Exhibit 10.7

 

MEZZANINE LOAN AND SECURITY AGREEMENT

(SECOND MEZZANINE)

 

Dated as of July 21, 2005

 

Between

 

MPO INTERMEDIATE HOLDINGS, LLC,

as Mezzanine Borrower

 

and

 

GERMAN AMERICAN CAPITAL CORPORATION,

as Mezzanine Lender

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TABLE OF CONTENTS

 

                    Page

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I.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION    1      1.1    Definitions    1
     1.2    Principles of Construction    27 II.    GENERAL TERMS    27      2.1
   Loan; Disbursement to Mezzanine Borrower    27           2.1.1    The Loan   
27           2.1.2    Disbursement to Mezzanine Borrower    28           2.1.3
   Use of Proceeds    28      2.2    Interest; Loan Payments; Late Payment
Charge; Payment of Principal and Interest    28           2.2.1    Payment of
Principal and Interest    28           2.2.2    Method and Place of Payment   
28           2.2.3    Late Payment Charge    29           2.2.4    Usury Savings
   29      2.3    Prepayments    29           2.3.1    Mandatory Prepayment   
29           2.3.2    Prepayments After Event of Default; Application of Amounts
Paid    30           2.3.3    Release of Collateral    30           2.3.4   
Release of Individual Property    31           2.3.5    Substitution of
Properties    33           2.3.6    Provisions Relating to Individual Properties
That Go Dark    39           2.3.7    Excess Account Collateral    39          
2.3.8    Reserve Requirements    40           2.3.9    Deficient GL Properties
   40      2.4    Regulatory Change; Taxes    40           2.4.1    Increased
Costs    40           2.4.2    Special Taxes    41           2.4.3    Other
Taxes    41           2.4.4    Indemnity    41           2.4.5    Change of
Office    41           2.4.6    Survival    41      2.5    Conditions Precedent
to Closing    42           2.5.1    Representations and Warranties; Compliance
with Conditions    42           2.5.2    Delivery of Mezzanine Loan Documents;
Title Policy; Reports; Leases    42           2.5.3    Satisfactory Collateral
   44           2.5.4    Loan (Mortgage)    44

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          2.5.5    Related Documents    44           2.5.6    Delivery of
Organizational Documents    44           2.5.7    Opinions of Mezzanine
Borrower’s Counsel    45           2.5.8    Completion of Proceedings    45     
     2.5.9    Payments    45           2.5.10    Interest Rate Cap Agreement   
45           2.5.11    Account Agreement    45           2.5.12    Ground Lessor
Estoppels; Clean Borrower Estoppel Certificate    45           2.5.13    Tenant
Estoppels and SNDAs    45           2.5.14    REAs    46           2.5.15   
Insolvency    46           2.5.16    Independent Manager/Member Certificate   
46           2.5.17    Transaction Costs    46           2.5.18    Material
Adverse Effect    46           2.5.19    Subleases    46           2.5.20   
Master Lease; Master Lease SNDA    46           2.5.21    Tax Lot    46       
   2.5.22    Condominium Estoppels    47           2.5.23    Condominium
Documents    47           2.5.24    Appraisal    47           2.5.25   
Financial Statements    47           2.5.26    Flood Certifications    47       
   2.5.27    Intentionally Omitted    47           2.5.28    Merger Agreement   
47           2.5.29    Intercreditor Agreements    47           2.5.30    Equity
and Real Property Transfer Documents    47           2.5.31    Consents    48
III.    CASH MANAGEMENT    48      3.1    Cash Management    48           3.1.1
   Establishment of Account    48           3.1.2    Pledge of Account
Collateral (Second Mezzanine)    48           3.1.3    Maintenance of Mezzanine
Account    49           3.1.4    Eligible Accounts    49           3.1.5   
Deposits into Sub-Accounts    50           3.1.6    Monthly Funding    50       
   3.1.7    Cash Management Bank    51           3.1.8    Mezzanine Borrower’s
Account Representations, Warranties and Covenants    52           3.1.9   
Account Collateral (Second Mezzanine) and Remedies    52           3.1.10   
Transfers and Other Liens    53           3.1.11    Reasonable Care    53       
   3.1.12    Mezzanine Lender’s Liability    54           3.1.13    Continuing
Security Interest    54

 

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IV.    REPRESENTATIONS AND WARRANTIES    54      4.1    Borrower Representations
   54           4.1.1    Organization    54           4.1.2    Proceedings    55
          4.1.3    No Conflicts    55           4.1.4    Litigation    56       
   4.1.5    Agreements    56           4.1.6    Title to Assets    57          
4.1.7    No Bankruptcy Filing    58           4.1.8    Full and Accurate
Disclosure    58           4.1.9    Ownership Interests    58           4.1.10
   No Plan Assets    58           4.1.11    Compliance    59           4.1.12   
Financial Information    59           4.1.13    Absence of UCC Financing
Statements, Etc.    59           4.1.14    Federal Reserve Regulations    60  
        4.1.15    Setoff, Etc.    60           4.1.16    Not a Foreign Person   
60           4.1.17    Enforceability    60           4.1.18    Subdivision   
60           4.1.19    Insurance    60           4.1.20    Physical Condition   
60           4.1.21    Subleases    61           4.1.22    Single Purpose
Entity/Separateness    61           4.1.23    Subsidiaries    61          
4.1.24    Tax Filings    62           4.1.25    Solvency/Fraudulent Conveyance
   62           4.1.26    Investment Company Act    62           4.1.27   
Interest Rate Cap Agreement    62           4.1.28    Brokers    62          
4.1.29    No Other Debt    63           4.1.30    Taxpayer Identification Number
   63           4.1.31    Merger Agreement    63           4.1.32   
Representations and Warranties in the Loan Documents (Mortgage)    63      4.2
   Survival of Representations    63      4.3    Mezzanine Borrower’s Knowledge
   64 V.    MEZZANINE BORROWER COVENANTS    64      5.1    Affirmative Covenants
   64           5.1.1    Performance by Mezzanine Borrower    64           5.1.2
   Existence; Compliance with Legal Requirements; Insurance    64          
5.1.3    Litigation    65           5.1.4    Single Purpose Entity    65       
   5.1.5    Consents    66           5.1.6    Notice of Default    67          
5.1.7    Cooperate in Legal Proceedings    67           5.1.8    Perform
Mezzanine Loan Documents    67

 

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          5.1.9    Further Assurances; Separate Notes    67           5.1.10   
Business and Operations    69           5.1.11    Title to the Collateral    69
          5.1.12    Costs of Enforcement    70           5.1.13    Estoppel
Statements    70           5.1.14    Loan Proceeds    70           5.1.15    No
Joint Assessment    70           5.1.16    No Further Encumbrances    71       
   5.1.17    Article 8 “Opt In” Language    71           5.1.18    Loan
(Mortgage) Covenants    71           5.1.19    Senior Mezzanine Loan Covenants
   73           5.1.20    Intentionally Omitted    75           5.1.21   
Impositions           5.2    Negative Covenants    75           5.2.1    Debt   
75           5.2.2    Encumbrances    76           5.2.3    Engage in Different
Business    76           5.2.4    Make Advances    76           5.2.5   
Partition    76           5.2.6    Commingle    76           5.2.7    Guarantee
Obligations    76           5.2.8    Transfer Assets    76           5.2.9   
Amend Organizational Documents    76           5.2.10    Dissolve    77       
   5.2.11    Bankruptcy    77           5.2.12    ERISA    77           5.2.13
   Distributions    77           5.2.14    Modify REAs    77           5.2.15   
Modify Mezzanine Account Agreement    77           5.2.16    Zoning
Reclassification    77           5.2.17    Change of Principal Place of Business
   77           5.2.18    Debt Cancellation    78           5.2.19   
Misapplication of Funds    78           5.2.20    Single-Purpose Entity    78
VI.    INSURANCE; CASUALTY; CONDEMNATION; RESTORATION    78      6.1   
Insurance Coverage Requirements    78      6.2    Condemnation    79      6.3   
Certificates    80 VII.    RESERVED    80 VIII.    TRANSFERS, INDEBTEDNESS AND
SUBORDINATE LIENS    80      8.1    Restrictions on Transfers    80      8.2   
Sale of Building Equipments    81

 

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     8.3    Immaterial Transfers and Easements, Etc.    81      8.4   
Indebtedness    81      8.5    Permitted Equity Transfers    82      8.6   
Deliveries to Mezzanine Lender    84      8.7    Loan Assumption    84      8.8
   Subleases    84           8.8.1    New Subleases and Sublease Modifications
   84           8.8.2    Leasing Conditions    84           8.8.3    Delivery of
New Sublease or Sublease Modification    86           8.8.4    Security Deposits
   86           8.8.5    No Default Under Subleases    87 IX.    INTEREST RATE
CAP AGREEMENT    87      9.1    Interest Rate Cap Agreement (Second Mezzanine)
   87      9.2    Pledge    87      9.3    Covenants    88      9.4    Powers of
Mezzanine Borrower Prior to an Event of Default    89      9.5   
Representations and Warranties    89      9.6    Payments    90      9.7   
Remedies    90      9.8    Sales of Rate Cap Collateral    92      9.9    Public
Sales Not Possible    93      9.10    Receipt of Sale Proceeds    93      9.11
   Replacement Interest Rate Cap Agreement    93 X.    RESERVED    94 XI.   
BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
INFORMATION    94      11.1    Books and Records    94      11.2    Financial
Statements    94           11.2.1    Monthly Reports    94           11.2.2   
Quarterly Reports    95           11.2.3    Annual Reports    95          
11.2.4    Disclosure Restrictions    96           11.2.5    Capital Expenditures
Summaries    96           11.2.6    Master Lease    96           11.2.7   
Annual Budget; Operating Agreement    96           11.2.8    Other Information
   97      11.3    Proprietary Information    97

 

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XII.    RESERVED    98 XIII.    ENVIRONMENTAL MATTERS    98      13.1   
Representations    98      13.2    Covenants    98           13.2.1   
Compliance with Environmental Laws    98      13.3    Environmental Reports   
99      13.4    Environmental Indemnification    99      13.5    Recourse Nature
of Certain Indemnifications    100 XIV.    ASSIGNMENTS AND PARTICIPATIONS    100
     14.1    Assignment and Acceptance    100      14.2    Effect of Assignment
and Acceptance    100      14.3    Content    101      14.4    Register    102  
   14.5    Substitute Mezzanine Notes    102      14.6    Participations    102
     14.7    Disclosure of Information    103      14.8    Security Interest in
Favor of Federal Reserve Bank    103 XV.    INTENTIONALLY BLANK    103 XVI.   
ADDITIONAL RIGHTS; COSTS    103      16.1    Certain Additional Rights of
Mezzanine Lender    103      16.2    Costs    104 XVII.    RESERVED    104
XVIII.    DEFAULTS    104      18.1    Event of Default    104      18.2   
Remedies    110      18.3    Remedies Cumulative; Waivers    111      18.4   
Costs of Collection    111      18.5    Distribution of Collateral Proceeds   
112 XIX.    SPECIAL PROVISIONS    112      19.1    Exculpation    112          
19.1.1    Exculpated Parties    112           19.1.2    Carveouts From
Non-Recourse Limitations    113

 

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XX.    MISCELLANEOUS    115      20.1    Survival    115      20.2    Mezzanine
Lender’s Discretion    116      20.3    Governing Law    116      20.4   
Modification, Waiver in Writing    117      20.5    Delay Not a Waiver    117  
   20.6    Notices    118      20.7    TRIAL BY JURY    120      20.8   
Headings    120      20.9    Severability    120      20.10    Preferences   
121      20.11    Waiver of Notice    121      20.12    Expenses; Indemnity   
121      20.13    Exhibits and Schedules Incorporated    123      20.14   
Offsets, Counterclaims and Defenses    123      20.15    Liability of Assignees
of Mezzanine Lender    124      20.16    No Joint Venture or Partnership; No
Third Party Beneficiaries    124      20.17    Publicity    124      20.18   
Waiver of Marshaling of Assets    125      20.19    Waiver of Counterclaim and
other Actions    125      20.20    Conflict; Construction of Documents; Reliance
   125      20.21    Prior Agreements    125      20.22    Counterparts    126  
   20.23    Direction of Mortgage Borrower with Respect to the Property    126

 

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EXHIBITS AND SCHEDULES

 

EXHIBIT A   

FORM OF COUNTERPARTY ACKNOWLEDGMENT

EXHIBIT B   

FORM OF ASSIGNMENT AND ACCEPTANCE

EXHIBIT C   

FORM OF INDEPENDENT MEMBER/DIRECTOR CERTIFICATE

EXHIBIT D   

FORM OF PLEDGOR ACKNOWLEDGMENT

EXHIBIT E   

INTENTIONALLY DELETED

EXHIBIT F   

INTENTIONALLY DELETED

EXHIBIT G   

INTENTIONALLY DELETED

EXHIBIT H   

INTENTIONALLY DELETED

EXHIBIT I   

INTENTIONALLY DELETED

EXHIBIT J   

MEZZANINE BORROWER ORGANIZATIONAL STRUCTURE

EXHIBIT K   

LITIGATION SCHEDULE

EXHIBIT L   

INTEREST RATE CAP AGREEMENT

EXHIBIT M   

INTENTIONALLY DELETED

EXHIBIT N   

FORM OF MEMBER POWER

EXHIBIT O   

UCC ARTICLE 8 “OPT-IN” PROVISIONS

SCHEDULE I   

SUBLEASES

SCHEDULE II   

ALLOCATED LOAN AMOUNTS

SCHEDULE III   

PRE-APPROVED TRANSFEREES

 

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MEZZANINE LOAN AND SECURITY AGREEMENT (SECOND MEZZANINE)

 

THIS MEZZANINE LOAN AND SECURITY AGREEMENT (SECOND MEZZANINE) dated as of July
21, 2005 (as amended, restated, replaced, supplemented, or otherwise modified
from time to time, this “Agreement”), between MPO INTERMEDIATE HOLDINGS, LLC, a
Delaware limited liability company (“Mezzanine Borrower”) having an office at
c/o Toys “R” Us, Inc., One Geoffrey Way, Wayne, New Jersey 07470 and GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation, on behalf of the holders
of the Mezzanine Notes, having an address at 60 Wall Street, New York, New York
10005 (together with its successors and assigns, “Mezzanine Lender”).

 

RECITALS:

 

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

 

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

 

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

 

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

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

 

“ABL Intercreditor Agreement” shall mean an intercreditor agreement between
Mortgage Lender, Mezzanine Lender, each Senior Mezzanine Lender, each Junior
Mezzanine Lender, and the agent for the lenders under the ABL Loan.

 

“ABL Loan” shall have the meaning provided in the ABL Intercreditor Agreement.

 

“Account Agreement (Mortgage)” shall have the meaning set forth in the Loan
Agreement (“Mortgage”).

 

“Account Collateral (Second Mezzanine)” shall have the meaning set forth in
Section 3.1.2.

 

“Acknowledgment” shall mean the Acknowledgment, dated on or about the date
hereof made by Counterparty, or as applicable, Approved Counterparty in the form
of Exhibit A.

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“Additional Non-Consolidation Opinion” shall have the meaning set forth in
Section 4.1.22(b).

 

“Affiliate” shall mean, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with, or any general partner or managing member in, such
specified Person. An Affiliate of a Person includes, without limitation, (i) any
officer or director of such Person, (ii) any record or beneficial owner of more
than 20% of any class of ownership interests of such Person and (iii) any
Affiliate of the foregoing. For the purposes of this definition, “control” when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities or other beneficial interest, by contract or
otherwise; and the terms “controlling” and “controlled” have the meanings
correlative to the foregoing.

 

“Aggregate Capped Debt Service” shall mean the aggregate amount of interest due
and payable in accordance with the Mortgage Note and the Mezzanine Notes for any
immediately preceding twelve (12) Payment Dates, assuming that interest on the
aggregate outstanding principal balance of the Mortgage Notes and the Mezzanine
Notes is accruing at a loan constant equal to the Capped Interest Rate.

 

“Aggregate Appraised Value” as of the date determined shall mean the sum of (a)
the aggregate appraised values as of the Closing Date of all Properties which
remain as of the date determined subject to the Lien of the Security Instrument
(excluding the Replaced Properties, Release Properties and the Substitute
Properties) and (b) the appraised value of the Substitute Property as of such
date of determination.

 

“Agreement” shall mean this Agreement, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

“Allocated Loan Amount” shall mean with respect to each Individual Property, the
designated allocated portion of the Loan applicable to such Individual Property
that is set forth on Schedule II attached hereto.

 

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

 

“Annual Budget” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Approved Bank” shall mean a bank or other financial institution which has a
minimum long-term unsecured debt rating of at least “AA” and a minimum
short-term unsecured debt rating of at least “A-1+” by each of the Rating
Agencies, or if any such bank or other financial institution is not rated by all
the Rating Agencies, then a minimum long-term rating of at least “AA” and a
minimum short-term unsecured debt rating of at least “A-1+”, or their respective
equivalents, by two of the Rating Agencies, but in any event one of the two
Rating Agencies shall be S&P, it being understood that the AA and A-1+ benchmark
ratings and other benchmark ratings in this Agreement are intended to be the
ratings, or the equivalent of ratings, issued by S&P.

 

2

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“Approved Counterparty” shall mean a bank or other financial institution which
has (a) either (i) a long-term unsecured debt rating of “A+” or higher by S&P or
(ii) if the long-term unsecured debt rating is “A” or lower by S&P, a short-term
rating of not less than “A-1” from S&P; (b) a long-term unsecured debt rating of
not less than “Aa3” by Moody’s; and (c) if the counterparty is rated by Fitch,
either a long-term unsecured debt rating of not less than “A” from Fitch or a
short-term unsecured debt rating of not less than “F-1” from Fitch.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by Mezzanine Lender and an assignee, and accepted by Mezzanine Lender in
accordance with Article XIV and in such form customarily used by Mezzanine
Lender in connection with the participation or syndication of mortgage or
mezzanine loans at the time of such assignment.

 

“Bankruptcy Code” shall mean Title 11, U.S.C.A., as amended from time to time
and any successor statute thereto.

 

“Borrower” shall mean, collectively, Mortgage Borrower, Mezzanine Borrower,
First Mezzanine Borrower, Third Mezzanine Borrower and Fourth Mezzanine
Borrower.

 

“Building Equipment” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York or in the state in which Servicer is located
are not open for business. When used with respect to an Interest Determination
Date, Business Day shall mean any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.

 

“Capped Interest Rate” shall mean a rate per annum equal to the sum of (a) the
LIBOR Cap Strike Rate and (b) the LIBOR Margin.

 

“Cash” shall mean the legal tender of the United States of America.

 

“Cash Management Bank (First Mezzanine)” shall mean Bank of America, N.A., as
servicer, or any successor Approved Bank acting as Cash Management Bank (First
Mezzanine) under the Mezzanine Account Agreement or other financial institution
approved by the Mezzanine Lender.

 

“Cash Management Bank” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Certificate” shall have the meaning set forth in the Pledge.

 

“Clean Borrower Estoppel Certificate” shall have the meaning set forth in the
Loan Agreement (Mortgage).

 

3

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“Clean Ground Lessor Estoppel Certificate” shall have the meaning set forth in
the Loan Agreement (Mortgage).

 

“Close Affiliate” shall mean with respect to any Person (the “First Person”) any
other Person (each, a “Second Person”) which is an Affiliate of the First Person
and in respect of which any of the following are true: (a) the Second Person
owns, directly or indirectly, at least 75% of all of the legal, beneficial
and/or equitable interest in such First Person, (b) the First Person owns,
directly or indirectly, at least 75% of all of the legal, beneficial and/or
equitable interest in such Second Person, or (c) a third Person owns, directly
or indirectly, at least 75% of all of the legal, beneficial and/or equitable
interest in both the First Person and the Second Person.

 

“Closing Date” shall mean the date of this Agreement set forth in the first
paragraph hereof.

 

“Closing Date DSCR” shall mean 3.78x.

 

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

 

“Collateral” shall mean collectively (i) all of the Pledged Collateral and all
proceeds thereof, (ii) all Receipts, (iii) any stock certificates or other
certificates, membership interest certificates or instruments evidencing any of
the foregoing property described in clauses (i) and (ii) above, (iv) the Rate
Cap Collateral, (v) the Account Collateral (Second Mezzanine) and (vi) all other
rights appurtenant to the property described in clauses (i) through (v) above.

 

“Collateral Accounts” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Collateral Accounts (First Mezzanine)” shall have the meaning set forth in the
First Mezzanine Loan Agreement.

 

“Collateral Accounts (Fourth Mezzanine)” shall have the meaning set forth in the
Fourth Mezzanine Loan Agreement.

 

“Collateral Accounts (Second Mezzanine)” shall have the meaning set forth in
Section 3.1.1.

 

“Collateral Accounts (Third Mezzanine)” shall have the meaning set forth in the
Third Mezzanine Loan Agreement.

 

“Combined Principal Amount” shall mean the sum of each “Principal Amount” as
defined in each of the Loan Agreement (Mortgage), Loan Agreement (Second
Mezzanine), First Mezzanine Loan Agreement, Third Mezzanine Loan Agreement, and
Fourth Mezzanine Loan Agreement.

 

4

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“Condominium” shall mean, with respect to each Condominium Property, the
condominium regime created by the Condominium Documents.

 

“Condominium Documents” shall mean, with respect to each Condominium Property,
collectively, the Condominium Declaration, the by-laws of the Condominium, the
floor plans attached to the Condominium Declaration, and any other similar
written agreements among or otherwise binding upon any unit owners of the
Condominium in their capacity as such and that govern or otherwise relate to the
establishment, continuance, maintenance or operation of the Condominium, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“Condominium Properties” shall mean, collectively, all of the Individual
Properties that are subject to a Condominium and “Condominium Property” shall
mean each such Property.

 

“Control” shall mean (i) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise and
(ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.

 

“Contemplated Transactions” shall mean, collectively, (i) the transactions
consummated pursuant to the Merger Agreement, including but not limited to the
change in control of the Toys ‘R’ Us, Inc. and the various equity transfers in
connection with the related restructuring, (ii) the transfers of certain of the
Properties to Master Lessee, (iii) the transfers of all of the Properties from
Master Lessee to Borrower, (iv) the leasing or subleasing of all of the
Properties from Mortgage Borrower to Master Lessee pursuant to the Master Lease,
(v) the execution and delivery of the Loan Documents or the Mezzanine Loan
Documents, Mortgage Borrower’s or Mezzanine Borrower’s performance thereunder,
the recordation of the Security Instrument, and the exercise of any remedies by
Mortgage Lender or Mezzanine Lender, and (vi) following Mortgage Lender’s or its
designee’s succession in title to any Property, the transfer of any such
Property by Mortgage Lender or such designee.

 

“Counterparty” shall mean, with respect to the Interest Rate Cap Agreement
(Second Mezzanine), SMBC Derivative Products Limited, and with respect to any
Replacement Interest Rate Cap Agreement (Second Mezzanine), any substitute
Approved Counterparty.

 

“Counterparty Opinion” shall have the meaning set forth in Section 9.3(f).

 

“Debt” shall mean, with respect to any Person at any time, (a) indebtedness or
liability of such Person for borrowed money whether or not evidenced by bonds,
debentures, notes or other instruments, or for the deferred purchase price of
property or services; (b) obligations of such Person as lessee under leases
which should have been or should be, in accordance with GAAP, recorded as
capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of

 

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ERISA; (d) obligations issued for, or liabilities incurred on the account of,
such Person; (e) obligations or liabilities of such Person arising under letters
of credit, credit facilities or other acceptance facilities; (f) obligations of
such Person under any guarantees or other agreement to become secondarily liable
for any obligation of any other Person, endorsements (other than for collection
or deposit in the ordinary course of business) and other contingent obligations
to purchase, to provide funds for payment, to supply funds to invest in any
Person or otherwise to assure a creditor against loss; (g) obligations of such
Person secured by any Lien on any property of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.

 

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

 

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

 

“Default Rate” shall have the meaning set forth in the Mezzanine Note.

 

“Deficient GL Properties” shall mean, collectively, each Ground Lease Property
for which either (a) no Ground Lessor Estoppel Certificate or, as applicable,
ground lessor consent is delivered or (b) a Ground Lessor Estoppel Certificate
(including, but not limited to, a Disputed Sum GL Estoppel) or, as applicable, a
ground lessor consent, is delivered which is unacceptable to Mezzanine Lender in
its reasonable discretion, a list of which Deficient GL Properties is attached
to the Loan Agreement (Mortgage); provided, however, that if at any time after
the Closing Date any of the following shall occur with respect to any particular
Deficient GL Properties, the term “Deficient GL Properties” shall no longer
include (and the Recourse Guaranty (Mezzanine) shall no longer cover) the losses
under Section 19.1.2(m) with respect to such Properties: (a) a Property Release,
(b) a Substitution, (c) delivery of evidence reasonably acceptable to Mezzanine
Lender that the Disputed Sum has been paid in full, if applicable or (d)
delivery of a Clean Ground Lessor Estoppel Certificate and/or consent, as
applicable.

 

“Disputed Sums” shall mean in the case of each Ground Lease Property (each a
“Disputed Sum GL Property”) for which a Clean Ground Lessor Estoppel Certificate
is delivered that is otherwise acceptable but which identifies a dispute that
Mezzanine Lender reasonably determines can be cured by payment to the Fee Owner
of a liquidated sum (each a “Disputed Sum GL Estoppel”), the liquidated sums,
collectively.

 

“Disputed Sum GL Estoppel” shall have the meaning provided in the definition of
the term “Disputed Sums.”

 

“Disputed Sum GL Property” shall have the meaning provided in the definition of
the term “Disputed Sums.”

 

“Disqualified Transferee” shall mean any proposed transferee that, (i) has
(within the past five (5) years) defaulted, or is now in default, beyond any
applicable cure period,

 

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of its material obligations, under any written agreement with Lender, any
affiliate of Lender, any financial institution or other person providing or
arranging financing; (ii) has been convicted in a criminal proceeding for a
felony or a crime involving moral turpitude or that is an organized crime figure
or is reputed (as determined by Lender in its sole discretion) to have
substantial business or other affiliations with an organized crime figure; (iii)
has at any time filed a voluntary petition under the Bankruptcy Code or any
other federal or state bankruptcy or insolvency law; (iv) as to which an
involuntary petition has at any time been filed under the Bankruptcy Code or any
other federal or state bankruptcy or insolvency law; (v) has at any time filed
an answer consenting to or acquiescing in any involuntary petition filed against
it by any other person under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (vi) has at any time consented to or acquiesced in
or joined in an application for the appointment of a custodian, receiver,
trustee or examiner for itself or any of its property; (vii) has at any time
made an assignment for the benefit of creditors, or has at any time admitted its
insolvency or inability to pay its debts as they become due; or (viii) has been
found by a court of competent jurisdiction or other governmental authority in a
comparable proceeding to have violated any federal or state securities laws or
regulations promulgated thereunder.

 

“Distributions” shall have the meaning set forth in the Pledge.

 

“DSCR” shall mean a ratio, as determined by Lender for the applicable period, in
which:

 

(a) the numerator is Portfolio Four-Wall EBITDAR, applied consistently, as
stated on Borrower’s or Master Lessee’s four most recent quarterly financial
statements delivered to Lender pursuant to Section 11.2.2, for the trailing
twelve (12) month period immediately prior to the applicable calculation date;
and

 

(b) the denominator is the Aggregate Capped Debt Service.

 

“Eligible Account” shall mean (i) a segregated trust account or accounts
maintained with the corporate trust department of a federal depository
institution or state-chartered depository institution subject to regulations
regarding fiduciary funds on deposit such as or similar to Title 12 of the Code
of Federal Regulations Section 9.10(b) which, in either case, has corporate
trust powers, acting in its fiduciary capacity or (ii) a segregated account
maintained at an Approved Bank. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.

 

“Enforcement Costs” shall have the meaning set forth in Section 18.4.

 

“Environmental Certificate” shall have the meaning set forth in Section 13.2.1.

 

“Environmental Claim” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Environmental Event” shall have the meaning set forth in Section 13.2.1.

 

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“Environmental Indemnity (Second Mezzanine)” shall mean the Environmental
Indemnity (Second Mezzanine), dated as of the date hereof, made by Guarantor in
favor of Mortgage Lender.

 

“Environmental Indemnity (Mortgage)” shall mean the Environmental Indemnity,
dated as of the date hereof, made by Guarantor in favor of Mortgage Lender.

 

“Environmental Law” shall have the meaning provided in the Environmental
Indemnity (Second Mezzanine).

 

“Environmental Reports” shall have the meaning set forth in Section 13.1.

 

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

 

“Event of Default” shall have the meaning set forth in Section 18.1(a).

 

“Excess Account Collateral” shall have the meaning set forth in Section 2.3.7.

 

“Excess Cash Flow” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Excess Proceeds” shall have the meaning set forth in Section 2.3.1(b).

