has a legal and valid perfected first priority security interest in
the Defeasance Collateral Account and the Defeasance Collateral, (B) if a
Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a result
of a Defeasance Event pursuant to this Section 2.5, (C) the Defeasance Event
will not result in a deemed exchange for purposes of the Code and will not
adversely affect the status of the Note as indebtedness for federal income tax
purposes, (D) a non-consolidation opinion with respect to the Successor Borrower
in form and substance acceptable to the Rating Agencies, and (E) that the
assumption agreement referenced in Section 2.5.3 below is enforceable against
Borrower and Successor Borrower in accordance with its terms and that the Note,
the Defeasance Security Agreement and the other Loan Documents, as so assumed,
are enforceable against such Successor Borrower in accordance with their
respective terms.

(vi) Borrower shall deliver to Lender a Rating Agency Confirmation as to the
Defeasance Event and shall comply with all Rating Agency requirements and
applicable REMIC provisions under the Code;

(vii) Borrower shall deliver an Officer’s Certificate certifying that it is
requesting the lien against the Property be released to facilitate a disposition
or refinancing of, or other customary commercial transaction involving, the
Property and

 

20

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

not as part of an arrangement to collateralize a REMIC offering with obligations
that are not real estate mortgages, and that the requirements set forth in this
Section 2.5 have been satisfied;

(viii) Borrower shall deliver a certificate of a “big four” or other nationally
recognized public accounting firm reasonably acceptable to Lender certifying
that the Defeasance Collateral will generate monthly amounts equal to or greater
than the Scheduled Defeasance Payments;

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

(x) Borrower shall pay all costs and expenses associated with the purchase of
the Defeasance Collateral, all Rating Agency fees and expenses in connection
with the Defeasance Event, and all reasonable costs and expenses of Lender
incurred in connection with the Defeasance Event, including without limitation,
the preparation of the Defeasance Security Agreement and related documentation,
the preparation and recordation of the release of the lien of the Mortgage and
Lender’s reasonable attorneys’ fees and expenses.

(b) If Borrower has elected to defease the Note and the requirements of this
Section 2.5 have been satisfied, the Property shall be released from the lien of
the Mortgage and the Defeasance Collateral pledged pursuant to the Defeasance
Security Agreement shall be the sole source of collateral securing the Note. In
connection with the release of the Lien, Borrower shall submit to Lender, not
less than thirty (30) days prior to the Defeasance Date (or such shorter time as
is acceptable to Lender in its sole 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 Property is located and that
contains 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 (i) is in
material compliance with all Legal Requirements, and (ii) will effect such
release in accordance with the terms of this Agreement. Borrower shall pay all
costs, taxes and expenses associated with the release of the lien of the
Mortgage, including Lender’s reasonable attorneys’ fees. Except as set forth in
this Section 2.5, no repayment, prepayment or defeasance of all or any portion
of the Note shall cause, give rise to a right to require, or otherwise result
in, the release of the lien of the Mortgage on the Property.

2.5.2 Defeasance Collateral Account. On or before the date on which Borrower
delivers the Defeasance Collateral, Borrower shall open at any Eligible
Institution the defeasance collateral account (the “Defeasance Collateral
Account”) which shall at all times be an Eligible Account. The Defeasance
Collateral Account shall contain only (i) Defeasance Collateral, and (ii) cash
from interest and principal paid on the Defeasance Collateral. All cash from
interest and principal payments paid on the Defeasance Collateral shall be paid
over to Lender on each Monthly Payment Date and applied first to accrued and
unpaid interest and then to principal. Any cash from interest and principal paid
on the Defeasance Collateral not needed to pay the Scheduled Defeasance Payments
shall be paid to Borrower without interest. Borrower

 

21

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

shall cause the Eligible Institution at which the Defeasance Collateral is
deposited to enter an agreement with Borrower and Lender, satisfactory to Lender
in its sole discretion, pursuant to which such Eligible Institution shall agree
to hold and distribute the Defeasance Collateral in accordance with this
Agreement and to further create a first priority security interest herein in
favor of Lender in conformity with all applicable state and federal laws
governing granting of security interests. The Borrower or Successor Borrower, as
applicable, shall be the owner of the Defeasance Collateral Account and shall
report all income accrued on Defeasance Collateral for federal, state and local
income tax purposes in its income tax return. Borrower shall prepay all cost and
expenses associated with opening and maintaining the Defeasance Collateral
Account. Lender shall not in any way be liable by reason of any insufficiency in
the Defeasance Collateral Account.

2.5.3 Successor Borrower. Upon the release of the Property in accordance with
Section 2.5.1, Borrower shall assign all its obligations and rights under the
Note, together with the pledged Defeasance Collateral, to a successor entity
(the “Successor Borrower”) designated by LaSalle Bank National Association in
its sole discretion. Such successor entity shall be a single purpose bankruptcy
remote entity, which shall not own any other assets or have any other
liabilities or operate any other property (except in connection with other
defeased loans held in the same securitized loan pool with the Loan), and shall
execute an assumption agreement in form and substance reasonably satisfactory to
Lender pursuant to which it shall assume Borrower’s obligations under the Note
and the Defeasance Security Agreement. As conditions to such assignments and
assumption, Borrower shall (a) pay all reasonable costs and expenses incurred by
Lender or its agents in connection with such assignment and assumption
(including, without limitation, the review of the proposed transferee and the
preparation of the assumption agreement and related documentation), and (b) pay
to the servicer of this Note a defeasance processing fee in an amount not
greater than $20,000, provided, notwithstanding anything to the contrary herein
or in the other Loan Documents, no other assumption fee shall be payable by
Borrower in connection with such assumption. Upon such assumption, Borrower
shall be relieved of its obligations hereunder, under the other Loan Documents
and under the Defeasance Security Agreement, with the sole exception of
(A) representations and warranties made in connection with the Defeasance Event,
(B) the underlying obligation to effect the Defeasance Event, (C) any loss to
Lender if the Defeasance Event is set aside, voided or rescinded and (D) any
rights or obligations that are specifically intended to survive the repayment of
the Loan or other payment, satisfaction or termination of the Note, the Loan
Documents or the Defeasance Security Agreement.

2.5.4 Partial Defeasance. Pursuant to Section 2.7, in connection with obtaining
a Release of any Individual Property comprising the Property, Borrower is
required to partially defease an amount of the outstanding principal of the Loan
equal to the applicable Release Amount for the Individual Property in question.
In connection with each such partial Release, the Note (or Undefeased Note after
the first such partial release) shall be split into two (2) substitute notes,
one (1) such substitute note having a principal balance equal to the Release
Amount for the Individual Property being released (the “Defeased Note”) and the
other note having a principal balance equal to outstanding principal balance of
the entire Note (or Undefeased Note after the first such partial release) less
the amount of the Defeased Note (the “Undefeased Note”). In all other respects,
the Defeased Note and Undefeased Note (or the new “Undefeased Note,” as the case
may be) shall be identical to the Note. The Defeased Note and

 

22

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

the Undefeased Note (or the new “Undefeased Note,” as the case may be, shall not
be cross-collateralized or cross-defaulted. Upon such splitter, Borrower shall
defease the Defeased Note pursuant to Sections 2.5.1 through 2.5.3 above
(provided, however, for purposes hereof, the “Note” as referred to in the
definition of “Defeasance Collateral” shall mean the Defeased Note, and the
“Property” as referred to in Section 2.5.1 and 2.5.3 shall mean the Individual
Property being released). Failure to defease the Defeased Note within sixty
(60) days of such splitter shall be an Event of Default. Upon completion of a
partial defeasance as described above, all references herein and in the other
Loan Documents to the “Note” shall mean the Defeased Note and the Undefeased
Note.

 

Section 2.6 Substitution of Property.

Subject to the terms and conditions set forth in this Section 2.6, Borrower may
obtain (i) a release of the Lien of a Mortgage (and the related Loan Documents)
encumbering an Individual Property (the “Substituted Property”), and (ii) a
release of the Borrower’s obligations under the Loan Documents with respect to
such Substituted Property first arising after the date of such substitution
(other than those obligations expressly stated to survive), by simultaneously
substituting therefor another property which a prudent institutional lender
would find to be of like or better kind and quality (including without
limitation geographic location, tenant strength and lease terms) simultaneously
acquired by Borrower, including the Improvements located thereon and all
personal property owned by Borrower in connection therewith (collectively, the
“Substitute Property”) for the Substituted Property, provided that the following
conditions precedent are satisfied:

(a) During the twelve (12) month period immediately prior to and including the
date of such substitution, Borrower has obtained the release and substitution of
no more than six (6) of the Individual Properties (including the Substituted
Property which is the subject of the current substitution) in accordance with
this Section 2.6.

(b) The Allocated Loan Amount of the Substituted Property plus the Allocated
Loan Amount(s) of all Substituted Properties previously released from the lien
of the Mortgage in accordance with this Section 2.6, does not exceed One Hundred
Twenty-Five Million Dollars ($125,000,000.00).

(c) The Maturity Date shall have not occurred.

(d) Lender shall have received at least thirty (30) days prior’ written notice
requesting the substitution and identifying the Substitute Property and
Substituted Property.

(e) Lender shall have received payment of a fee in the amount of one-tenth of
one percent (0.10%) of the Allocated Loan Amount of the Substituted Property.

(f) Lender shall have received an appraisal of the Substitute Property and the
Property, dated no more than ninety (90) days prior to the substitution date, by
an MAI appraiser having at least five (5) years of experience in the appraisal
of commercial properties with the same use as the Property and in the geographic
area in which the Property is located, which appraiser would be acceptable to a
reasonably prudent institutional lender and is acceptable to the Rating
Agencies.

 

23

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

(g) After giving effect to the substitution, the Debt Service Coverage Ratio for
the Loan (excluding the Substituted Property and including the Substitute
Property) is not less than the greater of (i) the Debt Service Coverage Ratio
for the Loan as of the Closing Date and (ii) the Debt Service Coverage Ratio for
the Loan as of the date immediately preceding the substitution (including the
Substituted Property and excluding the Substitute Property).

(h) After giving effect to the substitution, the ratio of the outstanding
principal amount of the Loan to the aggregate fair market value (based upon the
value set forth in the appraisal referenced in clause (f) above) of the Property
(excluding the Substituted Property and including the Substitute Property), is
not greater than the lesser of (i) the ratio of the outstanding principal amount
of the Loan as of the Closing Date to the aggregate fair market value of the
Property as of the Closing Date (based upon the value set forth in the appraisal
obtained as of the Closing Date), and (ii) the ratio of the outstanding
principal amount of the Loan immediately prior to the subject release to the
aggregate fair market value of the Property (including the Substituted Property
and excluding the Substitute Property) immediately prior to the subject release
(based upon the value set forth in the appraisal referenced in clause
(f) above).

(i) The Net Operating Income (as adjusted and determined in accordance with
Lender’s reasonable standard underwriting practice and procedures as used in
connection with the underwriting of the Loan) for the Substitute Property does
not show a downward trend over the three (3) years immediately prior to the date
of substitution.

(j) If (i) the Loan has been the subject of a Securitization, and (ii) the
Allocated Loan Amount of the Substituted Property plus the Allocated Loan
Amount(s) of all Substituted Properties previously released from the lien of the
Mortgage in accordance with this Section 2.6, exceeds Sixty-Two Million Five
Hundred Thousand Dollars ($62,500,000.00), then Lender shall have received a
Rating Agency Confirmation in connection with the substitution.

(k) No Event of Default shall have occurred and be continuing and Borrower shall
be in compliance in all material respects with all terms and conditions set
forth in this Agreement and in each Loan Document on Borrower’s part to be
observed or performed. Lender shall have received an Officer’s Certificate from
Borrower confirming the foregoing, stating that the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of the
substitution with respect to Borrower, the Substituted Property and the
Substitute Property, subject to any updates to the representations set forth in
Section 3.1.22 and Schedule II provided in writing to Lender at such time,
stating that the substitution and the related transactions are arms length
transactions and do not constitute a fraudulent conveyance under applicable
bankruptcy and insolvency laws, containing any other representations and
warranties with respect to Borrower, the Substituted Property, the Substitute
Property or the Loan as a prudent institutional lender would reasonably require
and/or the Rating Agencies may require, and certifying that the requirements set
forth in this Section 2.6 for the substitution have been satisfied, such
Officer’s Certificate to be in form and substance which would be reasonably
satisfactory to a prudent institutional lender and/or is satisfactory to the
Rating Agencies.

(1) Borrower shall have executed, acknowledged and delivered to Lender (i) a
deed of trust (“Replacement Mortgage”) and an assignment of leases and rents
(“Replacement

 

24

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

Assignment of Leases”) with respect to the Substitute Property, together with a
letter from Borrower countersigned by a title insurance company acknowledging
receipt of such Replacement Mortgage and Replacement Assignment of Leases, and
of a UCC-1 financing statement (“Replacement Financing Statement”), and agreeing
to record such Replacement Mortgage, Replacement Assignment of Leases and
Replacement Financing Statement in the real estate records for the county in
which the Substitute Property is located so as to effectively create upon such
recording valid and enforceable first priority Liens upon the Substitute
Property in favor of Lender (or such other trustee as may be desired under local
law), subject only to the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Replacement Loan Documents, (ii) an environmental
indemnity agreement with respect to the Substitute Property (“Replacement
Environmental Indemnity”) and (iii) such other forms of loan documents with
respect to the Substitute Property (together with the Replacement Mortgage, the
Replacement Assignment of Leases the Replacement Financing Statement and the
Replacement Environmental Indemnity, the “Replacement Loan Documents”) as would
be reasonably required by a prudent institutional lender. The Replacement Loan
Documents shall be the same in form and substance as the counterparts of such
documents executed and delivered with respect to the related Substituted
Property, subject to modifications reflecting only the Substitute Property as
the Property that is the subject of such documents and such modifications as a
prudent institutional lender would reasonably determine to be necessary to
conform such Replacement Loan Documents to the applicable law, practice and
property type of the Substitute Property in the state where it is located. The
Replacement Mortgage encumbering the Substitute Property shall secure all
amounts evidenced by the Note.

(m) Lender shall have received a title insurance policy (or a marked, signed and
redated irrevocable commitment to issue such title insurance policy)
(“Replacement Title Policy”) insuring the Lien of the Replacement Mortgage
encumbering the Substitute Property, issued by the title company that issued the
Title Insurance Policy insuring the Lien of the Mortgage encumbering the
Substituted Property and dated as of the date of the substitution, with
reinsurance and direct access agreements that replace such agreements issued in
connection with the Title Insurance Policy insuring the Lien of the Mortgage
encumbering the Substituted Property. The title insurance policy issued with
respect to the Substitute Property shall (1) provide coverage in the amount of
the Loan, (2) insure Lender that the Replacement Mortgage creates a valid first
lien on the Substitute Property encumbered thereby, free and clear of all
exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (3) contain such endorsements and affirmative coverages as are
then available and are contained in the Title Insurance Policy insuring the
Substituted Property (including but not limited to “tie-in” and “separate tax
lot” endorsements), and (4) name Lender and its successors and/or assigns as the
insured. Lender also shall have received copies of paid receipts or other
evidence showing that all premiums in respect of such endorsements and title
insurance policies have been paid.

(n) Lender shall have received a current survey for the Substitute Property,
certified to the title company and Lender and their successors and assigns in
the same form and having the same content as the certification of the survey of
the Substituted Property, prepared by a professional land surveyor licensed in
the state in which the Substitute Property is located in accordance with the
2005 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, and
otherwise would be reasonably acceptable to a prudent institutional lender and
is

 

25

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

acceptable to the Rating Agencies. Such survey shall reflect the same legal
description contained in the title insurance policy relating to the Substitute
Property and shall include, among other things, a metes and bounds description
of the real property comprising part of the Substitute Property (unless such
real property has been satisfactorily designated by lot number on a recorded
plat). The surveyor’s seal shall be affixed to the survey and the survey shall
certify that the surveyed property is not located in a “one-hundred-year flood
hazard area.”

(o) Lender shall have received valid certificates of insurance indicating that
the requirements for the policies of insurance required for the Property
hereunder have been satisfied with respect to the Substitute Property and
evidence of the payment of all premiums payable for the existing policy period.

(p) Lender shall have received a Phase I environmental report for the Substitute
Property which would be reasonably acceptable to a prudent institutional lender
and which is acceptable to the Rating Agencies and, if recommended under the
Phase I environmental report, a Phase II environmental report for the Substitute
Property acceptable to Lender and the Rating Agencies, which conclude that the
Substitute Property does not contain any Hazardous Substances (as defined in the
Environmental Indemnity) and is not subject to any material risk of
contamination from any off-site Hazardous Substances (as defined in the
Environmental Indemnity).

(q) Borrower shall deliver or cause to be delivered to Lender (i) updates
certified by Borrower of all organizational documentation related to Borrower
and/or the formation, structure, existence, good standing and/or qualification
to do business of Borrower delivered to Lender on the Closing Date; (ii) good
standing certificates and certificates of qualification to do business in the
jurisdiction in which the Substitute Property is located (if required in such
jurisdiction); and (iii) resolutions of Borrower authorizing the substitution
and any actions taken in connection with such substitution. After giving effect
to such substitution, Borrower shall remain a Special Purpose Entity.

(r) Lender shall have received the following opinions of Borrower’s counsel
acceptable to the Rating Agencies if the Loan has been the subject of a
Securitization, or to the Lender if the Loan has not been the subject of a
Securitization: (i) an opinion or opinions of counsel admitted to practice under
the laws of the state in which the Substitute Property is located stating that
the Replacement Loan Documents delivered with respect to the Substitute Property
are valid and enforceable in accordance with their terms, subject to the laws
applicable to creditors’ rights and equitable principles, and that Borrower is
qualified to do business and in good standing under the laws of the jurisdiction
where the Substitute Property is located; (ii) an opinion of counsel stating
that the Replacement Loan Documents delivered with respect to the Substitute
Property were duly authorized, executed and delivered by Borrower and that the
execution and delivery of such Replacement Loan Documents and the performance by
Borrower of its obligations thereunder will not cause a breach of, or a default
under, any agreement, document or instrument to which Borrower is a party or to
which it or its properties are bound; (iii) an opinion of counsel stating that
subjecting the Substitute Property to the Lien of the Replacement Mortgage and
the execution and delivery of the Replacement Loan Documents does not and will
not affect or impair the ability of Lender to enforce its remedies under all of
the Loan Documents; (iv) an update of the Insolvency Opinion indicating that the
substitution does

 

26

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

not affect the opinions set forth therein; (v) if the Loan is part of a
Securitization, an opinion of counsel acceptable to the Rating Agencies that the
substitution does not constitute a “significant modification” of the Loan under
Section 1001 of the Code or otherwise cause a tax to be imposed on a “prohibited
transaction” by any REMIC Trust; and (vi) such other customary opinions as a
prudent institutional lender would reasonably require and/or the Rating Agencies
shall require.

(s) Borrower shall have paid, or escrowed with Lender, all Basic Carrying Costs
relating to the Substitute Property, including without limitation, (i) accrued
but unpaid insurance premiums relating to the Substitute Property, and
(ii) currently due and payable Taxes (including any in arrears) relating to the
Substitute Property and (iii) currently due and payable maintenance charges and
other impositions relating to the Substitute Property.

(t) Borrower shall have paid or reimbursed Lender for all reasonable
out-of-pocket costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in connection with the
substitution and Borrower shall have paid all recording charges, filing fees,
taxes or other expenses (including, without limitation, mortgage and intangibles
taxes and documentary stamp taxes) payable in connection with the substitution.
Borrower shall have paid all costs and expenses of the Rating Agencies incurred
in connection with the substitution.

(u) Lender shall have received annual operating statements and occupancy
statements for the Substitute Property for the most current completed fiscal
year and a current operating statement for the Substitute Property, each
certified to Lender as being true, correct and complete in all material
respects, and a certificate from Borrower certifying that there has been no
material adverse change in the financial condition of the Substitute Property
since the date of such operating statements.

(v) Borrower shall have used commercially reasonable efforts to deliver to
Lender estoppel certificates from any existing tenants of the Substitute
Property. All such estoppel certificates shall be substantially in the form
approved by Lender in connection with the origination of the Loan and shall
indicate that (1) the subject lease is a valid and binding obligation of the
tenant thereunder, (2) to such tenant’s knowledge, there are no defaults under
such lease on the part of the landlord or tenant thereunder, (3) to such
tenant’s knowledge, the tenant thereunder has no defense or offset to the
payment of rent under such leases, (4) no rent under such lease has been paid
more than one (1) month in advance, (5) the tenant thereunder has no option
under such lease to purchase all or any portion of the Substitute Property, and
(6) all tenant improvement work required under such lease has been substantially
completed (subject to usual and customary “punch list” items which are described
in such estoppel) and the tenant under such lease is in actual occupancy of its
leased premises and has commenced paying rent with no remaining rights of
set-off or free rent periods.

(w) Lender shall have received copies of all tenant leases affecting the
Substitute Property certified by Borrower as being true, correct and complete.

(x) Lender shall have received a subordination, attornment and non-disturbance
agreement in the form attached hereto as Schedule V, with such commercially

 

27

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

reasonable changes as may be requested by the applicable tenant from time to
time, and which would be reasonably acceptable to a prudent institutional
lender, with respect to tenants designated by Lender at the Substitute Property,
and Lender agrees to execute and deliver any such Subordination, Non-Disturbance
and Attornment Agreement.

(y) Lender shall have received a physical conditions report with respect to the
Substitute Property stating that the Substitute Property and its use comply in
all material respects with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of damage or waste. If
requested by Lender, such compliance with applicable Legal Requirements shall be
confirmed by delivery to Lender of (i) a certificate of an architect licensed in
the state in which the Substitute Property is located, (ii) a letter from the
municipality in which such Property is located (with respect to zoning laws),
(iii) a certificate of a surveyor that is licensed in the state in which the
Substitute Property is located (with respect to zoning and subdivision laws),
(iv) an ALTA 3.1 zoning endorsement to the title insurance policy for the
Substitute Property delivered pursuant to clause (m) above (with respect to
zoning laws), and (v) a subdivision endorsement to the title insurance policy
delivered pursuant to clause (m) above (with respect to subdivision laws). If
the physical conditions report recommends that any immediate repairs be made
with respect to the Substitute Property, (A) such recommended immediate repairs
shall be completed by Borrower within a commercially reasonable time following
such substitution, and (B) the physical conditions report shall include an
estimate of the cost of such recommended repairs and, if such estimate exceeds
five percent (5%) of the Allocated Loan Amount for the Substituted Property,
then Borrower shall deposit with Lender an amount equal to one hundred
twenty-five percent (125%) of such estimated cost, which deposit shall
constitute additional security for the Loan and shall be released to Borrower
upon the delivery to Lender of (I) an update to such physical conditions report
or a letter from the engineer that prepared such physical conditions report
indicating that the recommended repairs were completed in good and workmanlike
manner and (II) paid receipts indicating that the costs of all such repairs have
been paid.

(z) Lender shall have received a certified copy of an amendment to the
Management Agreement reflecting the deletion of the Substituted Property and the
addition of the Substitute Property as a property managed pursuant thereto and
Manager shall have executed and delivered to Lender an amendment to the
Manager’s Agreement reflecting such amendment to the Management Agreement.

(aa) Lender shall have received such other and further approvals, opinions,
documents and due diligence information in connection with the substitution as
requested by the Rating Agencies if the Loan is part of a Securitization, or by
Lender if the Loan is not part of a Securitization, required to effect the
substitution.

(bb) Lender shall have received copies of all contracts and agreements relating
to the leasing and operation of the Substitute Property, together with a
certification of Borrower attached to each such contract or agreement certifying
that the attached copy is a true, correct and complete copy of such contract or
agreement and all amendments thereto.

 

28

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

(cc) Lender shall have received a copy of a deed conveying all of Borrower’s
right, title and interest in and to the Substituted Property to an entity other
than Borrower pursuant to an arms length transaction and a letter from Borrower
countersigned by a title insurance company acknowledging receipt of such deed
and agreeing to record such deed in the real estate records for the county in
which the Substituted Property is located.

(dd) Borrower shall submit to Lender, not less than thirty (30) days prior to
the date of such substitution, a release of Lien (and related Loan Documents)
for the Substituted Property for execution by Lender. Such release shall be in a
form appropriate for the jurisdiction in which the Substituted Property is
located.

Upon the satisfaction of the foregoing conditions precedent and the release of
the Lien of the Mortgage encumbering the Substituted Property, the Substitute
Property shall be deemed to be an Individual Property and a portion of the
Property for purposes of this Agreement and the other Loan Documents.

 

Section 2.7 Release of Individual Properties.

On any date after the Release Date, Borrower may obtain the release of any
Individual Property from the Lien of the Mortgage encumbering such Individual
Property (and the related Loan Documents), provided that the following
conditions precedent are satisfied:

(a) Borrower shall defease an amount of the outstanding principal of the Loan
equal to the applicable Release Amount for the Individual Property being
released in accordance with the requirements of Section 2.5.4 with respect to
such partial defeasance, and Borrower shall have executed originals of the
Defeased Note and the Undefeased Note, as well as any amended and restated Loan
Documents necessary to complete the partial defeasance.

(b) The Allocated Loan Amount of the Individual Property to be released plus the
Allocated Loan Amount(s) of all Individual Properties previously released from
the lien of the Mortgage in accordance with this Section 2.7, does not exceed
One Hundred Twenty-Five Million Dollars ($125,000,000.00).

(c) The Maturity Date shall have not occurred.

(d) Lender shall have received at least thirty (30) days prior written notice
requesting the release and identifying the Individual Property, accompanied by a
copy of the applicable contract of sale and all related documents.

(e) Lender shall have received an appraisal of the Individual Property being
released and an appraisal of the Property remaining subject to the lien of the
Mortgage following such release (“Remaining Property), dated no more than ninety
(90) days prior to the release date, by an MAI appraiser having at least five
(5) years of experience in the appraisal of commercial properties with the same
use as the Property and in the geographic area in which the Property is located,
which appraiser would be acceptable to a reasonably prudent institutional lender
and is acceptable to the Rating Agencies.

 

29

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

(f) After giving effect to the release, the Debt Service Coverage Ratio for the
Loan is not less than the greater of (i) the Debt Service Coverage Ratio for the
Loan as of the Closing Date and (ii) the Debt Service Coverage Ratio for the
Loan as of the date immediately preceding the release.

(g) After giving effect to the release and the related partial defeasance, the
ratio of the outstanding principal amount of the Loan to the aggregate fair
market value (based upon the value set forth in the appraisal referenced in
clause (e) above) of the Remaining Property, is not greater than the lesser of
(i) the ratio of the outstanding principal amount of the Loan as of the Closing
Date to the aggregate fair market value of the Property as of the Closing Date
(based upon the value set forth in the appraisal obtained as of the Closing
Date), and (ii) the ratio of the outstanding principal amount of the Loan
immediately prior to the subject release to the aggregate fair market value of
the Property (including the Individual Property which is the subject of the
release) immediately prior to the subject release (based upon the value set
forth in the appraisal referenced in clause (e) above).

(h) If the Loan has been the subject of a Securitization, Lender shall have
received a Rating Agency Confirmation in connection with the release.

(i) No Event of Default shall have occurred and be continuing and Borrower shall
be in compliance in all material respects with all terms and conditions set
forth in this Agreement and in each Loan Document on Borrower’s part to be
observed or performed. Lender shall have received an Officer’s Certificate from
Borrower confirming the foregoing, stating that the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of the
release, subject to any updates to the representations set forth in
Section 3.1.22 and Schedule II provided in writing to Lender at such time,
containing any other representations and warranties with respect to Borrower,
the Property or the Loan as the Rating Agencies may require, and certifying that
the requirements set forth in this Section 2.7 for the release have been
satisfied, such Officer’s Certificate to be in form and substance satisfactory
to the Rating Agencies.

(j) After giving effect to such release, Borrower shall remain a Special Purpose
Entity.

(k) Borrower shall have paid or reimbursed Lender for all reasonable
out-of-pocket costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in connection with the
release and Borrower shall have paid all recording charges, filing fees, taxes
or other expenses (including, without limitation, mortgage and intangibles taxes
and documentary stamp taxes) payable in connection with the release. Borrower
shall have paid all costs and expenses of the Rating Agencies incurred in
connection with the release.

(l) Lender shall have received a copy of a deed conveying all of Borrower’s
right, title and interest in and to the Individual Property to be released to an
entity other than Borrower pursuant to an arms length transaction and a letter
from Borrower countersigned by a title insurance company acknowledging receipt
of such deed and agreeing to record such deed in the real estate records for the
county in which the Individual Property to be released is located.

 

30

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

(m) Borrower shall submit to Lender, not less than thirty (30) days prior to the
date of such release, a release of Lien (and related Loan Documents) for the
Individual Property being released for execution by Lender. Such release shall
be in a form appropriate for the jurisdiction in which the Individual Property
to be released is located.

(n) In the event that the Individual Property to be released is adjacent to or
part of a group of Remaining Property, Borrower shall deliver to Lender (i) all
subdivision and zoning approvals, if any, with respect to the Individual
Property to be released and the Remaining Property as may be necessary under
local law to allow the Individual Property to be released and the Remaining
Properties to be operated and owned as independent parcels for all building,
zoning, subdivision and taxing purposes, and that following the release of the
Individual Property, the Remaining Properties will continue to comply with all
building, zoning and subdivision laws, and (ii) copies of each proposed
cross-easement and mutual or nonexclusive easement for ingress, egress, access,
pedestrian walkways, parking, traffic flow, utilities and services shared by the
Individual Property to be released and the Remaining Property and the like which
may be required by any Governmental Authority or which are reasonably necessary
for the operation of such parcels, which easements shall be considered Permitted
Encumbrances, all of which would be reasonably approved by a prudent
institutional lender.

(o) If same would be requested by a prudent institutional lender, Lender shall
have received a new Title Insurance Policy or a “bring down” or “date down” of
the existing Title Insurance Policy insuring the Lien of the Mortgage on the
Remaining Property, and confirming that other than the Permitted Encumbrances
there are no other Liens encumbering the Remaining Property.

(p) Lender shall have received such other and further customary approvals,
opinions, documents and due diligence information in connection with the release
as requested by the Rating Agencies if the Loan is part of a Securitization, or
as reasonably requested by Lender if the Loan is not part of a Securitization,
required to effect the release.

III. REPRESENTATIONS AND WARRANTIES

 

Section 3.1 Borrower Representations.

Borrower represents and warrants that:

3.1.1 Organization.

(a) Each of Borrower and each Required SPE is duly organized, validly existing
and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on its ability to perform its obligations hereunder, and
Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents by it, and has the
power and authority to execute, deliver and perform under this Agreement, the
other Loan Documents and all the transactions contemplated hereby.

 

31

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

(b) Borrower’s exact legal name is correctly set forth in the first paragraph of
this Agreement. Borrower is an organization of the type specified in the first
paragraph of this Agreement. Borrower is incorporated or organized under the
laws of the state specified in the first paragraph of this Agreement. Borrower’s
principal place of business and chief executive office, and the place where
Borrower keeps its books and records, including recorded data of any kind or
nature, regardless of the medium of recording, including software, writings,
plans, specifications and schematics, is and has been for the preceding four
(4) months (or, if less than four (4) months, the entire period of the existence
of Borrower) the address of Borrower set forth in the first paragraph of this
Agreement. Borrower’s organizational identification number, if any, assigned by
the state of its incorporation or organization is D1 1600160. Borrower’s federal
tax identification number is 20-5881070.

3.1.2 Proceedings. This Agreement and the other Loan Documents have been duly
authorized, executed and delivered by Borrower and constitute a legal, valid and
binding obligation 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).

3.1.3 No Conflicts. The execution and delivery of this Agreement and the other
Loan Documents by Borrower and the performance of its obligations hereunder and
thereunder will not conflict with any provision of any law or regulation to
which Borrower is subject, or conflict with, result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any of
Borrower’s organizational documents or any agreement or instrument to which
Borrower is a party or by which it is bound, or any order or decree applicable
to Borrower, or result in the creation or imposition of any lien on any of
Borrower’s assets or property (other than pursuant to the Loan Documents).

3.1.4 Litigation. There is no action, suit, proceeding or investigation pending
or, to Borrower’s knowledge, threatened against Borrower in any court or by or
before any other Governmental Authority which would materially and adversely
affect the ability of Borrower to carry out the transactions contemplated by
this Agreement and the other Loan Documents.

3.1.5 Agreements. Borrower is not in default with respect to any order or decree
of any court or any order, regulation or demand of any Governmental Authority,
which default might have consequences that would materially and adversely affect
the condition (financial or other) or operations of Borrower or its properties
or might have consequences that would adversely affect its performance
hereunder.

3.1.6 Consents. No consent, approval, authorization or order of any court or
Governmental Authority is required for the execution, delivery and performance
by Borrower of, or compliance by Borrower with, this Agreement or the
consummation of the transactions contemplated hereby, other than those which
have been obtained by Borrower.

3.1.7 Title. Borrower has good, marketable and insurable fee simple title to the
real property comprising part of the Property and good title to the balance of
the Property owned

 

32

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

by it, free and clear of all Liens whatsoever except the Permitted Encumbrances.
The Mortgage, when properly recorded in the appropriate records, together with
any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create (i) a valid, first priority lien on the
Property, subject only to Permitted Encumbrances and (ii) a perfected security
interest in and to, and a perfected collateral assignment of, all personality
(including the Leases), all in accordance with the terms thereof, in each case
subject only to any Permitted Encumbrances. 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 be liens prior to, or
equal or coordinate with, the lien of the Mortgage. None of the Permitted
Encumbrances, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by the Mortgage and this Loan
Agreement, materially and adversely affect the value of the Property, impair the
use or operations of the Property or impair Borrower’s ability to pay its
obligations in a timely manner.

3.1.8 No Plan Assets. As of the date hereof and throughout the term of the Loan
(a) Borrower is not and will not be an “employee benefit plan,” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), whether or not subject to Title I of ERISA, or a “plan” as defined in
Section 4975 of the Code, (b) none of the assets of Borrower constitutes or will
constitute “plan assets” of one or more such plans within the meaning of U.S.
Department of Labor Regulation 29 C.F.R. Section 2510.3-101 (the “Plan Assets
Regulation”), and (c) transactions by or with Borrower are not and will not be
subject to any state statute regulating investments of, or fiduciary obligations
with respect to, governmental plans, as defined in Section 3(32) of ERISA.

3.1.9 Compliance. Borrower and the Property and the use thereof comply in all
material respects with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes and Prescribed Laws.
Borrower is not in default or violation of any order, writ, injunction, decree
or demand of any Governmental Authority, the violation of which might materially
adversely affect the condition (financial or otherwise) or business of Borrower.
Borrower has not committed any act which may give any Governmental Authority the
right to cause Borrower to forfeit the Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan
Documents.

3.1.10 Financial Information. All financial data, including, without limitation,
the statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of the Property (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Property as of the date of such reports, and (iii) have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or the
operation thereof, except as referred to or reflected in said financial
statements. Since the date of the financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower or the Property from that set forth in said financial statements.

 

33

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

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

3.1.12 Utilities and Public Access. Each Individual Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service such Individual Property for its current
uses. All public utilities necessary to the continued use and enjoyment of each
Individual Property as presently used and enjoyed are located either in the
public right of way abutting such Individual Property (which are connected so as
to serve such Individual Property without passing over other property) or in
recorded easements serving such Individual Property and such easements are set
forth in and insured by the Title Insurance Policy. All roads necessary for the
use of each Individual Property for its current purpose have been completed and
dedicated to public use and accepted by all governmental authorities or are the
subject of access easements for the benefit such Individual Property.

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

3.1.14 Assessments. There are no pending or, to Borrower’s knowledge after due
investigation and inquiry, proposed special or other assessments for public
improvements or otherwise affecting the Property, nor are there any contemplated
improvements to the Property that may result in such special or other
assessments.

3.1.15 Enforceability. The Loan Documents are not subject to any right of
rescission, set off, counterclaim or defense by Borrower, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and Borrower has not asserted any right of rescission, set off, counterclaim or
defense with respect thereto.

3.1.16 Assignment of Leases. The Assignment of Leases creates a valid assignment
of, or a valid security interest in, certain rights under the Leases, subject
only to a license granted to Borrower to exercise certain rights and to perform
certain obligations of the lessor under the Leases, including the right to
operate the Property. No Person other than Lender has any interest in or
assignment of the Leases or any portion of the Rents due and payable or to
become due and payable thereunder.

3.1.17 Insurance. Borrower has obtained and has delivered to Lender original or
certified copies 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, has done, by act or omission, anything which would
impair the coverage of any of the Policies.

3.1.18 Licenses. All permits and approvals, including without limitation,
certificates of occupancy required by any Governmental Authority for the use,
occupancy and operation of the Property in the manner in which the Property is
currently being used, occupied and operated have been obtained and are in full
force and effect.

 

34

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

3.1.19 Flood Zone. None of the Improvements on the Property are located in an
area identified by the Federal Emergency Management Agency as a special flood
hazard area.

3.1.20 Physical Condition. Except as otherwise disclosed in the physical
condition reports provided to Lender as of the Closing Date, the Property,
including, without limitation, 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 in the Property, whether latent
or otherwise, and Borrower has not received written notice from any insurance
company or bonding company of any defects or inadequacies in the Property, or
any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.

3.1.21 Boundaries. Except as shown on the Surveys, all of the improvements which
were included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property, and no improvements on adjoining properties encroach upon such
Individual Property, and no easements or other encumbrances affecting such
Individual Property encroach upon any of the improvements, so as to affect the
value or marketability of the Property except those which are insured against by
title insurance.

3.1.22 Leases. Borrower represents and warrants to Lender with respect to the
Leases that, except as disclosed on the schedule of exceptions attached hereto
as Schedule II: (a) the rent roll attached hereto as Schedule II is true,
complete and correct in all material respects and the Property is not subject to
any Leases other than the Leases described in Schedule II (provided, however,
that Schedule II does not list any amendments, modification or assignments to
any Lease or any subleases or subsubleases), (b) the Leases identified on
Schedule II are in full force and effect and there are no defaults thereunder by
Borrower, or to Borrower’s knowledge, any other party, (c) the copies of the
Leases delivered to Lender are true, correct and complete, and there are no oral
agreements with respect thereto, (d) except as disclosed in any tenant estoppel
delivered to Lender in connection with the closing of the Loan, no Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date, (e) except as disclosed in any tenant estoppel delivered to
Lender in connection with the closing of the Loan, all work to be performed by
Borrower under each Lease has been performed as required and has been accepted
by the applicable Tenant, (f) except as disclosed in any tenant estoppel
delivered to Lender in connection with the closing of the Loan, any payments,
free rent, partial rent, rebate of rent or other payments, credits, allowances
or abatements required to be given by Borrower to any Tenant has already been
received by such Tenant and (g) all security deposits are being held in
accordance with Legal Requirements.

3.1.23 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid under
applicable Legal

 

35

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

Requirements in connection with the transfer of the Property to Borrower have
been paid or are being paid simultaneously herewith. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid under
applicable Legal Requirements in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Mortgage, have been paid or are
being paid simultaneously herewith. 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 hereunder or are
insured against by the title insurance policy to be issued in connection with
the Mortgage.