 

“Excluded Personal Property” shall mean, collectively, (a) all of the personal
property of Master Lessee (including, without limitation, all inventory and
equipment, but excluding any items that constitute fixtures), (b) any licenses
or other intellectual property relating to the trade names “Toys ‘R’ Us” or
“Babies ‘R’ Us” and (c) any personal property of third-party Tenants under
Subleases. For purposes of this definition, the terms “inventory”, “equipment”
and “fixtures” shall have the meaning set forth in the Uniform Commercial Code
in effect in the State of New York, except that the term “fixtures” shall
specifically include, but not be limited to, and the terms “inventory” and
“equipment” shall specifically exclude, all HVAC equipment, elevators,
escalators and lighting together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing.

 

“Exculpated Parties” shall have the meaning set forth in Section 19.1.1.

 

“Excusable Delay” shall mean a delay solely due to acts of God, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion,
fire, casualty, strikes, work stoppages, shortages of labor or materials or
other causes beyond the reasonable control of Mezzanine Borrower or Mortgage
Borrower, but Mezzanine Borrower’s or Mortgage Borrower’s lack of funds in and
of itself shall not be deemed a cause beyond the control of Mezzanine Borrower
or Mortgage Borrower, as applicable.

 

“Fee Owner” shall mean, collectively, the owner of the fee simple estate
relating to each Ground Lease Property.

 

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“First Mezzanine Account” shall have the meaning ascribed to “Mezzanine Account”
in the First Mezzanine Loan Agreement.

 

“First Mezzanine Borrower” shall mean MPO Intermediate, LLC, a Delaware limited
liability company.

 

“First Mezzanine Lender” shall mean German American Capital Corporation, a
Maryland corporation, its successors and/or assigns, as the holder of the First
Mezzanine Loan.

 

“First Mezzanine Lender Monthly Debt Service Notice” shall mean the written
notice required to be delivered by First Mezzanine Lender pursuant to Section
3.1.6 of the First Mezzanine Loan Agreement to Mortgage Lender at least five (5)
Business Days prior to each Payment Date setting forth the First Mezzanine Loan
Debt Service Amount payable by First Mezzanine Borrower on the first Payment
Date occurring after the date such notice is delivered.

 

“First Mezzanine Loan” shall mean that certain $18,000,000 mezzanine loan, made
as of the date hereof, from First Mezzanine Lender to the First Mezzanine
Borrower.

 

“First Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan and
Security Agreement (First Mezzanine), dated as of the date hereof, between First
Mezzanine Borrower, as borrower, and First Mezzanine Lender, as lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

“First Mezzanine Loan Debt Service Amount” shall mean, with respect to any
specified date or a particular period of time, interest payments under the First
Mezzanine Note (excluding any default or accrued interest) due as of such date
(as set forth in the First Mezzanine Lender Monthly Debt Service Notice
delivered to Mortgage Lender) or payable during such period (including the last
day thereof), as applicable and repayment in full of the principal balance of
the First Mezzanine Note on the scheduled maturity of the First Mezzanine Loan
(but excluding any principal payments on account of an acceleration of the First
Mezzanine Loan or a default under any of the First Mezzanine Loan Documents).

 

“First Mezzanine Loan Default Notice” shall mean a notice from First Mezzanine
Lender to Mezzanine Lender (upon which Mezzanine Lender may conclusively rely
without any inquiry into the validity thereof) that an “Event of Default” has
occurred and is continuing under any of the First Mezzanine Loan Documents.

 

“First Mezzanine Loan Default Revocation Notice” shall mean a notice from First
Mezzanine Lender that an Event of Default which has occurred under the Senior
Mezzanine Loan Documents is no longer continuing.

 

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“First Mezzanine Loan Documents” shall mean the documents evidencing and
securing the First Mezzanine Loan, as may be modified, amended, extended,
supplemented, restated or replaced from time to time.

 

“Fiscal Quarter” shall mean each quarter within a Fiscal Year in accordance with
GAAP.

 

“Fiscal Year” shall mean each twelve (12) month period ending on the last
Saturday closest to January 31 for such calendar year and commencing on the day
following such Saturday on the preceding calendar year during each year of the
term of the Loan or the portion of any such 12-month period falling within the
term of the Loan in the event that such a 12-month period occurs partially
before or after, or partially during, the term of the Loan, or such other
12-month fiscal accounting period as Borrower may establish from time to time.

 

“Fitch” shall mean Fitch Ratings Inc.

 

“Fourth Mezzanine Account” shall mean account number 1235465997 at Bank of
America, N.A.

 

“Fourth Mezzanine Borrower” shall mean MPO Junior Holdings, LLC, a Delaware
limited liability company.

 

“Fourth Mezzanine Lender” shall mean German American Capital Corporation, a
Maryland corporation, and its successors and/or assigns, as the holder of the
Fourth Mezzanine Loan.

 

“Fourth Mezzanine Loan” shall mean that certain $8,000,000 mezzanine loan, made
as of the date hereof, from Fourth Mezzanine Lender to the Fourth Mezzanine
Borrower.

 

“Fourth Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan and
Security Agreement (Fourth Mezzanine), dated as of the date hereof, between
Fourth Mezzanine Borrower, as borrower, and Fourth Mezzanine Lender, as lender,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

 

“Fourth Mezzanine Loan Documents” shall mean the documents evidencing and
securing the Fourth Mezzanine Loan, as may be modified, amended, extended,
supplemented, restated or replaced from time to time.

 

“GAAP” shall mean the 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

 

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profession, to the extent such principles are applicable to the facts and
circumstances on the date of determination.

 

“Go Dark” shall mean (a) with respect to any Individual Property other than a Go
Dark Purchase Option Property, if such Individual Property is not open for
business to the public for a period of ninety (90) consecutive days, unless such
closure (i) is a result of a Taking of or casualty or other damage or injury to
such Individual Property or (ii) is in connection with an Alteration permitted
hereunder and (b) with respect to any Go Dark Purchase Option Property, if the
Toys ‘R’ Us store or Babies ‘R’ Us store, or the Tenant under any Sublease, as
applicable, at such Individual Property is not open for business to the public
if such failure would commence the period after which a purchase right or option
that would be triggered.

 

“Go Dark Purchase Option Property” means any Individual Property having an
Operating Agreement which contains a purchase right, termination right,
recapture right or option that would be triggered if the Toys ‘R’ Us store or
Babies ‘R’ Us store, as applicable, at such Individual Property is not open for
business to the public for a period designated in such Operating Agreement,
including but not limited to the Individual Properties listed on Schedule VI
which are specifically designated as having such a purchase right or option.

 

“Go Dark Limit” shall mean 20% of the Loan Amount.

 

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

 

“Ground Lease Property” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Guarantor” shall mean Toys ‘R’ Us Inc., a Delaware corporation, or any
successor or assign permitted pursuant to the provisions set forth herein.

 

“Hazardous Materials” shall have the meaning provided in the Environmental
Indemnity (Second Mezzanine).

 

“HoldCo” shall mean MPO Holdings, LLC, a Delaware limited liability company.

 

“Holding Account” shall mean the “Holding Account” and various sub-accounts to
the Holding Account established pursuant to the Loan Agreement (Mortgage) as in
effect on the date hereof.

 

“Impositions” shall mean all taxes (including all ad valorem, sales (including
those imposed on lease rentals), use, single business, gross receipts, value
added, intangible transaction, privilege or license or similar taxes),
governmental assessments (including all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and
whether or not commenced or completed within the term of the Agreement), water,
sewer or other rents and charges,

 

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excises, levies, fees (including license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Property and/or any Rents (including all interest
and penalties thereon), which at any time prior to, during or in respect of the
term hereof may be assessed or imposed on or in respect of or be a Lien upon (a)
Borrower (including all income, franchise, single business or other taxes
imposed on Borrower for the privilege of doing business in the jurisdiction in
which the Property is located), (b) the Property, or any other collateral
delivered or pledged to Lender in connection with the Loan, or any part thereof,
or any Rents therefrom of any estate, right, title or interest therein, or (c)
any occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Property or the leasing or use of all or
any part thereof. Nothing contained in this Agreement shall be construed to
require Borrower to pay any tax, assessment, levy or charge imposed on (i) any
tenant occupying any portion of the Property or (ii) Lender in the nature of a
capital levy, estate, inheritance, succession, income or net revenue tax.

 

“Improvements” shall have the meaning set forth in the Security Instrument.

 

“Increased Costs” shall have the meaning set forth in Section 2.4.1.

 

“Indebtedness” shall mean, at any given time, the Principal Amount, together
with all accrued and unpaid interest thereon and all other obligations and
liabilities due or to become due to Mezzanine Lender pursuant hereto, under the
Mezzanine Note or in accordance with the other Mezzanine Loan Documents and all
other amounts, sums and expenses paid by or payable to Mezzanine Lender
hereunder or pursuant to the Mezzanine Note or the other Mezzanine Loan
Documents.

 

“Indemnified Parties” shall have the meaning set forth in Section 20.12(a).

 

“Independent” shall mean, when used with respect to any Person, a Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in any Borrower or in any of their Affiliates, (ii) is not
connected with any Borrower, or any of their Affiliates, as an officer,
employee, promoter, underwriter, trustee, partner, member, manager, creditor,
director, supplier, customer or person performing similar functions and (iii) is
not a member of the immediate family of a Person defined in (i) or (ii) above.

 

“Independent Accountant” shall mean a firm or another firm of nationally
recognized, certified public accountants which is Independent and which is
selected by Mezzanine Borrower or Mortgage Borrower, as applicable, and
reasonably acceptable to Mezzanine Lender.

 

“Independent Director”, “Independent Manager,” or “Independent Member” shall
mean a Person who is not and will not be while serving and has never been (i) a
member (other than an Independent Member), manager (other than an Independent
Manager), director (other than an Independent Director), employee, attorney, or
counsel of any Borrower or its Affiliates (provided that Mezzanine Borrower may
not have the same

 

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Independent Directors, Independent Managers or Independent Members as Mortgage
Borrower), (ii) a customer, supplier or other Person who derives more than 1% of
its purchases or revenues from its activities with any Borrower or its
Affiliates, (iii) a direct or indirect legal or beneficial owner in any entity
referred to in (i) or (ii) above or any of its Affiliates, (iv) a member of the
immediate family of any member, manager, employee, attorney, customer, supplier
or other Person referred to in (i), (ii) or (iii) above or (v) a person
Controlling or under the common Control of anyone listed in (i) through (iv)
above. A Person that otherwise satisfies the foregoing shall not be disqualified
from serving as an Independent Director or Independent Manager or Independent
Member if such individual is at the time of initial appointment, or at any time
while serving as such, is an Independent Director or Independent Manager or
Independent Member, as applicable, of a Single Purpose Entity affiliated with
Mezzanine Borrower (other than an Independent Director or Independent Manager or
Independent Member of Mortgage Borrower).

 

“Individual Property” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Insurance Requirements” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Interest Determination Date” shall have the meaning set forth in the Mezzanine
Note.

 

“Interest Period” shall have the meaning set forth in the Mezzanine Note.

 

“Interest Rate Cap Agreement (Second Mezzanine)” shall mean the Confirmation and
Agreement (together with the confirmation and schedules relating thereto), dated
on or about the date hereof, between the Counterparty and Mezzanine Borrower,
obtained by Mezzanine Borrower and collaterally assigned to Mezzanine Lender
pursuant to this Agreement. After delivery of a Replacement Interest Rate Cap
Agreement (Second Mezzanine) to Mezzanine Lender, the term Interest Rate Cap
Agreement (Second Mezzanine) shall be deemed to mean such Replacement Interest
Rate Cap Agreement (Second Mezzanine).

 

“Jointly Assessed Ground Lease Properties” shall mean the Ground Lease
Properties for which real estate taxes are jointly assessed with the larger
underlying fee parcel of which the related Land forms a part, as provided for in
the Loan Agreement (Mortgage).

 

“Junior Mezzanine Borrower” shall mean, collectively, Third Mezzanine Borrower
and Fourth Mezzanine Borrower, as the context may require.

 

“Junior Mezzanine Lender” shall mean, collectively, Mezzanine Lender, Third
Mezzanine Lender and Fourth Mezzanine Lender, as the context may require.

 

“Junior Mezzanine Loan” shall mean, collectively, the Third Mezzanine Loan and
the Fourth Mezzanine Loan.

 

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“Junior Mezzanine Loan Documents” shall mean, collectively, the Third Mezzanine
Loan Documents and the Fourth Mezzanine Loan Documents, as the context may
require.

 

“Late Payment Charge” shall have the meaning set forth in Section 2.2.3.

 

“Legal Requirements” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Lender” shall mean, collectively, Mortgage Lender, Mezzanine Lender, First
Mezzanine Lender, Third Mezzanine Lender and Fourth Mezzanine Lender.

 

“LIBOR” shall have the meaning set forth in the Mezzanine Note.

 

“LIBOR Cap Strike Rate” shall mean 7% per annum.

 

“LIBOR Margin” shall have the meaning set forth in the Mezzanine Note.

 

“LIBOR Rate” shall have the meaning set forth in the Mezzanine Note.

 

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance or charge on or
affecting Mortgage Borrower, any Senior Mezzanine Borrower, Mezzanine Borrower,
the Collateral, the Property, any portion thereof 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 the filing of
mechanic’s, materialmen’s and other similar liens and encumbrances, in case,
excluding any such items filed against and solely affecting the Excluded
Personal Property.

 

“Loan” shall mean the loan in the amount of $21,000,000 made by Mezzanine Lender
to Mezzanine Borrower pursuant to this Agreement.

 

“Loan (Mortgage)” or “Mortgage Loan” shall mean the loan in the amount of
$145,000,000 made by Mortgage Lender to Mortgage Borrower pursuant to the Loan
Agreement (Mortgage).

 

“Loan Agreement (Mortgage)” shall mean the Loan and Security Agreement, dated as
of the date hereof, between Mortgage Borrower, as borrower, and Mortgage Lender,
as lender.

 

“Loan Documents (Mortgage)” shall mean, collectively, the Loan Agreement
(Mortgage), the Mortgage Note, the Security Instrument, the Assignment of Leases
(as defined in the Loan Agreement (Mortgage)), the Environmental Indemnity
(Mortgage), the Account Agreement (Mortgage), the Recourse Guaranty (Mortgage),
the Clean Borrower Estoppel Certificate, the Master Lease, the Master Lease
SNDA, the Account Agreement and all other documents executed and/or delivered by
Mortgage Borrower, Master Lessee or Guarantor in connection with the Loan
(Mortgage) in favor of

 

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Mortgage Lender, and in connection with any Property Substitution including any
opinion certificates or other certifications or representations delivered by or
on behalf of Mortgage Borrower, or any Affiliate of Borrower in favor of
Mortgage Lender.

 

“LTV Ratio” shall mean the ratio, expressed as a percentage, of the Combined
Principal Amount as of the date of determination, to the Aggregate Appraised
Value as of the date of determination.

 

“Master Lease” shall mean that certain Master Lease Agreement for the Properties
by and between Mortgage Borrower, as lessor, and Master Lessee, as lessee, dated
the date hereof, as more particularly described in Section 5.1.19. Mezzanine
Lender acknowledges that Mortgage Borrower does not own, and Mortgage Lender
does not have a lien on, the Excluded Personal Property and that the term
“Master Lease” shall not include the Excluded Personal Property or leases or
licenses with respect to the Excluded Personal Property.

 

“Master Lease Variable Additional Rent” shall have the meaning set forth in the
Loan Agreement (Mortgage).

 

“Master Lessee” shall mean Toys ‘R’ Us-Delaware, Inc., a Delaware corporation,
or any successor or assign permitted pursuant to the provisions set forth
herein.

 

“Material Adverse Effect” shall mean any event or condition that has a material
adverse effect on (i) the Property taken as a whole, (ii) the use, operation, or
value of any Individual Property, (iii) the business, profits, operations or
financial condition of Mortgage Borrower and/or Mezzanine Borrower (taken as a
whole), (iv) the ability of Mezzanine Borrower to repay the principal and/or
interest of the Loan as it becomes due or to satisfy any of Mezzanine Borrower’s
material obligations under the Mezzanine Loan Documents, (v) the ability of
Mortgage Borrower or any Senior Mezzanine Borrower to repay the principal and
interest of the Loan (Mortgage) or Senior Mezzanine Loan as it becomes due or to
satisfy any of Mortgage Borrower’s material obligations under the Loan Documents
(Mortgage) or Senior Mezzanine Borrower’s obligations under any Senior Mezzanine
Loan, or (vi) the Collateral taken as a whole.

 

“Material Sublease” shall mean any Sublease to a single Tenant covering the
lesser of (a) 40,000 or more or (b) more than 50% of the square feet of rentable
area of any Individual Property, including, without limitation, the Material
Sublease (including all amendments and supplements thereto) designated as such
on Schedule I attached hereto and made a part hereof.

 

“Material Sublease Approval Threshold” shall mean Material Subleases with
respect to Individual Properties having aggregate Allocated Loan Amounts equal
to or greater than 5% of the Loan Amount.

 

“Maturity Date” shall have the meaning set forth in the Notes.

 

“Maturity Date Payment” shall have the meaning set forth in the Notes.

 

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“Maximum Legal Rate” shall mean the maximum non-usurious 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 Mezzanine Note and as
provided for herein or the other Mezzanine 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.

 

“Member/Stock Power” shall mean the member/stock power executed by Mezzanine
Borrower and substantially in the form of Exhibit N.

 

“Merger Agreement” shall mean that certain Plan of Merger among Toys ‘R’ Us,
Inc., Global Toys Acquisition, LLC and Global Toys Acquisition Merger Sub, Inc.
dated as of March 17, 2005.

 

“Mezzanine Account” shall have the meaning set forth in Section 3.1.1.

 

“Mezzanine Account Agreement” shall mean (a) the side letter agreement dated the
date hereof between Cash Management Bank (Second Mezzanine) and Mezzanine Lender
or (b) at any time when Mezzanine Lender or Servicer is not the Cash Management
Bank (Second Mezzanine), an Account and Control Agreement, in form reasonably
acceptable to Mezzanine Lender among Mezzanine Lender, Mezzanine Borrower and
Cash Management Bank (First Mezzanine).

 

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

 

“Mezzanine Borrower’s Account” shall mean an account or accounts maintained by
Mezzanine Borrower for its own account at such bank and with such account number
as may be designated in writing by Mezzanine Borrower to Mezzanine Lender and
Cash Management Bank from time to time.

 

“Mezzanine Debt Service Reserve Account” shall have the meaning set forth in
Section 3.1.1.

 

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

 

“Mezzanine Lender’s Expenses” shall mean all reasonable expenses incurred in
connection with the origination of the Loan, including, without limitation,
preparation of the Mezzanine Loan Documents, recording fees, underwriting costs,
search fees, and other fees and out of pocket expenses (including reasonable
attorneys’ fees and disbursements and other third party expenses) of the
Mezzanine Lender.

 

“Mezzanine Loan Documents” shall mean, collectively, this Agreement, the
Mezzanine Note, the Mezzanine Account Agreement, the Recourse Guaranty
(Mezzanine), the Environmental Indemnity (Second Mezzanine) and the Pledge and
any and all other agreements, instruments or documents executed by Mezzanine
Borrower (or any of its Affiliates) evidencing, securing or delivered in
connection with the Loan and

 

16

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the transactions contemplated thereby, including, without limitation, any
certificates or representations delivered by or on behalf of Mezzanine Borrower,
or any Affiliate of Mezzanine Borrower.

 

“Mezzanine Loan Default Notice” shall mean a notice from Mezzanine Lender that
an Event of Default has occurred and is continuing under the Mezzanine Loan
Documents.

 

“Mezzanine Loan Default Revocation Notice” shall mean a notice from Mezzanine
Lender that an Event of Default which has occurred under the Mezzanine Loan
Documents is no longer continuing.

 

“Mezzanine Note” shall mean that certain Mezzanine Note A-1 (Second Mezzanine),
dated the date hereof, made by Mezzanine Borrower, as maker, in favor of
Mezzanine Lender, as payee, in the principal amount of $21,000,000, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

“Mortgage Borrower” shall have the meaning ascribed to the term “Borrower” in
the Loan Agreement (Mortgage).

 

“Mortgage Default” shall have the meaning ascribed to “Default” in the Loan
Agreement (Mortgage).

 

“Mortgage Event of Default” shall have the meaning ascribed to “Event of
Default” in the Loan Agreement (Mortgage).

 

“Mortgage Lender” shall mean German American Capital Corporation, a Maryland
corporation, its successors and assigns.

 

“Mortgage Loan” shall mean the loan in the amount of $145,000,000 made by
Mortgage Lender to Mortgage Borrower pursuant to the Loan Agreement (Mortgage).

 

“Mortgage Note” shall have the meaning ascribed to “Notes” in the Loan Agreement
(Mortgage).

 

“New Sublease” shall have the meaning set forth in Section 8.8.1.

 

“Non-Consolidation Opinion” shall have the meaning provided in Section 2.5.7.

 

“Non-Disqualification Opinion” shall mean an opinion of outside tax counsel
reasonably acceptable to the Lender or the Rating Agencies to whom such opinion
is addressed that a contemplated action will neither cause any trust formed as a
REMIC pursuant to a Securitization to fail to qualify as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code at any time
that any “regular interests” in the REMIC are outstanding nor cause a
“prohibited transaction” tax (within the meaning of Section 860F(a)(2) of the
Code) or “prohibited contribution” tax (within the meaning of Section 860G(d) of
the Code) to be imposed on any such REMIC.

 

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“Obligations (Mortgage)” shall have the meaning ascribed to “Obligations” in the
Loan Agreement (Mortgage).

 

“Obligations (First Mezzanine)” shall have the meaning ascribed thereto in the
First Mezzanine Loan Agreement.

 

“Obligations (Second Mezzanine)” shall mean all indebtedness, obligations and
liabilities of Mezzanine Borrower and Guarantor to Mezzanine Lender, under this
Agreement or any of the other Mezzanine Loan Documents or in respect of the Loan
or the Mezzanine Note, or other instruments at any time evidencing any of the
foregoing, whether existing on the date of this Agreement or arising or incurred
hereafter, direct or indirect, joint or several, absolute or contingent, matured
or unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise.

 

“Officer’s Certificate” shall mean a certificate executed by an authorized
signatory of Mezzanine Borrower that is familiar with the financial condition of
Mezzanine Borrower and Mortgage Borrower and the operation of the Property, or
in the case of Officer’s Certificates required under Section 11, the Chief
Financial Officer of Borrower.

 

“Operating Agreements” shall mean, collectively, the Master Lease, the Material
Subleases, the REAs, and the Condominium Documents.

 

“Opinion of Counsel” shall mean an opinion of counsel of a law firm selected by
Mezzanine Borrower and reasonably acceptable to Mezzanine Lender.

 

“Other Charges” shall mean, collectively, (i) Common Charges and any special
assessments and other similar amounts charged to Mortgage Borrower under the
Condominium Documents or otherwise payable with respect to the Condominium
Properties pursuant to the Condominium Documents, (ii) all sums, charges, fees,
costs, expenses, common area maintenance charges and other charges or
assessments reserved in or payable under the REAs and (iii) maintenance charges,
impositions other than Impositions, 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 by any Governmental Authority,
other than those required to be paid by a tenant pursuant to its respective
Sublease.

 

“Other Taxes” shall have the meaning set forth in Section 2.4.3.

 

“Outside Date” shall mean September 15, 2005.

 

“Owner’s Title Policy Loss Payment Direction Letter” shall mean that certain
letter of even date herewith from Mortgage Borrower to the Mezzanine Lender and
other parties named therein and countersigned by the Title Companies, directing
the Title Company to make certain loss payments under certain of Mortgage
Borrower’s owner’s title insurance policies to Mezzanine Lender as more
particularly set forth therein.

 

18

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“Ownership Interest” shall mean the 100% membership interest in First Mezzanine
Borrower and 100% indirect equity interest in Mortgage Borrower pledged to
Mezzanine Lender by Mezzanine Borrower pursuant to the Pledge.

 

“Payment Date” shall have the meaning set forth in the Mezzanine Note.

 

“Permitted Debt” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Permitted Debt (Second Mezzanine)” shall mean the Mezzanine Note and other
obligations, indebtedness, and liabilities specifically provided for in
specifically provided for in any Mezzanine Loan Document and secured by this
Agreement, the Pledge and/or the other Mezzanine Loan Documents, and the
obligations, indebtedness, and liabilities specifically provided for under the
Mortgage Loan, any Senior Mezzanine Loan and any Junior Mezzanine Loan.

 

“Permitted Encumbrances” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Permitted Fund Manager” means any Person that on the date of determination is
(i) a nationally-recognized manager of investment funds investing in debt or
equity interests relating to commercial real estate, and (ii) not subject to a
bankruptcy proceeding.

 

“Permitted Mortgage Loan Amendment” shall have the meaning set forth in Section
5.1.19(b).

 

“Permitted Transferee” shall mean any entity that, together with its Close
Affiliates (i) is experienced in owning and/or operating properties similar to
the Properties, (ii) (a) has a net worth, as of a date no more than six (6)
months prior to the date of the transfer of at least $1 Billion and (b)
immediately prior to such transfer, controls real estate equity assets of at
least $1 Billion, (iii) owns or has under management or acts as the exclusive
fund manager or investment advisor, at the time of the transfer, not fewer than
200 retail properties (excluding the Properties) containing not fewer than
4,000,000 rentable square feet in the aggregate and (iv) is not a Disqualified
Transferee.

 

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

 

“Personal Property” shall have the meaning set forth in the granting clause of
the Security Instrument.

 

“Plan” shall have the meaning set forth in Section 4.1.10.

 

19

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“Pledge” shall mean that certain Pledge and Security Agreement (Second
Mezzanine), dated as of the date hereof, from Mezzanine Borrower to Mezzanine
Lender.

 

“Pledged Collateral” shall have the meaning set forth in the Pledge.

 

“Portfolio Four-Wall EBITDAR” shall mean earnings from store operations before
interest expense/income, taxes, depreciation and amortization, any rental
expense on real property, distribution expense, direct and allocated corporate
overhead expense, regional office allocation, royalty charges from affiliates
and restructuring expense plus any non-cash charges/less any non-cash income,
including but not limited to losses on sales of assets and non cash compensation
expense.

 

“Pre-approved Transferee” shall mean any of the entities set forth on Schedule
III hereof, or any Close Affiliates thereof, provided any of the foregoing
entities or their Close Affiliates shall only be a “Pre-approved Transferee” if
(i) such entity continues to be Controlled by substantially the same Persons
Controlling such entity as of the Closing Date or if such Pre-approved
Transferee is a publicly traded company, such Pre-approved Transferee continues
to be publicly traded on an established securities market, (ii) there has been
no material adverse change in the financial condition or results of operations
of such entity since the Closing Date and (iii) such entity and its Close
Affiliates together own, have under management or act as the exclusive fund
manager or investment advisor, at the time of the transfer, not fewer than 200
retail properties (excluding the Properties) containing not fewer than 4,000,000
rentable square feet in the aggregate.

 

“Prepayment Fee” shall have the meaning set forth in the Mezzanine Note.

 

“Principal Amount” shall have the meaning set forth in the Mezzanine Note.

 

“Proceeds” shall have the meaning set forth in the Loan Agreement (Mortgage).

 

“Prohibited Mortgage Loan Amendment” shall have the meaning specified in Section
5.1.17.

 

“Property” shall have the meaning set forth in the Loan Agreement (Mortgage).

 

“Property Release” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Protective Advances” shall mean sums advanced by Mezzanine Lender for the
purposes of payment of items reasonably necessary to protect the Collateral.

 

“Rate Cap Collateral” shall have the meaning set forth in Section 9.2.

 

“Rating Agencies” shall mean (a) prior to a Securitization, each of S&P, Moody’s
and Fitch and any other nationally-recognized statistical rating agency which
has been approved by Lender and (b) after a Securitization has occurred, each
such Rating Agency which has rated the Securities in the Securitization.

 

20

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“Rating Agency Confirmation” shall mean, collectively, a written affirmation
from each of the Rating Agencies that the credit rating of the Securities given
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 which may be satisfied by a Rating Agency declining to
review the matter in question without adverse impact on the Securities. In the
event that, at any given time, no such Securities shall have been issued and are
then outstanding, then the term Rating Agency Confirmation shall be deemed
instead to require the written approval of Lender based on its good faith
determination of whether the Rating Agencies would issue a Rating Agency
Confirmation if any such Securities were outstanding.

 

“REAs” shall mean, collectively, any “construction, operation and reciprocal
easement agreement” or similar agreement (including any “separate agreement” or
other agreement between Borrower and one or more other parties to an REA with
respect to such REA) affecting any Individual Property or portion thereof,
including, without limitation, all REAs as defined in the Security Instrument.

 

“Receipts” shall mean with respect to any Person, the declaration or payment of
any cash, cash flow, dividend or distribution on or in respect of any member’s
or partner’s interest, shares of any class of capital stock or other beneficial
interest of such Person; the purchase, redemption, exchange or other retirement
of any member’s or partner’s interest, shares of any class of capital stock or
other beneficial interest of such Person, directly or indirectly; the return of
capital by such Person to its members, shareholders or partners as such; or any
other distribution of any nature whatsoever on or in respect of any member’s or
partner’s interest, shares of any class of capital stock or other beneficial
interest of such Person.

 

“Recourse Guaranty (Mezzanine)” shall mean that certain Guaranty of Recourse
Obligations of Mezzanine Borrower, dated as of the date hereof, by Guarantor in
favor of Mezzanine Lender, as the same may be amended, supplemented, restated or
otherwise modified from time to time.