3.1.24 Single Purpose. Borrower and any other entity required by Lender to be a
Special Purpose Entity pursuant to the provisions of this Section 3.1.24 or
otherwise (a “Required SPE”) shall not hold or acquire, directly or indirectly,
any ownership interest (legal or equitable) in any real or personal property
other than the Property, or become a shareholder of or a member or partner in
any entity which acquires any property other than the Property, until such time
as the Debt has been fully repaid and all obligations under the Loan Documents
are satisfied. Borrower’s and any Required SPE’s articles of incorporation,
partnership agreement or operating agreement, as applicable, (w) as to Borrower,
limit its purpose to the acquisition, development, sale, ownership, leasing,
transferring, exchanging, management, operation, mortgaging, financing,
refinancing and maintenance of the Property, and as to any Required SPE, limit
its purpose to acting as the general partner of the limited partnership that
owns the Property, or a member of the limited liability company that owns the
Property, or the general partner of any Required SPE which is a limited
partnership, or a member of any Required SPE which is a limited liability
company, (x) prohibit other activities, mergers, consolidations and asset sales
until such time as the Indebtedness has been fully repaid, (y) contain
separateness covenants satisfactory to Lender and substantially similar to those
set forth in this Section 3.1.24, and (z) provide that such provisions shall not
be amended without the prior written consent of Lender. Borrower hereby
represents and warrants to, and covenants with Lender that:

(a) Borrower is organized solely for the purpose of acquiring, developing,
owning, holding, selling, leasing, transferring, exchanging, managing, operating
and maintaining the Property, entering into the Loan Documents with the Lender,
refinancing the Property in connection with a permitted repayment of the Loan,
and transacting lawful business that is incident, necessary and appropriate to
accomplish the foregoing; and any Required SPE is organized solely for the
purpose of acting as a general partner of the limited partnership that owns the
Property, or a member of the limited liability company that owns the Property,
or the general partner of any Required SPE which is a limited partnership, or a
member of any Required SPE which is a limited liability company;

(b) Borrower is not engaged and will not engage in any business unrelated to the
acquisition, development, sale, ownership, leasing, transferring, exchanging,
management, operation, mortgaging, financing, refinancing and maintenance of the
Property, and any Required SPE is not engaged and will not engage in any
business unrelated to (1) acting as general partner of the limited partnership
that owns the Property, (2) acting as a member of the limited liability company
that owns the Property, (3) acting as general partner of any Required SPE which
is a limited partnership, or (4) acting as a member of any Required SPE which is
a limited liability company;

 

36

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

(c) Borrower does not have and will not have any assets other than the Property
and such incidental personal property as may be necessary for the operation of
the Property, and any Required SPE does not have and will not have any assets
other than its partnership interest in the limited partnership that owns the
Property, or its member interest in the limited liability company that owns the
Property or acts as the general partner of such limited partnership or managing
member of such limited liability company, as applicable;

(d) each of Borrower and any Required SPE (if such entity is a corporation) has
at all times on its board of directors at least two (2) Independent Persons that
are directors, who shall be selected by Borrower or such Required SPE,
respectively, but which must be reasonably satisfactory to Lender;

(e) each of Borrower and any Required SPE (i) (if such entity is a limited
liability company with a board of managers) has at all times on its board of
managers at least two (2) Independent Persons that are managers of the limited
liability company, who shall be selected by Borrower or such Required SPE,
respectively, but which must be reasonably satisfactory to Lender, or (ii) (if
such entity is a limited liability company with only one (1) member and without
a board of managers) shall have at least two (2) Independent Persons that are
non-economic members of the limited liability company, who shall be selected by
Borrower or such Required SPE, respectively, but which must be reasonably
satisfactory to Lender, or (iii) shall have at least one (1) member that owns at
least one percent (1%) of the equity of such limited liability company that is a
Special Purpose Entity;

(f) each of Borrower and any Required SPE (if such entity is a partnership) has
at all times a Special Purpose Entity as its general partner (or multiple
Special Purpose Entities as its sole general partners if there are more than one
general partners);

(g) any Borrower or Required SPE that is a limited liability company, if such
limited liability company has only one member, (1) has been formed under
Delaware law and (2) has at least one (1) individual or entity as a springing
member, which shall become a member of the limited liability company upon the
dissolution or disassociation of the sole member;

(h) Borrower and any Required SPE (1) have articles of organization, a
certificate of formation, limited liability company agreement and/or an
operating agreement, as applicable (if such entity is a limited liability
company), (2) have a limited partnership agreement (if such entity is a limited
partnership), or (3) have a certificate of incorporation, articles or bylaws (if
such entity is a corporation) that, in each case, provide that such entity will
not, without the affirmative vote of (A) all directors (if Borrower or such
Required SPE is a corporation), or all managers (if Borrower or such Required
SPE is a limited liability company with at least two (2) Independent Persons
that are managers, or all members (if Borrower or such Required SPE is a limited
liability company with at least two (2) Independent Persons that are
non-economic members) (including the Independent Person(s)), or (B) all of its
members if Borrower or such Required SPE is a limited liability company with a
Special Purpose Entity member, or (C) all of its general partners if Borrower or
such Required SPE is a partnership, take any Material Action;

 

37

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

(i) Borrower and any Required SPE have not and shall not, without the
affirmative vote of (A) all directors (if Borrower or such Required SPE is a
corporation), or managers (if Borrower or such Required SPE is a limited
liability company with at least two (2) Independent Persons that are managers),
or all members (if Borrower or such Required SPE is a limited liability company
with at least two (2) Independent Persons that are non-economic members)
(including the Independent Person(s)), or (B) all of its members if Borrower or
such Required SPE is a limited liability company with a Special Purpose Entity
as a member, or (C) all of its general partners if Borrower or such Required SPE
is a partnership, take any Material Action;

(j) each of Borrower and any Required SPE is solvent and pays its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same become due, and endeavors to maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations;

(k) each of Borrower and any Required SPE has not failed and will not fail to
correct any known misunderstanding regarding the separate identity of such
entity;

(l) each of Borrower and any Required SPE will maintain its accounts, books and
records separate from any other Person;

(m) each of Borrower and any Required SPE will file its own tax returns;
provided, however, that its assets and income may be included in a consolidated
tax return of its parent companies if inclusion on such consolidated tax return
is in compliance with applicable law or, in the event that such Borrower or
Required SPE is a disregarded entity for federal tax purposes, then its assets
and income may be included on the tax returns filed by its owner;

(n) each of Borrower and any Required SPE has maintained and will maintain its
own resolutions and agreements;

(o) each of Borrower and any Required SPE (1) has not commingled and will not
commingle its funds or assets with those of any other person, (2) will pay its
obligations solely with its own assets, and (3) has not participated and will
not participate in any cash management system with any other person other than
Lender;

(p) each of Borrower and any Required SPE has held and will hold its assets in
its own name;

(q) each of Borrower and any Required SPE has held itself out and identified
itself and will hold itself out and identify itself, and has conducted and will
conduct its business in its own name or in a name franchised or licensed to it
by an entity other than an Affiliate of Borrower;

(r) each of Borrower and any Required SPE has maintained and will maintain its
balance sheets, operating statements and other entity documents separate from
any other Person and has not permitted and will not permit its assets to be
listed as assets on the financial statement of any other entity except as
required or permitted by generally accepted accounting

 

38

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

principles; provided, however, that any such consolidated financial statement
shall contain a note indicating that it maintains separate balance sheets and
operating statements for such Borrower or Required SPE, respectively, and, if it
is the Borrower, for the Property;

(s) each of Borrower and any Required SPE has a sufficient number of employees
in light of its contemplated business operations, which may be none, and pays
the salaries of its own employees, if any;

(t) each of Borrower and any Required SPE has observed and will observe all
partnership, corporate or limited liability company formalities, as applicable;

(u) each of Borrower and any Required SPE has no, and will have no, Indebtedness
(including loans (whether or not such loans are evidenced by a written
agreement) between such Borrower or Required SPE, respectively, and any
Affiliates of Borrower) other than (i) with respect to Borrower, the Loan, and
(ii) with respect to Borrower or any Required SPE, unsecured liabilities
incurred in the ordinary course of business relating to the routine
administration of Borrower or such Required SPE, respectively, and, with respect
to Borrower only, unsecured liabilities incurred in the ordinary course of
business relating to the ownership and operation of the Property, which
liabilities are owed to unrelated third parties, are not more than sixty
(60) days past the date incurred and are paid when due (unless disputed in
accordance with applicable law), are not evidenced by a note, and are in amounts
that are normal and reasonable under the circumstances, but in any event shall
not exceed $5,000,000.00;

(v) each of Borrower and any Required SPE will not guarantee or become obligated
for the debts of any other entity or person or hold out its credit as being
available to satisfy the obligations of any other entity or Person, including
not acquiring obligations or securities of its partners, members or shareholders
(except to the extent that any Required SPE acting as the general partner of
Borrower may become liable for the debts of Borrower, where Borrower is a
limited partnership);

(w) each of Borrower and any Required SPE has not and will not acquire
obligations of its partners, members or shareholders or any other Affiliate;

(x) each of Borrower and any Required SPE has allocated and will allocate fairly
and reasonably any overhead expenses that are shared with any Affiliate,
including, but not limited to, paying for shared office space and services
performed by any employee of an Affiliate;

(y) each of Borrower and any Required SPE has not maintained or used, and will
not maintain or use, invoices and checks bearing the name of any other Person,
and will use its own stationery for written communications with all other
Persons;

(z) each of Borrower and any Required SPE has not pledged and will not pledge
its assets for the benefit of any other Person except as permitted or required
pursuant to this Agreement;

 

39

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

(aa) each of Borrower and any Required SPE 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;

(bb) each of Borrower and any Required SPE has not made and will not make loans
to any Person or hold evidence of indebtedness issued by any other person or
entity (other than cash and investment-grade securities issued by an entity that
is not an Affiliate of or subject to common ownership with such entity);

(cc) each of Borrower and any Required SPE 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, and has not identified itself and shall not
identify itself as a division of any other Person (except to the extent such
treatment may be required under the federal income tax law and similar state law
for disregarded entities);

(dd) each of Borrower and any Required SPE 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, commercially reasonable and
are no less favorable to it than would be obtained in a comparable arm’s-length
transaction with an unrelated third party;

(ee) each of Borrower and any Required SPE does not and will not have any of its
obligations guaranteed by any Affiliate except as otherwise required in the Loan
Documents;

(ff) each of Borrower and any Required SPE has complied and will comply with all
of the terms and provisions contained in its organizational documents. The
statement of facts contained in its organizational documents are true and
correct and will remain true and correct.

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

3.1.26 Solvency. Borrower (a) has not entered into the transaction or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
the Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the making of the
Loan, exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does

 

40

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

not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower).

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

3.1.28 Organizational Chart. The organizational chart attached as Schedule IV
hereto, relating to Borrower and certain Affiliates and other parties, is true,
complete and correct on and as of the date hereof.

3.1.29 Bank Holding Company. 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.

3.1.30 No Other Debt. Borrower has not borrowed or received debt financing
(other than permitted pursuant to this Agreement) that has not been heretofore
repaid in full.

3.1.31 Investment Company Act. Borrower is not (1) an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (2) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (3) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

3.1.32 No Bankruptcy Filing. Borrower is not contemplating either the filing of
a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of its assets or property, and Borrower does not have any knowledge
of any Person contemplating the filing of any such petition against it.

3.1.33 Full and Accurate Disclosure. To the best of Borrower’s knowledge, no
information contained in this Agreement, the other Loan Documents, or any
written statement furnished by or on behalf of Borrower pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
There is no fact or circumstance presently known to Borrower which has not been
disclosed to Lender and which materially adversely affects, or is reasonably
likely to materially adversely affect, the Property, Borrower or its business,
operations or condition (financial or otherwise).

 

41

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

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

3.1.35 No Change in Facts or Circumstances; Disclosure. To the best of
Borrower’s knowledge, there has been no material adverse change in any
condition, fact, circumstance or event that would make the financial statements,
rent rolls, reports, certificates or other documents submitted in connection
with the Loan inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects the business
operations or the financial condition of Borrower or the Property.

3.1.36 Management Agreement. All of the representations and warranties with
respect to the Management Agreement set forth in Article VII of this Agreement
are true and correct in all material respects.

3.1.37 Perfection of Accounts.

(a) This Agreement, together with the other Loan Documents (once recorded and/or
filed, as appropriate), create a valid and continuing security interest (as
defined in the Uniform Commercial Code) in the Accounts 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
Accounts;

(b) The Accounts constitute “deposit accounts” or “securities accounts” within
the meaning of the Uniform Commercial Code, as set forth in the Cash Management
Agreement;

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

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

3.1.38 No Customer Identification – USA Patriot Act Notice; OFAC. Lender hereby
notifies Borrower that pursuant to the requirements of the Patriot Act and
Lender’s policies and practices, Lender is required to obtain, verify and record
certain information and documentation that identifies Borrower, which
information includes the name and address of Borrower and such other information
that will allow Lender to identify Borrower in accordance with the Patriot Act.
Borrower represents and covenants that it is not and will not become a person
(individually, a “Prohibited Person” and collectively “Prohibited Persons”)
listed on the OFAC List or otherwise subject to any other prohibitions or
restriction imposed by any

 

42

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

Prescribed Laws administered by OFAC (collectively the “OFAC Rules”). Borrower
represents and covenants that it also (a) is not and will not become owned or
controlled by a Prohibited Person, (b) is not acting and will not act for or on
behalf of a Prohibited Person, (c) is not otherwise associated with and will not
become associated with a Prohibited Person, (d) is not providing and will not
provide any material, financial or technological support for or financial or
other service to or in support of acts of terrorism or a Prohibited Person.
Borrower will not transfer any interest in Borrower to or enter into a Lease
with a Prohibited Person. Borrower shall immediately notify Lender if Borrower
has knowledge that any Guarantor or any member or beneficial owner of Borrower
or any Guarantor is or becomes a Prohibited Person or (i) is indicted on or
(ii) arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. Borrower will not enter into any Lease or any other
transaction or undertake any activities related to the Loan in violation of the
Anti-Money Laundering Laws. Borrower shall (A) not use or permit the use of any
proceeds of the Loan in any way that will violate either the OFAC Rules or
Anti-Money Laundering Laws, (B) comply and cause all of its subsidiaries to
comply with applicable OFAC Rules and Anti-Money Laundering Laws, (C) provide
information as Lender may require from time to time to permit Lender to satisfy
its obligations under the OFAC Rules and/or the Anti-Money Laundering Laws and
(D) not engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the foregoing. Borrower shall immediately notify Lender if any Tenant becomes
a Prohibited Person or (1) is convicted of, (2) pleads nolo contendere to,
(3) is indicted on, or (4) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering.

 

Section 3.2 Survival of Representations.

The representations and warranties set forth in Section 3.1 shall survive, and
any covenants contained in Section 3.1 shall continue, for so long as any amount
remains payable to Lender under this Agreement or any of the other Loan
Documents.

IV. BORROWER COVENANTS

 

Section 4.1 Borrower Affirmative Covenants.

Borrower hereby covenants and agrees with Lender that:

4.1.1 Existence; Compliance with Legal Requirements. Borrower shall do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its existence, rights, licenses, permits and franchises and comply in all
material respects with all Legal Requirements applicable to it and the Property,
including, without limitation, Prescribed Laws.

4.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Property or any part
thereof as the same become due and payable. Borrower shall furnish to Lender
receipts for the payment of the Taxes and the Other Charges prior to the date
the same shall become delinquent. Borrower shall not permit or suffer and shall
promptly discharge any lien or charge against the Property. After prior notice
to Lender, Borrower, at its own expense, may contest by appropriate

 

43

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

legal proceeding, conducted in good faith and with due diligence, the amount or
validity of any Taxes or Other Charges, provided that (i) no Event of Default
has occurred and remains uncured; (ii) such proceeding shall be permitted under
and be conducted in accordance with all applicable statutes, laws and
ordinances; (iii) neither the Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, canceled or lost;
(iv) Borrower shall promptly upon final determination thereof pay the amount of
any such Taxes or Other Charges, together with all costs, interest and penalties
which may be payable in connection therewith; (v) such proceeding shall suspend
the collection of Taxes or Other Charges from the Property; and (vi) Borrower
shall deposit with Lender cash, or other security as may be approved by Lender,
in an amount equal to one hundred fifteen percent (115%) of the contested
amount, to insure the payment of any such Taxes or Other Charges, together with
all interest and penalties thereon. Lender may pay over any such cash or other
security held by Lender to the claimant entitled thereto at any time when, in
the judgment of Lender, the entitlement of such claimant is established.

4.1.3 Litigation. Borrower shall give prompt notice to Lender of any litigation
or governmental proceedings pending or, to Borrower’s knowledge, threatened
against Borrower which might materially adversely affect the Property or
Borrower’s ability to perform its obligations hereunder or under the other Loan
Documents.

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

4.1.5 Further Assurances; Supplemental Mortgage Affidavits. Borrower shall, at
Borrower’s sole cost and expense:

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

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

4.1.6 Financial Reporting.

(a) Borrower shall keep and maintain or will cause to be kept and maintained
proper and accurate books and records, in accordance with GAAP, reflecting the
financial affairs of Borrower. Lender shall have the right from time to time
during normal business hours upon reasonable notice to Borrower to examine such
books and records at the office of Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.

 

44

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

(b) Borrower shall furnish Lender annually, within one hundred twenty (120) days
following the end of each Fiscal Year, a complete copy of Borrower’s annual
financial statements prepared in accordance with GAAP covering the Property,
including statements of income and expense and cash flow for Borrower and the
Property and a balance sheet for Borrower. Such statements shall set forth Gross
Revenue and Operating Expenses for the Property. Borrower’s annual financial
statements shall be accompanied by an Officer’s Certificate stating that such
annual financial statement presents fairly the financial condition and the
results of operations of Borrower and the Property. Following the occurrence and
during the continuance of an Event of Default, such annual financial statements
shall be audited by a “Big Four” accounting firm or other independent certified
public accountant reasonably acceptable to Lender. Together with Borrower’s
annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying as of the date thereof whether to the best of Borrower’s
knowledge there exists an event or circumstance which constitutes an Event of
Default by Borrower under the Loan Documents and if such Event of Default
exists, the nature thereof, the period of time it has existed and the action
then being taken to remedy the same. At any time during which an Alterations
Guaranty is held by Lender in accordance with the terms of this Agreement (“Net
Worth Period”) Borrower shall furnish Lender annually, within ninety (90) days
following the end of each Fiscal Year, a complete copy of annual financial
statements prepared in accordance with GAAP, including statements of income and
expense and cash flow for RREEF and a balance sheet for RREEF. During any Net
Worth Period, Borrower shall cause RREEF’s annual financial statements to be
accompanied by a certificate executed by an authorized representative of RREEF
stating that such annual financial statement presents fairly the financial
condition and the results of operations of RREEF.

(c) Borrower will furnish Lender on or before the thirtieth (30th) day after the
end of each fiscal quarter (based on Borrower’s Fiscal Year) (or following the
later to occur of (i) the date which is twelve (12) months following the Closing
Date or (2) the Securitization of the Loan, on or before the forty-fifth
(45th) day after the end of each calendar quarter), the following items,
accompanied by an Officer’s Certificate certifying that such items are true,
correct, accurate and complete and fairly present the financial condition and
results of the operations of Borrower and the Property in accordance with GAAP
as applicable:

(i) quarterly and year-to-date statements of income and expense and cash flow
prepared for such quarter with respect to the Property, with a balance sheet for
such quarter for Borrower;

(ii) a current rent roll for the Property; and

(iii) any notice received from a Tenant under a lease that is over 5,000 square
feet threatening non-payment of Rent or other default, alleging or acknowledging
a default by Borrower, requesting a termination of a Lease or a material
modification of any Lease or notifying Borrower of the exercise or non-exercise
of any option provided for in such Tenant’s Lease, or any other similar material
correspondence received by Borrower from such Tenants during the subject
quarter.

(d) Intentionally Omitted.

 

45

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

(e) Borrower shall submit the Annual Budget to Lender not later than fifteen
(15) days prior to the commencement of each Fiscal Year. Upon the occurrence of
any Cash Management Period, such Annual Budget shall be subject to Lender’s
written approval in its reasonable discretion (each such Annual Budget, an
“Approved Annual Budget”). In the event that Lender objects to a proposed Annual
Budget submitted by Borrower, Lender shall advise Borrower of such objections
within fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise such Annual Budget and resubmit the same to Lender. Lender shall advise
Borrower of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise the same in accordance
with the process described in this subsection until Lender reasonably approves
the entire Annual Budget. Until such time that Lender reasonably approves a
proposed Annual Budget, the most recently Approved Annual Budget (or, subject to
the proviso at the end of this sentence, the most recent Annual Budget submitted
by Borrower if such Annual Budget was not subject to Lender’s approval) shall
apply in connection with disbursing funds to Borrower for Operating Expenses
pursuant to the Cash Management Agreement during any Cash Management Period;
provided that, such Approved Annual Budget shall be adjusted to reflect actual
increases in taxes, insurance premiums and other charges; and provided further
that, upon the commencement of any Cash Management Period Lender shall either
reasonably approve the existing Annual Budget or object to such existing Annual
Budget, and upon any disapproval Borrower shall revise and resubmit such Annual
Budget, within the time periods set forth in this paragraph as if the existing
Annual Budget was first submitted for Lender’s approval on the date of the
commencement of the Cash Management Period, and if Lender has not reasonably
approved such Annual Budget within sixty (60) days after commencement of the
Cash Management Period then no further funds shall be disbursed to Borrower for
Operating Expenses pursuant to the Cash Management Agreement until such time as
the Annual Budget has been reasonably approved by Lender.

(f) Borrower shall furnish to Lender, within ten (10) Business Days after
request (or as soon thereafter as may be reasonably possible), such further
detailed information with respect to the operation of the Property and the
financial affairs of Borrower as may be reasonably requested by Lender, which
information may be presented by Borrower in format that is produced in
Borrower’s ordinary course of business or is otherwise reasonably available to
Borrower.

4.1.7 Title to the Property. Borrower will warrant and defend the validity and
priority of the Liens of the Mortgage and the Assignment of Leases on the
Property against the claims of all Persons whomsoever, subject only to Permitted
Encumbrances.

4.1.8 Estoppel Statement.

(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, stating
(i) the unpaid principal amount of the Note, (ii) the Applicable Interest Rate
of the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and
(v) that this Agreement and the other Loan Documents have not been modified or
if modified, giving particulars of such modification.

 

46

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

(b) After request by Borrower, Lender shall within ten (10) Business Days
furnish Borrower with a statement, duly acknowledged and certified, stating
(i) the unpaid principal amount of the Note, (ii) the Applicable Interest Rate
of the Note, (iii) the date installments of interest and/or principal were last
paid and (iv) whether or not Lender has sent any notice of default under the
Loan Documents which remains uncured in the opinion of Lender.

(c) Borrower shall use commercially reasonable efforts to deliver to Lender,
upon request, an estoppel certificate from each Tenant under any Lease; provided
that such certificate may be in the form required under any Tenant’s Lease;
provided, further, that Borrower shall not be required to deliver such
certificates more frequently than one (1) time in any calendar year.

4.1.9 Leases.

(a) Borrower shall not be authorized to enter into any ground lease of the
Property, without Lender’s prior written approval. Except as otherwise set forth
in clauses (b) and (d) below, Borrower shall not, without Lender’s prior written
consent, modify, amend, surrender or terminate any Lease, which approval shall
not be unreasonably withheld, conditioned or delayed. Except as otherwise set
forth in clauses (b) and (d) below, all Leases of space in the Property shall be
on the form of lease previously approved by Lender with Tenants and for a use
acceptable to Lender. Except as otherwise set forth in clause (b) below, all
Leases of space in the Property executed or renewed after the date hereof must
be approved by Lender prior to the execution thereof by Borrower.

(b) Notwithstanding anything contained herein to the contrary, Borrower may
enter into a proposed Lease (including the amendment, renewal or extension of an
existing Lease (a “Renewal Lease”)) without the prior written consent of Lender,
provided such proposed Lease or Renewal Lease (i) provides for rental rates and
terms comparable to existing local market rates and terms (taking into account
the type and quality of the tenant) as of the date such Lease or Renewal Lease
is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arm’s-length transaction with
a bona fide, independent third party Tenant, (iii) is written on the standard
form of lease previously approved by Lender, with only reasonable, non-material
changes thereto, and (iv) is not a Major Lease. So long as (A) RREEF owns,
directly or indirectly, at least fifty-one percent (51%) of the ownership
interests in Borrower, and (B) the property manager of the Property is a
Qualified Manager, Borrower (i) shall, with regard to any Lease other than a
Major Lease, not terminate any such Lease or accept a surrender of any such
Lease except by reason of a tenant default or if commercially reasonable and
provided such termination will not materially impair the value of the Property,
(ii) shall, with regard to any Major Lease, not terminate any such Lease or
accept a surrender of such Lease except by reason of a tenant default or
otherwise with prior written consent of Lender, which shall not be unreasonably
withheld. If the conditions set forth in clauses (A) and (B) above are not met,
Borrower shall not terminate any Lease without Lender’s consent unless (i) by
reason of a tenant default, and (ii) such Lease is not a Major Lease.

 

47

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

(c) Borrower shall cause the Tenants under any new Lease or the renewal of any
existing Lease to execute and deliver a Subordination, Non-Disturbance and
Attornment Agreement in the form annexed as Schedule V promptly upon Lender’s
request contemporaneously with the execution of such Lease, with such
commercially reasonable changes as may be requested by Tenants, from time to
time, and which are reasonably acceptable to Lender, and Lender agrees to
execute and deliver any such Subordination, Non-Disturbance and Attornment
Agreement.

(d) Borrower (i) shall observe and perform the obligations imposed upon the
lessor under the Leases in a commercially reasonable manner; (ii) shall enforce
the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner; provided, however, that, subject to the provisions of clause (b) above,
Borrower shall not terminate or accept a surrender of a Major Lease without
Lender’s prior approval; (iii) shall not collect any of the Rents more than one
(1) month in advance (other than security deposits); (iv) shall not execute any
assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) except as provided in Section 4.1.9(b),
shall not alter, modify or change any Lease so as to change the amount of or
payment date for rent, change the expiration date, grant any option for
additional space or term, materially reduce the obligations of the lessee or
increase the obligations of lessor; and (vi) shall hold all security deposits
under all Leases in accordance with Legal Requirements. Upon request, Borrower
shall furnish Lender with executed copies of all Leases.

4.1.10 Alterations. Lender’s prior approval shall be required in connection with
any alterations to any Improvements (except tenant improvements under any Lease
approved by Lender or under any Lease for which approval was not required by
Lender under this Agreement) (a) that may have a material adverse effect on
Borrower’s financial condition, the value of the Property or the ongoing
revenues and expenses of the Property or (b) the cost of which (including any
related alteration, improvement or replacement) is reasonably anticipated to
exceed the Alteration Threshold, which approval may be granted or withheld in
Lender’s reasonable discretion. If the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements shall at any time
exceed the Alteration Threshold, Borrower shall promptly deliver to Lender as
security for the payment of such amounts and as additional security for
Borrower’s obligations under the Loan Documents any of the following: (i) cash,
(ii) a Letter of Credit, (iii) U.S. Obligations, (iv) other securities
acceptable to Lender, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same, (v) a completion bond, provided
that Lender shall have received a Rating Agency Confirmation as to the form and
issuer of same, or (vi) an Alterations Guaranty. Such security shall be in an
amount equal to the excess of the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold. If at any time that an Alterations Guaranty has been
delivered to Lender, RREEF fails to maintain a net worth equal to or greater
than Two Hundred Fifty Million Dollars ($250,000,000.00), then Borrower shall,
within five (5) Business Days notice of notice of such determination, provide a
Letter of Credit or deposit cash with Lender in the same amount as the maximum
amount guaranteed pursuant to such Alterations Guaranty.

 

48

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

4.1.11 Material Agreements. Borrower shall (a) promptly perform and/or observe
all of the material covenants and agreements required to be performed and
observed by it under each Material Agreement to which it is a party, and do all
things necessary to preserve and to keep unimpaired its rights thereunder,
(b) promptly notify Lender in writing of the giving of any notice of any default
by any party under any Material Agreement of which it is aware and (c) promptly
enforce the performance and observance of all of the material covenants and
agreements required to be performed and/or observed by the other party under
each Material Agreement to which it is a party in a commercially reasonable
manner.

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

4.1.13 Costs of Enforcement/Remedying Defaults. In the event (a) that the
Mortgage is foreclosed in whole or in part or the Note or any other Loan
Document is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any Lien or mortgage prior to or
subsequent to the Mortgage in which proceeding Lender is made a party, (c) of
the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or Guarantor or an assignment by Borrower or Guarantor for
the benefit of its creditors, or (d) Lender shall remedy or attempt to remedy
any Event of Default hereunder, Borrower shall be chargeable with and agrees to
pay all costs incurred by Lender as a result thereof, including costs of
collection and defense (including reasonable attorneys’, experts’, consultants’
and witnesses’ fees and disbursements) in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, which
shall be due and payable on demand, together with interest thereon from the date
incurred by Lender at the Default Rate, and together with all required service
or use taxes.

4.1.14 Business and Operations. Borrower will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership and leasing of the Property. Borrower will qualify to do
business and will remain in good standing under the laws of each jurisdiction as
and to the extent the same are required for the ownership and leasing of the
related Property. Borrower shall at all times cause each Individual Property to
be maintained as an industrial business park.

4.1.15 Loan Fees. Borrower shall pay all fees and costs (including, without
limitation, all origination and commitment fees) required of Borrower pursuant
to the terms of that certain term sheet between Borrower and Lender dated
October 10, 2006.

 

Section 4.2 Borrower Negative Covenants.

Borrower covenants and agrees with Lender that:

4.2.1 Due on Sale and Encumbrance; Transfers of Interests. Without the prior
written consent of Lender in accordance with Article 6 of the Mortgage, Borrower
shall not permit or suffer any Transfer to occur, unless specifically permitted
by Article 8.

 

49

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

4.2.2 Liens. Borrower shall not create, incur, assume or suffer to exist any
Lien on any portion of the Property except for Permitted Encumbrances.

4.2.3 Dissolution. Borrower shall not (i) engage in any dissolution, liquidation
or consolidation or merger with or into any other business entity, (ii) engage
in any business activity not related to the ownership and operation of the
Property, (iii) transfer, lease or sell, in one transaction or any combination
of transactions, all or substantially all of the property or assets of Borrower
except to the extent expressly permitted by the Loan Documents, or (iv) cause,
permit or suffer any Required SPE to (A) dissolve, wind up or liquidate or take
any action, or omit to take an action, as a result of which such Required SPE
would be dissolved, wound up or liquidated in whole or in part, or (B) amend,
modify, waive or terminate the certificate or articles of incorporation,
organization or formation, bylaws, or partnership agreement or operating
agreement of such Required SPE, in each case without obtaining the prior consent
of Lender.

4.2.4 Change in Business. Borrower shall not enter into any line of business
other than the ownership and operation of the Property.

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

4.2.6 Affiliate Transactions. Borrower shall not enter into, or be a party to,
any transaction with an Affiliate of Borrower except in the ordinary course of
business and on terms which are fully disclosed to Lender in advance and are no
less favorable to Borrower or such Affiliate than would be obtained in a
comparable arm’s length transaction with an unrelated third party.

4.2.7 Zoning. Borrower shall not 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 reasonable consent of Lender.

4.2.8 Assets. Borrower shall not purchase or own any property other than the
Property and any property necessary or incidental for the operation of the
Property.

4.2.9 No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of the Property (i) with any other real property constituting a
tax lot separate from the Property, and (ii) 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.

4.2.10 Principal Place of Business. Borrower shall not change its principal
place of business from the address set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior notice.

 

50

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

4.2.11 ERISA.

(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under the ERISA or Section 4975 of the Code.

(b) Borrower shall deliver to Lender such certifications or other evidence from
time to time throughout the term of the Loan, as requested by Lender in its sole
discretion, that (A) Borrower is not an “employee benefit plan” as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “plan” within
the meaning of Section 4975 of the Code; (B) Borrower is not subject to any
state statute regulating investments of, or fiduciary obligations with respect
to, governmental plans as defined in Section 3(32) of ERISA; and (C) one or more
of the following circumstances is true:

(i) Equity interests in Borrower are publicly offered securities, within the
meaning of the Plan Assets Regulation;

(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower is held by “benefit plan investors” within the meaning of
the Plan Assets Regulation; or

(iii) Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of the Plan Assets Regulation.

(c) Borrower will not sell, assign or transfer the Property, or any portion
thereof or interest therein, to any Transferee that does not execute and deliver
to Lender its written assumption of the obligations of this covenant.

(d) Borrower further covenants and agrees to protect, defend, indemnify and hold
Lender harmless from and against all loss, cost, damage and expense (including
without limitation, all attorneys’ fees and excise taxes, costs of correcting
any prohibited transaction or obtaining an appropriate exemption) that Lender
may incur as a result of Borrower’s breach of this Section 4.2.11. This covenant
and indemnity shall survive the extinguishment of the lien of the Mortgage by
foreclosure or action in lieu thereof; furthermore, the foregoing indemnity
shall supersede any limitations on Borrower’s liability under any of the Loan
Documents.

4.2.12 Material Agreements. Borrower shall not, without Lender’s prior written
reasonable consent: (a) enter into, surrender or terminate any Material
Agreement to which it is a party (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
Material Agreement to which it is a party, except as provided therein or on an
arms’-length basis and commercially reasonable terms; or (c) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement to which it is a party in any material
respect, except on an arm’s-length basis and commercially reasonable terms.

 

51

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

V. INSURANCE, CASUALTY AND CONDEMNATION

 

Section 5.1 Insurance.

5.1.1 Insurance Policies.

(a) Borrower shall obtain and maintain, or cause to be maintained, insurance for
Borrower and the Property providing at least the following coverages:

(i) comprehensive all risk insurance on the Improvements and the personal
property at the Property (A) in an amount equal to one hundred percent (100%) of
the “Full Replacement Cost,” which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation;
(B) containing an Agreed Amount Endorsement with respect to the Improvements and
personal property at the Property waiving all co-insurance provisions; and
(C) providing for no deductible in excess of One Hundred Thousand and No/100
Dollars ($100,000) for all such insurance coverage. In addition, Borrower shall
obtain: (y) if any portion of the Improvements is currently or at any time in
the future located in a federally designated “special flood hazard area,” flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as Lender shall require; and
(z) earthquake insurance in amounts and in form and substance satisfactory to
Lender in the event a seismic analysis of the Property determines that the
probably maximum loss for the Property is twenty percent (20%) or greater and
such earthquake insurance is commercially available and requiring same is
consistent with prevailing industry standards for lenders making securitized
loans substantially similar to the Loan, provided that the insurance pursuant to
clauses (y) and (z) hereof shall be on terms consistent with the comprehensive
all risk insurance policy required under this subsection (i).

(ii) commercial general liability insurance against claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, such insurance (A) to be on the so-called “occurrence” form with a
combined limit, excluding umbrella coverage, of not less than Two Million and
No/100 Dollars ($2,000,000) in the aggregate and One Million and No/100 Dollars
($1,000,000) per occurrence; (B) to continue at not less than the aforesaid
limit until required to be changed by Lender by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed
operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all legal contracts; and (5) contractual liability
covering the indemnities contained in Article 9 of the Mortgage to the extent
the same is available;

(iii) loss of rents/business income insurance (A) with loss payable jointly to
Lender and Borrower; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; and (C) containing coverage for
the time period

 

52

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

necessary to make physical repairs and an extended period of indemnity
endorsement which provides that after the physical loss to the Improvements and
personal property has been repaired, the continued loss of income will be
insured until such income either returns to the same level it was at prior to
the loss, or the expiration of six (6) months from the date that the Property is
repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period. The
amount of such loss of rents/business income insurance shall be determined prior
to the date hereof and at least once each year thereafter based on Borrower’s
reasonable estimate of the gross income from the Property for the succeeding
twelve (12) month period. All proceeds hereunder shall be paid by joint check to
Borrower and Lender, which check shall be endorsed by Borrower for deposit by
Lender, and shall be held by Lender and applied to the obligations secured by
the Loan Documents from time to time due and payable hereunder and under the
Note; provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by the Loan
Documents on the respective dates of payment provided for in the Note and the
other Loan Documents except to the extent such amounts are actually paid out of
the proceeds of such business income insurance;

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

(v) workers’ compensation, subject to the statutory limits of the state in which
the Property is located, and employer’s liability insurance with such limits as
required by applicable law in respect of any work or operations on or about the
Property, or in connection with the Property or its operation (if applicable);

(vi) property coverage for ordinance and law coverage if at any time the
Property or use thereof is deemed a legal non-conforming use to cover (A) the
value of the undamaged portion, (B) demolition and debris removal, and
(C) increased cost of construction, in limits approved by Lender;

(vii) comprehensive boiler and machinery insurance, if applicable, in amounts as
shall be reasonably required by Lender on terms consistent with the commercial
property insurance policy required under subsection (i) above;

(viii) umbrella liability insurance in addition to primary coverage in an amount
not less than Thirty-Five Million and No/100 Dollars ($35,000,000.00) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above and (viii) below;

 

53

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

(ix) motor vehicle liability coverage for all owned and non owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence,
including umbrella coverage, of One Million and No/100 Dollars ($1,000,000);

(x) so-called “dramshop” insurance or other liability insurance required in
connection with the sale of alcoholic beverages;

(xi) the insurance required under this Section 5.1.1(a) shall cover perils of
terrorism and certified and non-certified acts of terrorism and Borrower shall
maintain insurance for loss resulting from perils and acts of terrorism on terms
(including amounts) consistent with those required under this Section 5.1.1(a)
at all times during the term of the Loan, provided such coverage is commercially
available; and

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

(b) All insurance provided for in Section 5.1.1(a) shall be obtained under valid
and enforceable policies (collectively, the “Policies” or, in the singular, the
“Policy”) and, to the extent not specified above, shall be subject to the
approval of Lender as to deductibles, loss payees and insureds. Not less than
ten (10) days prior to the expiration dates of the Policies theretofore
furnished to Lender, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to Lender of payment of the premiums then
due thereunder (the “Insurance Premiums”), shall be delivered by Borrower to
Lender. At any time following the date the Policies are first made available to
Borrower from the applicable insurance carrier(s), Borrower shall provide Lender
with copies of each of such Policies within ten (10) days of Lender’s written
request therefor; provided, however, that in no event shall Borrower be required
to provide copies of any Policy if Borrower has provided certificates of
insurance evidencing such Policy issued on an Acord 28 form (2003 edition) or
other form of certificate reasonably acceptable to Lender.

(c) Any blanket insurance Policy shall specifically allocate to the Property the
amount of coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only the
Property in compliance with the provisions of Section 5.1.1 (a).

(d) All Policies of insurance provided for or contemplated by Section 5.1.1 (a),
except for the Policy referenced in Section 5.1.1(a)(v), shall name Borrower as
the insured and Lender and its successors and/or assigns as the additional
insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood, earthquake and terrorism insurance, shall contain a
standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable jointly to Lender and Borrower.

(e) All Policies of insurance provided for in Section 5.1.1(a), except for the
Policies referenced in Section 5.1.1(a)(v) and (a)(viii) shall contain clauses
or endorsements to the effect that:

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

 

54

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

(ii) the Policy shall not be canceled without at least thirty (30) days’ written
notice to Lender and any other party named therein as an additional insured and,
if obtainable by Borrower using commercially reasonable efforts, shall not be
materially changed (other than to increase the coverage provided thereby)
without such a thirty (30) day notice; and

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

(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage required hereunder as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and until paid shall be secured by the
Mortgage and shall bear interest at the Default Rate; provided, however, that
notwithstanding Lender’s right, without notice, to take the actions described in
this sentence, Lender shall use commercially reasonable efforts to provide
Borrower with prompt written notice of any such action.