 

“Recourse Guaranty (Mortgage)” shall mean that certain Guaranty of Recourse
Obligations of Mortgage Borrower, dated as of the date hereof, by Guarantor in
favor of Mortgage Lender, as the same may be amended, supplemented, restated or
otherwise modified from time to time.

 

“Register” shall have the meaning set forth in Section 14.4.

 

“Regulatory Change” shall mean any change after the date of this Agreement in
federal, state or foreign laws or regulations or the adoption or the making,
after such date, of any interpretations, directives or requests applying to
Mezzanine Lender, or any Person Controlling Mezzanine Lender or to a class of
banks or companies Controlling banks of or under any federal, state or foreign
laws or regulations (whether or not having

 

21

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the force of law) by any court or Governmental Authority or monetary authority
charged with the interpretation or administration thereof.

 

“Release Date” shall have the meaning provided in Section 2.3.4(a).

 

“Release Instruments” shall have the meaning provided in Section 2.3.4(c).

 

“Release Price” shall mean the product of (a) the Allocated Loan Amount for the
Release Property and (b) the applicable Release Price Percentage.

 

“Release Price Percentage” shall mean, as of any Release Date, the percentage
applicable to the range of Combined Principal Amounts that would be outstanding
immediately following such Release, as set forth in the following table:

 

Range of Outstanding Combined Principal Amount Following Release

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

  

Release Price

Percentage

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

 

From $200,000,000 to and including $170,000,000

   100 %

Less than $170,000,000 to and including $140,000,000

   110 %

Less than $140,000,000 to $0.00

   115 %

 

“Release Property” shall have the meaning provided in Section 2.3.4.

 

“Rents” shall have the meaning set forth in the Loan Agreement (Mortgage).

 

“Replaced Property” shall have the meaning provided in Section 2.3.5(a).

 

“Replacement Interest Rate Cap Agreement (Second Mezzanine)” shall mean an
interest rate cap agreement from an Approved Counterparty with terms that are
the same in all material respects as the terms of the Interest Rate Cap
Agreement (Second Mezzanine) except that the same shall be effective as of (i)
in connection with a replacement following a downgrade, withdrawal or
qualification of the rating of the Counterparty such that it ceases to qualify
as an “Approved Counterparty”, the date required in Section 9.3(b) or (ii) in
connection with a replacement related to an extension of the Maturity Date, the
date required in Section 5(a)(ii) of the Mezzanine Note; provided that to the
extent any such interest rate cap agreement does not meet the foregoing
requirements, a Replacement Interest Rate Cap Agreement (Second Mezzanine) shall
be such interest rate cap agreement approved in writing by Mezzanine Lender, and
if the Loan or any portion thereof is included in a Securitization, each of the
Rating Agencies with respect thereto.

 

“Requesting Parties” shall have the meaning set forth in Section 11.3(b).

 

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

 

“Scope” shall mean an amount equal the sum of (i) the aggregate amount of the
Allocated Loan Amounts for all Deficient GL Properties that are not Disputed Sum
GL Properties plus (ii) without duplication of any amounts described in (i), the
aggregate Disputed Sums with respect to all Disputed Sum GL Properties. As of
the Closing Date, the Scope is equal to $24,496,966.

 

“Scope Trigger” shall mean an amount equal to 10% of the Combined Principal
Amount on the Outside Date.

 

“Securitization” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Security Instrument” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Senior Mezzanine Borrower” shall mean First Mezzanine Borrower.

 

“Senior Mezzanine Lender” shall mean First Mezzanine Lender.

 

“Senior Mezzanine Loan” shall mean the First Mezzanine Loan.

 

“Senior Mezzanine Loan Default Revocation Notice” shall mean a First Mezzanine
Loan Default Revocation Notice.

 

“Senior Mezzanine Loan Default Notice” shall mean a First Mezzanine Loan Default
Notice.

 

“Senior Mezzanine Loan Documents” shall mean the First Mezzanine Loan Documents.

 

“Servicer” shall mean such Person designated in writing with an address for such
Person by Mezzanine Lender, in its sole discretion, to act as Mezzanine Lender’s
agent hereunder with such powers as are specifically delegated to the Servicer
by Mezzanine Lender, whether pursuant to the terms of this Agreement, the
Mezzanine Account Agreement or otherwise, together with such other powers as are
reasonably incidental thereto.

 

“Single Purpose Entity” shall mean a Person, other than an individual, which (i)
is formed or organized solely for the purpose of owning, holding, developing,
using, operating and financing an ownership interest in the Collateral, (ii)
does not engage in any business unrelated to the Collateral and the ownership,
development, use, operation and financing thereof, (iii) has not and will not
have any assets other than those related to its interest in the Collateral or
the operation, management and financing thereof or any indebtedness other than
the Permitted Debt (Second Mezzanine), (iv) maintains its own separate books and
records and its own accounts, in each case which are separate and

 

23

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apart from the books and records and accounts of any other Person, (v) holds
itself out as being a Person, separate and apart from any other Person, (vi)
does not and will not commingle its funds or assets with those of any other
Person, (vii) conducts its own business in its own name; (viii) maintains
separate financial statements, (ix) pays its own liabilities out of its own
funds, (x) observes all partnership, corporate or limited liability company
formalities, as applicable, (xi) pays the salaries of its own employees, if any,
and maintains a sufficient number of employees, if any, in light of its
contemplated business operations, (xii) does not guarantee or otherwise obligate
itself with respect to the debts of any other Person or hold out its credit as
being available to satisfy the obligations of any other Person, (xiii) does not
acquire obligations or securities of its partners, members or shareholders,
(xiv) allocates fairly and reasonably shared expenses, including, without
limitation, any overhead for shared office space, if any, (xv) uses separate
stationary, invoices, and checks, (xvi) maintains an arms-length relationship
with its Affiliates, (xvii) does not and will not pledge its assets for the
benefit of any other Person or make any loans or advances to any other Person,
(xviii) does and will continue to use commercially reasonable efforts to correct
any known misunderstanding regarding its separate identity, (xix) maintains
adequate capital in light of its contemplated business operations and (xx) has
not and will not engage in, seek, or consent to the dissolution, winding up,
liquidation, consolidation or merger and except as otherwise permitted in this
Agreement, has not and will not engage in, seek or consent to any asset sale,
transfer of partnership, membership or shareholder interests, or amendments of
its partnership or operating agreement, certificate of incorporation, articles
of organization or other organizational document. In addition, if such Person is
a partnership, (1) all general partners of such Person shall be Single Purpose
Entities; and (2) if such Person has more than one general partner, then the
organizational documents shall provide that such Person shall continue (and not
dissolve) for so long as a solvent general partner exists. In addition, if such
Person is a corporation, then, at all times: (a) such Person shall have at least
two (2) Independent Directors and (b) the board of directors of such Person may
not take any action requiring the unanimous affirmative vote of 100% of the
members of the board of directors unless all of the directors, including the
Independent Directors, shall have participated in such vote. In addition, if
such Person is a limited liability company, (a) such Person shall have at least
two (2) Independent Managers or Independent Members, (b) if such Person is
managed by a board of managers, the board of managers of such Person may not
take any action requiring the unanimous affirmative vote of 100% of the members
of the board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (c) if such Person is not
managed by a board of managers, the members of such Person may not take any
action requiring the affirmative vote of 100% of the members of such Person
unless all of the members, including the Independent Members, shall have
participated in such vote, (d) each managing member shall be a Single Purpose
Entity and (e) its articles of organization, certificate of formation and/or
operating agreement, as applicable, shall provide that until all of the
Indebtedness and Obligations (First Mezzanine) are paid in full such entity will
not dissolve. In addition, the organizational documents of such Person shall
provide that such Person (1) without the unanimous consent of all of the
partners, directors or members, as applicable, shall not with respect to itself
or to any other Person in which it has a direct or indirect legal or

 

24

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beneficial interest (a) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or other similar official
for the benefit of the creditors of such Person or all or any portion of such
Person’s properties, or (b) take any action that might cause such Person to
become insolvent, petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally, (2) has and will maintain its books,
records, resolutions and agreements as official records, (3) has held and will
hold its assets in its own name, (4) has and will maintain its financial
statements, accounting records and other organizational documents, books and
records separate and apart from any other Person, (5) has not and will not
identify its partners, members or shareholders, or any affiliates of any of them
as a division or part of it, (6) has and will maintain an arms-length
relationship with its Affiliates, and (7) has not and will not enter into or be
a party to any transaction with its partners, members, shareholders, or its
Affiliates except in the ordinary course of business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arms-length transaction with a third party.

 

“Solvency Opinion” shall have the meaning provided in Section 2.57.

 

“Special Taxes” shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, or any liabilities with respect thereto,
including those arising after the date hereof as result of the adoption of or
any change in law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or application
thereof by a Governmental Authority but excluding, in the case of Mezzanine
Lender, such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by Mezzanine Lender’s net income by the
United States of America or any Governmental Authority of the jurisdiction under
the laws under which Mezzanine Lender is organized or maintains a lending
office.

 

“SPE Entity” shall mean Mezzanine Borrower and any other Person which is
required by this Agreement to be, as long as the Loan is outstanding, a Single
Purpose Entity.

 

“Sponsors” shall have the meaning set forth in Section 8.5(iii)(9).

 

“State” shall mean, with respect to each Individual Property, the State in which
such Individual Property or any part thereof is located.

 

“Sub-Account(s)” shall have the meaning set forth in Section 3.1.1.

 

“Sublease” shall mean any lease (other than the Master 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 by the Borrower or the Master Lessee a possessory interest in, or right
to use or occupy all or any portion 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

 

25

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guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto. Lender
acknowledges that Borrower does not own, and Lender does not have a lien on, the
Excluded Personal Property and that the term “Subleases” shall not include the
Excluded Personal Property or leases or licenses with respect to the Excluded
Personal Property.

 

“Sublease Modification” shall have the meaning set forth in Section 8.8.1.

 

“Substitute Property” shall have the meaning provided in Section 2.3.5(a).

 

“Substitute Property Mortgage Spreader Agreement” shall have the meaning
provided in Section 2.3.5(a).

 

“Substitution” shall have the meaning provided in Section 2.3.5.

 

“Substitution Date” shall have the meaning provided in Section 2.3.5(a).

 

“Substitution Due Diligence Package” shall have the meaning provided in Section
2.3.5.

 

“Substitution Notice” shall have the meaning provided in Section 2.3.5(c).

 

“Survey” shall have the meaning set forth in the Loan Agreement (Mortgage).

 

“Taking” 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 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.

 

“Tenant” shall have the meaning set forth in the Loan Agreement (Mortgage).

 

“Third Mezzanine Borrower” shall mean Giraffe Junior, LLC, a Delaware limited
liability company.

 

“Third Mezzanine Lender” shall mean German American Capital Corporation, a
Maryland corporation, and its successors and/or assigns, as the holder of the
Third Mezzanine Loan.

 

“Third Mezzanine Loan” shall mean that certain $8,000,000 mezzanine loan, made
as of the date hereof, from Third Mezzanine Lender to Third Mezzanine Borrower.

 

“Third Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan and
Security Agreement (Third Mezzanine), dated as of the date hereof, between Third
Mezzanine Borrower, as borrower, and Third Mezzanine Lender, as lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

 

26

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“Third Mezzanine Loan Documents” shall mean the documents evidencing and
securing the Third Mezzanine Loan, as may be modified, amended, extended,
supplemented, restated or replaced from time to time.

 

“Title Company” shall have the meaning set forth in the Loan Agreement
(Mortgage).

 

“Title Policy (Mortgage)” shall have the meaning ascribed to “Title Policy” in
the Loan Agreement (Mortgage).

 

“Transfer” shall mean to, directly or indirectly, sell, assign, convey,
mortgage, transfer, pledge, hypothecate, encumber, grant a security interest in,
exchange or otherwise dispose of any beneficial interest or grant any option or
warrant with respect to, or where used as a noun, a direct or indirect sale,
assignment, conveyance, transfer, pledge or other disposition of any beneficial
interest by any means whatsoever whether voluntary, involuntary, by operation of
law or otherwise.

 

“True Lease Opinion” shall have the meaning provided in Section 2.5.7(b).

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State of Delaware or New York, as applicable.

 

“U.S. Government Obligations” shall have the meaning set forth in the Loan
Agreement (Mortgage).

 

1.2 Principles of Construction. All references to sections and schedules are to
sections and schedules in or to this Agreement unless otherwise specified. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term “financial statements” shall
include the notes and schedules thereto. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the definitions given
them in this Agreement when used in any other Mezzanine Loan Document or in any
certificate or other document made or delivered pursuant thereto. All uses of
the word “including” shall mean including, without limitation unless the context
shall indicate otherwise. 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.

 

II. GENERAL TERMS

 

2.1 Loan; Disbursement to Mezzanine Borrower.

 

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

 

27

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2.1.2 Disbursement to Mezzanine Borrower. Mezzanine Borrower may request and
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.
Mezzanine Borrower acknowledges and agrees that the full proceeds of the Loan
have been disbursed by Mezzanine Lender to Mezzanine Borrower on the Closing
Date.

 

2.1.3 Use of Proceeds. Mezzanine Borrower shall use the proceeds of the Loan to
(a) as a distribution to Mortgage Borrower to acquire the Property, (b) pay all
past-due operating expenses, if any, in respect of the Property, (c) fund any
working capital requirements of the Property, (d) make deposits into the
Sub-Accounts as required hereunder, (e) pay costs and expenses incurred in
connection with the closing of the Loan, (f) distribute to its parent entities
and (g) retain and/or distribute the balance, if any.

 

2.2 Interest; Loan Payments; Late Payment Charge; Payment of Principal and
Interest.

 

2.2.1 Payment of Principal and Interest.

 

(i) Except as set forth in Section 2.2.1(ii), interest shall accrue on the
Principal Amount as set forth in the Mezzanine Note.

 

(ii) Upon the occurrence and during the continuance of an Event of Default and
from and after the Maturity Date, if the entire Principal Amount is not repaid
on the Maturity Date, interest on the outstanding principal balance of the Loan
and, to the extent permitted by law, overdue interest and other amounts due in
respect of the Loan shall accrue at the Default Rate calculated from the date
such payment was due without regard to any grace or cure periods contained
herein. Interest at the Default Rate shall be computed from the occurrence of
the Event of Default until the actual receipt and collection of the Indebtedness
(or that portion thereof that is then due). To the extent permitted by
applicable law, interest at the Default Rate shall be added to the Indebtedness,
shall itself accrue interest at the same rate as the Loan and shall be secured
by this Agreement and the Pledge. This paragraph shall not be construed as an
agreement or privilege to extend the date of the payment of the Indebtedness,
nor as a waiver of any other right or remedy accruing to Mezzanine Lender by
reason of the occurrence of any Event of Default; and Mezzanine Lender retains
its rights under the Mezzanine Note to accelerate and to continue to demand
payment of the Indebtedness upon the happening of any Event of Default.

 

2.2.2 Method and Place of Payment.

 

(a) On each Payment Date, Mezzanine Borrower shall pay to Mezzanine Lender
interest accruing pursuant to the Mezzanine Note for the entire Interest Period
during which said Payment Date shall occur.

 

(b) All amounts advanced by Mezzanine Lender pursuant to the applicable
provisions of the Mezzanine Loan Documents, other than the Principal Amount,
together with any interest at the Default Rate or other charges as provided
therein, shall be due

 

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and payable hereunder as provided in the Mezzanine Loan Documents. In the event
any such advance or charge is not so repaid by Mezzanine Borrower, Mezzanine
Lender may, at its option, first apply any payments received under the Mezzanine
Note to repay such advances, together with any interest thereon, or other
charges as provided in the Mezzanine Loan Documents, and the balance, if any,
shall be applied in payment of any installment of interest or principal then due
and payable.

 

(c) The Maturity Date Payment shall be due and payable in full on the Maturity
Date.

 

2.2.3 Late Payment Charge. If any principal, interest or any other sums due
under the Mezzanine Loan Documents (other than the outstanding Principal Amount
due and payable on the Maturity Date) is not paid by Mezzanine Borrower on or
prior to the date on which it is due, Mezzanine Borrower shall pay to Mezzanine
Lender upon demand an amount equal to the lesser of three percent (3%) of such
unpaid sum or the Maximum Legal Rate (the “Late Payment Charge”) in order to
defray the expense incurred by Mezzanine Lender in handling and processing such
delinquent payment and to compensate Mezzanine Lender for the loss of the use of
such delinquent payment. Any such amount shall be secured by this Agreement, the
Pledge and the other Mezzanine Loan Documents to the extent permitted by
applicable law.

 

2.2.4 Usury Savings. This Agreement and the Mezzanine Note are subject to the
express condition that at no time shall Mezzanine Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject Mezzanine 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 Mezzanine Loan Documents, Mezzanine Borrower is at any time
required or obligated to pay interest on the principal balance due under the
Mezzanine Note at a rate in excess of the Maximum Legal Rate, then the LIBOR
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 under the Mezzanine Note. All
sums paid or agreed to be paid to Mezzanine Lender for the use, forbearance, or
detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

 

2.3 Prepayments. No prepayments of the Indebtedness shall be permitted except as
set forth in Section 2.3.1 hereof and Section 4 of the Mezzanine Note.

 

2.3.1 Mandatory Prepayment.

 

(a) Except as described in Section 2.3.1(b) below and subject to Article VIII,
Mezzanine Borrower shall repay the Mezzanine Note, in full, together with the

 

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Prepayment Fee (if applicable), in accordance with Section 4(b) and Section 4(d)
(if applicable) of the Mezzanine Note upon the occurrence of any of the
following events:

 

(i) if all or any portion of the Mortgage Borrower’s interest in the Property is
Transferred except in a manner that does not violate the Loan Agreement
(Mortgage) or as otherwise agreed to by Mezzanine Lender;

 

(ii) if all or any portion of the Mezzanine Borrower’s direct or indirect
interest in Mortgage Borrower is Transferred except in a manner that does not
violate this Agreement or is otherwise agreed to by Mezzanine Lender;

 

(iii) if a Transfer or series of Transfers of any direct or indirect ownership
interests in the Mezzanine Borrower or any other SPE Entity shall occur which
either individually or in the aggregate with all such Transfers violates the
requirements of Article VIII; or

 

(iv) if either the Loan (Mortgage or First Mezzanine Loan) is repaid in full or
refinanced.

 

(b) If there shall occur a casualty or Taking in respect of the Property and as
a result thereof either the Loan (Mortgage) or any Senior Mezzanine Loan is
prepaid in whole or in part, then, to the extent that there shall be excess
proceeds or awards available following the application of the proceeds or awards
to reconstruct or repair the Property or to the payment of all or any portion of
the Loan (Mortgage) and such Senior Mezzanine Loan pursuant to the terms of the
Loan Documents (Mortgage) and Senior Mezzanine Loan Documents (“Excess
Proceeds”), Mezzanine Borrower shall repay the Mezzanine Note, or a portion
thereof, in the amount of such available Excess Proceeds (excluding payment of
any Prepayment Fee) in accordance with Section 4(b) of the Mezzanine Note. All
Excess Proceeds shall be deposited directly into the Mezzanine Account.

 

2.3.2 Prepayments After Event of Default; Application of Amounts Paid. If,
following an Event of Default, Mezzanine Lender shall accelerate the
Indebtedness and Mezzanine Borrower thereafter tenders payment of all or any
part of the Indebtedness, or if all or any portion of the Indebtedness is
otherwise recovered by Mezzanine Lender after such Event of Default, (a) such
payment may be made only on the next occurring Payment Date together with all
unpaid interest thereon as calculated through the end of the Interest Period
during which such Payment Date occurs (even if such period extends beyond such
Payment Date and calculated as if such payment had not been made on such Payment
Date), and all other fees and sums payable hereunder or under the Mezzanine Loan
Documents, including without limitation, interest that has accrued at the
Default Rate and any Late Payment Charges), (b) such payment shall be deemed a
voluntary prepayment by Mezzanine Borrower, and (c) Mezzanine Borrower shall
pay, in addition to the Indebtedness, an amount equal to the Prepayment Fee.

 

2.3.3 Release of Collateral. Mezzanine Lender shall, upon the written request,
upon payment in full of the Principal Amount and interest on the Loan and all
other

 

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amounts due and payable under the Mezzanine Loan Documents in accordance with
the terms and provisions of the Mezzanine Note and this Agreement, release the
Lien of (i) this Agreement upon the Account Collateral (Second Mezzanine) and
the Rate Cap Collateral and (ii) the Pledge on the Collateral or assign it
(together with the Mezzanine Note), in whole or in part, to a new lender without
representation, warranty or recourse, and without fee except for reasonable
costs and expenses. In such event, Mezzanine Borrower shall submit to Mezzanine
Lender, not less than ten (10) Business Days prior to the date of such release
or assignment, a release of lien or assignment of lien, as applicable, for such
Collateral for execution by Mezzanine Lender. Such release or assignment, as
applicable, shall be in a form satisfactory to Mezzanine Lender in its
reasonable discretion. In addition, Mezzanine Borrower shall provide all other
documentation Mezzanine Lender reasonably requires to be delivered by Mezzanine
Borrower in connection with such release or assignment, as applicable.

 

2.3.4 Release of Individual Property. In the event Mortgage Borrower requests
the release of any Individual Property or Properties, subject to satisfaction of
each of the conditions set forth below (collectively, the “General Release
Conditions”), Mezzanine Lender shall consent to such release and to the other
actions to be taken by Mortgage Lender in accordance with Section 2.3.4 of the
Loan Agreement (Mortgage) with respect to such Individual Property or Properties
(each a “Release Property”):

 

(a) Mezzanine Borrower delivers a written notice (a “Property Release Notice”)
to Mezzanine Lender of its desire to effect such Property Release no later than
thirty (30) days prior to the date of such desired Property Release, and setting
forth the Business Day (the “Release Date”) on which Mezzanine Borrower desires
that Mortgage Lender release its interest in such Release Property.

 

(b) Mezzanine Borrower, Mortgage Borrower and each Senior Mezzanine Borrower
shall have paid (i) the “Release Price” (as such term is defined herein, in the
Loan Agreement (Mortgage), and in each Senior Mezzanine Loan Agreement, (ii) the
applicable Prepayment Fee (as such term is defined herein and in the Loan
Agreement (Mortgage), and each Senior Mezzanine Loan Agreement, if any, (iii)
all other sums due under the applicable loan in connection with such prepayment,
for deposit into the Holding Account and disbursement by the Cash Management
Bank in accordance with Section 3.1.6. Interest payable under the Mezzanine Note
shall be calculated through the end of the Interest Period in which such payment
is made on the Principal Amount (even if such period extends beyond such Payment
Date and calculated as if such payment had not been made on such Payment Date
(i.e. without a deduction for the portion of the Principal Amount included in
the Release Price)).

 

(c) Mezzanine Borrower shall submit to Mezzanine Lender not less than ten (10)
Business Days prior to the Release Date (which must be on a Business Day), a
release of Liens and related Mezzanine Loan Documents for each applicable
Release Property (for execution by Mezzanine Lender) in a form appropriate in
the applicable state and otherwise satisfactory to Mezzanine Lender in its
reasonable discretion and all other documentation Mezzanine Lender reasonably
requires to be delivered by Mezzanine Borrower in connection with such Property
Release (collectively, “Release

 

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Instruments”) (for execution by Mezzanine Lender) for each applicable Release
Property together with an Officer’s Certificate certifying that (i) the Release
Instruments are in compliance with all Legal Requirements, (ii) the release to
be effected will not violate the terms of this Agreement, (iii) the release to
be effected will not impair or otherwise adversely affect the Liens, security
interests and other rights of Mezzanine Lender under the Mezzanine Loan
Documents not being released (or as to the Properties subject to the Mezzanine
Loan Documents not being released), and (iv) the requirement described in
paragraph (e) below is satisfied in connection with such Property Release
(together with calculations and supporting documentation demonstrating the same
in reasonable detail).

 

(d) With respect to any Property Release, after giving effect to such Property
Release, the DSCR as of the Release Date for all of the Properties then
remaining subject to the Liens of the Security Instrument shall not be less than
the greater of (A) the Closing Date DSCR and (B) 80% of the DSCR for the
Properties subject to the Lien of the Security Instrument immediately prior to
the Release Date.

 

(e) No Event of Default shall have occurred and then be continuing on the date
on which Borrower delivers the Property Release Notice and on the Release Date.

 

(f) The Release Property is simultaneously transferred to a party other than any
Borrower or any SPE Entity.

 

(g) Mezzanine Borrower shall cause Mortgage Borrower to execute and deliver such
other instruments, certificates, opinions of counsel and documentation as
Mezzanine Lender and the Rating Agencies shall reasonably request in order to
preserve, confirm or secure the Liens and security granted to Mortgage Lender by
the Loan Documents, including any amendments, modifications or supplements to
any of the Loan Documents and partial release endorsements to the existing Title
Policy.

 

(h) Mezzanine Borrower shall pay for any and all reasonable out-of-pocket costs
and expenses incurred by Mezzanine Borrower or Mezzanine Lender in connection
with any proposed Property Release, including Mezzanine Lender’s reasonable
attorneys’ fees and disbursements and all title insurance premiums for any
endorsements to any existing Title Policies reasonably required by Mezzanine
Lender in connection with such proposed release.

 

(i) Prior to the Release Date, Mezzanine Borrower shall deliver to Mezzanine
Lender evidence reasonably satisfactory to Mezzanine Lender that all amounts
owing to any parties in connection with the transaction relating to the proposed
Property Release have been paid in full, or will simultaneously be paid in full
on the Release Date or adequate reserves therefor are established by Mezzanine
Borrower in cash with respect to contingent or other liabilities that may arise
out of such transaction and for which Mezzanine Borrower is not adequately
indemnified or insured against as reasonably determined by Mezzanine Lender.

 

(j) As a condition precedent to a Release but not as a direct covenant of the
Borrower, on the Release Date, each Junior Mezzanine Borrower shall have paid to
each

 

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Lender (as applicable) the Release Price and any other sums required to be paid
under each Junior Mezzanine Loan Agreement (as applicable). This Section
2.3.4(j) shall not create a debtor creditor relationship between Mezzanine
Borrower and any other Lender.

 

(k) The transfer of the Release Property in connection with the Property Release
does not trigger any rights of first refusal or purchase options in any
Operating Agreements, including, but not limited to the rights or obligations
set forth on Schedule VI of the Loan Agreement (Mortgage).

 

2.3.5 Substitution of Properties. (a) Generally. Mezzanine Borrower may cause
Mortgage Borrower, subject to the conditions in this Section 2.3.5, to
substitute one or more properties (each a “Substitute Property”) for one or more
existing Individual Properties (each a “Replaced Property”) (each release and
substitution a “Substitution”); provided, however, such right of Substitution
shall be limited to Individual Properties whose aggregate Allocated Loan Amounts
represent not greater than fifteen percent (15%) of the Loan Amount. From and
after the Substitution of a Substitute Property in accordance herewith, such
Substitute Property shall thereafter be deemed a Property, and shall have the
Allocated Loan Amount applicable to the Replaced Property. Concurrently with the
completion of all steps necessary to effect a Substitution as provided in this
Section 2.3.5, Mezzanine Lender shall cause Mortgage Lender to release such
Replaced Property from the Lien of the Security Instrument and related Loan
Documents (or to the extent so requested by Mortgage Borrower, assign the Lien
of the Security Instrument to a new lender without representation, warranty or
recourse). In the event of a Substitution, the Mortgage Note shall remain in
full force and effect, and the Lien of the Security Instrument shall be spread
to encumber the Substitute Property (each a “Substitute Property Mortgage
Spreader Agreement”).

 

(b) Certain Requirements. All Substitute Properties shall comply with this
Section 2.3.5. To qualify as a Substitute Property, a property must, as of the
Substitution Date (in addition to the other criteria set forth in this Section
2.3.5):

 

(i) be subject to the Master Lease;

 

(ii) be a property as to which Mortgage Borrower will hold insurable fee title
or a valid and subsisting leasehold interest free and clear of any Lien or other
encumbrance except for exceptions not materially impairing the value of such
property, and have an appraised value at least equal to the Appraised Value of
the Replaced Property;

 

(iii) be free and clear, as evidenced by the environmental report referred to in
paragraph (c) below, of Hazardous Substances requiring remediation or other
action under any Environmental Law the presence of which violates Environmental
Laws and be in material compliance with all Environmental Laws;

 

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(iv) in the case of Substitutions which occur after the Outside Date, be in good
repair and condition, as evidenced by the engineering report referred to in
clause (c) below; and

 

(v) be in compliance, in all material respects, with Legal Requirements and
Insurance Requirements, as evidenced by diligence items required to be provided
in paragraph (c) below.

 

(c) Diligence Process. The Mezzanine Borrower shall submit to the Mezzanine
Lender written notice (a “Substitution Notice”) setting forth the Business Day
no earlier than forty-five (45) days after the date of such Substitution Notice
on which Mezzanine Borrower desires to effect such Substitution (the
“Substitution Date”), together with the following materials (the “Substitution
Due Diligence Package”) relating to the proposed Substitute Property: (i) a
description of the proposed Substitute Property sufficient to obtain the Title
Policy, (ii) two years of historical cash flow operating statements, if
available, (iii) true, complete and correct copies of any Material Subleases
affecting the proposed Substitute Property, (iv) a map and site plan, including
an existing Survey of the property dated not more than six (6) months prior to
such submission, (v) a copy of the proposed amendment to the Master Lease and
Master Lease SNDA to include the Substitute Property, (vi) copies of all
permits, licenses and approvals required with respect to operation of the
Substitute Property, (vii) an environmental report issued by a recognized
environmental consultant, (viii) copies of all REAs, condominium documents and
ground leases, (ix) in the case of Substitutions which occur after the Outside
Date, an engineer’s inspection report, (x) ground lessor, REA, condominium
association and tenant (under Material Subleases) estoppel certificates and
tenant (under Material Subleases) Non-Disturbance Agreements, in each case in
the forms attached hereto and including such variations that are either
immaterial or are reasonably acceptable to Mezzanine Lender, as applicable,
together with any consents required with respect to the Contemplated
Transactions, (xi) a commitment from the Title Company with respect to the
issuance of a Title Policy, together with copies of all exceptions referenced
therein and a copy of the recorded memorandum of ground lease if such Substitute
Property will be a Ground Lease Property, (xii) upon the reasonable request of
the Mezzanine Lender, a PML study, (xiii) a FIRREA appraisal conducted by
Cushman & Wakefield (or another Independent appraiser engaged by Mortgage Lender
and reasonably acceptable to Mezzanine Lender), (xiv) if such Substitute
Property is not then owned by the Mortgage Borrower or its Affiliate, a duly
executed copy of the purchase and sale agreement for such Substitute Property
and copies of all proposed documentation transferring title to the Substitute
Property to Mortgage Borrower including any interim transfers to its Affiliates,
(xii) a copy of the flood certification, (xv) either (A) a letter or other
evidence with respect to the proposed Substitute Property from the appropriate
Governmental Authorities concerning compliance with applicable zoning and
building laws, (B) an ALTA 3.1 zoning endorsement for the Title Policy or (C) a
zoning report prepared by PZR indicating that the Substitute Property is in
material compliance with applicable zoning and building laws, (xvi) a copy of
the valid permanent certificate of occupancy (if required by applicable law),
(xvii) calculations of the LTV Ratio and DSCR both before and after the proposed
Substitution, (xviii) pro formas of the insurance certificates required under
Article VI with respect to such Substitute Property, (xix) UCC,

 

34

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bankruptcy, state and federal tax lien, litigation and judgment searches
conducted by a search firm reasonably acceptable to the Mezzanine Lender with
respect to the title holder of such Substitute Property on the date immediately
prior to acquisition thereof by Mortgage Borrower, in each of the locations
reasonably specified by the Mezzanine Lender and not revealing any Liens other
than Permitted Encumbrances. In addition, Mezzanine Borrower shall permit the
Mezzanine Lender at all reasonable times and upon reasonable prior notice to
make an inspection of such Substitute Property. Mezzanine Lender shall confirm
Mezzanine Borrower’s compliance with this paragraph (c) with respect to each
proposed Substitute Property within thirty (30) days after Mezzanine Lender’s
receipt of the applicable Substitution Due Diligence Package and Mezzanine
Lender’s failure to so confirm or deny Mezzanine Borrower’s compliance within
such thirty (30) day period shall be deemed compliance by Mezzanine Borrower
with this paragraph (c), provided that this sentence appears in bold capital
letters on the envelope containing the Substitution Due Diligence Package.

 

(d) Additional Conditions Precedent. In addition to the conditions in paragraphs
(a), (b) and (c) above, each Substitution shall be subject to the satisfaction
of the following conditions precedent:

 

(i) Intentionally Omitted;

 

(ii) Release Conditions. Mezzanine Borrower’s compliance with the condition set
forth in Section 2.3.4(c), (e), (f), (g) and (k) with respect to the release of
the Replaced Property;

 

(iii) Financial and Other Tests.

 

(1) DSCR. After giving effect to such Substitution, as of the Substitution Date
the DSCR for all of the Properties then remaining subject to the Liens of the
Security Instrument (i.e., including the Substitute Property and excluding the
Replaced Property), shall not be less than the greater of (A) the Closing Date
DSCR and (B) 80% of the DSCR for the Properties subject to the Lien of the
Security Instrument immediately prior to the Substitution Date;

 

(2) LTV Ratio. After giving effect to such Substitution, as of the Substitution
Date the LTV Ratio for all of the Properties then remaining subject to the Liens
of the Security Instrument (i.e. including the Substitute Property and excluding
the Replaced Property), shall not be less than 79.8%.

 

(3) Geographic Diversity. The proposed Substitution does not (I) cause the
aggregate Allocated Loan Amounts to exceed (A) sixty percent (60%) of the
Principal Amount with respect to Individual Properties located in Pennsylvania,
(B) forty percent (40%) of the Principal Amount with respect to Individual
Properties located in Ohio, and (C) eighty percent (80%) of the Principal Amount
with respect to Individual Properties located in Massachusetts, or (II) cause
the sum of (A) the aggregate Allocated Loan Amounts with respect to Individual
Properties located in Ohio plus (B) the aggregate Allocated Loan

 

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Amounts with respect to Individual Properties located in Pennsylvania, to exceed
ninety percent (90%) of the Principal Amount.

 

(iv) Mezzanine Lender’s Costs and Expenses. Mezzanine Borrower shall pay for any
and all reasonable out-of-pocket costs and expenses of Mezzanine Lender incurred
in connection with any proposed Substitution, including Mezzanine Lender’s
reasonable attorneys’ fees and disbursements, all title insurance premiums for
any endorsements to any existing Title Policies reasonably required by Mezzanine
Lender in connection with such proposed Substitution, title premiums, mortgage
recording taxes, transfer taxes and recording fees;

 

(v) Transaction Costs. Mezzanine Borrower shall deliver to Mezzanine Lender
evidence reasonably satisfactory to Mezzanine Lender that all amounts owing to
any parties in connection with the transactions relating to the proposed
Substitution have been paid in full, or will simultaneously be paid in full on
the Substitution Date or adequate reserves therefor are established by Mezzanine
Borrower in cash with respect to contingent or other liabilities that may arise
out of such transaction and for which Mezzanine Borrower is not adequately
indemnified or insured against as reasonably determined by Mezzanine Lender;

 

(vi) Opinions of Counsel. Delivery to Mezzanine Lender of the following
favorable original Opinions of Counsel or updates thereto in connection with the
Substitute Property similar in form and substance to the opinions which were
delivered on the Closing Date in connection with the Replaced Property,
reasonably satisfactory to Mezzanine Lender and addressed to the Mezzanine
Lender on behalf of the holders of the Notes: (a) if requested by the Rating
Agencies, a true lease opinion and a non-consolidation opinion, (b) a local
counsel enforceability opinion, (c) an enforceability opinion under New York
law, (d) an opinion to the effect that each of Mortgage Borrower, Master Lessee
and Guarantor is duly organized and validly existing under the laws of the state
of its formation and is qualified or licensed to do business in each
jurisdiction where the nature of its business in which it is engaged makes such
qualification or licensing necessary and (e) an opinion to the effect that the
Mezzanine Loan Documents or amendments thereto have been duly authorized,
executed and delivered by Mezzanine Borrower, Master Lessee and Guarantor and
are the valid and binding obligations and agreements of such party, enforceable
in accordance with their terms, in each case with the same exceptions as made on
Closing Date;

 

(vii) No Event of Default. No Event of Default shall have occurred and then be
continuing on the date on which Mezzanine Borrower delivers the Substitution
Notice and on the Substitution Date;

 

(viii) Accuracy of Representations and Warranties. The representations and
warranties set forth in the Loan Documents shall be true and correct as to the
Substitute Property on the Substitution Date in all material respects (subject
to

 

36

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any additional items set forth on updated exhibits and schedules hereto provided
by Mezzanine Borrower which do not violate the provisions of the Mezzanine Loan
Documents and are not reasonably likely to have a Material Adverse Effect with
respect to such Substitute Property);

 

(ix) Officer’s Certificate. Delivery to Mezzanine Lender of an Officer’s
Certificate certifying to the truth and accuracy of the statements in clauses
(vii) and (viii);

 

(x) Non-Disqualification Opinion. Delivery of a Non-Disqualification Opinion;

 

(xi) Organizational Documents. If required by the Rating Agencies, delivery of
original updated organizational documents of the Mortgage Borrower, Mezzanine
Borrower, Second Mezzanine Borrower, Third Mezzanine Borrower, Fourth Mezzanine
Borrower, HoldCo, Master Lessee and Guarantor, including, but not limited to a
current certificate of good standing. If the Substitute Property is located in a
State not previously covered by the Security Instrument, evidence of Mortgage
Borrower’s and Master Lessee’s qualification to do business in the State where
the Substitute Property is located. Delivery of appropriate evidence of the
authorization of the Mortgage Borrower, Master Lessee and Guarantor approving
the execution, delivery and performance of the Loan Documents or amendments
thereto being executed and delivered in connection with the Substitution, duly
adopted by the Mortgage Borrower, Master Lessee and Guarantor as applicable and
accompanied by an Officer’s Certificate stating that such authorizations have
not been altered or repealed and are in full force and effect, and certifying as
to the names of the Persons authorized to sign on behalf of such parties,
together with the true signatures of each such Person;

 

(xii) Insurance Certificates. Delivery of the insurance certificates naming
Mezzanine Lender with respect to the Substitute Property required by the Loan
Agreement (Mortgage); and

 

(xiii) Loan Documents. Delivery to Mezzanine Lender of originals of the
following Loan Documents or amendments thereto:

 

(1) a Substitute Property Mortgage Spreader Agreement, duly executed and
acknowledged by Mortgage Borrower;

 

(2) a first priority Assignment of Master Lease, Subleases, Rents and Security
Deposits, from Mortgage Borrower, as assignor, to Mortgage Lender, as assignee,
assigning to Mortgage Lender all of Mortgage Borrower’s interest in and to the
Master Lease, the Subleases, Rents and Security Deposits as security for the
Mortgage Loan with respect to the Substitute Property, or a counterpart original
of the Assignment of Leases, modified as necessary, duly executed and
acknowledged by Mortgage Borrower (the “Assignment of Leases Counterpart”);

 

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(3) UCC financing statements (Form UCC-1) (or other forms required in any
jurisdiction), covering all fixtures, Building Equipment and other personal
property (other than the Excluded Personal Property), and all proceeds thereof,
naming Mortgage Borrower as debtor and Mortgage Lender as secured party
(collectively, the “UCC Financing Statements”; together with the Assignment of
Leases Counterpart and the Substitute Property Mortgage Spreader Agreement, the
“Security Documents”);

 

(4) the Title Policy (Mortgage) or endorsements to the Title Policy (Mortgage),
and related mezzanine endorsements thereto as applicable, issued by the Title
Company in an amount equal to 125% of the Allocated Loan Amount for the
Substitute Property, reflecting the addition of each such Substitute Property
and containing such affirmative coverage similar in form and substance to the
affirmative coverage provided in connection with the Replaced Property, insuring
that the Substitute Property Mortgage Spreader Agreement creates a valid first
lien on Mortgage Borrower’s fee or leasehold title in the Substitute Property
subject to the Permitted Encumbrances, and insuring the perfected first priority
interest of Mortgage Lender pursuant to the Substitute Property Mortgage
Spreader Agreement, together with any title insurance premiums, fees or charges
due in connection therewith, and the Mezzanine Borrower shall cause Mortgage
Borrower to cooperate with the Mortgage Lender and execute such further
instruments and documents and perform such further acts as the Mezzanine Lender,
Mortgage Lender or the Title Company shall reasonably request to carry out the
creation and perfection of the liens and security interests contemplated by the
Security Documents and the release, discharge and removal of any encumbrances
required for the issuance of the Title Policy;

 

(5) an amendment to the Master Lease and to the Master Lease SNDA incorporating
the Substitute Property and eliminating the Replaced Property;

 

(6) updates to any Exhibits and Schedules to the Loan Documents (Mortgage) as
applicable, without disclosing matters inconsistent with the requirements of
this Section 2.3.5; and

 

(7) a Confirmation of Guaranty and Indemnity in customary form duly executed and
delivered by Guarantor, adding the Substitute Property to and affirming its
obligations under the Recourse Guaranty (Mezzanine) and the Environmental
Indemnity.

 

(xiv) Mezzanine Loan Deliveries. The Second Mezzanine Lender, Third Mezzanine
Lender and Fourth Mezzanine Lender shall have received all deliveries required
under Section 2.3.5 of the Mezzanine Loan Agreement, including, but not limited
to, insurance certificates naming Second Mezzanine Lender, Third Mezzanine
Lender and Fourth Mezzanine Lender with respect to the Substitute Property, a
copy of the owner’s title insurance policy and related mezzanine endorsement (if
available in such State) and copies of the Substitution

 

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Due Diligence Package and all final deliveries to Mortgage Lender under this
Section 2.3.5.

 

(xv) Additional Deliveries. Mezzanine Lender shall have received such other
deliveries reasonably requested by Mezzanine Lender, provided such requests are
customary and are consistent with the deliveries required with respect to the
Properties on the Closing Date.

 

2.3.6 Provisions Relating to Individual Properties That Go Dark. At any one time
and from time to time, Mezzanine Borrower may cause Mortgage Borrower to allow
Individual Properties (other than the Distribution Centers) to Go Dark provided
that (i) the aggregate Allocated Loan Amount for all Individual Properties that
Go Dark at any one time (excluding any Go Dark Purchase Option Properties) shall
not exceed the Go Dark Limit and (ii) in no event may Mezzanine Borrower allow
the Mortgage Borrower to allow any Go Dark Purchase Option Property to Go Dark.
If the aggregate Allocated Loan Amount for all Individual Properties that Go
Dark at any one time shall exceed (excluding any Go Dark Purchase Option
Property) the Go Dark Limit, then within thirty (30) days of such property first
closing for business to the general public, Mezzanine Borrower shall cause
Mortgage Borrower to either:

 

(a) cause one or more Individual Properties to be released from the lien of the
Security Instrument in accordance with Section 2.3.5 hereof such that the
aggregate Allocated Loan Amount for all Individual Properties that Go Dark does
not exceed the Go Dark Limit; or

 

(b) provide a Substitute Property, to be subject to the lien of the Security
Instrument, in accordance with Section 2.3.6 hereof to the extent permitted
under such Section such that the aggregate Allocated Loan Amount for all
Individual Properties that Go Dark does not exceed the Go Dark Limit.

 

If any Individual Property shall Go Dark, Mezzanine Borrower shall cause
Mortgage Borrower to promptly send written notice thereof to Mezzanine Lender.
If an Individual Property shall Go Dark, the Master Lessee shall nonetheless be
required to make into the Holding Account without reduction the full Master
Lease Rent payment as and when required under the Master Lease and the Rent
Payment Direction Letter with respect to all Individual Properties.

 

2.3.7 Excess Account Collateral. Upon the occurrence of any Property Release,
provided no Low DSCR Cash Sweep Period exists and no Event of Default has
occurred and is continuing, Mezzanine Lender shall promptly perform an analysis
of the Account Collateral in order to reasonably determine the amount of the
Account Collateral (including, but not limited to, Proceeds) attributable to the
Release Property (the “Excess Account Collateral”), and shall promptly instruct
Cash Management Bank to return to each Borrower, as applicable, the Excess
Account Collateral, if any, except to the extent that Mezzanine Lender, Second
Mezzanine Lender, Third Mezzanine Lender, Fourth Mezzanine Lender and Mortgage
Lender reasonably determine that a shortfall exists in such Sub-Account with
respect to the Property other than the Release Property.

 

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2.3.8 Reserve Requirements. Upon the occurrence of a Property Release, provided
no Low DSCR Cash Flow Sweep Period exists and no Event of Default has occurred
and is continuing, Mezzanine Borrower shall promptly prepare a revised estimate
of Impositions and Other Charges, insurance premiums, Ground Rent and Master
Lease Rent with respect to the remaining Properties in accordance with the terms
of the Loan Agreement (Mortgage), and shall promptly provide Mezzanine Borrower
and Cash Management Bank with notice of the revised Monthly Tax Reserve Amount,
Monthly Insurance Reserve Amount and Monthly Ground Rent Amount.

 

2.3.9 Deficient GL Properties. In the event that on the Outside Date the Scope
is greater than the Scope Trigger, Mezzanine Borrower shall, at its option,
either (a) pay a one-time fee to Mezzanine Lender on the Outside Date in an
amount equal to the product of twenty-five (25) basis points and the Principal
Amount on the Closing Date or (b) agree to increase the LIBOR Margin by fifteen
(15) basis points effective as of the Outside Date.

 

2.4 Regulatory Change; Taxes.

 

2.4.1 Increased Costs. If as a result of any Regulatory Change or compliance of
Mezzanine Lender therewith, the basis of taxation of payments to Mezzanine
Lender or any company Controlling Mezzanine Lender of the principal of or
interest on the Loan is changed or Mezzanine Lender or the company Controlling
Mezzanine Lender shall be subject to (i) any tax, duty, charge or withholding of
any kind with respect to this Agreement (excluding federal taxation of the
overall net income of Lender or the company Controlling Lender); or (ii) any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities, of
Mezzanine Lender or any company Controlling Mezzanine Lender is imposed,
modified or deemed applicable; or (iii) any other condition affecting loans to
borrowers subject to LIBOR-based interest rates is imposed on Mezzanine Lender
or any company Controlling Mezzanine Lender and Mezzanine Lender determines
that, by reason thereof, the cost to Mezzanine Lender or any company Controlling
Mezzanine Lender of making, maintaining or extending the Loan to Mezzanine
Borrower is increased, or any amount receivable by Mezzanine Lender or any
company Controlling Mezzanine Lender hereunder in respect of any portion of the
Loan to Mezzanine Borrower is reduced, in each case by an amount deemed by
Mezzanine Lender in good faith to be material (such increases in cost and
reductions in amounts receivable being herein called “Increased Costs”), then
Mezzanine Lender shall provide notice thereof to Mezzanine Borrower and
Mezzanine Borrower agrees that it will pay to Mezzanine Lender upon Mezzanine
Lender’s written request such additional amount or amounts as will compensate
Mezzanine Lender or any company Controlling Mezzanine Lender for such Increased
Costs to the extent Mezzanine Lender reasonably determines that such Increased
Costs are allocable to the Loan. If Mezzanine Lender requests compensation under
this Section 2.4.1, Mezzanine Borrower may, by notice to Mezzanine Lender,
require that Mezzanine Lender furnish to Mezzanine Borrower a statement setting
forth the basis for requesting such compensation and the method for determining
the amount thereof. In the event that Borrower is required to pay any Increased
Costs in accordance with the terms hereof, Borrower shall have the right to
prepay the Principal Amount

 

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(together will all accrued but unpaid interest thereon calculated through the
end of the then current Interest Period) without the imposition of any
Prepayment Fee.

 

2.4.2 Special Taxes. Mezzanine Borrower shall make all payments hereunder free
and clear of and without deduction for Special Taxes. If Mezzanine Borrower
shall be required by law to deduct any Special Taxes from or in respect of any
sum payable hereunder or under any other Mezzanine Loan Document to Mezzanine
Lender, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.4.2) Mezzanine Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
Mezzanine Borrower shall make such deductions, and (iii) Mezzanine Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law. Notwithstanding anything to the contrary
contained in this Section 2.4, Mezzanine Borrower shall not be liable for any
amounts as a result of withholding for Special Taxes or additional costs
incurred as a result of the assignment of all or any portion of the Loan by
Lender to any Person that is subject to Special Taxes and which is organized
under or has its principal place of business outside of the United States of
America or any political subdivision thereof.

 

2.4.3 Other Taxes. In addition, Mezzanine Borrower agrees to pay any present or
future stamp or documentary taxes or other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder, or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other Mezzanine Loan Documents, or the Loan (hereinafter referred
to as “Other Taxes”).

 

2.4.4 Indemnity. Mezzanine Borrower shall indemnify Mezzanine Lender for the
full amount of Special Taxes and Other Taxes (including any Special Taxes or
Other Taxes imposed by any Governmental Authority on amounts payable under this
Section 2.4.4) paid by Mezzanine Lender and any liability (including penalties,
interest, and reasonable out-of-pocket expenses) arising therefrom or with
respect thereto, whether or not such Special Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within thirty (30) days
after the date Mezzanine Lender makes written demand therefor.

 

2.4.5 Change of Office. To the extent that changing the jurisdiction of
Mezzanine Lender’s applicable office would have the effect of minimizing Special
Taxes, Other Taxes or Increased Costs, Mezzanine Lender shall use reasonable
efforts to make such a change, provided that same would not otherwise be
disadvantageous to Mezzanine Lender.

 

2.4.6 Survival. Without prejudice to the survival of any other agreement of
Mezzanine Borrower hereunder, the agreements and obligations of Mezzanine
Borrower contained in this Section 2.4 shall survive the payment in full of
principal and interest hereunder, and the termination of this Agreement.

 

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2.5 Conditions Precedent to Closing. The obligation of Mezzanine Lender to make
the Loan hereunder is subject to the fulfillment by, or on behalf of, Mezzanine
Borrower or waiver by Mezzanine Lender of the following conditions precedent no
later than the Closing Date; provided, however, that unless a condition
precedent shall expressly survive the Closing Date pursuant to a separate
agreement, by funding the Loan, Mezzanine Lender shall be deemed to have waived
any such conditions not theretofore fulfilled or satisfied:

 

2.5.1 Representations and Warranties; Compliance with Conditions.

 

(a) The representations and warranties of Mezzanine Borrower contained in this
Agreement and the other Mezzanine Loan Documents shall be true and correct in
all material respects on and as of the Closing Date with the same effect as if
made on and as of such date, and no Default or Event of Default shall have
occurred and be continuing; and Mezzanine Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Mezzanine Loan Document on its part to be observed or performed;
and

 

(b) The representations and warranties of (i) Mortgage Borrower contained in the
Loan Agreement (Mortgage) and the other Loan Documents (Mortgage) and (ii) each
Senior Mezzanine Borrower contained in the Senior Mezzanine Loan Documents shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as if made on and as of such date, and no Mortgage Default,
Mortgage Event of Default or “Default” or “Event of Default” (as defined in each
Senior Mezzanine Loan Agreement) shall have occurred and be continuing; and
Mortgage Borrower, each Senior Mezzanine Borrower and Guarantor shall be in
compliance in all material respects with all terms and conditions set forth in
the Loan Agreement (Mortgage) and each Senior Mezzanine Loan Agreement, as
applicable, and in each other Loan Document (Mortgage) and each Senior Mezzanine
Loan Document, as applicable, on its part to be observed or performed.

 

2.5.2 Delivery of Mezzanine Loan Documents; Title Policy; Reports; Leases.

 

(a) Mezzanine Loan Documents. Mezzanine Lender shall have received an original
copy of this Agreement, the Mezzanine Note and all of the other Mezzanine Loan
Documents, in each case, duly executed (and to the extent required,
acknowledged) and delivered on behalf of Mezzanine Borrower and any other
parties thereto;

 

(b) Certificates. Mezzanine Lender shall have received originals of the
Certificates together with a Member Power endorsed in blank;

 

(c) UCC Financing Statements. The UCC financing statements relating to the
Pledge and this Agreement shall have been delivered to Mezzanine Lender for
filing in the applicable jurisdictions;

 

(d) Interest Rate Cap Agreement. Mezzanine Lender shall have received the
original Interest Rate Cap Agreement (Second Mezzanine) which shall be in form
and

 

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substance reasonably satisfactory to Mezzanine Lender and a counterpart of the
Acknowledgment executed and delivered by the Counterparty;

 

(e) Mezzanine Account Agreement. Mezzanine Lender shall have received the
original of the Mezzanine Account Agreement executed by each of Cash Management
Bank (Second Mezzanine) and Mezzanine Borrower;

 

(f) Title Insurance.

 

(i) Mezzanine Lender shall have received a copy of the Title Policy (Mortgage)
or a marked-up and signed commitment having the force and effect of a title
policy, marked “paid” by an authorized representatives of the Title Company)
issued by the Title Company with respect to the Loan (Mortgage) and dated as of
the Closing Date, with a mezzanine loan endorsement in favor of Mezzanine
Lender, it successors and assigns, dated as of the Closing Date and reinsurance
and direct access agreements in form and substance acceptable to Mezzanine
Lender. Mezzanine Lender shall also have received evidence that all premiums in
respect of the Title Policy (Mortgage) have been paid; and

 

(ii) Mezzanine Lender shall have received an “Eagle 9” title policy in favor of
Mezzanine Lender, its successors and assigns, dated as of the Closing Date.
Mezzanine Lender also shall have received evidence that all premiums in respect
of the “Eagle 9” title policy have been paid.

 

(g) Survey. Mezzanine Lender shall have received copies of the Surveys for the
Property delivered under the Loan Agreement (Mortgage);

 

(h) Insurance. Mezzanine Lender shall have received valid certificates of
insurance for the policies of insurance required by the Loan Agreement
(Mortgage) naming Mezzanine Lender as an additional insured and containing a
cross liability/severability endorsement, satisfactory to Mezzanine Lender in
its sole discretion, and evidence of the payment of all insurance premiums
currently due and payable for the existing policy period;

 

(i) Environmental Reports. Mezzanine Lender shall have received an Environmental
Report or regulatory database search in respect of the Property reasonably
satisfactory to Mezzanine Lender;

 

(j) Zoning. Unless otherwise agreed in writing between Mezzanine Lender and
Mezzanine Borrower, Mezzanine Lender shall have received with respect to each
Individual Property one of the following: (i) letters or other evidence with
respect to the Property from the appropriate municipal authorities (or other
Persons) concerning compliance with applicable zoning and building laws
reasonably acceptable to Mezzanine Lender or (ii) an ALTA 3.1 zoning endorsement
for the Title Policy (Mortgage); title policy or (iii) a zoning report
reasonably acceptable to Mezzanine Lender prepared by PZR or another nationally
recognized zoning due diligence firm reasonably acceptable to Lender.

 

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(k) Certificate of Occupancy. Unless otherwise agreed in writing between
Mezzanine Lender and Mezzanine Borrower, Mezzanine Lender shall have received a
copy of the valid permanent certificate of occupancy for each Individual
Property located in a jurisdiction that requires certificates of occupancy under
applicable law, in each case reasonably acceptable to Mezzanine Lender.

 

(l) Encumbrances. Mezzanine Borrower shall have taken or caused to be taken such
actions in such a manner so that Mezzanine Lender has a valid and perfected
first Lien as of the Closing Date on the Collateral and Mezzanine Lender shall
have received satisfactory evidence thereof;

 

(m) Intentionally Omitted.

 

(n) Intentionally Omitted.

 

(o) Pledgor Acknowledgments. Mezzanine Lender shall have received an original of
the Acknowledgment in the form of Exhibit D executed by each of First Mezzanine
Borrower and Mezzanine Borrower and dated as of the Closing Date.

 

2.5.3 Satisfactory Collateral. The Pledge and the other Mezzanine Loan Documents
shall constitute a valid and perfected Lien on the Collateral for the full
amount of the Principal Amount, free and clear of all Liens other than
encumbrances specifically approved by Mezzanine Lender, in writing, in its sole
discretion;

 

2.5.4 Loan (Mortgage). The Loan (Mortgage) shall have been made (or shall be
made concurrently with the Loan) to the Mortgage Borrower in accordance with the
terms of the Loan Documents (Mortgage) and no Mortgage Event of Default shall
have occurred and be continuing under and as defined in the Loan Documents
(Mortgage);

 

2.5.5 Related Documents. Each additional document not specifically referenced
herein, but relating to the transactions contemplated herein, shall have been
duly authorized, executed and delivered by all parties thereto and Mezzanine
Lender shall have received and approved copies thereof;

 

2.5.6 Delivery of Organizational Documents. On or before the Closing Date,
Mezzanine Borrower shall deliver, or cause to be delivered, to Mezzanine Lender
copies certified by an Officer’s Certificate, of all organizational
documentation related to Mortgage Borrower, each Senior Mezzanine Borrower,
Guarantor, each SPE Entity, HoldCo, Master Lessee, and Mezzanine Borrower as
have been requested by Mezzanine Lender and/or the formation, structure,
existence, good standing and/or qualification to do business of Mortgage
Borrower, each Senior Mezzanine Borrower, Guarantor, each SPE Entity, HoldCo,
Master Lessee, and Mezzanine Borrower as Lender may request in its sole
discretion, including, without limitation, good standing certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
requested by Mezzanine Lender. Each of the organizational documents of any SPE
Entity shall contain single purpose entity provisions reasonably approved by
Lender prior to the date hereof.

 

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2.5.7 Opinions of Mezzanine Borrower’s Counsel.

 

(a) Mezzanine Lender shall have received a Non-Consolidation Opinion in such
form approved by the Lender (the “Non-Consolidation Opinion”);

 

(b) Mezzanine Lender shall have received a True Lease Opinion with respect to
the Master Lease in form and substance reasonably acceptable to the Mezzanine
Lender and the Rating Agencies (the “True Lease Opinion”);

 

(c) Mezzanine Lender shall have received a Solvency Opinion in form and
substance acceptable to the Rating Agencies (the “Solvency Opinion”); and

 

(d) Mezzanine Lender shall have received from Counterparty the Counterparty
Opinion in such form approved by the Mezzanine Lender.