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

5.1.2 Insurance Company. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the state in which
the Property is located as admitted or non-admitted carriers and having a claims
paying ability rating of “A” or better by S&P, or a syndicate of insurers
through which (a) at least 60% of the coverage by primary insurers (if there are
4 of fewer members of the syndicate) or (b) at least 50% of the coverage by
primary insurers (if there are 5 or more members of the syndicate) is with
carriers having claims paying ability ratings of “A-” or better by S&P (provided
that (i) the first layer of coverage shall be issued by an insurer having a
claims paying ability of “A” or better by S&P, and (ii) all other carriers not
required to satisfy the coverage requirements in clauses (a) and (b) above (the
“Remaining Carriers”) shall have claims paying ability ratings of “BBB” or
better by S&P, except that so long as (A) RREEF owns, directly or indirectly, at
least fifty-one percent (51%) of the ownership interests in Borrower, and
(B) the property manager of the Property is a Qualified Manager, then up to 5%
of the Remaining Carriers may be permitted to have claims paying ability ratings
of at least A- VIII by A.M. Best’s). Notwithstanding the foregoing, Borrower
shall be permitted to maintain the Policies with insurance companies which do
not

 

55

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

meet the foregoing requirements (an “Otherwise Rated Insurer”), provided
Borrower obtains a “cut-through” endorsement (that is, an endorsement which
permits recovery against the provider of such endorsement) with respect to any
Otherwise Rated Insurer from an insurance company which meets the claims paying
ability ratings required above. Moreover, if Borrower desires to maintain
insurance required hereunder from an insurance company which does not meet the
claims paying ability ratings set forth herein but the parent of such insurance
company, which owns at least fifty-one percent (51%) of such insurance company,
maintains such ratings, Borrower may use such insurance companies if approved by
the Rating Agencies (such approval may be conditioned on items required by the
Rating Agencies including a requirement that the parent guarantee the
obligations of such insurance company or the provision of a “cut-through”
endorsement with respect to such insurer from such parent).

 

Section 5.2 Casualty and Condemnation.

5.2.1 Casualty. If the Property shall sustain a Casualty in an amount greater
than $100,000, Borrower shall give prompt notice of such Casualty to Lender. If
the Property shall sustain a Casualty Borrower shall promptly commence and
diligently prosecute to completion the repair and restoration of the Property as
nearly as possible to the condition the Property was in immediately prior to
such Casualty (a “Restoration”) and otherwise in accordance with Section 5.3, it
being understood, however, that Borrower shall not be obligated to restore the
Property to the precise condition of the Property prior to such Casualty
provided the Property is restored, to the extent practicable, to be of at least
equal value and of substantially the same character as prior to the Casualty.
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to, make proof of
loss if not made promptly by Borrower. In the event of a Casualty where the loss
does not exceed Restoration Threshold, Borrower may settle and adjust such
claim; provided that (a) no Event of Default has occurred and is continuing and
(b) such adjustment is carried out in a commercially reasonable and timely
manner. In the event of a Casualty where the loss exceeds the Restoration
Threshold or if an Event of Default then exists, Borrower may settle and adjust
such claim only with the consent of Lender (which consent shall not be
unreasonably withheld, conditioned, or delayed) and Lender shall have the
opportunity to participate, at Borrower’s reasonable cost, in any such
adjustments. Notwithstanding any Casualty, Borrower shall continue to pay the
Debt at the time and in the manner provided for its payment in the Note and in
this Agreement.

5.2.2 Condemnation. Borrower shall give Lender prompt notice of any actual or,
to Borrower’s knowledge, threatened Condemnation by any Governmental Authority
of all or any part of the Property and shall deliver to Lender a copy of any and
all papers served in connection with such proceedings. Provided no Event of
Default has occurred and is continuing, in the event of a Condemnation where the
amount of the taking does not exceed the Restoration Threshold, Borrower may
settle and compromise such Condemnation; provided that the same is effected in a
commercially reasonable and timely manner. In the event a Condemnation where the
amount of the taking exceeds the Restoration Threshold or if an Event of Default
then exists, Borrower may settle and compromise the Condemnation only with the
consent of Lender (which consent shall not be unreasonably withheld,
conditioned, or delayed) and Lender shall have the opportunity to participate,
at Borrower’s reasonable cost, in any litigation and settlement discussions in
respect thereof and Borrower shall from time to time deliver to Lender all

 

56

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

instruments requested by Lender to permit such participation. Borrower shall, at
its expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and reasonably cooperate with them in the
carrying on or defense of any such proceedings. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement. Lender shall
not be limited to the interest paid on the Award by any Governmental Authority
but shall be entitled to receive out of the Award interest at the rate or rates
provided herein or in the Note. If the Property or any portion thereof is taken
by any Governmental Authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 5.3. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.

5.2.3 Casualty Proceeds. Payments on account of the business interruption
insurance specified in Subsection 5.1.1(a)(iii) above with respect to any
Casualty or Condemnation shall be deposited directly into the Clearing Account.

 

Section 5.3 Delivery of Net Proceeds.

5.3.1 Minor Casualty or Condemnation. If a Casualty or Condemnation has occurred
to the Property and the Net Proceeds shall be less than the Restoration
Threshold and the costs of completing the Restoration shall be less than the
Restoration Threshold, and provided no Event of Default shall have occurred and
remain uncured, the Net Proceeds will be disbursed by Lender to Borrower.
Promptly after receipt of the Net Proceeds, Borrower shall commence and
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement. If any Net Proceeds are received by Borrower and
may be retained by Borrower pursuant to the terms hereof, such Net Proceeds
shall, until completion of the Restoration, be held in trust for Lender until
used to pay for the cost of Restoration in accordance with the terms hereof and
shall be segregated from other funds of Borrower to be used to pay for the cost
of Restoration in accordance with the terms hereof.

5.3.2 Major Casualty or Condemnation.

(a) If a Casualty or Condemnation has occurred to the Property and the Net
Proceeds are equal to or greater than the Restoration Threshold or the costs of
completing the Restoration is equal to or greater than the Restoration
Threshold, Lender shall make the Net Proceeds available for the Restoration,
provided that each of the following conditions are met:

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

(ii) (A) in the event the Net Proceeds are insurance proceeds, less than
twenty-five percent (25%) of the total floor area of the Improvements at the
Property has been damaged, destroyed or rendered unusable as a result of such
Casualty or (B) in the event the Net Proceeds are an Award, less than ten
percent (10%) of the land constituting the Property is taken, and such land is
located along the perimeter or periphery of the Property, and no portion of the
Improvements is the subject of the Condemnation;

 

57

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

(iii) Leases requiring payment of annual rent equal to eighty percent (80%) of
the Gross Revenue received by Borrower during the twelve (12) month period
immediately preceding the Casualty or Condemnation and all Major Leases shall
remain in full force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required for Restoration,
notwithstanding the occurrence of such Casualty or Condemnation.

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

(v) Lender shall be reasonably satisfied that any operating deficits and all
payments of principal and interest under the Note will be paid during the period
required for Restoration from (A) the Net Proceeds, or (B) other funds of
Borrower;

(vi) Lender shall be reasonably satisfied that the Restoration will be completed
on or before the earliest to occur of (A) the date six (6) months prior to the
Maturity Date, (B) the earliest date required for such completion under the
terms of any Lease, (C) such time as may be required under applicable Legal
Requirements in order to repair and restore the Property to the condition it was
in immediately prior to such Casualty or to as nearly as possible the condition
it was in immediately prior to such Condemnation, as applicable or (D) the
expiration of the insurance coverage referred to in Section 5.1.1(a)(iii);

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

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

(ix) such Casualty or Condemnation, as applicable, does not result in the loss
of access to the Property or the related Improvements.

(b) The Net Proceeds shall be delivered to Lender and held by Lender in an
interest-bearing account and, until disbursed in accordance with the provisions
of this Section 5.3.2, shall constitute additional security for the Debt. The
Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from
time to time during the course of the Restoration, upon receipt of evidence
reasonably satisfactory to Lender that (A) all requirements set forth in
Section 5.3.2(a) have been satisfied, (B) all materials installed and work and
labor performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid for in
full, and (C) there exist no notices of pendency, stop orders, mechanic’s or
materialman’s liens or notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Property arising out of the
Restoration which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.

 

58

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

(c) All plans and specifications required in connection with the Restoration
shall be subject to prior approval of Lender and an independent architect
selected by Lender (the “Casualty Consultant”); provided, however, that if
Borrower has engaged an independent architect in connection with performing the
Restoration that is reasonably acceptable to Lender, then Lender may agree to
rely upon the Borrower’s architect as its Casualty Consultant rather than engage
its own Casualty Consultant. The plans and specifications shall require that the
Restoration be completed in a first-class workmanlike manner at least equivalent
to the quality and character of the original work in the Improvements (provided,
however, that in the case of a partial Condemnation, the Restoration shall be
done to the extent reasonably practicable after taking into account the
consequences of such partial Condemnation), so that upon completion thereof, the
Property shall be at least equal in value and general utility to the Property
prior to the damage or destruction; it being understood, however, that Borrower
shall not be obligated to restore the Property to the precise condition of the
Property prior to such Casualty provided the Property is restored, to the extent
practicable, to be of at least equal value and of substantially the same
character as prior to the Casualty. Borrower shall restore all Improvements such
that when they are fully restored and/or repaired, such Improvements and their
contemplated use fully comply with all applicable material Legal Requirements.
The identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged, shall
be subject to approval of Lender and the Casualty Consultant. All reasonable,
out-of-pocket costs and expenses incurred by Lender in connection with
recovering, holding and advancing the Net Proceeds for the Restoration
including, without limitation, reasonable attorneys’ fees and disbursements and
the Casualty Consultant’s fees and disbursements, shall be paid by Borrower.

(d) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term “Casualty Retainage”
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 5.3.2(d), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 5.3.2(d) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which the Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor’s,
subcontractor’s or materialman’s contract, the contractor, subcontractor or
materialman delivers

 

59

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

the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the Mortgage and evidence of payment of any premium
payable for such endorsement. If required by Lender, the release of any such
portion of the Casualty Retainage shall be approved by the surety company, if
any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

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

(f) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the reasonable opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 5.3.2 shall constitute additional security for the Debt.

(g) The excess, if any, of the Net Proceeds and the remaining balance, if any,
of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 5.3.2, and the receipt by Lender
of evidence reasonably satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, shall be remitted by
Lender to Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents; provided, however, the amount of
such excess returned to Borrower in the case of a Condemnation shall not exceed
the amount of Net Proceeds Deficiency deposited by Borrower with the balance
being applied to the Debt in the manner provided for in Subsection 5.3.2(h).

(h) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 5.3.2(g) may be retained and applied by Lender toward the payment of the
Debt, whether or not then due and payable, in such order, priority and
proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall designate.

VI. RESERVE FUNDS

 

Section 6.1 Required Repairs.

6.1.1 Required Repairs. Borrower shall perform the repairs at the Property as
set forth on Schedule III hereto (such repairs hereinafter referred to as
“Required Repairs”) and shall complete each of the Required Repairs on or before
the respective deadline for each repair as set forth on Schedule III.

 

60

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

Section 6.2 Tax Funds.

6.2.1 Deposits of Tax Funds. On each Monthly Payment Date Borrower shall deposit
with Lender an amount equal to one-twelfth of the Taxes that Lender estimates
will be payable during the next ensuing twelve (12) months in order to
accumulate sufficient funds to pay all such Taxes at least ten (10) days prior
to their respective due dates. Amounts deposited pursuant to this Section 6.2.1
are referred to herein as the “Tax Funds.” If at any time Lender reasonably
determines that the Tax Funds will not be sufficient to pay the Taxes, Lender
shall notify Borrower of such determination and the monthly deposits for Taxes
shall be increased by the amount that Lender estimates is sufficient to make up
the deficiency at least ten (10) days prior to the respective due dates for the
Taxes; provided that if Borrower receives notice of any deficiency after the
date that is ten (10) days prior to the date that Taxes are due, Borrower will
deposit such amount within three (3) Business Days after its receipt of such
notice. Notwithstanding the foregoing, without waiving any of Borrower’s
obligations under the Loan Documents to pay Taxes, so long as Borrower pays all
Taxes prior to the due date thereof without the addition of interest, fees or
penalty, Lender agrees to defer its right under this Agreement and the other
Loan Documents to require monthly deposits of Tax Funds with Lender at all times
other than during a Cash Management Period. If (a) Borrower fails to pay all
Taxes due with respect to the Property prior to the due date thereof without the
addition of interest, fees or penalty, and to provide Lender with evidence
reasonably satisfactory to Lender thereof, or (b) a Cash Management Period
occurs, and until a Cash Management Period Termination Event occurs, then in
addition to Lender’s other remedies under applicable law and under the Loan
Documents, Borrower shall immediately commence making monthly deposits of Tax
Funds in an amount determined by Lender in accordance with this Section 6.2.1
for such purpose pursuant to the Cash Management Agreement.

6.2.2 Release of Tax Funds. Lender shall have the right to apply the Tax Funds
to payments of Taxes. In making any payment relating to Taxes, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds
shall exceed the amounts due for Taxes, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax Funds. Any Tax Funds remaining after the Debt has been paid
in full shall be returned to Borrower.

 

Section 6.3 Insurance Funds.

6.3.1 Deposits of Insurance Funds. On each Monthly Payment Date Borrower shall
deposit with Lender an amount equal to one-twelfth of the Insurance Premiums
that Lender estimates will be payable for the renewal of the coverage afforded
by the Policies upon the expiration thereof in order to accumulate sufficient
funds to pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies. Amounts deposited pursuant to this Section 6.3.1 are
referred to herein as the “Insurance Funds.” If at any time Lender reasonably
determines that the Insurance Funds will not be sufficient to pay the Insurance
Premiums, Lender shall notify Borrower of such determination and the monthly
deposits for Insurance Premiums shall be increased by the amount that Lender
estimates is sufficient to make up the deficiency at

 

61

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

least thirty (30) days prior to expiration of the Policies. Notwithstanding the
foregoing, without waiving any of Borrower’s obligations under the Loan
Documents to pay maintain the insurance coverage required pursuant to
Section 5.1.1 and pay the related Insurance Premiums, so long as Borrower pays
all Insurance Premiums prior to the due date thereof without the addition of
interest, fees or penalty, Lender agrees to defer its right under this Agreement
and the other Loan Documents to require monthly deposits of Insurance Funds with
Lender at all times other than during a Cash Management Period. If (a) Borrower
fails to pay all Insurance Premiums due with respect to the Property prior to
the due date thereof without the addition of interest, fees or penalty, and to
provide Lender with evidence reasonably satisfactory to Lender thereof, or (b) a
Cash Management Period occurs, and until a Cash Management Period Termination
Event occurs, then in addition to Lender’s other remedies under applicable law
and under the Loan Documents, Borrower shall immediately commence making monthly
deposits of Insurance Funds in an amount determined by Lender in accordance with
this Section 6.3.1 for such purpose pursuant to the Cash Management Agreement.

6.3.2 Release of Insurance Funds. Lender shall have the right to apply the
Insurance Funds to payment of Insurance Premiums. In making any payment relating
to Insurance Premiums, Lender may do so according to any bill, statement or
estimate procured from the insurer or its agent, without inquiry into the
accuracy of such bill, statement or estimate. If the amount of the Insurance
Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Insurance Funds. Any Insurance Funds remaining
after the Debt has been paid in full shall be returned to Borrower.

 

Section 6.4 Capital Expenditure Funds.

6.4.1 Deposits of Capital Expenditure Funds. Borrower shall deposit with Lender
on each Monthly Payment Date an amount equal to $60,207.00 for annual Capital
Expenditures approved by Lender, which approval shall not be unreasonably
withheld or delayed. Amounts deposited pursuant to this Section 6.4.1 are
referred to herein as the “Capital Expenditure Funds.” Lender may reassess its
estimate of the amount necessary for Capital Expenditures from time to time, and
may require Borrower to increase the monthly deposits required pursuant to this
Section 6.4.1 upon thirty (30) days’ notice to Borrower if Lender determines in
its reasonable discretion that an increase is necessary to maintain proper
operation of the Property. Notwithstanding the foregoing, without waiving any of
Borrower’s obligations under the Loan Documents to maintain the Property and pay
for all Capital Expenditures, Lender agrees to defer its right under this
Agreement and the other Loan Documents to require monthly deposits of Capital
Expenditure Funds with Lender at all times other than during a Cash Management
Period. If a Cash Management Period occurs, and until a Cash Management Period
Termination Event occurs, then in addition to Lender’s other remedies under
applicable law and under the Loan Documents, Borrower shall immediately commence
making monthly deposits of Capital Expenditure Funds in an amount determined by
Lender in accordance with this Section 6.4.1 for such purpose pursuant to the
Cash Management Agreement.

 

62

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

6.4.2 Release of Capital Expenditure Funds.

(a) Lender shall direct Agent to disburse Capital Expenditure Funds only for
Capital Expenditures.

(b) Lender shall direct Agent to disburse to Borrower the Capital Expenditure
Funds upon satisfaction by Borrower of each of the following conditions:
(i) Borrower shall submit a request for payment to Lender at least ten (10) days
prior to the date on which Borrower requests such payment be made and specifies
the Capital Expenditures to be paid, (ii) on the date such request is received
by Lender and on the date such payment is to be made, no Event of Default shall
exist and be continuing, (iii) Lender shall have received a certificate from
Borrower (A) stating that the items to be funded by the requested disbursement
are Capital Expenditures, (B) stating that all Capital Expenditures at the
Property to be funded by the requested disbursement have been completed in a
good and workmanlike manner and in accordance with all material applicable Legal
Requirements, such certificate to be accompanied by a copy of any license,
permit or other approval required by any Governmental Authority in connection
with the Capital Expenditures, (C) identifying each Person that supplied
materials or labor in connection with the Capital Expenditures to be funded by
the requested disbursement, and (D) stating that each such Person has been paid
in full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to Lender,
(iv) at Lender’s option, a title search for the Property indicating that the
Property is free from all Liens, claims and other encumbrances not previously
approved by Lender, and (v) at Lender’s option, if the cost of any individual
Capital Expenditure exceeds $500,000, Lender shall have received a report
satisfactory to Lender in its reasonable discretion from an architect or
engineer approved by Lender in respect of such architect or engineer’s
inspection of the required repairs, and (vi) Lender shall have received such
other evidence as Lender shall reasonably request that the Capital Expenditures
at the Property to be funded by the requested disbursement have been completed
and are paid for or will be paid upon such disbursement to Borrower. Lender
shall not be required to disburse Capital Expenditure Funds more frequently than
once each calendar month, unless such requested disbursement is in an amount
greater than the Minimum Disbursement Amount (or a lesser amount if the total
amount of Capital Expenditure Funds is less than the Minimum Disbursement
Amount, in which case only one disbursement of the amount remaining in the
account shall be made).

(c) Nothing in this Section 6.4.2 shall (i) make Lender responsible for making
or completing the Capital Expenditures Work; (ii) require Lender to expend funds
in addition to the Capital Expenditure Funds to complete any Capital
Expenditures Work; (iii) obligate Lender to proceed with the Capital
Expenditures Work; or (iv) obligate Lender to demand from Borrower additional
sums to complete any Capital Expenditures Work.

(d) Borrower shall permit Lender and Lender’s agents and representatives
(including, without limitation, Lender’s engineer, architect, or inspector) or
third parties to enter onto the Property during normal business hours (subject
to the rights of Tenants under their Leases) to inspect the progress of any
Capital Expenditures Work and all materials being used in connection therewith
and to examine all plans and shop drawings relating to such Capital Expenditures
Work. Borrower shall cause all contractors and subcontractors to cooperate with
Lender or Lender’s representatives or such other Persons described above in
connection with inspections described in this Section 6.4.2(d).

 

63

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

(e) If a disbursement will exceed $500,000, Lender may require an inspection of
the Property at Borrower’s expense prior to making a disbursement of Capital
Expenditure Funds in order to verify completion of the Capital Expenditures Work
for which reimbursement is sought. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by
Lender and may require a certificate of completion by an independent qualified
professional architect acceptable to Lender prior to the disbursement of Capital
Expenditure Funds. Borrower shall pay the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional architect.

(f) In addition to any insurance required under the Loan Documents, Borrower
shall provide or cause to be provided workmen’s compensation insurance,
builder’s risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with Capital Expenditures Work. All
such policies shall be in form and amount reasonably satisfactory to Lender.

 

Section 6.5 Rollover Funds.

6.5.1 Deposits of Rollover Funds. Borrower shall deposit with Lender on each
Monthly Payment Date the sum of $160,552.00, for tenant improvements and leasing
commissions that may be incurred following the date hereof. Amounts deposited
pursuant to this Section 6.5.1 are referred to herein as the “Rollover Funds.”
Notwithstanding the foregoing, without waiving any of Borrower’s obligations
under the Loan Documents to pay for all tenant improvements and leasing
commissions, Lender agrees to defer its right under this Agreement and the other
Loan Documents to require monthly deposits of Rollover Funds with Lender at all
times other than during a Cash Management Period. If a Cash Management Period
occurs, and until a Cash Management Period Termination Event occurs, then in
addition to Lender’s other remedies under applicable law and under the Loan
Documents, Borrower shall immediately commence making monthly deposits of
Rollover Funds in an amount determined by Lender in accordance with this
Section 6.5.1 for such purpose pursuant to the Cash Management Agreement.

6.5.2 Release of Rollover Funds. Lender shall direct Agent to disburse to
Borrower the Rollover Funds upon satisfaction by Borrower of each of the
following conditions: (i) Borrower shall submit a request for payment to Lender
at least ten (10) days prior to the date on which Borrower requests such payment
be made and specifies the tenant improvement costs and leasing commissions to be
paid, (ii) on the date such request is received by Lender and on the date such
payment is to be made, no Event of Default shall exist and remain uncured,
(iii) Lender shall have reviewed and approved the Lease (to the extent required
pursuant to Section 4.1.9) in respect of which Borrower is obligated to pay or
reimburse certain tenant improvement costs and leasing commissions, (iv) Lender
shall have received and approved a budget for tenant improvement costs and a
schedule of leasing commissions payments and the requested disbursement will be
used to pay all or a portion of such costs and payments, (v) Lender shall have
received a certificate from Borrower (A) stating that all tenant improvements at
the Property to be funded by the requested disbursement have been completed in
good and workmanlike manner and materially in accordance with all applicable
federal, state and local laws, rules and regulations, such certificate to be
accompanied by a copy of any

 

64

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

license, permit or other approval by any Governmental Authority required in
connection with the Capital Expenditures, (B) identifying each Person that
supplied materials or labor in connection with the tenant improvements to be
funded by the requested disbursement, and (C) stating that each such Person has
been paid in full or will be paid in full upon such disbursement, such
certificate to be accompanied by lien waivers or other evidence of payment
reasonably satisfactory to Lender, (vi) at Lender’s option, a title search for
the Property indicating that the Property is free from all Liens, claims and
other encumbrances not previously approved by Lender, and (vii) Lender shall
have received such other evidence as Lender shall reasonably request that the
tenant improvements at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Rollover Funds more
frequently than once each calendar month, unless such requested disbursement is
in an amount greater than the Minimum Disbursement Amount (or a lesser amount if
the total amount of Rollover Funds is less than the Minimum Disbursement Amount,
in which case only one disbursement of the amount remaining in the account shall
be made).

 

Section 6.6 Lease Termination Rollover Funds.

6.6.1 Deposits of Rollover Funds. In the event that Borrower receives a fee,
payment or other compensation from any Tenant relating to or in exchange for the
termination of such Tenant’s Lease (a “Lease Termination Fee”) Borrower shall
immediately deposit such Lease Termination Fee with Lender, to be utilized for
tenant improvements and leasing commissions that may be incurred with respect to
the space relating to such Lease Termination Fee (a “Termination Space”) and, in
the event that there is a Rent Deficiency with respect to the Termination Space
from and after the date that the Lease for the Termination Space was terminated,
in replacement of Rent. Amounts deposited pursuant to this Section 6.6.1 are
referred to herein as the “Lease Termination Rollover Funds”.

6.6.2 Release of Lease Termination Rollover Funds.

(a) Lender shall direct Agent to disburse to Borrower the Lease Termination
Rollover Funds upon satisfaction by Borrower of each of the following
conditions: (i) Borrower shall submit a request for payment to Lender at least
ten (10) days prior to the date on which Borrower requests such payment be made
and (A) specifies the tenant improvement costs and leasing commissions to be
paid for the Termination Space or (B) specifies the amount by which the rent
expected to be obtained by Borrower for the Termination Space during the next
succeeding calendar month pursuant to the Lease or Leases for such Termination
Space (a “Replacement Lease”) is less than the amount of monthly rent received
from the previous Tenant leasing the Termination Space pursuant to its Lease
prior to such termination (the “Rent Deficiency”), (ii) on the date such request
is received by Lender and on the date such payment is to be made, no Event of
Default shall exist and remain uncured, (iii) Lender shall have reviewed and, to
the extent required hereby, reasonably approved the Replacement Lease in respect
of which Borrower is obligated to pay or reimburse certain tenant improvement
costs and leasing commissions, (iv) with respect to any Lease Termination
Rollover Funds to be released by Lender for tenant improvements or leasing
commissions pursuant to a Replacement Lease, Lender shall have received a budget
for tenant improvement costs and a schedule of leasing commission payments and
the requested disbursement will be used to pay all or a portion of such

 

65

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

costs and payments, (v) with respect to any Lease Termination Rollover Funds to
be released by Lender for tenant improvements or leasing commissions pursuant to
a Replacement Lease, Lender shall have received a certificate from Borrower
(A) stating that all tenant improvements at the Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and
materially in accordance with all applicable federal, state and local laws,
rules and regulations, such certificate to be accompanied by a copy of any
license, permit or other approval by any Governmental Authority required in
connection with the tenant improvements to be funded by the requested
disbursement, (B) identifying each Person that supplied materials or labor in
connection with the tenant improvements to be funded by the requested
disbursement, and (C) stating that each such Person has been paid in full or
will be paid in full upon such disbursement, such certificate to be accompanied
by lien waivers or other evidence of payment reasonably satisfactory to Lender,
(vi) with respect to any Lease Termination Rollover Funds to be released by
Lender for tenant improvements or leasing commissions pursuant to a Replacement
Lease, at Lender’s option, a title search for the Property indicating that the
Property is free from all Liens, claims and other encumbrances not previously
approved by Lender and (vii) with respect to any Lease Termination Rollover
Funds to be released by Lender for tenant improvements or leasing commissions
pursuant to a Replacement Lease, Lender shall have received such other evidence
as Lender shall reasonably request that the tenant improvements at the Property
to be funded by the requested disbursement have been completed and are paid for
or will be paid upon such disbursement to Borrower. Lender shall not be required
to disburse Lease Termination Rollover Funds more frequently than once each
calendar month, unless such requested disbursement is in an amount greater than
the Minimum Disbursement Amount (or a lesser amount if the total amount of Lease
Termination Rollover Funds is less than the Minimum Disbursement Amount, in
which case only one disbursement of the amount remaining in the account shall be
made). All Rent Deficiency disbursements made by Lender shall be deposited into
the Clearing Account as if such sums were received by Borrower as Rent during
the calendar month after such request is made by Borrower.

(b) Notwithstanding the foregoing, upon receipt by Lender of evidence that, with
respect to any new Replacement Lease with a term of at least five (5) years, all
tenant improvements required to be completed by Borrower pursuant to the
Replacement Lease, if any, have been completed and all leasing commissions
required to be paid by Borrower with respect to the Replacement Lease, if any,
have been paid, and provided no Event of Default then exists, Lender shall
direct Agent to disburse to Borrower the Lease Termination Rollover Funds on
deposit with respect to such Termination Space provided that the rent to be
obtained by Borrower for such Termination Space during the next succeeding sixty
(60) calendar months pursuant to the respective Replacement Lease is equal to or
greater than the sum of the monthly rent last received from the previous Tenant
in such Termination Space pursuant to its Lease multiplied by sixty (60).

 

Section 6.7 Application of Reserve Funds.

Upon the occurrence of an Event of Default, Lender, at its option, may withdraw
the Reserve Funds and apply the Reserve Funds to the items for which the Reserve
Funds were established or to payment of the Debt in such order, proportion and
priority as Lender may determine in its sole discretion. Lender’s right to
withdraw and apply the Reserve Funds shall be in addition to all other rights
and remedies provided to Lender under the Loan Documents. In no event shall
Lender be obligated to disburse funds from a Reserve Fund if a Default or an
Event of Default exists.

 

66

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

Section 6.8 Security Interest in Reserve Funds.

6.8.1 Grant of Security Interest. Borrower shall be the owner of the Reserve
Funds. Borrower hereby pledges, assigns and grants a security interest to
Lender, as security for payment of the Debt and the performance of all other
terms, conditions and covenants of the Loan Documents on Borrower’s part to be
paid and performed, in all of Borrower’s right, title and interest in and to the
Reserve Funds. The Reserve Funds shall be under the sole dominion and control of
Lender.

6.8.2 Income Taxes. Borrower shall report on its federal, state and local income
tax returns all interest or income accrued on the Reserve Funds. The Reserve
Funds may be commingled with the general funds of Lender and no interest shall
be payable thereon, nor shall such Reserve Funds constitute trust funds.

6.8.3 Prohibition Against Further Encumbrance. Borrower shall not, without the
prior consent of Lender, further pledge, assign or grant any security interest
in the Reserve Funds or permit any lien or encumbrance to attach thereto, or any
levy to be made thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.

VII. PROPERTY MANAGEMENT

 

Section 7.1 The Management Agreement.

Borrower shall cause Manager to manage the Property in accordance with the
Management Agreement. Borrower shall (i) diligently perform and observe all of
the material terms, covenants and conditions of the Management Agreement on the
part of Borrower to be performed and observed, (ii) promptly notify Lender of
any notice to Borrower of any default by Borrower in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of Borrower to be performed and observed, and
(iii) promptly deliver to Lender a copy of each financial statement, business
plan, capital expenditures plan, report and estimate received by it under the
Management Agreement. If Borrower shall default in the performance or observance
of any material term, covenant or condition of the Management Agreement on the
part of Borrower to be performed or observed, 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 Borrower to be performed or observed.

 

Section 7.2 Prohibition Against Termination or Modification.

Borrower shall not surrender, terminate, cancel, materially modify, renew or
extend the Management Agreement, or enter into any other agreement relating to
the

 

67

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

management or operation of the Property with Manager or any other Person, or
consent to the assignment by the Manager of its interest under the Management
Agreement, in each case without the express consent of Lender, which consent
shall not be unreasonably withheld; provided, however, with respect to a new
manager such consent may be conditioned upon Borrower delivering a Rating Agency
Confirmation as to such new manager and management agreement and, if such new
manager is an Affiliate of Borrower, upon delivery of a non-consolidation
opinion acceptable to the Rating Agencies. 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 subordination of management agreement
in the form then used by Lender, with such commercially reasonable changes as
may be requested by such new manager and which are reasonably acceptable to
Lender.

 

Section 7.3 Replacement of Manager.

Lender shall have the right to require Borrower to replace the Manager with a
Person, which is not an Affiliate of Borrower, chosen by Borrower and approved
by Lender in its reasonable discretion upon the occurrence of any one or more of
the following events: (i) at any time following the occurrence of an Event of
Default, and/or (ii) if Manager shall be in material default under the
Management Agreement beyond any applicable notice and cure period or if at any
time the Manager has engaged in gross negligence, fraud or willful misconduct.
Borrower’s failure to appoint an acceptable replacement manager within thirty
(30) days after Lender’s request of Borrower to terminate the Management
Agreement shall constitute an immediate Event of Default.

VIII. PERMITTED TRANSFERS

 

Section 8.1 Permitted Transfer of the Property.

Notwithstanding the provisions of Section 4.2.1 and Article 6 of the Mortgage, a
sale of the Property and assumption of this Loan (hereinafter, an “Assumption”)
in its entirety prohibited by the foregoing may be permitted up to two (2) times
during the term of the Loan to any Person (“Transferee”), subject to Lender’s
prior written consent, which shall not be unreasonably withheld, conditioned, or
delayed, provided that each of the following terms and conditions are satisfied:

(a) Borrower is in compliance with all terms and conditions of the Loan
Documents and no Default or Event of Default has occurred and is then continuing
hereunder or under any of the other Loan Documents;

(b) Borrower gives Lender written notice of the terms of such prospective
Assumption not less than thirty (30) days before the date on which such
Assumption is scheduled to take place and, concurrently therewith, gives Lender
all information concerning Transferee as Lender reasonably requests. Lender
shall have the right to reasonably approve or disapprove the proposed
Transferee; provided, however, that no Lender approval shall be required if
(i) such Transferee is a Qualified Transferee, and (ii) following such
Assumption the Property will be managed by a Qualified Manager. In determining
whether to give or withhold its approval of the proposed Transferee, Lender
shall consider Transferee’s experience in owning and operating a

 

68

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

facility similar to the Property, Transferee’s entity structure, Transferee’s
financial strength, Transferee’s general business standing and Transferee’s
relationship and experience with contractors, vendors, tenants, lenders and
other business entities;

(c) Borrower shall pay Lender (i) in connection with such proposed Assumption,
all reasonable out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys’ fees incurred by Lender and any Rating Agency approval
fees (whether such Assumption is approved or rejected), plus (ii) concurrently
with the closing of such Assumption, a nonrefundable assumption fee in an amount
equal to 0.10% of the then outstanding principal balance of the Note; provided,
however, that no assumption fee shall be required if (A) such Transferee is a
Qualified Transferee, and (B) following such Assumption the Property will be
managed by a Qualified Manager;

(d) Transferee executes and delivers a commercially reasonable assumption
agreement in which it agrees to comply with and be bound by all provisions of
the Loan Documents and to assume all of Borrower’s obligations under the Loan
Documents arising from and after the date of closing of such Assumption, and
such other documents and agreements as Lender shall reasonably require to
evidence and effectuate said Assumption;

(e) Transferee delivers such documents as Lender may reasonably require,
including, without limitation, such hazard insurance endorsements or
certificates and other similar materials as Lender may reasonably deem necessary
at the time of the Assumption, all in form and substance satisfactory to Lender,
and an endorsement or endorsements to Lender’s Title Insurance Policy, extending
the effective date of such policy to the date of execution and delivery of the
assumption agreement referenced in Section 8.1(d), with no additional exceptions
added to such Title Insurance Policy, except for items consented to by Lender or
permitted under the Loan Documents, and insuring that fee simple title to the
Property is vested in the Transferee;

(f) Borrower executes and delivers to Lender, without any cost or expense to
Lender, a release of Lender, its officers, directors, employees and agents, from
all claims and liability relating to the transactions evidenced by the Loan
Documents through and including the date of the closing of the Assumption, which
agreement shall be in form and substance satisfactory to Lender and shall be
binding upon the Transferee;

(g) Subject to Section 11.22, such Assumption is not construed so as to relieve
Borrower of any personal liability under the Note or any of the Loan Documents
for any act or events occurring or obligations arising prior to or
simultaneously with the closing of such Assumption (excluding payment of the
principal amount of the Note and interest accrued thereon) and Borrower
executes, without any cost or expense to Lender, such documents and agreements
as Lender shall reasonably require to evidence and effectuate the ratification
of such personal liability;

(h) Transferee shall furnish all appropriate documentation evidencing
Transferee’s due formation and existence in good standing and the authorization
of those Persons executing documents on behalf of Transferee to execute the
assumption of the Loan, which documentation shall include certified copies of
all documents relating to the organization, formation and good standing of
Transferee and of the entities, if any, which are partners,

 

69

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

members or shareholders of Transferee. Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be) as Lender shall
require pursuant to Section 3.1.24 shall be Special Purpose Entities in
accordance with Section 3.1.24, whose formation documents shall be reasonably
approved by counsel to Lender;

(i) Transferee shall furnish a customary opinion of counsel reasonably
satisfactory to Lender and its counsel stating that (A) Transferee’s formation
documents provide proof for the matters described in Section 8.1(h) above,
(B) the assets of Transferee will not be consolidated with the assets of any
other entity having an interest in, or affiliation with, the Transferee, in the
event of a bankruptcy or insolvency of any such entity, if such opinion is
required by the Rating Agencies after the Securitization of any portion of the
Loan, (C) the assumption agreement has been duly authorized, executed and
delivered by Transferee and the Loan Documents and the assumption agreement are
valid, binding and enforceable against the Transferee in accordance with their
terms, subject to the laws applicable to creditors’ rights and equitable
principles, (D) Transferee and any entity which is a direct or indirect
controlling stockholder, general partner or managing member of Transferee has
been duly organized and is in good standing and in existence, and (E) with
respect to such other matters as Lender may reasonably request or the Rating
Agencies may request; and

(j) After the Securitization of any portion of the Loan, Lender shall have
received a Rating Agency Confirmation in connection with the Assumption;
provided, however, that no Rating Agency Confirmation shall be required if
(i) the Transferee is a Qualified Transferee and (ii) after such Assumption the
Property will be managed by a Qualified Manager.

 

Section 8.2 Permitted Transfers of Interest in Borrower.

Notwithstanding the provisions of Section 4.2.1 and Article 6 of the Mortgage,
provided that no Default or Event of Default has occurred, the following
Transfers shall not be deemed to be a sale or encumbrance in violation of
Section 4.2.1 and Article 6 of the Mortgage: (a) transfers of interests in
Borrower for estate planning purposes to immediate family members (which shall
be limited to a spouse, parent, child and grandchild (each an “Immediate Family
Member”)) of such party or to trusts or entities created for the benefit of
Immediate Family Members provided that (i) Borrower shall provide Lender with
thirty (30) days’ prior written notice of any such permitted Transfer,
(ii) Borrower shall reimburse Lender for all costs and expenses, including
reasonable attorney’s fees incurred by Lender in connection with such permitted
Transfer, (iii) there has been no change in Control or management rights of
Borrower as a result of such Transfer, including but not limited to any sale,
encumbrance, pledge, hypothecation, or transfer of any general partner or
managing member interest in the Borrower, (iv) such Transfer has no effect on
the continuing status of Borrower as a validly existing entity in good standing
and a Special Purpose Entity in compliance with the provisions of
Section 3.1.24, (v) Borrower shall furnish Lender with copies of any
documentation executed in connection with such permitted Transfer promptly after
execution thereof, and (vi) if after giving effect to such Transfer and all
prior Transfers, more than forty-nine percent (49%) in the aggregate of direct
or indirect interests in Borrower are owned by any Person and its Affiliates
that owned less than a forty-nine percent (49%) direct or indirect interest in
Borrower as of the Closing Date, Lender receives a non-consolidation opinion
acceptable to Lender and the Rating Agencies, (b) Transfers of direct and/or
indirect interests in Borrower by operation of law or

 

70

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

upon death by devise or descent, provided that the conditions set forth in
clauses (a)(iv) and (a)(vi) above are satisfied, (c) a Transfer of less than
forty-nine percent (49%) in the aggregate (which may be pursuant to one or more
transactions during the term of the Loan) of the direct and/or indirect
ownership interests (including beneficial interests) in Borrower provided that
the conditions set forth in clauses (a)(i) through (a)(vi) above are satisfied
as to each such Transfer, (d) any Transfer of direct or indirect ownership
interests in Borrower to a Qualified Transferee, provided that following such
Transfer the Property continues to be managed by a Qualified Manager and that
the conditions set forth in clauses (a)(i), (ii), (iv), (v) and (vi) above are
satisfied, (e) any Transfers of direct or indirect ownership interests in any
entity which is listed or quoted on the New York Stock Exchange, the American
Stock Exchange, or NASDAQ, or any successor exchange, and (f) any Transfers of
shares of RREEF, provided that (i) following such Transfer RREEF shall continue
to be under the day-to-day advisement of RREEF America L.L.C. or an Affiliate
thereof, as investment advisor to RREEF, (ii) if after giving effect to such
Transfer and all prior Transfers, more than forty-nine percent (49%) in the
aggregate of shares in RREEF are owned by a single Person or group of Affiliated
Persons, then such Person or group of Affiliated Persons must be a Qualified
Transferee, and (iii) the conditions set forth in clauses (a)(iv) and (a)(vi)
above are satisfied.