 

2.5.8 Completion of Proceedings. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated by this Agreement and
other Mezzanine Loan Documents and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Mezzanine Lender, and Mezzanine
Lender shall have received all such counterpart originals or certified copies of
such documents as Mezzanine Lender may reasonably request;

 

2.5.9 Payments. All payments, deposits or escrows, if any, required to be made
or established by Mezzanine Borrower under this Agreement, the Mezzanine Note
and the other Mezzanine Loan Documents on or before the Closing Date shall have
been paid.

 

2.5.10 Interest Rate Cap Agreement. Mezzanine Lender shall have received a copy
of the Interest Rate Cap Agreement (Second Mezzanine) which shall be in form and
substance reasonably satisfactory to Mezzanine Lender and an original
counterpart of the Acknowledgment executed and delivered by the Counterparty.

 

2.5.11 Account Agreement. Mezzanine Lender shall have received the original of
the Mezzanine Account Agreement executed by each of Cash Management Bank and
Mezzanine Borrower.

 

2.5.12 Ground Lessor Estoppels; Clean Borrower Estoppel Certificate. Mezzanine
Borrower shall have (a) requested and made commercially reasonable efforts to
obtain prior to Closing, an executed estoppel letter from each Ground Lessor in
the form required by the Loan Agreement (Mortgage), and shall have delivered to
Mezzanine Lender all such estoppels received by Mezzanine Borrower and (b)
delivered a Clean Borrower Estoppel Certificate with respect to all Deficient GL
Properties.

 

2.5.13 Tenant Estoppels and SNDAs. Mezzanine Borrower shall have requested and
made commercially reasonable efforts to obtain prior to Closing, an executed
tenant estoppel letter, substantially in form required by the Loan Agreement
(Mortgage) and a Non-Disturbance Agreement from each of the Tenants required by
the Loan Agreement

 

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(Mortgage), and shall have delivered to Mezzanine Lender all such estoppels and
Non-Disturbance Agreements received by Mezzanine Borrower.

 

2.5.14 REAs. Mezzanine Lender shall have received copies of all of the REAs to
which Mezzanine Borrower or its Affiliates is a party or is bound;

 

2.5.15 Insolvency. Neither Mezzanine Borrower nor any of its constituent Persons
shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding;

 

2.5.16 Independent Manager/Member Certificate. Mezzanine Lender shall have
received an executed Independent Manager/Member certificate substantially in the
form attached as Exhibit C from each Independent Manager/Member required
pursuant to the terms hereof;

 

2.5.17 Transaction Costs. Mezzanine Borrower shall have paid or reimbursed
Mezzanine Lender for all title insurance premiums, recording and filing fees,
costs of Environmental Reports, seismic reports, zoning reports, searches, flood
certifications, appraisals and other reports, the reasonable fees and costs of
Mezzanine Lender’s counsel and all other reasonable third party out-of-pocket
expenses incurred in connection with the origination of the Loan.

 

2.5.18 Material Adverse Effect. No change, circumstance, event or effect shall
have occurred that would be materially adverse to the assets, liabilities,
business, financial condition or results of operations of the Company and the
Company Subsidiaries (as such terms are defined in the Merger Agreement) taken
as a whole, other than any change, circumstance, event or effect resulting from
(i) changes in general economic conditions, (ii) the announcement of the Merger
Agreement and the transactions contemplated thereby, (iii) general changes or
developments in the industries in which the Company and the Company Subsidiaries
operate, (iv) any actions required under the Merger Agreement to obtain any
approval or authorization under applicable antitrust or competition laws for the
consummation of the transactions contemplated by the Merger Agreement or (v)
changes in any Laws (as defined in the Merger Agreement) or applicable
accounting regulations or principles, unless, in the case of the foregoing
clauses (i) and (iii), such changes or developments referred to therein would
reasonably be expected to have a materially disproportionate impact on the
business, financial condition or results of operations of the Company and the
Company Subsidiaries taken as a whole relative to other industry participants;

 

2.5.19 Subleases. Mezzanine Lender shall have received copies of all Subleases.

 

2.5.20 Master Lease; Master Lease SNDA. Mezzanine Lender shall have received a
copy of the Master Lease and shall have received the duly executed Master Lease
SNDA, each in form and substance required by the Loan Agreement (Mortgage) and
acceptable to the Rating Agencies;

 

2.5.21 Tax Lot. Mezzanine Lender shall have received a tax lot endorsement to
the Title Policy or other evidence that each Individual Property (or in the case
of Jointly Assessed Ground Lease Properties, the underlying fee parcel)
constitutes one (1) or more

 

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separate tax lots, which endorsement or other evidence shall be reasonably
satisfactory in form and substance to Mezzanine Lender;

 

2.5.22 Condominium Estoppels. Mezzanine Borrower shall have requested and made
commercially reasonable efforts to obtain prior to Closing, estoppel
certificates from the Condominium Board of all Condominium Properties
substantially in the form required by the Loan Agreement (Mortgage), and shall
have delivered to Mezzanine Lender all such estoppels received by Mezzanine
Borrower. Mezzanine Lender shall have received a condominium endorsement to the
Title Policy for each Condominium Property in form and substance reasonably
satisfactory to Lender;

 

2.5.23 Condominium Documents. Mezzanine Lender shall have received copies of all
Condominium Documents;

 

2.5.24 Appraisal. Mezzanine Lender shall have received an Appraisal of the
Property, which shall be satisfactory in form and substance to Mezzanine Lender;

 

2.5.25 Financial Statements. Lender shall have confirmed the accuracy of all
financial statements and other financial information with respect to the
Property delivered by Borrower to Lender.

 

2.5.26 Flood Certifications. Mezzanine Lender shall have received a flood zone
certification with respect to each Property.

 

2.5.27 Intentionally Omitted.

 

2.5.28 Merger Agreement. Mezzanine Borrower shall have delivered to Mezzanine
Lender a true, correct and complete copy of the Merger Agreement and, if
requested by Mezzanine Lender, all deliveries made by any of the parties thereto
or any of their respective Affiliates.

 

2.5.29 Intercreditor Agreements. Mezzanine Lender shall have received the ABL
Intercreditor Agreement as well as the loan documents evidencing the ABL Loan
(as defined in the ABL Intercreditor Agreement).

 

2.5.30 Equity and Real Property Transfer Documents. To the extent requested by
Mezzanine Lender, Mezzanine Borrower shall have delivered to Mezzanine Lender
true, correct and complete copies of all documentation pursuant to which the
transactions contemplated by the Merger Agreement are consummated, including,
but not limited to, all documents evidencing all stages of the restructuring of
Toys ‘R’ Us, Inc. and all documents evidencing (i) all preliminary transfers of
equity interests that resulted in the Mezzanine Borrower structure required by
the Loan Agreement (Mortgage), (ii) any preliminary transfers of the Properties
into Affiliates of Mezzanine Borrower and (iii) the preliminary transfers of all
of the Properties from Affiliates of Mezzanine Borrower into Mezzanine Borrower.

 

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2.5.31 Consents. Mezzanine Borrower shall have delivered all consents or
approval of or notices to any party to any Operating Agreement required under
such Operating Agreement in connection with any of the Contemplated
Transactions.

 

III. CASH MANAGEMENT

 

3.1 Cash Management.

 

3.1.1 Establishment of Account. Mezzanine Borrower hereby acknowledges that,
simultaneously with the execution of this Agreement, pursuant to the Mezzanine
Account Agreement, Mezzanine Borrower has established with Cash Management Bank
(Second Mezzanine), in the name of “MPO Intermediate Holdings, LLC, Mezzanine
Account in favor of Bank of America, N.A., as Agent” (the “Mezzanine Account”),
which has been established as a non-interest bearing deposit account with
interest-bearing sub-accounts. The Mezzanine Account and the funds deposited
therein shall serve as additional security for the Loan. Pursuant to the
Mezzanine Account Agreement, Mezzanine Borrower shall irrevocably instruct and
authorize Cash Management Bank (Second Mezzanine) to disregard any and all
orders for withdrawal from the Mezzanine Account made by, or at the direction
of, Mezzanine Borrower. Mezzanine Borrower agrees that, prior to the payment in
full of the Indebtedness, the terms and conditions of the Mezzanine Account
Agreement shall not be amended or modified in all material respect without the
prior written consent of Mezzanine Lender (which consent Mezzanine Lender may
grant or withhold in its sole discretion). In recognition of Mezzanine Lender’s
security interest in the funds deposited into the Mezzanine Account, Mezzanine
Borrower shall identify the Mezzanine Account with the name of MPO Intermediate
Holdings, LLC, Mezzanine Account in favor of Bank of America, N.A., as Agent.
Mezzanine Borrower confirms that it has established with Cash Management Bank
(Second Mezzanine) the following sub-accounts of the Mezzanine Account (each, a
“Sub-Account” and, collectively, the “Sub-Accounts” and together with the
Mezzanine Account, the “Collateral Accounts (Second Mezzanine)”), which (i) may
be ledger or book entry sub-accounts and need not be actual sub-accounts, (ii)
shall each be linked to the Mezzanine Account, (iii) shall each be a “deposit
account” (as such term is defined in Section 9-102(a)(29) of the UCC) and (iv)
shall each be an Eligible Account to which certain funds shall be allocated and
from which disbursements shall be made pursuant to the terms of this Agreement:

 

A sub-account for the retention of Account Collateral (Second Mezzanine) in
respect of Debt Service (Second Mezzanine) on the Loan with the account number
1235465978 (the “Mezzanine Debt Service Reserve Account”).

 

3.1.2 Pledge of Account Collateral (Second Mezzanine). To secure the full and
punctual payment and performance of the Obligations (Second Mezzanine),
Mezzanine Borrower hereby collaterally assigns, grants a security interest in
and pledges to Mezzanine Lender, to the extent not prohibited by applicable law,
a first priority continuing security interest in and to the following property
of Mezzanine Borrower, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all of the same, collectively, the
“Account Collateral (Second Mezzanine)”):

 

(a) the Collateral Accounts (Second Mezzanine) and all cash, deposits and/or
wire transfers from time to time deposited or held in, credited to or made to
Collateral Accounts (Second Mezzanine);

 

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(b) all interest and cash from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all of the foregoing or
purchased with funds from the Collateral Accounts (Second Mezzanine); and

 

(c) to the extent not covered by clauses (a) or (b) above, all proceeds (as
defined under the UCC) of any or all of the foregoing.

 

In addition to the rights and remedies herein set forth, Mezzanine Lender shall
have all of the rights and remedies with respect to the Account Collateral
(Second Mezzanine) available to a secured party at law or in equity, including,
without limitation, the rights of a secured party under the UCC, as if such
rights and remedies were fully set forth herein.

 

This Agreement shall constitute a security agreement for purposes of the Uniform
Commercial Code and other applicable law.

 

3.1.3 Maintenance of Mezzanine Account. Mezzanine Borrower agrees that each of
the Collateral Accounts (Second Mezzanine) is and shall be maintained (i) as a
“deposit account” (as such term is defined in Section 9-102(a)(29) of the UCC),
(ii) in such a manner that Mezzanine Lender shall have control (within the
meaning of Section 9-104(a)(2) of the UCC) over the Mezzanine Account and (iii)
such that no Person other than Lender shall have any right of withdrawal from
the Mezzanine Account Collateral and, except as provided herein and in the
Account Agreement, no Account Collateral (First Mezzanine) shall be released to
Mezzanine Borrower from the Collateral. Without limiting the Mezzanine
Borrower’s obligations under the immediately preceding sentence, Mezzanine
Borrower shall only establish and maintain the Mezzanine Account with a
financial institution that has executed an agreement substantially in the form
of the Mezzanine Account Agreement or in such other form acceptable to Mezzanine
Lender in its sole discretion.

 

3.1.4 Eligible Accounts. The Collateral Accounts (Second Mezzanine) shall be
Eligible Accounts. The Collateral Accounts (Second Mezzanine) shall be subject
to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other banking or governmental
authority, as may now or hereafter be in effect. Income and interest accruing on
the Collateral Accounts (Second Mezzanine) or any investments held in such
accounts shall be periodically added to the principal amount of such account and
shall be held, disbursed and applied in accordance with the provisions of this
Agreement and the Mezzanine Account Agreement. Mezzanine Borrower shall be the
beneficial owner of the Collateral Accounts (Second Mezzanine) for federal
income tax purposes and shall report all income on the Collateral Accounts
(Second Mezzanine).

 

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3.1.5 Deposits into Sub-Accounts. On the date hereof, Mezzanine Borrower has
deposited the following amounts into the Sub-Accounts:

 

(i) $0.00 into the Mezzanine Debt Service Reserve Account;

 

3.1.6 Monthly Funding.

 

(a) Mezzanine Borrower hereby irrevocably authorizes Mezzanine Lender to
transfer (and pursuant to the Mezzanine Account Agreement shall irrevocably
authorize Cash Management Bank (Second Mezzanine) to execute any corresponding
instructions of Mezzanine Lender), and Mezzanine Lender shall transfer from the
Mezzanine Account by 11:00 a.m. New York time on the date on which each payment
of Master Lease Rent under the Master Lease is made to the Holding Account, or
as soon thereafter as there shall be sufficient collected funds on deposit in
the Mezzanine Account, and from time to time (but no less frequently than weekly
thereafter) funds in an amount equal to the sum of any Protective Advances which
may have been advanced by (and not previously reimbursed to) the Mezzanine
Lender pursuant to the terms of the Mezzanine Loan Documents to cure any Default
or Event of Default, any Mortgage Default or Mortgage Event of Default, or to
protect the Collateral together with any interest payable on such amounts
pursuant to the Mezzanine Loan Documents, plus (x) the unpaid Debt Service
(Second Mezzanine) for the next occurring Payment Date, plus (y) an amount equal
to such payments for any prior month(s), to the extent not previously paid, plus
(z) an amount equal to the amount, if any, deducted from the Mezzanine Account
in any preceding month to pay any other amounts then due under the Mezzanine
Loan Documents (other than any Debt Service (Second Mezzanine)). Mezzanine
Borrower acknowledges that Mezzanine Lender shall not be required to make such
withdrawal and deposit until such time as Mezzanine Lender is able to calculate
the amount of the Debt Service (Second Mezzanine) for the next occurring Payment
Date.

 

(b) If for any reason there will be insufficient amounts in the Mezzanine Debt
Service Reserve Account on any Payment Date to pay the Debt Service (Second
Mezzanine) due on such Payment Date, Mezzanine Borrower shall immediately
deposit into the Mezzanine Account an amount equal to the shortfall of available
funds in the Mezzanine Debt Service Reserve Account. Any failure by Mezzanine
Borrower to deposit the full amount required by the preceding sentence shall
constitute an Event of Default hereunder. If Mezzanine Lender shall reasonably
determine that there will be insufficient amounts in the Mezzanine Account to
pay any Protective Advances as and when the same are due and payable, Mezzanine
Lender shall provide written notice of same to Mezzanine Borrower setting forth
the basis for such determination. Within five (5) Business Days of receipt of
said notice, Mezzanine Borrower shall deposit into the Mezzanine Account an
amount equal to the shortfall of available funds in the Mezzanine Account. Any
failure by Mezzanine Borrower to deposit the full amount required by the
preceding sentence within said five (5) Business Day period shall constitute an
Event of Default hereunder.

 

(c) Mezzanine Lender agrees to deliver to Mortgage Lender a monthly notice
letter (the Mezzanine Lender Monthly Debt Service Notice) at least five (5)
Business

 

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Days prior to each Payment Date setting forth the Debt Service (Second
Mezzanine) payable by Mezzanine Borrower on the first Payment Date occurring
after the date such notice is delivered.

 

(d) Mezzanine Borrower hereby acknowledges that, pursuant to Section 3.1.6 of
the Loan Agreement (Mortgage), (i) to the extent Mortgage Lender has received a
Senior Mezzanine Loan Default Notice and until such time as Mortgage Lender
receives a Senior Mezzanine Loan Default Revocation Notice, the Mortgage
Borrower and each Senior Mezzanine Borrower has irrevocably directed that Excess
Cash Flow and any other payments to be made to Mezzanine Borrower, any Junior
Mezzanine Borrower, Mezzanine Lender, or any Junior Mezzanine Lender are to be
deposited directly into the such Senior Mezzanine Account for application as
provided in such Senior Mezzanine Loan Agreement (in lieu of transferring such
funds to such accounts of the Mezzanine Lender, any Junior Mezzanine Lender, or
Mortgage Borrower as the Mortgage Borrower may have so directed if the Mortgage
Lender had not received such notice from Senior Mezzanine Lender).
Notwithstanding any provision herein to the contrary, provided no Event of
Default has occurred or is continuing, there shall be disbursed to Mezzanine
Borrower the Proceeds of a Condemnation or Casualty remaining after payment of
all amounts to which Mortgage Lender and each Senior Mezzanine Lender are
entitled. Mezzanine Borrower agrees that Mezzanine Lender shall not be required
to deliver to Mortgage Lender a Mezzanine Loan Default Notice prior to the
deposit of Proceeds into the Mezzanine Account.

 

3.1.7 Cash Management Bank.

 

(a) Mezzanine Lender shall have the right at Mezzanine Borrower’s sole cost and
expense to replace the Cash Management Bank with a financial institution
reasonably satisfactory to Mezzanine Borrower in the event that (i) the Cash
Management Bank fails, in any material respect, to comply with the Account
Agreement or (ii) the Cash Management Bank is no longer an Approved Bank. Upon
the occurrence and during the continuance of an Event of Default, Mezzanine
Lender shall have the right at Mezzanine Borrower’s sole cost and expense to
replace Cash Management Bank (Second Mezzanine) at any time, without notice to
Mezzanine Borrower. Mezzanine Borrower shall cooperate with Mezzanine Lender in
connection with the appointment of any replacement Cash Management Bank and the
execution by the Cash Management Bank (Second Mezzanine) and the Mezzanine
Borrower of an Mezzanine Account Agreement and delivery of same to Mezzanine
Lender (with a copy to First Mezzanine Lender, Third Mezzanine Lender and Fourth
Mezzanine Lender).

 

(b) So long as no Event of Default shall have occurred and be continuing,
Mezzanine Borrower shall have the right at its sole cost and expense to replace
the Cash Management Bank (First Mezzanine) with a financial institution that is
an Approved Bank provided that such financial institution and Mezzanine Borrower
shall execute and deliver to Mezzanine Lender (with a copy to Third Mezzanine
Lender and Fourth Mezzanine Lender an Mezzanine Account Agreement substantially
similar to the Mezzanine Account Agreement executed as of the Closing Date with
such changes therein as shall be reasonably acceptable to Mezzanine Lender.)

 

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3.1.8 Mezzanine Borrower’s Account Representations, Warranties and Covenants.
Mezzanine Borrower represents, warrants and covenants that:

 

(a) None of Mortgage Borrower, any Senior Mezzanine Borrower, Mezzanine Borrower
nor any other Person will have any right, title or interest in or to any Excess
Cash Flow during any period with respect to which the Mortgage Lender becomes
obligated under the Loan Agreement (Mortgage) to transfer such Excess Cash Flow
to the Mezzanine Account, except any rights Mezzanine Borrower shall have to
allocations of such funds following the disbursement to Mezzanine Borrower of
any Excess Cash Flow as provided in Section 3.1.6(d);

 

(b) There are no accounts other than the Collateral Accounts, Collateral
Accounts (First Mezzanine), Collateral Accounts (Second Mezzanine), Collateral
Accounts (Third Mezzanine) and Collateral Accounts (Fourth Mezzanine) maintained
by Mortgage Borrower, Mezzanine Borrower or any other Person with respect to the
collection of Mortgage Borrower’s, any Senior Mezzanine Borrower’s, or Mezzanine
Borrower’s rents, revenues, proceeds or other income from the Property or for
the collection of Mortgage Borrower’s or any Senior Mezzanine Borrower’s
Receipts in respect of Mezzanine Borrower, any Senior Mezzanine Borrower’s, or
Mortgage Borrower;

 

(c) Mezzanine Borrower shall cause Mortgage Borrower to deposit or cause to be
deposited all Distributions into the Mezzanine Account as required by the Pledge
and this Agreement or any other Mezzanine Loan Document; and

 

(d) so long as the Loan shall be outstanding, neither Mortgage Borrower,
Mezzanine Borrower nor any other Person shall open any other accounts with
respect to the collection of rents, revenues, proceeds or other income from the
Property or for the collection of Receipts in respect of Mortgage Borrower, any
Senior Mezzanine Borrower’s or Mezzanine Borrower, except as provided in the
Loan Agreement (Mortgage).

 

3.1.9 Account Collateral (Second Mezzanine) and Remedies.

 

(a) Upon the occurrence and during the continuance of an Event of Default,
without additional notice from Mezzanine Lender to Mezzanine Borrower, (i)
Mezzanine Lender may, in addition to and not in limitation of Mezzanine Lender’s
other rights, make any and all withdrawals from, and transfers between and
among, the Collateral Accounts (Second Mezzanine) as Mezzanine Lender shall
determine in its sole and absolute discretion to pay any Obligations, operating
expenses and/or capital expenditures for the Property; (ii) all Excess Cash Flow
shall be retained in the Mezzanine Account or applicable Sub-Accounts, and (iii)
all payments to the Mezzanine Borrower’s Account pursuant to Section 3.1.6 shall
immediately cease.

 

(b) Upon the occurrence and during the continuance of an Event of Default,
Mezzanine Borrower hereby irrevocably constitutes and appoints Mezzanine Lender
as Mezzanine Borrower’s true and lawful attorney-in-fact, with full power of
substitution, to

 

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execute, acknowledge and deliver any instruments and to exercise and enforce
every right, power, remedy, option and privilege of Mezzanine Borrower with
respect to the Account Collateral (Second Mezzanine), and do in the name, place
and stead of Mezzanine Borrower, all such acts, things and deeds for and on
behalf of and in the name of Mezzanine Borrower, which Mezzanine Borrower could
or might do or which Mezzanine Lender may deem necessary or desirable to more
fully vest in Mezzanine Lender the rights and remedies provided for herein and
to accomplish the purposes of this Agreement. The foregoing powers of attorney
are irrevocable and coupled with an interest. Upon the occurrence and during the
continuance of an Event of Default, Mezzanine Lender may perform or cause
performance of any such agreement, and any reasonable out-of-pocket expenses of
Mezzanine Lender incurred in connection therewith shall be paid by Mezzanine
Borrower as provided in Section 5.1.13.

 

(c) Mezzanine Borrower hereby expressly waives, to the fullest extent permitted
by law, presentment, demand, protest or any notice of any kind in connection
with this Agreement or the Account Collateral (Second Mezzanine). Mezzanine
Borrower acknowledges and agrees that ten (10) days’ prior written notice of the
time and place of any public sale of the Account Collateral (Second Mezzanine)
or any other intended disposition thereof shall be reasonable and sufficient
notice to Mezzanine Borrower within the meaning of the UCC.

 

3.1.10 Transfers and Other Liens. Mezzanine Borrower agrees that it will not (i)
sell or otherwise dispose of any of the Account Collateral (Second Mezzanine) or
(ii) create or permit to exist any Lien upon or with respect to all or any of
the Account Collateral (Second Mezzanine), except for the Lien granted to
Mezzanine Lender under this Agreement.

 

3.1.11 Reasonable Care. Beyond the exercise of reasonable care in the custody
thereof, Mezzanine Lender shall have no duty as to any Account Collateral
(Second Mezzanine) in its possession or control as agent therefor or bailee
thereof or any income thereon or the preservation of rights against any person
or otherwise with respect thereto. Mezzanine Lender shall be deemed to have
exercised reasonable care in the custody of the Account Collateral (Second
Mezzanine) in its possession if the Account Collateral (Second Mezzanine) is
accorded treatment substantially equal to that which Mezzanine Lender accords
its own property, it being understood that Mezzanine Lender shall not be liable
or responsible for any loss or damage to any of the Account Collateral (Second
Mezzanine), or for any diminution in value thereof, by reason of the act or
omission of Mezzanine Lender, its Affiliates, agents, employees or bailees,
except to the extent that such loss or damage results from Mezzanine Lender’s
gross negligence or willful misconduct. In no event shall Mezzanine Lender be
liable either directly or indirectly for losses or delays resulting from any
event which may be the basis of an Excusable Delay, computer malfunctions,
interruption of communication facilities, labor difficulties or other causes
beyond Mezzanine Lender’s reasonable control or for indirect, special or
consequential damages except to the extent of Mezzanine Lender’s gross
negligence or willful misconduct. Notwithstanding the foregoing, Mezzanine
Borrower acknowledges and agrees that (i) Mezzanine Lender does not have custody
of the Account Collateral (Second Mezzanine), (ii) Cash Management Bank (Second
Mezzanine) has custody of

 

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the Account Collateral (Second Mezzanine), (iii) the initial Cash Management
Bank (Second Mezzanine) was chosen by Mezzanine Borrower and (iv) Mezzanine
Lender has no obligation or duty to supervise Cash Management Bank (Second
Mezzanine) or to see to the safe custody of the Account Collateral (Second
Mezzanine).

 

3.1.12 Mezzanine Lender’s Liability.

 

(a) Mezzanine Lender shall be responsible for the performance only of such
duties with respect to the Account Collateral (Second Mezzanine) as are
specifically set forth in this Section 3.1 or elsewhere in the Mezzanine Loan
Documents, and no other duty shall be implied from any provision hereof.
Mezzanine Lender shall not be under any obligation or duty to perform any act
with respect to the Account Collateral (Second Mezzanine) which would cause it
to incur any expense or liability or to institute or defend any suit in respect
hereof, or to advance any of its own monies. Mezzanine Borrower shall indemnify
and hold Mezzanine Lender, its employees and officers harmless from and against
any loss, cost or damage (including, without limitation, reasonable attorneys’
fees and disbursements) incurred by Mezzanine Lender in connection with the
transactions contemplated hereby with respect to the Account Collateral (Second
Mezzanine) except as such may be caused by the gross negligence or willful
misconduct of Mezzanine Lender, its employees, officers or agents.

 

(b) Mezzanine Lender shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper,
document or signature believed by it in good faith to be genuine, and, in so
acting, it may be assumed that any person purporting to give any of the
foregoing in connection with the provisions hereof has been duly authorized to
do so. Mezzanine Lender may consult with counsel, and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder and in good faith in accordance
therewith.

 

3.1.13 Continuing Security Interest. This Agreement shall create a continuing
security interest in the Account Collateral (Second Mezzanine) and shall remain
in full force and effect until payment in full of the Indebtedness. Upon payment
in full of the Indebtedness, this security interest shall automatically
terminate without further notice from any party and Mezzanine Borrower shall be
entitled to the return, upon its request, of such of the Account Collateral
(Second Mezzanine) as shall not have been sold or otherwise applied pursuant to
the terms hereof and Mezzanine Lender shall execute such instruments and
documents as may be reasonably requested by Mezzanine Borrower to evidence such
termination and the release of the Account Collateral (Second Mezzanine).

 

IV. REPRESENTATIONS AND WARRANTIES

 

4.1 Borrower Representations. Mezzanine Borrower represents and warrants as of
the Closing Date that:

 

4.1.1 Organization. Each of Mortgage Borrower, Senior Mezzanine Borrower, Junior
Mezzanine Borrower and Mezzanine Borrower is a limited liability company and

 

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has been duly organized and is validly existing and in good standing pursuant to
the laws of the State of Delaware with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Master
Lessee is a corporation and has been duly organized and is validly existing and
in good standing pursuant to the laws of the State of Delaware with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged. Mortgage Borrower, each Senior Mezzanine Borrower,
Mezzanine Borrower and Master Lessee have each duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so qualified
in connection with its properties, businesses and operations, or, in the case of
qualifications in the various States (a) an application for such qualification
has been duly filed with the applicable Governmental Authority and all fees
required in order to obtain such qualification have been paid in full, (b) all
conditions to obtaining such qualification have been satisfied under applicable
law and the issuance of such qualification is a ministerial act of the
applicable Governmental Authority, (c) Mortgage Borrower has agreed to so
qualify and cause Master Lessee to qualify in accordance with a post-closing
side letter entered into on the date hereof, and (d) no such failure to qualify
would be reasonably likely to have a Material Adverse Effect. Each of Mortgage
Borrower, each Senior Mezzanine Borrower, Mezzanine Borrower, HoldCo, Master
Lessee and Guarantor possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Mezzanine Borrower is the ownership of the Ownership Interests.
The organizational structure of each Borrower and Master Lessee is accurately
depicted by the schematic diagram attached hereto as Exhibit J, and Mezzanine
Borrower shall not change its name, identity, corporate form or jurisdiction of
organization unless it shall have given Mezzanine Lender thirty (30) days prior
written notice of any such change and shall have taken all steps reasonably
requested by Mezzanine Lender to grant, perfect, protect and/or preserve the
liens and security interest granted to Mezzanine Lender under the Mezzanine Loan
Documents.

 

4.1.2 Proceedings. Each of Mortgage Borrower, each Senior Mezzanine Borrower,
Mezzanine Borrower, Guarantor and Master Lessee has full power to and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement and the other Mezzanine Loan Documents to which it is a party.
The Mezzanine Loan Documents which such Person is a party have been duly
executed and delivered by, or on behalf of, Mortgage Borrower, each Senior
Mezzanine Borrower, Mezzanine Borrower, Guarantor and Master Lessee, as
applicable, and constitute legal, valid and binding obligations of such Persons,
as applicable, enforceable against such Persons, as applicable in accordance
with their respective terms, subject only to applicable bankruptcy, insolvency
and similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

4.1.3 No Conflicts. The execution, delivery and performance of this Agreement
and the other Mezzanine Loan Documents by Mortgage Borrower, any Senior
Mezzanine Borrower, Mezzanine Borrower, Guarantor and Master Lessee, as
applicable, will not conflict with or result in a material breach of any of the
terms or provisions of, or constitute a material default under, or result in the
creation or imposition of any lien,

 

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charge or encumbrance (other than pursuant to the Mezzanine Loan Documents) upon
any of the property or assets of any such Person pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which any such Person is a party or by which
any of such Person’s property or assets is subject (unless consents from all
applicable parties thereto have been obtained), except for any conflict that
would not individually or in the aggregate reasonably be expected to result in a
Material Adverse Effect, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority, and any material consent, approval, authorization, order,
registration or qualification of or with any Governmental Authority required for
the execution, delivery and performance by Mortgage Borrower, any Senior
Mezzanine Borrower, Mezzanine Borrower, Guarantor and Master Lessee of this
Agreement, except for any violation that would not individually or in the
aggregate reasonably be expected to result in a Material Adverse Effect, or any
other Mezzanine Loan Documents has been obtained and is in full force and
effect.

 

4.1.4 Litigation. Except as set forth on Exhibit K attached hereto, there are no
arbitration proceedings, governmental investigations, actions, suits or
proceedings at law or in equity by or before any Governmental Authority now
pending or, to the best of Mezzanine Borrower’s knowledge, threatened against or
affecting Mortgage Borrower, any Junior Mezzanine Borrower, Mezzanine Borrower,
HoldCo, Guarantor, Master Lessee or any Individual Property (other than claims
(A)(i) which are being covered by insurance, (ii) which are being defended by
the relevant insurance company and (iii) as to which Mezzanine Borrower has not
received a notice from such insurance company that the claim exceeds the total
amount of insurance coverage with respect to such claim; (B) which are covered
by the self insurance limit permitted pursuant to the Mezzanine Loan Documents
and Loan Documents (Mortgage) and are being diligently defended by Mezzanine
Borrower, any other Borrower, Mortgage Borrower, HoldCo, Guarantor Master Lessee
or their respective Affiliates; or (C) which relate to employment claims for
which liability in the event any such matter is adversely determined could not
reasonably be expected to exceed $1,000,000 or provided that none of such
unscheduled claims could reasonably be expected to individually or in the
aggregate to have in a Material Adverse Effect if adversely determined). The
actions, suits or proceedings identified on Exhibit K, if determined against
Mortgage Borrower, Mezzanine Borrower, any Senior Mezzanine Borrower, Guarantor,
Master Lessee or the Property, would not materially and adversely affect the
condition (financial or otherwise) or business of any such Person or the
condition or operation of any Individual Property.

 

4.1.5 Agreements. Mezzanine Borrower is not a party to any agreement or
instrument or subject to any restriction which is reasonably likely to
materially and adversely affect Mezzanine Borrower or Mezzanine Borrower’s
business, properties or assets, operations or condition, financial or otherwise.
Mezzanine Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party or by
which Mezzanine Borrower or the Property is bound. Mezzanine Borrower has no
material financial obligation (contingent or otherwise) under any indenture,
mortgage, deed of trust, loan agreement or other similar agreement or

 

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instrument to which Mezzanine Borrower is a party or by which Mezzanine Borrower
or the Property is otherwise bound, other than (a) obligations constituting
Permitted Debt (Second Mezzanine) which are incurred in the ordinary course of
the ownership and operation of the Property and (b) obligations under the
Mezzanine Loan Documents.

 

4.1.6 Title to Assets. Mezzanine Borrower owns all of the Collateral as of the
date hereof, subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances, except for the Permitted Encumbrances and other Liens permitted
hereunder.

 

(b) Mortgage Borrower has good, marketable and insurable (i) leasehold title to
the Land and Improvements relating to the Ground Leased Properties and (ii) fee
simple title to the Land and the Improvements relating to the Properties, in
each case free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. Borrower has good and marketable
title to the remainder of the Property (excluding the Excluded Personal
Property), free and clear of all Liens whatsoever except the Permitted
Encumbrances. The Security Instrument, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create (i) a valid, perfected first
mortgage lien on the Land and the Improvements or the leasehold estate therein,
as applicable, subject only to Permitted Encumbrances and (ii) perfected
security interests in and to, and perfected collateral assignments of, all
personalty other than the Excluded Personal Property (including the Subleases)
or any leases of equipment from third parties, all in accordance with the terms
thereof, in each case subject only to any applicable Permitted Encumbrances.
There are no claims for payment for work, labor or materials affecting the
Property which are or may become a lien prior to, or of equal priority with, the
Liens created by the Loan Documents (Mortgage) other than the Permitted
Encumbrances. Borrower represents and warrants that none of the Permitted
Encumbrances would individually or in the aggregate reasonably be expected to
result in a Material Adverse Effect as of the Closing Date and thereafter.
Mezzanine Borrower shall cause Mortgage Borrower to preserve its right, title
and interest in and to the Property for so long as the Mezzanine Note and
Mortgage Note remain outstanding and will warrant and defend same and the
validity and priority of the Lien hereof from and against any and all claims
whatsoever other than the Permitted Encumbrances.

 

(c) with respect to any Individual Property for which no current survey has been
prepared in connection with this transaction, to the actual knowledge of
Mezzanine Borrower:

 

(i) there are no title defects that would be disclosed by an accurate survey as
of this date that would interfere with the continued use and operation of such
Individual Property as used as of this date, and

 

(ii) the Improvements and parking at such Individual Property and purported to
be owned by Mortgage Borrower and appraised pursuant to the Appraisal are wholly
located on the Land related to such Individual Property.

 

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(d) with respect to any parcel of land burdened by an REA, (1) the appurtenant
rights purported to be granted pursuant to such REA to benefit the Individual
Property are not subject to any title defect and (2) there are no liens or
encumbrances affecting such burdened parcel that, in either case, would
interfere with the continued use and operation of such Individual Property or
such appurtenant rights as used as of the date of this Agreement.

 

4.1.7 No Bankruptcy Filing. None of Mortgage Borrower, any Senior Mezzanine
Borrower, Mezzanine Borrower, Guarantor or Master Lessee is contemplating either
the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of such entity’s
assets or property, and Mezzanine Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or against Mortgage
Borrower, any Senior Mezzanine Borrower, Mezzanine Borrower, Guarantor or Master
Lessee.

 

4.1.8 Full and Accurate Disclosure. To Mezzanine Borrower’s knowledge no
statement of material fact made by Mezzanine Borrower in this Agreement or in
any of the other Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
herein or therein not materially misleading as of the date made which in any
such case could reasonably be expected to have a Material Adverse Effect. There
is no fact presently known to Mezzanine Borrower which has not been disclosed
which could reasonably be expected to have a Material Adverse Effect.

 

4.1.9 Ownership Interests. The Ownership Interests constitute all of the
Ownership Interests currently owned by Mezzanine Borrower.

 

4.1.10 No Plan Assets.

 

(a) Mezzanine Borrower does not maintain an employee benefit plan as defined by
Section 3(3) of ERISA, which is subject to Title IV of ERISA and Mezzanine
Borrower (i) has no knowledge of any material liability which has been incurred
or is expected to be incurred by Mezzanine Borrower which is or remains
unsatisfied for any taxes or penalties with respect to any “employee benefit
plan,” within the meaning of Section 3(3) of ERISA, or any “plan,” within the
meaning of Section 4975(e)(1) of the Internal Revenue Code or any other benefit
plan (other than a multiemployer plan) maintained, contributed to, or required
to be contributed to by Mezzanine Borrower or by any entity that is under common
control with Mezzanine Borrower within the meaning of ERISA Section 4001(a)(14)
(a “Plan”) or any plan that would be a Plan but for the fact that it is a
multiemployer plan within the meaning of ERISA Section 3(37); and (ii) has made
and shall continue to make when due all required contributions to all such
Plans, if any. Each such Plan has been and will be administered in material
compliance with its terms and the applicable provisions of ERISA, the Internal
Revenue Code, and any other applicable federal or state law; and no action shall
be taken or fail to be taken that would result in the disqualification or loss
of tax-exempt status of any such Plan intended to be qualified and/or tax
exempt; and

 

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(b) None of Mortgage Borrower, any Senior Mezzanine Borrower, or Mezzanine
Borrower is an employee benefit plan, as defined in Section 3(3) of ERISA,
subject to Title I of ERISA, none of the assets of Mortgage Borrower, any Senior
Mezzanine Borrower, or Mezzanine Borrower constitutes or will constitute plan
assets of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101 and Mortgage Borrower, any Senior Mezzanine Borrower, or Mezzanine
Borrower is not a governmental plan within the meaning of Section 3(32) of ERISA
and transactions by or with Mortgage Borrower, any Senior Mezzanine Borrower, or
Mezzanine Borrower are not subject to state statutes regulating investment of,
and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code currently in
effect, which prohibit or otherwise restrict the transactions contemplated by
this Agreement.

 

4.1.11 Compliance. Mortgage Borrower, each Senior Mezzanine Borrower, Mezzanine
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 (except for any non-compliance that individually
or in the aggregate would not reasonably be expected to result in a Material
Adverse Effect). To the best of Mezzanine Borrower’s knowledge, none of Mortgage
Borrower, any Senior Mezzanine Borrower, or Mezzanine Borrower is in default or
in violation of any order, writ, injunction, decree or demand of any
Governmental Authority. To the best of Mezzanine Borrower’s knowledge, there has
not been committed by any Senior Mezzanine Borrower, Mezzanine Borrower or
Mortgage Borrower any act or omission affording the federal government or any
other Governmental Authority the right of forfeiture as against the Property,
the Collateral or any part thereof or any monies paid in performance of
Mezzanine Borrower’s obligations under any of the Mezzanine Loan Documents.

 

4.1.12 Financial Information. The information set forth in the certificate of
Mezzanine Borrower regarding financial information dated of even date herewith
(i) is true, complete and correct in all material respects and (ii) fairly
represents the financial condition of the Property as of the Closing Date.
Neither Mortgage Borrower, any Senior Mezzanine Borrower, nor Mezzanine Borrower
has any material contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Mezzanine Borrower and could
reasonably be expected to have a Material Adverse Effect.

 

4.1.13 Absence of UCC Financing Statements, Etc. Except with respect to the
Permitted Encumbrances, the Loan Documents (Mortgage), the Senior Mezzanine Loan
Documents, the Junior Mezzanine Loan Documents, and the Mezzanine Loan
Documents, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
or security title in the interest in the Property or any of the Collateral.

 

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4.1.14 Federal Reserve Regulations. None of the proceeds of the Loan will be
used for the purpose of purchasing or carrying any “margin stock” as defined in
Regulation U, Regulation X or Regulation T or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
“margin stock” or for any other purpose which might constitute this transaction
a “purpose credit” within the meaning of Regulation U or Regulation X, which in
any such case would cause the Mezzanine Loan, the Mezzanine Borrower, or the
Mezzanine Lender to be in violation of Regulation U. As of the Closing Date,
Mezzanine Borrower does not own any “margin stock.”

 

4.1.15 Setoff, Etc. The Collateral and the rights of Mezzanine Lender with
respect to the Collateral are not subject to any setoff, claims, withholdings or
other defenses.

 

4.1.16 Not a Foreign Person. None of Mezzanine Borrower, any Senior Mezzanine
Borrower or Mortgage Borrower is a foreign person within the meaning of §
1445(f)(3) of the Code.

 

4.1.17 Enforceability. This Agreement and the other Mezzanine Loan Documents are
the legal, valid and binding obligations of Mezzanine Borrower, enforceable
against Mezzanine Borrower in accordance with their terms, subject only to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws from time to time in effect affecting creditor’s
rights.

 

4.1.18 Subdivision. The Individual Properties located in Florida, New York,
Oregon and Texas comply in all material respects with all applicable subdivision
laws, ordinances and regulations.

 

4.1.19 Insurance. Mezzanine Borrower has obtained and has delivered to Mezzanine
Lender certified copies or originals of all insurance policies required under
this Agreement, reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. Mezzanine Borrower has not and to the
best of Mezzanine Borrower’s knowledge no Person has, done by act or omission
anything which would impair the coverage of any such policy.

 

4.1.20 Physical Condition. To the best of Mezzanine Borrower’s knowledge, 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; to
the best of Mezzanine Borrower’s knowledge, there exists no structural or other
material defects or damages in or to the Property, whether latent or otherwise,
and Mezzanine Borrower has not received any 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.

 

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4.1.21 Subleases. The Property is not subject to any leases other than the
Master Lease and the Subleases (as defined in the Loan Agreement (Mortgage) set
forth on Schedule I attached hereto). No Person has any possessory interest in
the Property or right to occupy the same except under and pursuant to the
provisions of the Master Lease, the Subleases and the REAs. The current
Subleases are in full force and effect and to Mezzanine Borrower’s knowledge,
there are no material defaults thereunder by either party (other than as
expressly disclosed in the Loan Agreement (Mortgage), Schedule I or in the
Tenant estoppel certificates delivered to Mezzanine Lender in connection with
the closing of the Loan). No rent has been paid more than one (1) month in
advance of its due date, except as disclosed in the Tenant estoppel certificates
delivered to Mezzanine Lender in connection with the closing of the Loan or as
set forth in the Loan Agreement (Mortgage) on Schedule I. There has been no
prior sale, transfer or assignment, hypothecation or pledge by Mortgage Borrower
or Master Lessee of the Master Lease or any Sublease or of the Rents received
therein, which will be outstanding following the funding of the Loan, other than
those being assigned to Mortgage Lender concurrently herewith.

 

4.1.22 Single Purpose Entity/Separateness.

 

(a) Until the Indebtedness has been paid in full, Mezzanine Borrower hereby
represents, warrants and covenants that Mezzanine Borrower, Mortgage Borrower
and each SPE Entity is, shall be, and shall continue to be, a Single Purpose
Entity.

 

(b) All of the assumptions made in the Non-Consolidation Opinion, including, but
not limited to, any exhibits attached thereto, are true and correct in all
material respects and any assumptions made in any subsequent non-consolidation
opinion delivered in connection with the Mezzanine Loan Documents (an
“Additional Non-Consolidation Opinion”), including, but not limited to, any
exhibits attached thereto, will have been and shall be true and correct in all
material respects. Mezzanine Borrower, Mortgage Borrower and each SPE Entity
have complied and will comply in all material respects with all of the
assumptions made with respect to it in the Non-Consolidation Opinion in all
material respects. Mezzanine Borrower, Mortgage Borrower and each SPE Entity
will have complied and will comply with all of the assumptions made with respect
to it in any Additional Non-Consolidation Opinion. Each entity other than
Mortgage Borrower with respect to which an assumption shall be made in any
Additional Non-Consolidation Opinion will have complied and will comply in all
material respects with all of the assumptions made with respect to it in any
Additional Non-Consolidation Opinion.

 

4.1.23 Subsidiaries. Mezzanine Borrower has no subsidiaries other than Mortgage
Borrower and each Senior Mezzanine Borrower.

 

(a) All of the assumptions made in the True Lease Opinion, including, but not
limited to, any exhibits attached thereto, are true and correct in all material
respects.

 

(b) All of the assumptions made in the Solvency Opinion, including, but not
limited to, any exhibits attached thereto, are true and correct in all respects.
Mortgage

 

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Borrower, Mezzanine Borrower, each Senior Mezzanine Borrower, and Master Lessee
have complied and will comply with all of the assumptions made with respect to
it in the Solvency Opinion.

 

4.1.24 Tax Filings. Mezzanine Borrower has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns required to be
filed and has paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by Mezzanine Borrower.

 

4.1.25 Solvency/Fraudulent Conveyance. Mezzanine Borrower (a) has not entered
into the transaction contemplated by this Agreement or any Mezzanine Loan
Document with the actual intent to hinder, delay, or defraud any creditor and
(b) has received reasonably equivalent value in exchange for its obligations
under the Mezzanine Loan Documents. After giving effect to the Loan, the fair
saleable value of Mezzanine Borrower’s assets exceeds and will, immediately
following the making of the Loan, exceed Mezzanine Borrower’s total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of Mezzanine Borrower’s assets
is and will, immediately following the making of the Loan, be greater than
Mezzanine Borrower’s probable liabilities, including the maximum amount of its
contingent liabilities on its Debts as such Debts become absolute and matured,
Mezzanine 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. Mezzanine Borrower does not intend
to, and does not believe that it will, incur Debt and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Debt and liabilities as they mature (taking into account the timing and amounts
of cash to be received by Mezzanine Borrower and the amounts to be payable on or
in respect of obligations of Mezzanine Borrower).

 

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

 

4.1.27 Interest Rate Cap Agreement. A complete and correct copy of the Interest
Rate Cap Agreement (Second Mezzanine) is attached hereto as Exhibit L. The
Interest Rate Cap Agreement (Second Mezzanine) is in full force and effect and
enforceable against Mezzanine Borrower in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditors’ rights and subject as to enforceability to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

4.1.28 Brokers. Neither Mezzanine Borrower nor Mezzanine Lender has dealt with
any broker or finder with respect to the transactions contemplated by the
Mezzanine Loan Documents (except that Credit Suisse First Boston acted in
connection with certain

 

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of the Contemplated Transactions and is either not owed a fee in connection with
the Loan or any such fee shall be paid by Borrower) neither party has done any
acts, had any negotiations or conversations, or made any agreements or promises
which will in any way create or give rise to any obligation or liability for the
payment by either party of any brokerage fee, charge, commission or other
compensation to any Person with respect to the transactions contemplated by the
Mezzanine Loan Documents. Mezzanine Borrower and Mezzanine Lender shall each
indemnify and hold harmless the other from and against any loss, liability, cost
or expense, including any judgments, attorneys’ fees, or costs of appeal,
incurred by the other party and arising out of or relating to any breach or
default by the indemnifying party of its representations, warranties and/or
agreements set forth in this Section 4.1.28. The provisions of this Section
4.1.28 shall survive the expiration and termination of this Agreement and the
payment of the Indebtedness.

 

4.1.29 No Other Debt. Mezzanine Borrower has not borrowed or received debt
financing that has not been heretofore repaid in full, other than the Permitted
Debt (Second Mezzanine).

 

4.1.30 Taxpayer Identification Number. Mezzanine Borrower’s Federal taxpayer
identification number is 37-1512923.

 

4.1.31 Merger Agreement. Mezzanine Borrower has delivered to Mezzanine Lender
true complete and correct copies of the Merger Agreement and all deliveries made
by any party thereto or any of their respective Affiliates.

 

4.1.32 Representations and Warranties in the Loan Documents (Mortgage).

 

Mezzanine Borrower hereby represents and warrants that each of the
representations and warranties contained in the Loan Documents (Mortgage) (which
are hereby incorporated by reference as if fully set forth herein) is true and
correct in all material respects, as of the Closing Date and to the best of its
knowledge, after reasonable inquiry, there is no Mortgage Event of Default
thereunder.

 

4.2 Survival of Representations. Mezzanine Borrower agrees that all of the
representations and warranties of Mezzanine Borrower set forth in Section 4.1
and elsewhere in this Agreement and in the other Mezzanine Loan Documents shall
be deemed given and made as of the date hereof and survive for so long as any
amount remains owing to Mezzanine Lender under this Agreement or any of the
other Mezzanine Loan Documents by Mezzanine Borrower or Guarantor unless a
longer survival period is expressly stated in a Mezzanine Loan Document with
respect to a specific representation or warranty, in which case, for such longer
period. Notwithstanding the foregoing, the representations and warranties set
forth in Section 4.1.6(c) and (d) shall survive until repayment of the
Indebtedness in full without regard to extinguishment thereof by reason of
bankruptcy, anti-deficiency and or other similar laws relating to enforcement
actions. All representations, warranties, covenants and agreements made in this
Agreement or in the other Mezzanine Loan Documents by Mezzanine Borrower shall
be deemed to have been relied upon by Mezzanine Lender notwithstanding any
investigation heretofore or hereafter made by Mezzanine Lender or on its behalf.

 

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4.3 Mezzanine Borrower’s Knowledge. Whenever a representation or warranty is
made “to Mezzanine Borrower’s knowledge,” or a term of similar import, such term
shall mean the actual knowledge of Mezzanine Borrower or Master Lessee, as
applicable, or their respective officers or directors who would be likely to
have actual knowledge of the relevant subject matter.

 

V. MEZZANINE BORROWER COVENANTS

 

5.1 Affirmative Covenants. From the Closing Date and until payment and
performance in full of all obligations of Mezzanine Borrower under the Mezzanine
Loan Documents, Mezzanine Borrower (as to itself, each Senior Mezzanine
Borrower, Mortgage Borrower and the Property) hereby covenants and agrees with
Mezzanine Lender that:

 

5.1.1 Performance by Mezzanine Borrower.

 

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

 

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

 

5.1.2 Existence; Compliance with Legal Requirements; Insurance. Subject to
Mortgage Borrower’s right of contest pursuant to Section 7.3 of the Loan
Agreement (Mortgage), Mezzanine Borrower shall at all times comply and cause the
Mortgage Borrower and the Property to be in compliance in all material respects
with all Legal Requirements applicable to the Mezzanine Borrower, any Senior
Mezzanine Borrower, Mortgage Borrower, any SPE Entity and the Property and the
uses permitted upon the Property. Mezzanine 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 necessary to comply with
all Legal Requirements applicable to it and the Property. There shall never be
committed by Mezzanine Borrower, and Mezzanine Borrower shall not knowingly
permit Mortgage Borrower, any Senior Mezzanine Borrower, or any other Person in
occupancy of or involved with the operation or use of

 

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the Property to commit, any act or omission affording the federal government or
any state or local government the right of forfeiture as against the Property or
any part thereof or any monies paid in performance of Mezzanine Borrower’s
obligations under any of the Mezzanine Loan Documents. Mezzanine Borrower hereby
covenants and agrees not to commit, knowingly permit or suffer to exist any act
or omission affording such right of forfeiture. Mezzanine Borrower shall at all
times maintain, preserve and protect (and shall cause Mortgage Borrower to at
all times maintain, preserve and protect) all franchises and trade names where
the failure to so preserve and protect would be reasonably likely to have a
Material Adverse Effect, and preserve all the remainder of its property used in
and necessary for the conduct of its business and shall keep the Property (or
shall cause Mortgage Borrower to keep the Property) in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto
as required by the Loan Agreement (Mortgage). Mezzanine Borrower shall keep or
shall cause each Senior Mezzanine Borrower and Mortgage Borrower to keep the
Property insured at all times to such extent and against such risks, and
maintain liability and such other insurance, as is more fully set forth in this
Agreement and the Loan Agreement (Mortgage).

 

5.1.3 Litigation. Mezzanine Borrower shall give prompt written notice to
Mezzanine Lender of any litigation or governmental proceedings pending or
threatened in writing against Mezzanine Borrower, any Senior Mezzanine Borrower,
Mortgage Borrower, the Collateral or the Property which, if determined adversely
to such party, the Collateral or the Property would reasonably be expected to
have a Material Adverse Effect.

 

5.1.4 Single Purpose Entity. Each of Mezzanine Borrower and each SPE Entity has
been since the date of its formation and shall remain a Single Purpose Entity.

 

(a) Each of Mezzanine Borrower and each SPE Entity shall continue to maintain
its own deposit account or accounts, separate from those of any Affiliate, with
commercial banking institutions. None of the funds of Mezzanine Borrower or any
SPE Entity will be diverted to any other Person or for other than business uses
of Mezzanine Borrower or any SPE Entity, as applicable, nor (ii) will such funds
be commingled with the funds of any other Affiliate.

 

(b) To the extent that Mezzanine Borrower or any SPE Entity shares the same
officers or other employees as Mezzanine Borrower, any SPE Entity or their
Affiliates, the salaries of and the expenses related to providing benefits to
such officers and other employees shall be fairly allocated among such entities,
and each such entity shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.

 

(c) To the extent that any Mezzanine Borrower or any SPE Entity jointly
contracts with any other Mezzanine Borrower, any SPE Entity or either of their
Affiliates, as applicable, to do business with vendors or service providers or
to share overhead expenses, the costs incurred in so doing shall be allocated
fairly among such entities, and each such entity shall bear its fair share of
such costs. To the extent that

 

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Mezzanine Borrower or any SPE Entity contracts or does business with vendors or
service providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be fairly
allocated to or among such entities for whose benefit the goods and services are
provided, and each such entity shall bear its fair share of such costs. All
material transactions between (or among) Mezzanine Borrower, any SPE Entity
and/or any of their respective Affiliates shall be conducted on substantially
the same terms (or on more favorable terms for Mezzanine Borrower or such SPE
Entity, as applicable) as would be conducted with third parties.

 

(d) To the extent that Mezzanine Borrower, any SPE Entity or any of their
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.

 

(e) Mezzanine Borrower and each SPE Entity shall conduct its affairs strictly in
accordance with its organizational documents, and observe all necessary,
appropriate and customary corporate, limited liability company or partnership
formalities, as applicable, including, but not limited to, obtaining any and all
members’ consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts, including,
without limitation, payroll and intercompany transaction accounts.

 

(f) In addition, Mezzanine Borrower and each SPE Entity shall each: (i) maintain
books and records separate from those of any other Person; (ii) maintain its
assets in such a manner that it is not more costly or difficult to segregate,
identify or ascertain such assets; (iii) hold regular meetings of its board of
directors, shareholders, partners or members, as the case may be, and observe
all other corporate, partnership or limited liability company, as the case may
be, formalities; (iv) hold itself out to creditors and the public as a legal
entity separate and distinct from any other entity; (v) prepare separate tax
returns (unless part of a consolidated group) and financial statements (unless
part of a consolidated group), or if part of a consolidated group, it will be
shown as a separate member of such group or such consolidated tax returns or
financial statements will contain a note indicating that it and its Affiliate
are separate legal entities and maintain records, books of account and accounts
separate and apart from any other Person; (vi) transact all business with its
Affiliates on an arm’s-length basis and pursuant to enforceable agreements;
(vii) conduct business in its name and use separate stationery, invoices and
checks; (viii) not commingle its assets or funds with those of any other Person;
and (ix) not assume, guarantee or pay the debts or obligations of any other
Person.

 

5.1.5 Consents. If Mezzanine Borrower, or any SPE Entity is a corporation, the
board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. If Mezzanine Borrower or any SPE Entity is a limited
liability company, (a) if such Person is managed by a board of managers, the
board of managers of such Person may not take any action requiring the unanimous
affirmative vote of 100% of the members of the

 

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board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (b) if such Person is not
managed by a board of managers, the members of such Person may not take any
action requiring the affirmative vote of 100% of the members of such Person
unless all of the members, including the Independent Members, shall have
participated in such vote. An affirmative vote of 100% of the directors, board
of managers or members, as applicable, Mezzanine Borrower and any SPE Entity
shall be required to (i) file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings or to authorize Mezzanine Borrower or any SPE
Entity to do so or (ii) file an involuntary bankruptcy petition against any
Affiliate. Furthermore, Mezzanine Borrower’s and each SPE Entity’s formation
documents shall expressly state that for so long as the Loan is outstanding,
neither Mezzanine Borrower nor any SPE Entity shall be permitted to (i)
dissolve, liquidate, consolidate, merge or sell all or substantially all of
Mezzanine Borrower’s, Mortgage Borrower’s, or any SPE Entity’s assets other than
in connection with the repayment of the Loan or (ii) engage in any other
business activity and such restrictions shall not be modified or violated for so
long as the Loan is outstanding.

 

5.1.6 Notice of Default. Mezzanine Borrower shall promptly advise Mezzanine
Lender (a) of any event or condition that has or is likely to have a Material
Adverse Effect and (b) of the occurrence of any Event of Default of which
Mezzanine Borrower has knowledge.

 

5.1.7 Cooperate in Legal Proceedings. Mezzanine Borrower shall, and shall cause
each Senior Mezzanine Borrower and Mortgage Borrower to cooperate fully with
Mezzanine Lender with respect to any proceedings before any court, board or
other Governmental Authority which would reasonably be expected to affect in any
material adverse way the rights of Mezzanine Lender hereunder or under any of
the other Mezzanine Loan Documents and, in connection therewith, permit
Mezzanine Lender, at its election, to participate in any such proceedings which
may have a Material Adverse Effect.