IX. SALE AND SECURITIZATION OF MORTGAGE

 

Section 9.1 Sale of Mortgage and Secondary Market Transactions.

9.1.1 General. Lender shall have the right (a) to sell or otherwise transfer the
Loan or any portion thereof as a whole loan, (b) to sell participation interests
in the Loan or (c) to securitize the Loan or any portion thereof in a single
asset securitization or a pooled loan securitization. (Each transaction referred
to in clauses (a), (b) and (c) shall hereinafter be referred to as a “Secondary
Market Transaction” and each transaction referred to in clause (c) shall
hereinafter be referred to as a “Securitization.” Any certificates, notes or
other securities issued in connection with a Securitization are hereinafter
referred to as “Securities.”)

9.1.2 Borrower’s Cooperation. If requested by Lender and subject to
Section 9.1.4, Borrower shall reasonably cooperate with 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
Secondary Market Transactions, including, without limitation, to:

(a) provide updated financial and other information with respect to the
Property, the business operated at the Property, Borrower and the Manager,
(ii) provide updated budgets relating to the Property and (iii) cooperate with
third party service providers engaged by Lender to provide updated appraisals,
market studies, environmental reviews (Phase I’s and, if appropriate, Phase
II’s), property condition reports and other due diligence investigations of the
Property (collectively, the “Updated Information”), together, if customary, with
reasonably requested back-up of such Updated Information reasonably acceptable
to Lender and acceptable to the Rating Agencies;

(b) provide opinions of counsel, which may be relied upon by Lender, the Rating
Agencies and their respective counsel, agents and representatives, as to
non-consolidation and/or any other opinion required by the Rating Agencies with
respect to the Property and Borrower and Affiliates (other than any 10(b)(5)
opinion, a fraudulent conveyance opinion or a true sale opinion), which counsel
and opinions shall be satisfactory to the Rating Agencies;

 

71

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

(c) provide updated, as of the closing date of the Secondary Market Transaction,
representations and warranties made in the Loan Documents as the Rating Agencies
may require;

(d) execute amendments to the Loan Documents and Borrower’s organizational
documents reasonably requested by Lender; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (i) change the interest rate, the stated maturity or the
amortization of principal as set forth herein or in the Note, or (ii) modify or
amend any other material economic term of the Loan, create any additional
Borrower obligations or otherwise adversely affect the rights of Borrower under
the Loan Documents; and

9.1.3 Regulation AB. Subject to the provisions of Section 9.1.4, Borrower shall
cooperate with respect to compliance with Regulation AB in the manner set forth
below:

(a) If at the time one or more Disclosure Documents are being prepared for a
Securitization and Lender reasonably expects that Borrower alone or Borrower and
one or more Affiliates of Borrower collectively, or the Property alone or the
Property and Related Properties collectively, will be a Significant Obligor for
purposes of Regulation AB, Borrower shall furnish to Lender upon request
information required under Item 1119 of Regulation AB, if any, and Item 1112(a)
of Regulation AB and (i) the selected financial data or, if applicable, Net
Operating Income, required under Item 1112(b)(1) of Regulation AB, if Lender
expects that the principal amount of the Loan together with any Related Loans as
of the cut-off date for such Securitization may, or if the principal amount of
the Loan together with any Related Loans as of the cut-off date for such
Securitization does, equal or exceed ten percent (10%) (but less than twenty
percent (20%)) of the aggregate principal amount of all mortgage loans included
or expected to be included, as applicable, in the Securitization or (ii) the
financial statements required under Item 1112(b)(2) of Regulation AB, if Lender
expects that the principal amount of the Loan together with any Related Loans as
of the cut-off date for such Securitization may, or if the principal amount of
the Loan together with any Related Loans as of the cut-off date for such
Securitization does, equal or exceed twenty percent (20%) of the aggregate
principal amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization. Such information and financial data or
financial statements shall be furnished to Lender within ten (10) Business Days
after notice from Lender in connection with the preparation of Disclosure
Documents for the Securitization. Following the closing of the Securitization,
so long as the issuer in the Securitization is required to file reports on Form
8-K, Form 10-D or Form 10-K pursuant to Section 13(a) and/or Section 15(d) of
the Exchange Act (each, an “Exchange Act Filing”), such information and
financial data or financial statements shall be furnished to Lender, (A) not
later than thirty (30) days after the end of each fiscal quarter of Borrower and
(B) not later than seventy-five (75) days after the end of each Fiscal Year of
Borrower. To the extent it meets the requirements of Regulation AB, Borrower
also authorizes the applicable issuer in the Securitization to incorporate by
reference such financial statements and/or financial data from its Exchange Act
Filings or the Exchange Act Filings of a parent entity that contains Borrower’s
stand-alone financial statements and/or financial data. If required pursuant to
Regulation AB,

 

72

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

Borrower shall furnish to Lender such information and financial data and/or
financial statements for any tenant of any of the Properties if, in connection
with a Securitization, Lender expects there to be, with respect to such tenant
or group of affiliated tenants, a concentration within all of the mortgage loans
included or expected to be included, as applicable, in the Securitization such
that such tenant or group of affiliated tenants would constitute a Significant
Obligor. Notwithstanding anything to the contrary in this Section 9.1.3, in no
event will Borrower be required to provide information regarding the identity of
the shareholders in RREEF.

(b) All financial data and financial statements provided by Borrower pursuant to
Section 9.1.3(a) shall be prepared in accordance with GAAP applied on a
consistent basis, shall meet the requirements of Regulation AB, and shall
present fairly in all material respects the consolidated financial position of
the Significant Obligor as of the dates indicated and the consolidated results
of operations and cash flows of the Significant Obligor for the dates indicated,
or the other information shown therein, as applicable. All financial statements
relating to a Fiscal Year shall be audited by the independent accountants in
accordance with generally accepted auditing standards, Regulation S-X and all
other applicable Legal Requirements, shall be accompanied by the manually
executed report of the independent accountants thereon, which report shall meet
the requirements of Regulation AB and Regulation S-X, and shall be further
accompanied by a manually executed written consent of the independent
accountants, in form and substance acceptable to Lender, to the inclusion of
such financial statements in any Disclosure Document and any Exchange Act Filing
and to the use of the name of such independent accountants and the reference to
such independent accountants as “experts” in any Disclosure Document and
Exchange Act Filing, all of which shall be provided at the same time as the
related financial statements are required to be provided. All other financial
data and financial statements shall be certified by the general partner,
managing member or authorized senior officer of Borrower, which certification
shall state that such financial data and financial statements meet the
requirements set forth in the first sentence of this paragraph.

(c) Borrower shall promptly provide any other or additional information or
financial statements, including without limitation, financial, statistical or
operating information, as shall be required pursuant to Regulation AB in
connection with any Disclosure Document or any Exchange Act Filing or as shall
otherwise be reasonably requested by Lender to meet disclosure, Rating Agency or
marketing requirements.

9.1.4 Costs. All costs and expenses incurred by Lender in connection with any
Secondary Market Transaction and all reasonable out-of-pocket costs and expenses
incurred by Borrower in connection with Borrower’s complying with requests made
pursuant to this Section 9.1 shall be paid by Lender; provided, however, that
the foregoing shall not require Lender to pay or reimburse Borrower for any
costs and expenses to provide any items required pursuant to the provisions of
this Section 9.1 that Borrower would otherwise be required to pay for or to
reimburse Lender for under this Agreement in the event that no Secondary Market
Transaction had occurred.

 

Section 9.2 Securitization Indemnification.

9.2.1 Use of Information. Borrower understands that all or any portion of the
Updated Information, including without limitation the information and financial
statements

 

73

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

and/or financial data provided pursuant to Section 9.1, may be included in
disclosure documents in connection with a Secondary Market Transaction,
including, without limitation, an offering circular, a prospectus, prospectus
supplement, free writing prospectus, private placement memorandum or other
offering document (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 Exchange Act
of 1934, as amended (the “Exchange Act”), and may be 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. In the
event any Disclosure Document is required to be revised or it comes to
Borrower’s attention that the Updated Information contains material mistakes or
omissions, Borrower shall reasonably cooperate with Lender (subject to
Section 9.1.4) in updating the Updated Information 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, Borrower Affiliates, the Property and Manager necessary to keep the
Disclosure Document accurate and complete in all material respects with respect
to such matters.

9.2.2 Borrower Obligations Regarding Disclosure Documents. Borrower shall, in
connection with each Disclosure Document: (A) certify in writing that Borrower
has examined such Disclosure Documents specified by Lender and that those
specific sections of such Disclosure Documents examined by Borrower which
expressly relate to Borrower, Borrower Affiliates, the Property and Manager (the
“Covered Disclosure Information”), do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, (B) indemnify Lender or any Affiliate of Lender that has filed
any registration statement relating to the Securitization or has acted as the
sponsor or depositor in connection with the Securitization or an underwriter,
placement agent or initial purchaser of Securities issued in the Securitization,
and each of their respective officers, directors, partners, employees,
representatives and agents and each Person who controls any such Person within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act (collectively, the “Disclosure Indemnified Parties”) for any actual
out-of-pocket losses, claims, damages or liabilities (collectively, the
“Disclosure Liabilities”) to which a Disclosure Indemnified Party may become
subject insofar as the Disclosure Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Covered Disclosure Information or arise out of or are based upon the
omission or alleged omission to state in the Covered Disclosure Information a
material fact required to be stated therein or necessary in order to make the
statements in the Covered Disclosure Information, in light of the circumstances
under which they were made, not misleading; provided, however, that Borrower
shall not be required to indemnify such Disclosure Indemnified Parties for any
Disclosure Liabilities arising from any untrue statement or omission which
Borrower specifically identified to Lender in writing at the time of Borrower’s
examination of the applicable Disclosure Document, and (C) reimburse each
Disclosure Indemnified Party for any legal or other expenses reasonably incurred
by such Disclosure Indemnified Party in connection with investigating or
defending the Disclosure Liabilities; provided, however, that Borrower will be
liable in any such case under clauses (B) or (C) above only to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of

 

74

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

Borrower in connection with the preparation of the Disclosure Document or in
connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of Borrower, operating statements and rent
rolls with respect to the Property. This indemnity agreement will be in addition
to any liability which Borrower may otherwise have. Moreover, the
indemnification and reimbursement obligations provided in clauses (B) and
(C) above shall be effective, valid and binding obligations of Borrower whether
or not a certification described in clause (A) above is provided.

9.2.3 Borrower’s Additional Indemnity. In connection with Exchange Act Filings,
Borrower shall (i) indemnify the Disclosure Indemnified Parties for Disclosure
Liabilities to which any such Disclosure Indemnified Party may become subject
insofar as the Disclosure Liabilities arise out of or are based upon (A) any
untrue statement or alleged untrue statement of any material fact in the
information, financial statements and/or financial data provided pursuant to
Section 9.1.3, or the omission or alleged omission to state in such information,
financial statements and/or financial data a material fact required to be stated
therein in order to make the statements in such information, financial
statements and/or financial data, in light of the circumstances under which they
were made, not misleading, or (B) Borrower’s failure to timely provide the
information and documentation required pursuant to Section 9.1 and Regulation
AB, or Borrower’s failure to otherwise comply with the provisions of Section 9.1
or Regulation AB, and (ii) reimburse each Disclosure Indemnified Party for any
legal or other expenses reasonably incurred by such Disclosure Indemnified Party
in connection with defending or investigating such Disclosure Liabilities.

9.2.4 Indemnification Procedure. Promptly after receipt by an indemnified party
under this Section 9.2 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9.2, notify the indemnifying party in
writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any liability
which the indemnifying party may have to any indemnified party hereunder except
to the extent that failure to notify causes prejudice to the indemnifying party.
In the event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party 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 from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this Section 9.2, such indemnified party shall
pay for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the 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 the indemnifying, party, 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 at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.

 

75

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

9.2.5 Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Sections 9.2.2 or
9.2.3 is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2.2 or 9.2.3, the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or 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 who was 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: (i) Lender’s and Borrower’s relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.

9.2.6 Survival. The liabilities and obligations of both Borrower and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

 

Section 9.3 Rating Surveillance.

Lender may, at Lender’s option and sole expense, retain the Rating Agencies to
provide rating surveillance services on any Securities issued in a
Securitization.

 

Section 9.4 Component Notes

Lender, without in any way limiting Lender’s other rights hereunder, in its sole
and absolute discretion, shall have the right at any time to require Borrower to
execute and deliver “component” notes (including senior and junior notes), which
notes may be paid in such order of priority as may be designated by Lender,
provided that (i) the aggregate principal amount of such “component” notes shall
equal the outstanding principal balance of the Loan immediately prior to the
creation of such “component” notes, (ii) the weighted average interest rate of
all such “component” notes shall on the date created equal the Applicable
Interest Rate, (iii) the debt service payments on all such “component” notes
shall on the date created equal the debt service payment which was due under the
Loan immediately prior to the creation of such component notes and (iv) the
other terms and provisions of each of the “component” notes shall be identical
in substance and substantially similar in form to the Loan Documents. Subject to
the provisions of Section 9.1.4, Borrower shall cooperate with all reasonable
requests of Lender in order to establish the “component” notes and shall execute
and deliver such documents as shall reasonably be required by Lender and any
Rating Agency in connection therewith, all in form and substance reasonably
satisfactory to Lender and satisfactory to any Rating Agency, including, without
limitation, the severance of security documents if requested. In the event

 

76

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

Borrower fails to execute and deliver such documents to Lender within ten
(10) Business Days following such request by Lender, Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect such transactions, Borrower ratifying all that such attorney
shall do by virtue thereof. It shall be an Event of Default under this
Agreement, the Note, the Mortgage and the other Loan Documents if Borrower fails
to comply with any of the terms, covenants or conditions of this Section 9.4
after expiration of fifteen (15) Business Days after notice thereof.

X. DEFAULTS

 

Section 10.1 Event of Default.

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

(i) if (A) any monthly installment of principal and/or interest due under the
Note is not paid within five (5) days after the same is due, (B) the payment due
on the Maturity Date is not paid when due, or (C) any other portion of the Debt
is not paid within five (5) days after notice to Borrower from Lender that same
is due and payable;

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

(iii) if the Policies are not kept in full force and effect, or if Borrower does
not deliver to Lender either the Policies or certificates of insurance as
required pursuant to Section 5.1.1(b), within the time periods set forth in such
Section;

(iv) if, in violation of any of the provisions of the Loan Documents, Borrower
suffers or permits a Transfer without Lender’s prior written consent (unless
specifically permitted by Article 8), or otherwise breaches or permits or
suffers a breach of Section 4.2.1 or Article 6 of the Mortgage;

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

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

(vii) if a receiver, liquidator or trustee shall be appointed for Borrower or
any Required SPE, or if Borrower or any Required SPE shall be adjudicated a
bankrupt or insolvent, or if 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
or any Required SPE, or if any proceeding for the dissolution or liquidation of
Borrower or any Required SPE shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or any Required SPE, upon the same not being
discharged, stayed or dismissed within sixty (60) days;

 

77

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

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

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

(x) if Borrower breaches any representation, warranty or covenant contained in
Section 3.1.24 (Special Purpose Entity) hereof;

(xi) if Borrower fails to comply with the covenants as to Prescribed Laws set
forth in Section 4.1.1;

(xii) if Borrower breaches any of the negative covenants contained in Sections
4.2.2 (Liens) or 4.2.3 (Dissolution);

(xiii) failure of Borrower to comply with the financial reporting requirements
of Section 4.1.6 within 20 days after notice from Lender;

(xiv) if Borrower shall continue to be in default under any of the terms,
covenants or conditions of Section 9.1 hereof for ten (10) Business Days after
notice to Borrower from Lender;

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

(xvi) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in Subsections (i) to
(xv) above, for thirty (30) days after notice to Borrower from Lender, in the
case of any Default which can be cured by the payment of a sum of money, or for
sixty (60) 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 60 day period and provided further that
Borrower shall have commenced to cure such Default within such 60 day period and
thereafter diligently and expeditiously proceeds to cure the same, such 60 day
period shall be extended for such time as is reasonably necessary for Borrower
in the exercise of due diligence to cure such Default, such additional period
not to exceed ninety (90) days;

(xvii) if any other such event shall occur or condition shall exist, if the
effect of such event or condition is to accelerate the maturity of any portion
of the Debt or to permit Lender to accelerate the maturity of all or any portion
of the Debt; or

 

78

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

(xviii) if there shall be default under any of the other Loan Documents beyond
any applicable cure periods contained in such Loan Documents.

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

 

Section 10.2 Remedies.

(a) Upon the occurrence of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Property. 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 in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) to the
maximum extent permitted by applicable law, Lender is not subject to any “one
action” or “election of remedies” law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Property and
the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

(b) Lender shall have the right from time to time to partially foreclose the
Mortgage in any manner and for any amounts secured by the Mortgage then due and
payable as determined by Lender in its sole discretion including, without
limitation, 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 Mortgage 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 Mortgage to recover so much of the principal balance of the Loan as Lender
may accelerate and such other sums secured by the Mortgage as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and
not previously recovered.

 

79

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

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

(d) Any amounts recovered from the Property or any other collateral for the Loan
after an Event of Default may be applied by Lender toward the payment of any
interest and/or principal of the Loan and/or any other amounts due under the
Loan Documents in such order, priority and proportions as Lender in its sole
discretion shall determine.

 

Section 10.3 Right to Cure Defaults.

Upon an Event of Default, Lender may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder or being deemed to have cured any Event of Default
hereunder, make, do or perform any obligation of Borrower hereunder in such
manner and to such extent as Lender may deem necessary. Lender is authorized to
enter upon the Property for such purposes, or appear in, defend, or bring any
action or proceeding to protect its interest in the Property for such purposes,
and the cost and expense thereof (including reasonable attorneys’ fees to the
extent permitted by law), with interest as provided in this Section 10.3, shall
constitute a portion of the Debt and shall be due and payable to Lender upon
demand. All such costs and expenses incurred by Lender in remedying such Event
of Default or such failed payment or act or in appearing in, defending, or
bringing any action or proceeding shall bear interest at the Default Rate, for
the period after such cost or expense was incurred into the date of payment to
Lender. All such costs and expenses incurred by Lender together with interest
thereon calculated at the Default Rate shall be deemed to constitute a portion
of the Debt and be secured by the liens, claims and security interests provided
to Lender under the Loan Documents and shall be immediately due and payable upon
demand by Lender therefor.

 

80

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

Section 10.4 Remedies Cumulative.

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

XI. MISCELLANEOUS

 

Section 11.1 Successors and Assigns.

All covenants, promises and agreements in this Agreement, by or on behalf of
Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.

 

Section 11.2 Lender’s Discretion.

Whenever pursuant to this Agreement Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender’s determination of
Rating Agency criteria, shall be substituted therefor.