 

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

 

5.1.9 Further Assurances; Separate Notes. Mezzanine Borrower shall execute and
acknowledge (or cause to be executed and acknowledged) and deliver to Mezzanine
Lender all documents, and take all actions, reasonably required by Mezzanine
Lender from time to time to confirm the rights created or now or hereafter
intended to be created under this Agreement and the other Mezzanine Loan
Documents and any security interest created or purported to be created
thereunder, to protect and further the validity, priority and enforceability of
this Agreement and the other Mezzanine Loan Documents, to subject to the
Mezzanine Loan Documents any property of Mezzanine Borrower intended by the
terms of any one or more of the Mezzanine Loan Documents to be encumbered by the
Mezzanine Loan Documents, or otherwise carry out the purposes of the Mezzanine

 

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Loan Documents and the transactions contemplated thereunder. Mezzanine Borrower
agrees that it shall, upon request, reasonably cooperate with Mezzanine Lender
in connection with any request by Mezzanine Lender to sever one or more of the
Mezzanine Notes into two (2) or more separate substitute notes in an aggregate
principal amount equal to the Principal Amount and to reapportion the Loan among
such separate substitute notes, including, without limitation, by executing and
delivering to Mezzanine Lender new substitute notes to replace the Mezzanine
Note, amendments to or replacements of existing Mezzanine Loan Documents to
reflect such severance and/or Opinions of Counsel with respect to such
substitute notes, amendments and/or replacements, provided that Mezzanine
Borrower shall bear no costs or expenses in connection therewith (other than
internal administrative costs and expenses of Mezzanine Borrower). Any such
substitute notes may have varying principal amounts and economic terms,
provided, however, that (i) the maturity date of any such substitute note shall
be the same as the scheduled Maturity Date of the Mezzanine Note immediately
prior to the issuance of such substitute notes, (ii) the initial weighted
average LIBOR Margin for the term of the substitute notes shall not exceed the
LIBOR Margin under the Mezzanine Note being substituted immediately prior to the
issuance of such substitute notes; and (iii) the economics of the Loan, shall
not change in a manner which is adverse to Mezzanine Borrower. Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Lender
may apply payment of all sums due under such substitute notes in such order and
priority as Mezzanine Lender shall elect in its sole and absolute discretion.

 

(b) It is acknowledged that the entering of the Loan, the Mortgage Loan, and
each Senior Mezzanine Loan and Junior Mezzanine Loan concurrently is beneficial
to Mezzanine Borrower, Mortgage Borrower, each Senior Mezzanine Borrower, and
each Junior Mezzanine Borrower, and accordingly, Mezzanine Borrower further
agrees that if, in connection with the Securitization, it is determined by the
Rating Agencies that a portion of the Securitization would not receive an
“investment grade” rating unless the principal amount of the Mortgage Loan were
to be decreased and, as a result, the principal amount of the Mortgage Loan is
decreased, then (i) the Mezzanine Borrower shall cooperate (and cause each
Senior Mezzanine Borrower and Mortgage Borrower to cooperate) with Lender’s
“resizing” of the Loan and the Mezzanine Loan and (ii) Lender shall on the date
of the “resizing” of the Loan lend to the Mezzanine Borrower (by way of a
reallocation of the principal amount of the Mortgage Loan and the Loan) such
additional amount equal to the amount of the principal reduction of the Mortgage
Loan provided that each Borrower execute and deliver any and all necessary
amendments or modifications to the Loan Documents (Mortgage), Mezzanine Loan
Documents, Senior Mezzanine Loan Documents, or Junior Mezzanine Loan Documents,
as applicable. In addition, Mezzanine Borrower and Mezzanine Lender agree that
if, in connection with the Securitization, it is determined by the Rating
Agencies that, if the principal amount of the Loan were to be decreased and, as
a result the principal amount of the Mortgage Loan were increased, more
“investment grade” rated securities could be issued, then (i) if “resizing” to
decrease the size of the Mezzanine Loan and increase the size of the Mortgage
Loan is provided for in the Mezzanine Loan Documents, Mezzanine Borrower shall
cooperate (and cause each Senior Mezzanine Borrower and Mortgage Borrower to
cooperate) with Lender’s “resizing” of the Loan, the Mezzanine Loan, and any
Senior

 

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Mezzanine Loan or Junior Mezzanine Loan, and (ii) Lender shall on the date of
the “resizing” of the Loan lend to the Mortgage Borrower (by way of a
reallocation of the principal amount of the Loan and the Mezzanine Loan) an
additional amount equal to the amount of principal reduction of the Loan,
provided that Mortgage Borrower, Mezzanine Borrower, and each Senior Mezzanine
Borrower and Junior Mezzanine Borrower execute and deliver any and all necessary
modifications to the Loan Documents (Mortgage) and Mezzanine Loan Documents. In
connection with the foregoing, Mezzanine Borrower agrees, at Mezzanine Lender’s
sole cost and expense, to execute and deliver such documents and other
agreements reasonably required by Mortgage Lender and/or Mezzanine Lender to
“re-size” the Loan and the Mortgage Loan, including, without limitation, an
amendment to this Agreement, the Mezzanine Note, the Pledge and the other Loan
Documents (Mortgage) and, if the principal amount of the Mortgage Loan is
increased, a fully paid endorsement to the Title Policy reflecting an increase
in the insured amount thereunder. Notwithstanding the foregoing, Mezzanine
Lender agrees that any “resizing” of the Mortgage Loan and the Loan shall not
change the economics of the Mortgage Loan and the Mezzanine Loan shall not
change the economics of the Loan and the Mezzanine Loan taken as a whole in a
manner which is adverse to Borrower and no amendment of any of the Loan
Documents (Mezzanine) in connection with such “resizing” shall (taken as a whole
with the Loan Documents (Mortgage)) increase in any material respect the
obligations or liabilities of, or decrease the rights of, Mezzanine Borrower
other than to a de minimis extent. Mezzanine Borrower shall cause Mortgage
Borrower to pay the title charges and the mortgage and mortgage recording taxes
resulting only from the first “resizing” of the Mortgage Loan and Mezzanine
Loan, with such charges and taxes being the responsibility of Mortgage Lender in
connection with any subsequent “resizings” of the Loan.

 

5.1.10 Business and Operations. Mezzanine Borrower shall continue to and shall
cause each Senior Mezzanine Borrower and Mortgage Borrower to continue to engage
in the businesses presently conducted by each of them as and to the extent the
same are necessary for the ownership, maintenance, management and operation of
the Property and the Collateral, as applicable. Mezzanine Borrower shall and
shall cause each Senior Mezzanine Borrower and Mortgage Borrower to, qualify to
do business and shall remain in good standing under the laws of all applicable
jurisdictions as and to the extent required for the Mortgage Borrower’s
ownership, maintenance, management and operation of the Property and, as
applicable, the Mezzanine Borrower’s ownership of the Collateral.

 

5.1.11 Title to the Collateral. Mezzanine Borrower shall warrant and defend (a)
its title to the Collateral and every part thereof, subject to the Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Lien of the Pledge and this Agreement on the Collateral, subject
to the Liens permitted hereunder (including Permitted Encumbrances), in each
case against the claims of all Persons whomsoever. Mezzanine Borrower shall
reimburse Mezzanine Lender for any losses, costs, damages or expenses (including
reasonable attorneys’ fees and court costs) incurred by Mezzanine Lender if an
interest in the Collateral is claimed by another Person.

 

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5.1.12 Costs of Enforcement. In the event (a) that this Agreement or the Pledge
is foreclosed upon in whole or in part or that by reason of Mezzanine Borrower’s
default hereunder this Agreement or the Pledge is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) of the foreclosure of
any security agreement prior to or subsequent to this Agreement or the Pledge in
which proceeding Mezzanine Lender is made a party, or (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Mezzanine
Borrower or any of its constituent Persons or an assignment by Mezzanine
Borrower or any of its constituent Persons for the benefit of its creditors,
Mezzanine Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all reasonable out-of-pocket costs of collection and defense,
including reasonable attorneys’ fees and costs, incurred by Mezzanine Lender or
Mezzanine Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.

 

5.1.13 Estoppel Statements. Mezzanine Borrower shall, from time to time, upon
thirty (30) days’ prior written request from Mezzanine Lender, execute,
acknowledge and deliver to the Mezzanine Lender (and shall cause each Senior
Mezzanine Borrower and Mortgage Borrower to execute, acknowledge and deliver to
Mezzanine Lender), an Officer’s Certificate, stating that this Agreement and the
other Mezzanine Loan Documents (or as applicable, the Senior Mezzanine Loan
Documents and the Loan Documents (Mortgage)) are unmodified and in full force
and effect (or, if there have been modifications, that this Agreement and the
other Mezzanine Loan Documents or, as applicable, the Senior Mezzanine Loan
Documents or Loan Documents (Mortgage) are in full force and effect as modified
and setting forth such modifications), stating the amount of accrued and unpaid
interest and the outstanding principal amount of the Mezzanine Note (or, as
applicable, the Senior Mezzanine Note or Mortgage Note) and containing such
other information with respect to the Mezzanine Borrower, Senior Mezzanine
Borrower, Mortgage Borrower, the Property, the Loan, the Senior Mezzanine Loan,
and the Loan (Mortgage) as Mezzanine Lender shall reasonably request. Mezzanine
Lender shall, from time to time, but no more often than once annually, upon
thirty (30) days’ prior written request from Mezzanine Borrower, execute,
acknowledge and deliver to Mezzanine Borrower, a certificate signed by an
officer of Mezzanine Lender, stating that this Agreement and the other Loan
Documents are unmodified and in full force and effect (or, if there have been
modifications, that this Agreement and the other Loan Documents are in full
force and effect as modified and setting forth such modifications). The estoppel
certificate from Mezzanine Borrower shall also state either that, to Mezzanine
Borrower knowledge, no Default exists hereunder or, if any Default shall exist
hereunder, specify such Default and the steps being taken to cure such Default
and the estoppel certificate from Mezzanine Lender shall state whether Mezzanine
Lender has delivered notice of a Default or an Event of Default.

 

5.1.14 Loan Proceeds. Mezzanine Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.3.

 

5.1.15 No Joint Assessment. Mezzanine Borrower shall not suffer or permit
(except with respect to the Jointly Assessed Ground Lease Properties) or
initiate the joint assessment of the Property (a) with any other real property
constituting a tax lot separate

 

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from the Property and (b) which constitutes real property 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 such real property
portion of the Property.

 

5.1.16 No Further Encumbrances. Subject to Section 8.3. Mezzanine Borrower shall
do, or cause to be done, all things necessary to keep and protect the Property
and the Collateral and all portions thereof unencumbered from any Liens,
easements or agreements granting rights in or restricting the use or development
of the Property, except for (a) Permitted Encumbrances, (b) Liens permitted
pursuant to the Mezzanine Loan Documents or the Loan Documents (Mortgage), (c)
Liens for Impositions prior to the imposition of any interest, charges or
expenses for the non-payment thereof and (d) the Subleases.

 

5.1.17 Article 8 “Opt In” Language. Each organizational document of Mortgage
Borrower, each Senior Mezzanine Borrower and Mezzanine Borrower shall be
modified to include, the language set forth on Exhibit O.

 

5.1.18 Loan (Mortgage) Covenants. Mezzanine Borrower hereby covenants that it
shall cause Mortgage Borrower, to fully keep, perform and comply with (or cause
to be kept, performed and complied with) each of the covenants set forth in the
Loan Agreement (Mortgage) and the Security Instrument, which are hereby
incorporated by reference as if fully set forth herein, notwithstanding any
waiver or future amendment of such covenants by Mortgage Lender (other than a
Permitted Mortgage Loan Amendment). Mezzanine Borrower acknowledges that the
obligation to comply with such covenants is separate from, and may be enforced
independently from, the obligations of the Mortgage Borrower under the Loan
Documents (Mortgage).

 

(a) Mezzanine Borrower shall not, and shall cause Mortgage Borrower to, (i)
amend or modify (by agreement on the part of the Mortgage Borrower or Mezzanine
Borrower) or (ii) affirmatively permit the modification or amendment of (by
operation of law or otherwise) the Loan Documents (Mortgage) in effect as of the
Closing Date except for those amendments or modifications (“Permitted Mortgage
Loan Amendments”) that are (i) required under the Loan Documents (Mortgage) or
that Mortgage Borrower is required to consent to thereunder pursuant to the
express terms of the Loan Documents (Mortgage), (ii) which do not constitute a
Prohibited Mortgage Loan Amendment, or (iii) are otherwise consented to by
Mezzanine Lender. As used herein, a “Prohibited Mortgage Loan Amendment” shall
mean an amendment or modification to the Loan Documents (Mortgage) that (A) is
reasonably likely to have a Material Adverse Effect, or (B) which (1) increases
the principal amount of the Loan (Mortgage) (exclusive of protective advances),
(2) increases the interest rate payable under the Loan (Mortgage), (3) provides
for the payment of any additional interest, additional fees, increases the
amount of or adds additional reserve payments or increases the amount of or adds
additional escrows, or otherwise increases the amount payable under the Loan
(Mortgage) or other payments required under the Loan, (4) increases the
frequency or payment amount of the periodic principal installments under the
Loan (Mortgage), (5) modifies the recourse carveout obligations under the Loan
Documents (Mortgage) in

 

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a manner which increases or expands recourse liability, (6) modifies the
due-on-sale, due-on-encumbrance, or collateral release provisions of the Loan
Documents (Mortgage), (7) modifies the provisions governing requirements with
respect to the Independent Directors under the Loan Documents (Mortgage) in a
manner materially adverse to Mezzanine Lender, (8) adds material additional
obligations, liabilities or indemnities on the part of Mortgage Borrower,
Guarantor or Mezzanine Borrower, (9) shortens any default cure periods or adds
any additional defaults under the Loan Documents (Mortgage), (10) extends the
maturity date of the Loan (Mortgage) beyond the initially scheduled maturity
date (except pursuant to the extension option in the Loan Documents (Mortgage)
or in connection with any work-out or other surrender, compromise, release,
renewal, or indulgence relating to the Loan (Mortgage)), (11) modifies any
provisions related to the Master Lease in a manner materially adverse to
Mezzanine Lender, (12) waives or modifies any provisions related to the use of
proceeds under the Loan Documents (Mortgage), (13) modifies any provisions of
the Loan Documents (Mortgage) related to the funding of escrows or cash
management or any provision of the Account Agreement (Mortgage) or (14)
materially decreases or materially modifies any insurance requirements under the
Loan Documents (Mortgage). Any amendment or modification to the Loan Documents
(Mortgage) in violation of this Section shall be ineffective as between
Mezzanine Borrower and Mezzanine Lender, and, if not cured by Mezzanine Borrower
within thirty (30) days after written notice from Mezzanine Lender shall
constitute an Event of Default hereunder, unless Mezzanine Lender consents
thereto in writing in its sole discretion.

 

(b) In the event the Loan (Mortgage) shall at any time be repaid, or the Liens
securing the Loan (Mortgage) at any time be released in full, then unless and
until the Mezzanine Note shall have been repaid in full and all obligations of
Mezzanine Borrower to Mezzanine Lender hereunder and under the other Mezzanine
Loan Documents shall have been satisfied, then Mezzanine Borrower shall
nevertheless comply or cause the Mortgage Borrower to comply with each of the
terms and provisions of the Loan Documents (Mortgage) (other than payment of
principal, interest and premium (if any)) and the Loan Documents (Mortgage)
shall nevertheless be deemed to remain in full force and effect as between
Mezzanine Borrower and Mezzanine Lender with Mezzanine Lender being deemed in
such context to possess exclusively all of the rights and remedies of the
Mortgage Lender thereunder including without limitation, all rights of consent
and approval, rights to receive and control the disposition of casualty
insurance proceeds and condemnation awards, and the right to collect rents
through a lockbox and make waterfall distributions (but expressly excluding any
rights and remedies relating to payment of the indebtedness under the Loan
Documents (Mortgage) and evidenced by the Mortgage Note and Mezzanine Borrower
shall nevertheless comply or cause the Mortgage Borrower to comply with each of
the terms and provisions of the Loan Documents (Mortgage) (and any Permitted
Mortgage Loan Amendments or amendment or modification consented to in writing by
Mezzanine Lender) (other than the payment of principal, interest and premium, if
any). Mezzanine Borrower shall, and shall cause Mortgage Borrower to, execute
any and all documents reasonably requested by Mezzanine Lender for the
implementation or furtherance of the foregoing provided that the same shall be
at Mezzanine Lender’s sole cost and expense. Mezzanine Borrower

 

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shall deliver to Mezzanine Lender copies of any and all modifications to the
Loan Documents (Mortgage) within five (5) Business Days after execution thereof.

 

(c) Mezzanine Borrower covenants and agrees to cause Mortgage Borrower to
deliver any and all financial information delivered or required to be delivered
to Mortgage Lender pursuant to the terms of the Loan Documents (Mortgage) to be
delivered simultaneously to Mezzanine Lender.

 

5.1.19 Senior Mezzanine Loan Covenants. Mezzanine Borrower hereby covenants that
it shall cause each Senior Mezzanine Borrower to fully keep, perform and comply
with (or cause to be kept, performed and complied with) each of the covenants
set forth in each Senior Mezzanine Loan Agreement and the Senior Mezzanine Loan
Documents, which are hereby incorporated by reference as if fully set forth
herein, notwithstanding any waiver or future amendment of such covenants by
Senior Mezzanine Lender (other than a Permitted Senior Mezzanine Loan
Amendment). Mezzanine Borrower acknowledges that the obligation to comply with
such covenants is separate from, and may be enforced independently from, the
obligations of the Senior Mezzanine Borrower under the Senior Mezzanine Loan
Documents.

 

(a) Mezzanine Borrower shall not, and shall cause each Senior Mezzanine Borrower
not to, (i) amend or modify (by agreement on the part of each Senior Mezzanine
Borrower) or (ii) affirmatively permit the modification or amendment of (by
operation of law or otherwise) the Senior Mezzanine Loan Documents in effect as
of the Closing Date except for those amendments or modifications or waivers
(“Permitted Senior Mezzanine Loan Amendments”) that are (i) required under the
Senior Mezzanine Loan Documents or that Senior Mezzanine Borrower is required to
consent to thereunder pursuant to the express terms of the Senior Mezzanine Loan
Documents, (ii) which do not constitute a Prohibited Senior Mezzanine Loan
Amendment, or (iii) are otherwise consented to by Mezzanine Lender, in its
reasonable discretion. As used herein, a “Prohibited Senior Mezzanine Loan
Amendment” shall mean an amendment or modification to the Senior Mezzanine Loan
Documents that (A) is reasonably likely to have a Material Adverse Effect, or
(B) which (1) increases the principal amount of a Senior Mezzanine Loan
(exclusive of protective advances), (2) increases the interest rate payable
under the Senior Mezzanine Loan, (3) provides for the payment of any additional
interest, additional fees, increases the amount of or adds additional reserve
payments or increases the amount of or adds additional escrows, or otherwise
increases the amount payable under the Senior Mezzanine Loan, other than
reserves for Debt Service (Second Mezzanine) or other payments required under
the Loan, (4) increases the frequency or payment amount of the periodic
principal installments under the Senior Mezzanine Loan, (5) modifies the
recourse carveout obligations under the Senior Mezzanine Loan Documents in a
manner which increases or expands recourse liability, (6) modifies the
due-on-sale, due-on-encumbrance, or collateral release provisions of the Senior
Mezzanine Loan Documents in a manner materially adverse to Mezzanine Lender, (7)
modifies the provisions governing requirements with respect to the Independent
Directors under the Senior Mezzanine Loan Documents in a manner materially
adverse to Mezzanine Lender, (8) adds material additional obligations,
liabilities or indemnities on the part of the Senior Mezzanine Borrower,
Indemnitor or Mezzanine Borrower,

 

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(9) shortens any default cure periods or adds any additional defaults under the
Senior Mezzanine Loan Documents, (10) extends the maturity date of the Senior
Mezzanine Loan beyond the initially scheduled maturity date (except in
connection with any extension permitted under the Senior Mezzanine Loan
Documents or any work-out or other surrender, compromise, release, renewal, or
indulgence relating to the Senior Mezzanine Loan in a manner materially adverse
to Mezzanine Lender, (11) modifies any provisions related to the Management
Agreement in a manner materially adverse to Mezzanine Lender, (12) waives or
modifies any provisions related to the use of proceeds under the Senior
Mezzanine Loan Documents in a manner materially adverse to Mezzanine Lender,
(13) modifies any provisions of the Senior Mezzanine Loan Documents related to
the funding of escrows or cash management or any provision of the account
agreement related to such Senior Mezzanine Loan in a manner materially adverse
to Mezzanine Lender or (14) decreases or materially modifies any insurance
requirements under the Senior Mezzanine Loan Documents in a manner materially
adverse to Mezzanine Lender. Any amendment or modification to the Senior
Mezzanine Loan Documents in violation of this Section shall be ineffective as
between Mezzanine Borrower and Mezzanine Lender, and, if not cured by Mezzanine
Borrower within thirty (30) days after written notice from Mezzanine Lender
shall constitute an Event of Default hereunder, unless Mezzanine Lender consents
thereto in writing in its reasonable discretion.

 

(b) In the event each Senior Mezzanine Loan shall at any time be repaid, or the
Liens securing the Senior Mezzanine Loan at any time be released in full, then
unless and until the Mezzanine Note shall have been repaid in full and all
obligations of Mezzanine Borrower to Mezzanine Lender hereunder and under the
other Mezzanine Loan Documents shall have been satisfied, then Mezzanine
Borrower and Manager shall nevertheless comply or cause each Senior Mezzanine
Borrower to comply with each of the terms and provisions of the Senior Mezzanine
Loan Documents) (other than payment of principal, interest and premium (if any))
and the Senior Mezzanine Loan Documents shall nevertheless be deemed to remain
in full force and effect as between Mezzanine Borrower and Mezzanine Lender with
Mezzanine Lender being deemed in such context to possess exclusively all of the
rights and remedies of the Senior Mezzanine Lender thereunder including without
limitation, all rights of consent and approval, rights to receive and control
the disposition of casualty insurance proceeds and condemnation awards, and the
right to collect rents through a lockbox and make waterfall distributions (but
expressly excluding any rights and remedies relating to payment of the
indebtedness under the Senior Mezzanine Loan Documents and evidenced by the
Senior Mezzanine Note and Mezzanine Borrower shall nevertheless comply or cause
the Senior Mezzanine Borrower to comply with each of the terms and provisions of
the Senior Mezzanine Loan Documents (and any Permitted Senior Mezzanine Loan
Amendments or amendment or modification consented to in writing by Mezzanine
Lender) (other than the payment of principal, interest and premium, if any).
Mezzanine Borrower shall, and shall cause Senior Mezzanine Borrower to, execute
any and all documents reasonably requested by Mezzanine Lender for the
implementation or furtherance of the foregoing provided that the same shall be
at Mezzanine Lender’s sole cost and expense. Mezzanine Borrower shall deliver to
Mezzanine Lender copies of any and all modifications to the First Mezzanine Loan
Documents within five (5) Business Days after execution thereof.

 

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(c) Mezzanine Borrower covenants and agrees to cause each Senior Mezzanine
Borrower to deliver any and all financial information delivered or required to
be delivered to each Senior Mezzanine Lender pursuant to the terms of the Senior
Mezzanine Loan Documents to be delivered simultaneously to Mezzanine Lender.

 

5.1.20 Intentionally Omitted. Impositions. Mezzanine Borrower shall cause each
Senior Mezzanine Borrower to cause Mortgage Borrower to pay all Impositions, to
timely pay all claims for labor, material or supplies that if unpaid or unbonded
might by law become a lien or charge upon any of its property (including the
Property), and to keep the Property free from any Lien (other than the lien of
the Loan Documents (Mortgage) and the Permitted Encumbrances), and shall in any
event cause the prompt, full and unconditional discharge of all Liens imposed
upon the Property or any portion thereof within forty-five (45) days after
receiving written notice (whether from Mezzanine Lender, the lienholder or any
other Person) of the filing thereof; subject in each case to Mortgage Borrower’s
or Master Lessee’s right to contest the same as permitted in but subject to the
conditions set forth in the Loan Agreement (Mortgage) so long as no Event of
Default has occurred and is continuing. In the event that Mortgage Borrower
elects to commence any contest or similar proceeding with respect to any such
Imposition, Lien or other claim described herein, Mezzanine Borrower shall
provide prompt written notice thereof to Mezzanine Lender together with such
evidence as Mezzanine Lender may reasonably require showing Mortgage Borrower’s
satisfaction of the requirements set forth in Section 7.3 of the Loan Agreement
(Mortgage) to Mortgage Borrower conducting such contest. Notwithstanding the
foregoing, Mezzanine Borrower shall cause each Senior Mezzanine Borrower to
cause Mortgage Borrower promptly to pay any contested Imposition, Lien or claim
and the payment thereof shall not be deferred, if Mezzanine Lender or Mortgage
Borrower may be subject to criminal damages as a result thereof. If such action
or proceeding is terminated or discontinued adversely to Mortgage Borrower, then
Mezzanine Borrower shall cause each Senior Mezzanine Borrower to cause Mortgage
Borrower to deliver to Mezzanine Lender reasonable evidence of payment of such
contested Imposition or Lien.

 

5.2 Negative Covenants. From the Closing Date until payment and performance in
full of all obligations of Mezzanine Borrower under the Mezzanine Loan Documents
or the earlier release of the Lien of this Agreement or the Pledge in accordance
with the terms of this Agreement and the other Mezzanine Loan Documents,
Mezzanine Borrower covenants and agrees with Mezzanine Lender that it will not
do (and will not permit Mortgage Borrower to do), or permit to be done, directly
or indirectly, any of the following:

 

5.2.1 Debt. Without the prior written consent of Mezzanine Lender, such consent
to be made in Mezzanine Lender’s sole determination, incur, create, assume or be
liable with respect to any additional Debt (including, but not limited to, any
secondary or junior financing or any preferred equity investment), or create or
permit to be created or to remain, any Lien on, or conditional sale or other
title retention agreement with respect to the Collateral or any part thereof or
income therefrom, other than the Mezzanine Loan Documents or except as permitted
therein (it being acknowledged and agreed that any

 

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refinancing of such Debt in connection with an assignment and restatement of the
Loan Documents (Mortgage) shall be in violation of this Section 5.2.1).

 

5.2.2 Encumbrances. Other than in connection with or as permitted under the
Mezzanine Loan Documents and the Loan Documents (Mortgage), Mezzanine Borrower,
any Senior Mezzanine Borrower, or Mortgage Borrower shall not (a) create or
incur or suffer to be created or incurred or to exist any lien, security title,
encumbrance, mortgage, pledge, negative pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (b) transfer any of its property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Debt or
performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more than
30 days after the same shall have been incurred any Debt or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; (e)
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without recourse
(other than endorsements of checks and negotiable instruments in the ordinary
course); or (f) incur or maintain any obligation to any holder of Debt which
prohibits the creation or maintenance of any lien securing the Obligations
(First Mezzanine).

 

5.2.3 Engage in Different Business. Engage, directly or indirectly, in any
business other than that of entering into this Agreement and the other Mezzanine
Loan Documents to which Mezzanine Borrower is a party and ownership of the
direct and indirect interests in each Senior Mezzanine Borrower and Mortgage
Borrower and activities related thereto;

 

5.2.4 Make Advances. Make advances or make loans to any Person, or hold any
investments, except as expressly permitted pursuant to the terms of this
Agreement or any other Mezzanine Loan Document;

 

5.2.5 Partition. Partition any Individual Property;

 

5.2.6 Commingle. Commingle its assets with the assets of any of its Affiliates;

 

5.2.7 Guarantee Obligations. Guarantee any obligations of any Person;

 

5.2.8 Transfer Assets. Transfer any asset other than in the ordinary course of
business or Transfer any interest in the Property except in each case (including
in connection with a Release or Substitution) as may be permitted hereby or in
the other Mezzanine Loan Documents;

 

5.2.9 Amend Organizational Documents. Amend or modify any of its organizational
documents without Mezzanine Lender’s consent, other than in connection with any
Transfer permitted pursuant to Article VIII or to reflect any change in capital
accounts, contributions, distributions, allocations or other provisions that do
not and

 

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could not reasonably be expected to have a Material Adverse Effect and provided
that Mezzanine Borrower remains and each SPE Entity each remain a Single Purpose
Entity;

 

5.2.10 Dissolve. Dissolve, wind-up, terminate, liquidate, merge with or
consolidate into another Person, except as expressly permitted pursuant to this
Agreement;

 

5.2.11 Bankruptcy. (i) File a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings, (ii) dissolve, liquidate, consolidate, merge
or sell all or substantially all of Mezzanine Borrower’s assets other than in
connection with the repayment of the Loan or (iii) file or solicit the filing of
an involuntary bankruptcy petition against any Borrower, HoldCo, Master Lessee,
Guarantor or any Affiliate of Mezzanine Borrower or any such Person, without
obtaining the prior consent of all of the directors, members or managers, as
applicable, of Mezzanine Borrower;

 

5.2.12 ERISA. Engage in any activity that would subject Mezzanine Borrower to
material liability under ERISA or qualify it as an “employee benefit plan”
(within the meaning of Section 3(3) of ERISA) to which ERISA applies and
Borrower’s assets do not and will not constitute plan assets within the meaning
of 29 C.F.R. Section 2510.3-101;

 

5.2.13 Distributions. From and after the occurrence and during the continuance
of an Event of Default, make any distributions to or for the benefit of any of
its partners or members or its or their Affiliates;

 

5.2.14 Modify REAs. Without the prior consent of Mezzanine Lender, which shall
not be unreasonably withheld, delayed or conditioned, Mezzanine Borrower shall
not permit Mortgage Borrower to execute any material modifications to the REAs;

 

5.2.15 Modify Mezzanine Account Agreement. Without the prior consent of
Mezzanine Lender, which shall not be unreasonably withheld, delayed or
conditioned, Mezzanine Borrower shall not execute any modification to the
Mezzanine Account Agreement;

 

5.2.16 Zoning Reclassification. Without the prior written consent of Mezzanine
Lender (which in the case of a clause (a) shall not be unreasonably withheld),
permit Mortgage Borrower to (a) initiate or consent to any zoning
reclassification of any portion of the Property, (b) seek any variance under any
existing zoning ordinance that could result in the use of the Property becoming
a non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, or (c) allow any portion of the Property to be used in
any manner that could result in the use of the Property becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation;

 

5.2.17 Change of Principal Place of Business. Change its principal place of
business and chief executive office set forth on the first page of this
Agreement without first giving Mezzanine Lender thirty (30) days’ prior written
notice (but in any event, within the period required pursuant to the UCC) and
there shall have been taken such action, reasonably satisfactory to Mezzanine
Lender, as may be necessary to maintain

 

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fully the effect, perfection and priority of the security interest of Mezzanine
Lender hereunder in the Account Collateral (Second Mezzanine) and the Rate Cap
Collateral at all times;

 

5.2.18 Debt Cancellation. Cancel or otherwise forgive or release any material
claim or debt owed to it by any Person, except for adequate consideration or in
the ordinary course of its business and except for termination of a Sublease as
permitted by Section 8.8;

 

5.2.19 Misapplication of Funds. Distribute any revenue from the Property or any
Proceeds in violation of the provisions of this Agreement, fail to remit amounts
to the Mezzanine Account, as required by Section 3.1.1 or the Pledge,
misappropriate any security deposit or portion thereof or apply the proceeds of
the Loan in violation of Section 2.1.3; or

 

5.2.20 Single-Purpose Entity. Fail to be a Single-Purpose Entity or take or
suffer any action or inaction the result of which would be to cause it or any
SPE Entity to cease to be a Single-Purpose Entity.