 

Section 11.3 Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES, AND BORROWER AGREES THAT THE PROPER VENUE FOR ANY
MATTERS IN CONNECTION HEREWITH SHALL BE IN THE STATE OR FEDERAL COURTS LOCATED
IN SAN FRANCISCO, CALIFORNIA, AS LENDER MAY ELECT AND BORROWER HEREBY SUBMITS
ITSELF TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ADJUDICATING ANY
MATTERS RELATED TO THE LOAN, PROVIDED, HOWEVER, THAT TO THE EXTENT THE MANDATORY
PROVISIONS OF THE LAWS OF ANOTHER JURISDICTION RELATING TO (i) THE PERFECTION OR
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTERESTS IN

 

81

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

ANY OF THE PROPERTY, (ii) THE LIEN, ENCUMBRANCE OR OTHER INTEREST IN THE
PROPERTY GRANTED OR CONVEYED BY THE MORTGAGE, OR (iii) THE AVAILABILITY OF AND
PROCEDURES RELATING TO ANY REMEDY HEREUNDER OR RELATED TO THE MORTGAGE ARE
REQUIRED TO BE GOVERNED BY SUCH OTHER JURISDICTION’S LAWS, SUCH OTHER LAWS SHALL
BE DEEMED TO GOVERN AND CONTROL. THE INVALIDITY, ILLEGALITY OR UNENFORCEABILITY
OF ANY PROVISION OF THIS AGREEMENT OR THE LOAN DOCUMENTS SHALL NOT AFFECT OR
IMPAIR THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THE REMAINDER OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND TO THIS END, THE PROVISIONS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE DECLARED TO BE SEVERABLE.

 

Section 11.4 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 against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.

 

Section 11.5 Delay Not a Waiver.

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under 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
this Agreement or any other Loan Document, Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement or the other Loan Documents, or to declare a 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.

 

Section 11.6 Notices.

All notices, demands, requests, consents, approvals or other communications (any
of the foregoing, a “Notice”) required, permitted, or desired to be given
hereunder shall be in writing sent by telefax (with answer back acknowledged) or
by registered or certified mail, postage prepaid, return receipt requested, or
delivered by hand or reputable overnight courier addressed to the party to be so
notified at its address hereinafter set forth, or to such other address as such
party may hereafter specify in accordance with the provisions of this
Section 11.6. Any Notice shall be deemed to have been received: (a) three
(3) days after the date such Notice is mailed, (b) on the date of sending by
telefax if sent during business hours on a Business Day (otherwise on the next
Business Day), (c) on the date of delivery by hand if

 

82

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

delivered during business hours on a Business Day (otherwise on the next
Business Day), and (d) on the next Business Day if sent by an overnight
commercial courier, in each case addressed to the parties as follows:

 

If to Lender:   

LaSalle Bank National Association

135 South LaSalle Street, Suite 3410

Chicago, Illinois 60603

Attention: Real Estate Capital Markets – Servicing Department

Facsimile No. (312) 904-0900

Re: Northern California Portfolio

with a copy to:   

LaSalle Bank National Association

135 South LaSalle Street, Suite 3400

Chicago, Illinois 60603

Attention: Nathan Stearns, Chief Operating Officer

Facsimile No. (312) 904-0900

with a copy to:   

Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois 60661-3693

Attention: David R. Dlugie, Esq.

Facsimile No. (312) 577-8666

Re: Northern California Portfolio (210029-820)

If to Borrower:   

Northern California Industrial Portfolio, Inc.

c/o RREEF America L.L.C.

101 California Street, 26th Floor

San Francisco, California 94111

Attention: Albert Pura

Facsimile No. (415) 986-6247

and:   

Orrick, Herrington & Sutcliffe LLP

405 Howard Street

San Francisco, California 94105

Attention: Michael H. Liever, Esq.

Facsimile No. (415) 773-5759

 

Section 11.7 Trial by Jury.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH
HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN

 

83

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

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. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

Section 11.8 Headings.

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

 

Section 11.9 Severability.

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

 

Section 11.10 Preferences.

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

 

Section 11.11 Waiver of Notice.

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

 

Section 11.12 Remedies of Borrower.

In the event that a claim or adjudication is made that Lender or its agents have
acted unreasonably or unreasonably delayed acting in any case where, by law or
under this Agreement or the other Loan Documents, Lender or such agent, as the
case may be, has an

 

84

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

obligation to act reasonably or promptly, neither Lender nor its agents shall be
liable for any monetary damages, and Borrower’s sole remedy shall be limited to
commencing 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.

 

Section 11.13 Expenses; Indemnity.

(a) Except as otherwise expressly provided herein, Borrower shall pay or, if
Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for
all reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and, except as otherwise expressly provided herein, all the costs of
furnishing all opinions by counsel for Borrower (including, without limitation,
any opinions requested by Lender pursuant to the Loan Documents as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Property); (ii) Borrower’s ongoing performance of and compliance with
Borrower’s agreements and covenants contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date, including, without limitation, confirming compliance with environmental
and insurance requirements; (iii) Lender’s ongoing performance of and compliance
with all agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iv) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Borrower;
(v) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred, in creating and perfecting the
Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vi) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Property, or any other security given for the
Loan; and (vii) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect to the
Property or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work out” or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. At any time during a Cash Management Period, any costs due
and payable to Lender which are not paid within ten (10) days after written
demand may be paid to Lender pursuant to the Cash Management Agreement.

(b) Borrower shall defend, indemnify and hold harmless Lender 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
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs,

 

85

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

expenses and disbursements of any kind or nature whatsoever (including the
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: (i) any breach by Borrower of its obligations
under, or any misrepresentation by Borrower contained in, any Loan Document;
(ii) the use or intended use of the proceeds of the Loan; 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 arose from the 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 within ten
(10) Business Days after demand therefor 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 11.13(b)
shall survive the term of the Loan and the exercise by Lender of any of its
rights or remedies under the Loan Documents, including the acquisition of any
Property by foreclosure or a conveyance in lieu of foreclosure.

 

Section 11.14 Schedules and Exhibits Incorporated.

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

 

Section 11.15 Offsets, Counterclaims and Defenses.

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

 

Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.

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

(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and nothing contained in this Agreement or the other Loan Documents shall
be deemed to confer upon anyone other than Lender any right to insist upon or to
enforce the performance or observance of any of the obligations contained herein
or therein. All conditions to the obligations of Lender to make the Loan
hereunder are imposed solely and exclusively for

 

86

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

the benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

 

Section 11.17 Publicity.

All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the Loan, or Lender, a Loan purchaser, the Servicer or the trustee
in a Secondary Market Transaction, shall be subject to the prior reasonable
approval of Lender.

 

Section 11.18 Waiver of Marshalling of Assets.

To the fullest extent permitted by law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower’s partners and others with interests in Borrower, and of the Property,
and 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 Property for the collection of the Debt without any prior or different
resort for collection or of the right of Lender to the payment of the Debt out
of the net proceeds of the Property in preference to every other claimant
whatsoever.

 

Section 11.19 Waiver of Offsets/Defenses/Counterclaims.

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 or otherwise to offset any obligations to make the payments
required by the Loan Documents. No failure by Lender to perform any of its
obligations hereunder shall be a valid defense to, or result in any offset
against, any payments which Borrower is obligated to make under any of the Loan
Documents.

 

Section 11.20 Conflict; Construction of Documents; Reliance.

In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or

 

87

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

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

 

Section 11.21 Brokers and Financial Advisors.

Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower shall indemnify,
defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 11.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.

 

Section 11.22 Exculpation.

Subject to the qualifications below and to Section 7.10 of the Mortgage, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Property, the Rents, or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower’s interest in the Property, in the Rents
and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan Documents, shall not sue for,
seek or demand any deficiency judgment against Borrower in any such action or
proceeding under or by reason of or under or in connection with the Note, this
Agreement, the Mortgage or the other Loan Documents. The provisions of this
Section 11.22 shall not, however, (a) constitute a waiver, release or impairment
of any obligation evidenced or secured by any of the Loan Documents; (b) impair
the right of Lender to name Borrower as a party defendant in any action or suit
for foreclosure and sale under the Mortgage; (c) affect the validity or
enforceability of the Loan Documents or any guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the
right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases; (f) 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 Mortgage or to exercise its
remedies against the Property; or (g) 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:

(i) fraud or willful material misrepresentation by Borrower in connection with
the Loan;

 

88

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

(ii) the gross negligence or willful misconduct of Borrower;

(iii) the breach of any representation, warranty or covenant in the Mortgage or
the Environmental Indemnity concerning environmental laws, hazardous substances
and asbestos and any indemnification of Lender with respect thereto in either
document;

(iv) physical waste of the Property or the removal or disposal of any portion of
the Property after an Event of Default;

(v) the misapplication, misappropriation or conversion by Borrower of (A) any
insurance proceeds paid by reason of any loss, damage or destruction to the
Property, (B) any Awards or other amounts received in connection with the
Condemnation of all or a portion of the Property, or (C) any Rents following an
Event of Default;

(vi) failure to pay, prior to same becoming delinquent, charges for labor or
materials or other charges that can create Liens on any portion of the Property;

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

(viii) Borrower or any Required SPE fails to maintain its status as a Special
Purpose Entity, or any other breach of the provisions of Section 3.1.24.

Notwithstanding anything to the contrary in this Agreement, the Note 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
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) the first full monthly payment
of interest under the Note is not paid when due; (ii) Borrower fails to obtain
Lender’s prior consent to any subordinate financing or other voluntary Lien
encumbering the Property in violation of the terms of this Agreement; (iii) a
Transfer occurs in violation of Section 4.2.1 or the Mortgage, other than as
expressly permitted pursuant to Article VIII of this Agreement; (iv) Borrower
files a voluntary petition under the Bankruptcy code or any other Federal or
state bankruptcy or insolvency law; (v) an Affiliate, officer, director, or
representative which controls, directly or indirectly, Borrower files, or joins
in the filing of, an involuntary petition against Borrower under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or solicits or
causes to be solicited petitioning creditors for any involuntary petition
against Borrower from any Person; (vi) Borrower files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any

 

89

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

other Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person;
(vii) any Affiliate, officer, director, or representative which controls
Borrower consents to or acquiesces in or joins in an application for the
appointment of a custodian, receiver, trustee, or examiner for Borrower or any
portion of the Property; or (viii) Borrower 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.

 

Section 11.23 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, including, without limitation,
the term sheet dated October 10, 2006 (as amended) between Borrower and Lender,
are superseded by the terms of this Agreement and the other Loan Documents.

 

Section 11.24 Servicer.

(a) At the option of Lender, the Loan may be serviced by a servicer (the
“Servicer”) selected by Lender 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 Servicer. Borrower shall not be responsible for any set-up fees or
other costs relating to or arising under the Servicing Agreement, including the
monthly servicing fee due to the Servicer under the Servicing Agreement.
Servicer shall, however, be entitled to reimbursement of reasonable costs and
expenses as and to the same extent (but without duplication) as Lender is
entitled thereto under the applicable provisions of this Agreement and the other
Loan Documents. Borrower shall pay any reasonable fees and expenses of the
Servicer (i) in connection with a release or substitution of the Property (or
any portion thereof), (ii) from and after a transfer of the Loan to any “master
servicer” or “special servicer” for any reason, including without limitation, as
a result of a decline in the occupancy level of the Property, (iii) in
connection with any Assumption or modification of the Loan, (iv) in connection
with the enforcement of the Loan Documents, or (v) in connection with any other
action or approval taken by Servicer hereunder on behalf of Lender at the
request of Borrower.

(b) Upon notice thereof from Lender, Servicer shall have the right to exercise
all rights of Lender and enforce all obligations of Borrower pursuant to the
provisions of this Agreement, the Note and the other Loan Documents.

(c) Provided Borrower shall have been given notice of Servicer’s address by
Lender, Borrower shall deliver to Servicer duplicate originals of all notices
and other instruments which Borrower may or shall be required to deliver to
Lender pursuant to this Agreement, the Note and the other Loan Documents (and no
deliver of such notices or other instruments by Borrower shall be of any force
or effect unless delivered to Lender and Servicer as provided above).

 

90

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

Section 11.25 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.

 

Section 11.26 Creation of Security Interest.

Notwithstanding any other provision set forth in this Agreement, the Note, the
Mortgage 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 Mortgage and any other Loan Document (including, without limitation,
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.

 

Section 11.27 Assignments and Participations.

(a) The Lender may assign to one or more Persons all or a portion of its rights
and obligations under this Loan Agreement.

(b) Upon such execution and delivery, from and after the effective date
specified in any such assignment, the assignee thereunder shall be a party
hereto and have the rights and obligations of Lender hereunder.

(c) Lender may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under this Loan Agreement; provided,
however, that (i) Lender’s obligations under this Loan Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (ii) Lender shall remain the
holder of any Note for all purposes of this Loan Agreement and (iv) Borrower
shall continue to deal solely and directly with Lender in connection with
Lender’s rights and obligations under and in respect of this Loan Agreement and
the other Loan Documents.

(d) Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 11.27, disclose to the
assignee or participant or proposed assignee or participant, as the case may be,
any information relating to Borrower or any of its Affiliates or to any aspect
of the Loan that has been furnished to the Lender by or on behalf of the
Borrower or any of its Affiliates.

 

Section 11.28 Set-Off.

In addition to any rights and remedies of Lender provided by this Loan Agreement
and by law, the Lender shall have the right, 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) 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,

 

91

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

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.

 

Section 11.29 Provisions Regarding Letters of Credit.

(a) Security for Debt. Each Letter of Credit delivered under this Agreement
shall be additional security for the payment of the Debt. Upon the occurrence of
an Event of Default, Lender shall have the right, at its option, to draw on any
Letter of Credit and to apply all or any part thereof to the payment of the
items for which such Letter of Credit was established or to apply each such
Letter of Credit to payment of the Debt in such order, proportion or priority as
Lender may determine. Any such application to the Debt shall be subject to the
Default Prepayment Consideration. On the Maturity Date, any such Letter of
Credit may be applied to reduce the Debt.

(b) Additional Rights of Lender. In addition to any other right Lender may have
to draw upon a Letter of Credit pursuant to the terms and conditions of this
Agreement, Lender shall have the additional rights to draw in full any Letter of
Credit: (a) with respect to any evergreen Letter of Credit, if Lender has
received a notice from the issuing bank that the Letter of Credit will not be
renewed and a substitute Letter of Credit is not provided at least thirty
(30) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (b) with respect to any Letter of Credit with a stated
expiration date, if Lender has not received a notice from the issuing bank that
it has renewed the Letter of Credit at least thirty (30) days prior to the date
on which such Letter of Credit is scheduled to expire and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (c) upon receipt of notice
from the issuing bank that the Letter of Credit’ will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided at
least thirty (30) days prior to the date on which such Letter of Credit is
scheduled to terminate); or (d) if Lender has received notice that the bank
issuing the Letter of Credit shall cease to be an Approved Bank. Notwithstanding
anything to the contrary contained in the above, Lender is not obligated to draw
any Letter of Credit upon the happening of an event specified in (a), (b),
(c) or (d) above and shall not be liable for any losses sustained by Borrower
due to the insolvency of the bank issuing the Letter of Credit if Lender has not
drawn the Letter of Credit.

[NO FURTHER TEXT ON THIS PAGE]

 

92

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

IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.

 

LENDER: LASALLE BANK NATIONAL ASSOCIATION, a national banking association By:  

/s/ Ashish Parikh

  Name:   ASHISH PARIKH   Title:   DIRECTOR BORROWER: NORTHERN CALIFORNIA
INDUSTRIAL PORTFOLIO, INC., a Maryland corporation By:  

/s/ Paul Melkus

    Paul A. Melkus   Title:   Vice President

 

93

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

SCHEDULE I

LOCATION OF PROPERTIES

Bay Center Business Park I

26250-26260 Eden Landing Road, Hayward, California 94545

3556-3565 Investment Blvd., Hayward, California 94545

3551-3566 Arden Road, Hayward, California 94545

3582-3588 Arden Road, Hayward, California 94545

3540-3550 Arden Road, Hayward, California 94545

Bay Center Business Park II

3832 Bay Center Place, Hayward, California 94545

3851 & 3857 Breakwater Avenue, Hayward, California 94545

3848, 3854, 3856 & 3858 Bay Center Place, Hayward, California 94545

3860-3876 Bay Center Place, Hayward, California 94545

Bay Center Business Park III

25531 Whitesell Street, Hayward, California 94545

3825 Bay Center Place, Hayward, California 94545

Bay Center Distribution Center

3875 Bay Center Place, Hayward, California 94545

Cabot Boulevard Warehouse

21001 Cabot Boulevard, Hayward, California 94545

Wiegman Distribution Center

30750, 30746 & 30736 Wiegman Road, Hayward, California 94544

Hayward Business Park

1495 Zephyr Avenue, Hayward, California 94544

 

Sch. I-1

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

1501-1513 Zephyr Avenue, Hayward, California 94544

1502-1520 Crocker Avenue, Hayward, California 94544

30677-30695 Huntwood Avenue, Hayward, California 94544

30800-30826 Santana Street, Hayward, California 94544

30803-30805 Santana Street, Hayward, California 94544

30962-30996 Santana Street, Hayward, California 94544

30973-30985 Santana Street, Hayward, California 94544

Huntwood Business Center

1236-1288 San Luis Obispo Avenue, Hayward, California 94544

1875-1887 Whipple Road/31348-31395 Huntwood Avenue, Hayward, California 94544

1837-1867 Whipple Road/31351-31395 Medallion Drive, Hayward, California 94544

31348-31395 Huntwood Avenue

Eden Landing Business Center

26227-26269 Research Road, Hayward, California 94545

Doolittle Business Center

1437 Doolittle Drive, San Leandro, California 94577

1451 Doolittle Drive, San Leandro, California 94577

1461 Doolittle Drive, San Leandro, California 94577

1471-1499 Doolittle Drive, San Leandro, California 94577

Port of Oakland Business Center

7303 Edgewater Drive, Oakland, California 94621

7305 Edgewater Drive, Oakland, California 94621

7307 Edgewater Drive, Oakland, California 94621

Bayview Business Center

2901-2949 Bayview Drive, Fremont, California 94538

 

Sch. I-2

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

48000-48016 Fremont Blvd., Fremont, California 94538

Freemont Commerce Center

41638-41758 Christy Street, Fremont California 94538

41762-41786 Christy Street, Fremont California 94538

41460-41484 Christy Street, Fremont California 94538

41444-41458 Christy Street, Fremont California 94538

Industrial Drive

45133-45169 Industrial Drive, Fremont, California 94538

Cadillac Court I

1151-1181 Cadillac Court, Milpitas, California 95035

Cadillac Court II

1123-1141 Cadillac Court, Milpitas, California 95035

COG Warehouse

931 Cadillac Court, Milpitas, California 95035

Dixon Landing Business Park

1850-1880 Milmont Drive, Milpitas, California 95035

1909-1971 Milmont Drive, Milpitas, California 95035

1940 Milmont Drive, Milpitas, California 95035

411-431 Dixon Landing Rd, Milpitas, California 95035

Okidata Distribution Center

1001 Cadillac Court, Milpitas, California 95035

Charcot Business Center

721-751 Charcot Avenue, San Jose, California 95131

2023-2035 O’Toole Avenue, San Jose, California 95131

2142-2158 Paragon Drive, San Jose, California 95131

 

Sch. I-3

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

2170-2190 Paragon Drive, San Jose, California 95131

Montague Industrial Center

1510-1518 Montague Expressway, San Jose, California 95131

1520-1528 Montague Expressway, San Jose, California 95131

1530-1538 Montague Expressway, San Jose, California 95131

1540-1548 Montague Expressway, San Jose, California 95131

1550-1558 Montague Expressway, San Jose, California 95131

1560-1568 Montague Expressway, San Jose, California 95131

1719 Little Orchard

1710 Little Orchard St., San Jose, California 95125

1310-1380 Kifer Road

1320 Kifer Road, Sunnyvale, California 94086

1324-1330 Kifer Road, Sunnyvale, California 94086

1360 Kifer Road, Sunnyvale, California 94086

1380 Kifer Road, Sunnyvale, California 94086

Walsh at Lafayette

1035 Walsh Avenue, Santa Clara, California 95050

1135 Walsh Avenue, Santa Clara, California 95050

1285 Walsh Avenue, Santa Clara, California 95050

915-925 Walsh Ave, Santa Clara, California 95050

 

Sch. I-4