 

VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

6.1 Insurance Coverage Requirements.

 

(a) Mezzanine Borrower will cause Mortgage Borrower, at its expense, to procure
and maintain the insurance policies required by the Loan Documents (Mortgage).
Each commercial general liability or umbrella liability policy with respect to
the Property shall name Mezzanine Lender as an additional insured and shall
contain a cross liability/severability endorsement in form and substance
acceptable to Mezzanine Lender.

 

(b) In the event of any loss or damage to the Property, Mezzanine Borrower shall
give prompt written notice to the insurance carrier and Mezzanine Lender.
Mezzanine Lender acknowledges that Mortgage Borrower’s rights to any insurance
proceeds are subject to the terms of the Loan Agreement (Mortgage). Mezzanine
Borrower may not and shall not permit Mortgage Borrower to settle, adjust or
compromise any claim under such insurance policies without the prior written
consent of Mezzanine Lender which shall not be unreasonably withheld, delayed or
denied; provided, further, that Mortgage Borrower may make proof of loss and
adjust and compromise any claim under casualty insurance policies which does not
exceed forty percent (40%) of the Allocated Loan Amount of the affected
Individual Property so long as no Event of Default has occurred and is
continuing. Any proceeds of such claim which are not used to reconstruct or
repair the Property or applied to Mortgage Borrower’s costs in connection
therewith, or applied to the balance of the loan evidenced by the Loan Documents
(Mortgage), shall be deposited into the accounts established pursuant to the
Loan Agreement (Mortgage) to the extent required thereby, or if such deposit is
not required thereunder, then such proceeds shall be paid to Mezzanine Lender
and applied to the payment of the Obligations (Second Mezzanine) whether or not
then due.

 

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(c) In the event that Mortgage Borrower is permitted pursuant to the terms of
the Loan Agreement (Mortgage) to reconstruct, restore or repair the Property
following a casualty to any portion of the Property, Mezzanine Borrower shall
cause Mortgage Borrower to promptly and diligently repair and restore the
Property in the manner and within the time periods required by the Loan
Agreement (Mortgage), the Leases and any other agreements affecting the
Property. In the event that Mortgage Borrower is permitted pursuant to terms of
the Loan Agreement (Mortgage) to elect to not reconstruct, restore or repair the
Property following a casualty to any portion of the Property, Mezzanine Borrower
shall not permit Mortgage Borrower to elect not to reconstruct, restore or
repair the Property without the prior written consent of Mezzanine Lender.

 

(d) Mezzanine Borrower shall comply with all Insurance Requirements and shall
not bring or keep or permit to be brought or kept any article upon any of the
Properties or cause or permit any condition to exist thereon which would be
prohibited by any Insurance Requirement, or would invalidate insurance coverage
required to be maintained by Mortgage Borrower on or with respect to any part of
the Property pursuant to Section 6.1 of the Loan Agreement (Mortgage).

 

(e) Mezzanine Lender hereby confirms and acknowledges that Mezzanine Borrower
has delivered to Mezzanine Lender certificates of insurance with respect to
Master Lessee’s insurance program, in amount, form and content so as to satisfy
the requirements of this Section 6.1 in all material respects as of the Closing
Date other than with respect to Section 6.1.9 of the Loan Agreement (Mortgage),
and that any renewals or modifications that comply with Section 6.1.11 of the
Loan Agreement (Mortgage) and are otherwise not, in substance, materially
different from the approved program in place on the Closing Date shall be deemed
to be in compliance.

 

6.2 Condemnation. In the event that all or any portion of the Property shall be
damaged or taken through condemnation (which term shall include any damage or
taking by any governmental authority, quasi-governmental authority, any party
having the power of condemnation, or any transfer by private sale in lieu
thereof), or any such condemnation shall be threatened, Mezzanine Borrower shall
give prompt written notice to Mezzanine Lender. Mezzanine Lender acknowledges
that Mortgage Borrower’s rights to any condemnation award is subject to the
terms of the Loan Agreement (Mortgage). Notwithstanding the foregoing, Mezzanine
Borrower may not and shall not permit Mortgage Borrower to settle or compromise
any claim, action or proceeding relating to such damage or condemnation without
the prior written consent of Mezzanine Lender, which shall not be unreasonably
withheld, delayed or denied; provided, further, that Mortgage Borrower may
settle, adjust and compromise any such claim, action or proceeding which does
not exceed forty percent (40%) of the Allocated Loan Amount of the affected
Individual Property so long as no Monetary Default or Event of Default has
occurred and is continuing. Any Excess Proceeds shall be paid to Mezzanine
Lender and applied to the payment of the Obligations (Second Mezzanine) whether
or not then due pursuant to Section 2.3.1(b). In the event that Mortgage
Borrower is permitted pursuant to the terms of the Loan Agreement (Mortgage) to
reconstruct, restore or repair the Property following a condemnation of any
portion of the Property, Mezzanine Borrower

 

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shall cause Mortgage Borrower to promptly and diligently repair and restore the
Property in the manner and within the time periods required by the Loan
Agreement (Mortgage), the Leases and any other agreements affecting the
Property. In the event that Mortgage Borrower is permitted pursuant to the terms
of the Loan Agreement (Mortgage) to elect not to reconstruct, restore or repair
the Property following a condemnation of any portion of the Property, Mezzanine
Borrower shall not permit Mortgage Borrower to elect not to reconstruct, restore
or repair the Property without the prior written consent of Mezzanine Lender.

 

6.3 Certificates. Mezzanine Borrower shall deliver (or cause Mortgage Borrower
to deliver) to Mezzanine Lender annually, concurrently with the renewal of the
insurance policies required hereunder, a certificate from Mezzanine Borrower’s
and Mortgage Borrower’s insurance agent stating that the insurance policies
required to be delivered to Mezzanine Lender pursuant to Section 6.1 are
maintained with insurers who comply with the terms of Section 6.1.9 of the Loan
Agreement (Mortgage) (as modified by the final sentence of Section 6.1.12 of the
Loan Agreement (Mortgage)), setting forth a schedule describing all premiums
required to be paid by Mezzanine Borrower or Mortgage Borrower, as applicable,
to maintain the policies of insurance required under Section 6.1 and stating
that either Mezzanine Borrower or Mortgage Borrower, as applicable, has paid
such premiums. Certificates of insurance with respect to all replacement
policies shall be delivered to Mezzanine Lender not less than fifteen (15)
Business Days prior to the expiration date of any of the insurance policies
required to be maintained hereunder which certificates shall bear notations
evidencing payment of applicable premiums. Mezzanine Borrower shall deliver to
Mezzanine Lender originals (or certified copies) of such replacement insurance
policies on or before the earlier to occur of (i) thirty (30) days after the
effective date thereof and (ii) five (5) Business Days after Mezzanine
Borrower’s receipt thereof. If Mezzanine Borrower fails to (i) maintain and
deliver to Mezzanine Lender the certificates of insurance and certified copies
or originals required by this Agreement upon five (5) Business Days’ prior
notice to Mezzanine Borrower, Mezzanine Lender may procure such insurance, and
all costs thereof (and interest thereon at the Default Rate) shall be added to
the Indebtedness. Mezzanine Lender shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to obtain any
insurance, incur any liability for or with respect to the amount of insurance
carried, the form or legal sufficiency of insurance contracts, solvency of
insurance companies, or payment or defense of lawsuits, and Mezzanine Borrower
hereby expressly assumes full responsibility therefor and all liability, if any,
with respect such matters.

 

VII. RESERVED

 

VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS

 

8.1 Restrictions on Transfers. Unless such action is permitted by the provisions
of this Article VIII, Mezzanine Borrower shall not, and shall not permit any
other Person holding any direct or indirect ownership interest in Mortgage
Borrower, any Senior Mezzanine Borrower, any Junior Mezzanine Borrower, HoldCo,
Master Lessee, any SPE Entity or the Property to, except with the prior written
consent of Mezzanine

 

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Lender, (i) Transfer all or any part of the Property, (ii) incur any Debt, other
than Permitted Debt (Second Mezzanine) or Permitted Encumbrances, or (iii)
except in connection with the Mezzanine Loan, permit any Transfer (directly or
indirectly) of any interest in Borrower, any Senior Mezzanine Borrower, any
Junior Mezzanine Borrower, HoldCo, Master Lessee or any SPE Entity.
Notwithstanding the foregoing, the grant of a Lien by Master Lessee on the
Excluded Personal Property (other than Master Lessee’s equity interest in
HoldCo) shall not be prohibited pursuant to this Section 8.1.

 

8.2 Sale of Building Equipments. Mezzanine Borrower may cause Mortgage Borrower
to Transfer or dispose of Building Equipment which is being replaced or which is
no longer necessary in connection with the operation of the Property free from
the Lien of the Security Instrument provided that such Transfer or disposal will
not have a Material Adverse Effect on the value of the Property taken as a
whole, will not materially impair the utility of the Property, and will not
result in a reduction or abatement of, or right of offset against, the Rents
payable under the Master Lease or any Sublease, in either case as a result
thereof, and provided further that any new Building Equipment acquired by
Mortgage Borrower (and not so disposed of) shall be subject to the Lien of the
Security Instrument.

 

8.3 Immaterial Transfers and Easements, Etc.. Mezzanine Borrower may cause
Mortgage Borrower, without the consent of Mezzanine Lender, to (i) make
immaterial Transfers of portions of the Property to Governmental Authorities for
dedication or public use (subject to the provisions of Section 6.2) or, portions
of the Property to third parties for the purpose of erecting and operating
additional structures whose use is integrated with the use of the Property, and
(ii) grant easements, restrictions, covenants, reservations and rights of way in
the ordinary course of business for access, water and sewer lines, telephone and
telegraph lines, electric lines or other utilities or for other similar
purposes, provided that no such Transfer, conveyance or encumbrance set forth in
the foregoing clauses (i) and (ii) shall materially impair the utility and
operation of the Property or have a Material Adverse Effect on the value of the
Property taken as a whole.

 

8.4 Indebtedness. Notwithstanding anything to the contrary contained in Section
8.1, Master Lessee, Guarantor and any other Person holding any direct or
indirect ownership interest in Master Lessee or Guarantor shall be permitted to
incur Debt without the consent of the Mezzanine Lender or a Rating Agency
Confirmation. Without limiting the foregoing, nothing herein or in the other
Mezzanine Loan Documents shall be deemed to prohibit the borrowing and repayment
of the loans being made on the date hereof to Guarantor pursuant to, or
Guarantor’s execution and delivery of, that certain Bridge Loan Agreement,
entered into as of the date hereof, by Guarantor, each lender from time to time
party thereto, Banc of America Bridge LLC, as administrative agent for the
lenders, Deutsche Bank AG Cayman Islands Branch, as joint-administrative agent,
and Banc of America Securities LLC, Deutsche Bank Securities Inc. and Credit
Suisse, as joint lead arrangers and joint bookrunning managers, and Citigroup
Global Markets Inc. as co-arranger (the “Bridge Loan Agreement”) and the other
Loan Documents (as defined in the Bridge Loan Agreement). In addition, holders
of direct and indirect interests in HoldCo, shall, provided that such interests
in HoldCo do not constitute more than 25% of

 

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such holder’s net worth, be permitted to incur Debt without the consent of the
Mezzanine Lender or a Rating Agency Confirmation.

 

8.5 Permitted Equity Transfers.

 

(a) A Transfer (but not a pledge or encumbrance) of an indirect beneficial
interest in Mezzanine Borrower that is otherwise prohibited hereunder shall
nevertheless be permitted without Mezzanine Lender’s prior written consent or a
Rating Agency Confirmation if (i) Mezzanine Lender receives thirty (30) days
prior written notice thereof, (ii) immediately prior to such Transfer, no Event
of Default shall have occurred and be continuing, (iii) no more than forty-nine
percent (49%) of the direct or indirect ownership interests in Mortgage
Borrower, Mezzanine Borrower, any Senior Mezzanine Borrower, any Junior
Mezzanine Borrower, HoldCo, or any SPE Entity is being Transferred (in the
aggregate of all such Transfers), (iv) the transferee is not a Disqualified
Transferee, (v) HoldCo continues to own 100% of the ownership interests in
Mezzanine Borrower and Mezzanine Borrower continues to own 100% of the ownership
interests in Borrower, (vi) Guarantor retains Control of Mortgage Borrower,
Master Lessee, HoldCo, Mezzanine Borrower, and each Junior Mezzanine Borrower,
and Mortgage Borrower and continues to own, directly and/or indirectly, at least
fifty-one percent (51%) of the equity interests in Master Lessee, (vii) Master
Lessee (or its successor by merger or acquisition of all or substantially all of
Master Lessee’s assets) remains the master lessee under the Master Lease, and
(viii) except as otherwise permitted under clause (b) below, no more than
forty-nine percent (49%) of the direct or indirect ownership interests in Master
Lessee or Guarantor is being Transferred (in the aggregate of all such
Transfers).

 

(b) Notwithstanding anything herein to the contrary, the following Transfers
shall not require the prior written consent of Mezzanine Lender:

 

(i) a Transfer of interests in any Sponsor,

 

(ii) a Transfer of interests in Guarantor or Master Lessee as a result of a
merger or a Transfer of all or substantially all of the assets of a direct or
indirect owner of Guarantor or Master Lessee to a Permitted Transferee or
Pre-Approved Transferee and provided Borrower complies with Section 8.5(a) and
(b) (and thereafter Transfers of interests in any such transferee if it is
publicly traded);

 

(iii) a Transfer (but not a pledge or encumbrance in the case of any Transfer of
interests in HoldCo) of any interests in Guarantor, Master Lessee or HoldCo,
provided that subsequent to any such Transfer, more than fifty-one percent (51%)
percent of HoldCo is owned by any one or more of the following:

 

(1) Bain Capital Partners, LLC;

 

(2) Kohlberg Kravis Roberts & Co.;

 

(3) Vornado Realty, L.P.;

 

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(4) a Permitted Transferee;

 

(5) a Pre-Approved Transferee

 

(6) any Person that has been previously approved in writing by Lender and the
Rating Agencies,

 

(7) a transferee described in clause (iv) or (v) below; and

 

(8) an investment fund, limited liability company, limited partnership or
general partnership with committed capital of at least $1,000,000,000 where a
Permitted Fund Manager acts as the general partner, managing partner, managing
member or fund manager and at least 51% of the equity interests in such
Permitted Fund Manager are owned, directly or indirectly, by any of the Persons
listed above; and

 

(9) any successor by merger with respect to, or transferee of all or
substantially all of the assets of, any of the foregoing (each of the foregoing
Persons described in clauses (1) through (8), a “Sponsor”);

 

(iv) a pledge or encumbrance of interests in Guarantor or Master Lessee and any
Transfer of such interests in realization upon such pledge or encumbrance,
provided not less than fifty-one percent (51%) of such transferee is owned by a
Sponsor;

 

(v) a pledge or encumbrance of interests in HoldCo as security for a loan
secured by all or substantially all of the assets of Master Lessee and any
Transfer of such interests in realization upon such pledge or encumbrance;

 

(vi) a pledge or encumbrance of direct or indirect interests in the Person
(“HoldCo Parent”) that owns the direct interests in HoldCo as security for a
loan secured by all or substantially all of the assets of the owner of the
interests in HoldCo Parent (provided that such interests in HoldCo Parent do not
constitute more than 25% of such owner’s net worth) and any Transfer of such
interests in realization upon such pledge or encumbrance, provided such Transfer
does not result in less than fifty-one percent (51%) percent of the direct or
indirect interests in HoldCo being owned by a Sponsor; and

 

(vii) a Transfer of direct or indirect interests in any Person that holds an
indirect interest in HoldCo that is either (A) publicly traded or (B) an
“umbrella partnership” in which a publicly traded REIT is the general partner
(eg, Vornado Realty Trust).

 

(c) Notwithstanding the foregoing, Mezzanine Borrower shall not, and shall not
permit or suffer any person to, pledge, hypothecate, encumber or grant a
security interest in or lien on any direct or, except as set forth in this
Section 8.5, indirect, interest in Mortgage Borrower, Senior Mezzanine Borrower,
Mezzanine Borrower, any Junior Mezzanine Borrower or any SPE Entities.

 

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8.6 Deliveries to Mezzanine Lender. Not less than thirty (30) days prior to (or,
in the case of the transactions described in Section 8.5 (other than clause
(b)(vii)), promptly following) the closing of any transaction that requires
consent of Mezzanine Lender under the provisions of Section 8.1, Mezzanine
Borrower shall deliver to Mezzanine Lender an Officer’s Certificate describing
the proposed transaction and stating that such transaction is permitted by this
Article VIII, together with any appraisal or other documents upon which such
Officer’s Certificate is based. In addition, Mezzanine Borrower shall provide
Lender with copies of executed deeds or other similar closing documents within
ten (10) Business Days after such closing.

 

8.7 Loan Assumption. Provided no Event of Default is then continuing, Mortgage
Borrower shall have the one time right to sell, assign, convey or transfer (but
not mortgage, hypothecate or otherwise encumber or grant a security interest in)
legal or equitable title to all (but not fewer than all) of the Properties only
if after giving effect to the proposed transaction (i) the Properties will be
owned by one or more Single Purpose Entities wholly owned by a Permitted
Transferee or a Pre-approved Transferee which shall have executed and delivered
to Mezzanine Lender an assumption agreement in form and substance acceptable to
Mezzanine Lender. Any such assumption of the Loan shall be conditioned upon,
among other things, (i) the delivery of financial information, including,
without limitation, audited financial statements, for such purchaser and the
direct and indirect owners such purchaser, (ii) the delivery of evidence that
the purchaser is a Single Purpose Entity and is not a Disqualified Transferee,
(iii) the execution and delivery of all documentation reasonably requested by
Mezzanine Lender, (iv) the delivery of Opinions of Counsel requested by
Mezzanine Lender, including, without limitation, a Non-Consolidation Opinion
with respect to the purchaser and other entities identified by Mezzanine Lender
or requested by the Rating Agencies and opinions with respect to the valid
formation, due authority and good standing of the purchaser and any additional
pledgors and the continued enforceability of the Loan Documents (Mezzanine) and
any other matters requested by Mezzanine Lender, (v) the delivery of a mezzanine
endorsement to the Title Policy in form and substance acceptable to Mezzanine
Lender, insuring the lien of the Security Instrument, as assumed, subject only
to the Permitted Encumbrances and (vi) the payment of all of Mezzanine Lender’s
reasonable out-of-pocket fees, costs and expenses, including, without
limitation, reasonable attorneys’ fees and costs, actually incurred by Mezzanine
Lender in connection with such assumption.

 

8.8 Subleases.

 

8.8.1 New Subleases and Sublease Modifications. Mezzanine Borrower represents
and warrants that each Individual Property is currently leased to Master Lessee
pursuant to the Master Lease, and substantially occupied by a Toys ‘R’ Us, a
Babies ‘R’ Us or a related distribution facility, and with respect to the
Individual Properties constituting retail properties, occupied in part by other
subtenants under the applicable Subleases.

 

8.8.2 Leasing Conditions. Except as otherwise provided in this Section 8.8,
Mezzanine Borrower shall not, and shall not permit Master Lessee to (x) enter
into any Sublease (a “New Sublease”) or (y) modify any Sublease (including,
without limitation,

 

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accept a surrender of any portion of the Property subject to a Sublease (unless
otherwise permitted or required by law), allow a reduction in the term of any
Sublease or a reduction in the Rent payable under any Sublease, change any
renewal provisions of any Sublease, materially increase the obligations of the
landlord or materially decrease the obligations of any Tenant) or terminate any
Sublease unless the Tenant under such Lease is in default (any such action
referred to in clauses (y) and (z) being referred to herein as a “Sublease
Modification”) without the prior written consent of Mezzanine Lender which
consent shall not be unreasonably withheld or delayed, provided, however, that
Mezzanine Borrower shall have the right to cause Mortgage Borrower or allow
Master Lessee to terminate a Sublease (x) to replace it with another Sublease,
(y) to use the property formerly subleased for itself as a Toys “R” Us or a
Babies “R” Us or (z) subject to Section 2.3.6 of the Loan Agreement (Mortgage),
in connection with the decision to have the store Go Dark. Any New Sublease or
Sublease Modification that requires Lender’s consent shall be delivered to
Mezzanine Lender for approval not less than ten (10) Business Days prior to the
effective date of such New Sublease or Sublease Modification. If Mezzanine
Lender fails to respond to a request for Lender’s consent pursuant to this
Section 8.8.2 within ten (10) Business Days of Mezzanine Lender’s receipt of
Mezzanine Borrower’s request therefor, Mezzanine Borrower may deliver to
Mezzanine Lender a second request in an envelope or under cover of a letter
marked “URGENT” and including a legend in bold typeface that Mezzanine Lender’s
failure to grant or deny the requested consent within ten (10) Business Days of
the receipt thereof will result in the requested consent being deemed to have
been granted. If Mezzanine Lender fails to respond to such second request within
ten (10) Business Days of its receipt thereof, Mezzanine Lender’s consent shall
be deemed granted. Notwithstanding the foregoing, provided no Event of Default
shall have occurred and be continuing, Mezzanine Borrower may permit Mortgage
Borrower to permit Master Lessee to enter into a New Sublease or Sublease
Modification, without Mezzanine Lender’s prior written consent, that satisfies
each of the following conditions:

 

(a) with respect to a New Sublease or Sublease Modification the premises demised
thereunder is not a Material Sublease that, when taken together with all other
Material Subleases, exceeds the Material Sublease Approval Threshold;

 

(b) the term of such Sublease Modification that modifies the term or New
Sublease, as applicable, does not exceed 120 months, plus up to two (2) 60-month
option terms (or equivalent combination of renewals) provided that such lease,
including the rental rate, is on market terms;

 

(c) the rental rate under such Sublease Modification that modifies the rent or
New Sublease, as applicable, is at least equal to the then prevailing market
rate for the entire term of such lease (except for the option periods as set
forth in the preceding clause (c));

 

(d) “fixed” or “base” rent under such New Sublease or, if the rent is modified,
under such Sublease Modification, as applicable, is at a substantially
consistent or rising level throughout the term of the lease, other than for (x)
market-rate “free rent” periods or (y) tenant improvement and tenant inducements
that exceed current market conditions but

 

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are amortized over a shorter time period than the entire initial term of such
New Sublease or Sublease Modification, as applicable;

 

(e) such New Sublease or Sublease (as Modified by the Sublease Modification), as
applicable, provides that the premises demised thereby cannot be used for any of
the following uses (it being agreed and understood that book stores and “Best
Buy” type operations shall be considered acceptable uses); any pornographic or
obscene purposes, any commercial sex establishment, any pornographic, obscene,
nude or semi-nude performances, modeling, obscene materials, activities or
sexual conduct or any other use that has or could reasonably be expected to have
a Material Adverse Effect;

 

(f) the Tenant under such New Sublease or Sublease Modification, as applicable,
is not an Affiliate of Mortgage Borrower (or, if such Tenant is an Affiliate of
Mortgage Borrower, such Tenant does not have the benefit of the Master Lease
SNDA or any Non-Disturbance Agreement and such New Sublease or Sublease
Modification, as applicable, is by its terms terminable by the Mortgage Lender
upon an Event of Default or transfer of the applicable Individual Property to
Mortgage Lender or its designee upon a foreclosure of the Security Instrument or
deed in lieu thereof) and by the Mezzanine Lender upon an event of default under
the Mezzanine Loan or foreclosure of the related pledge of the ownership
interests in Mortgage Borrower);

 

(g) the New Sublease or Sublease Modification, as applicable, does not prevent
Proceeds from being held and disbursed by Mezzanine Lender in accordance with
the terms hereof;

 

(h) the New Sublease or Sublease Modification, as applicable, shall not entitle
any Tenant to receive and retain Proceeds except those that may be specifically
awarded to it in condemnation proceedings because of the Taking of its trade
fixtures and its leasehold improvements which have not become part of the
Property and such business loss as Tenant may specifically and separately
establish; provided, however, that if the Tenant is responsible for maintaining
casualty insurance on the Property pursuant to the terms of such New Sublease or
Sublease Modification, such Tenant shall be entitled to receive and use the
proceeds of such insurance for restoration of the Property on the same terms and
conditions as Mortgage Borrower may use Proceeds hereunder; and

 

(i) the New Sublease or Sublease Modification, as applicable, does not trigger
any of the rights or obligations set forth on Schedule VI of the Loan Agreement
(Mortgage).

 

8.8.3 Delivery of New Sublease or Sublease Modification. Upon the execution of
any New Sublease or Sublease Modification, as applicable, Mezzanine Borrower
shall cause Mortgage Borrower to deliver to Mezzanine Lender an executed copy of
the Sublease.

 

8.8.4 Security Deposits. All security or other deposits of Tenants of the
Property shall be treated as trust funds and shall not be commingled with any
other funds of Mortgage Borrower, and such deposits shall be deposited, upon
receipt of the same by

 

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Mortgage Borrower in a separate trust account maintained by Mortgage Borrower
expressly for such purpose. Within ten (10) Business Days after written request
by Mezzanine Lender, Mezzanine Borrower shall cause Mortgage Borrower to furnish
to Mezzanine Lender reasonably satisfactory evidence of compliance with this
Section 8.8.4, together with a statement of all lease securities deposited with
Mortgage Borrower by the Tenants and the location and account number of the
account in which such security deposits are held.

 

8.8.5 No Default Under Subleases. Mezzanine Borrower shall cause Mortgage
Borrower or Master Lessee to (i) promptly perform and observe all of the
material terms, covenants and conditions required to be performed and observed
by Mortgage Borrower under the Subleases, if the failure to perform or observe
the same would have a Material Adverse Effect; (ii) exercise, within ten (10)
Business Days after a written request by Mezzanine Lender, any right to request
from the Tenant under any Sublease a certificate with respect to the status
thereof and (iii) not collect any of the Rents, more than one (1) month in
advance (except that Mortgage Borrower may collect such security deposits and
last month’s Rents as are permitted by Legal Requirements and are commercially
reasonable in the prevailing market and collect other charges in accordance with
the terms of each Sublease).

 

IX. INTEREST RATE CAP AGREEMENT.

 

9.1 Interest Rate Cap Agreement (Second Mezzanine). Prior to or
contemporaneously with the Closing Date, Mezzanine Borrower shall have obtained,
and thereafter maintain in effect, the Interest Rate Cap Agreement satisfying
the requirements set forth in the definition of “Interest Rate Cap Agreement “
herein. The notional amount of the Interest Rate Cap Agreement (Second
Mezzanine) may be reduced from time to time (and Lender shall authorize such
reduction) in amounts equal to any mandatory prepayment of the principal of the
Loan made in accordance with Section 5(b) of the Mezzanine Note.

 

9.2 Pledge. As security for the full and punctual payment and performance of the
Obligations (Second Mezzanine) when due (whether upon stated maturity, by
acceleration, early termination or otherwise), Mezzanine Borrower, as pledgor,
hereby pledges, assigns, hypothecates, transfers and delivers to Mezzanine
Lender as collateral and hereby grants to Mezzanine Lender a continuing first
priority lien on and security interest in, to and under all of the following
whether now owned or hereafter acquired and whether now existing or hereafter
arising (the “Rate Cap Collateral”): all of the right, title and interest of
Mezzanine Borrower in and to (i) the Interest Rate Cap Agreement (Second
Mezzanine); (ii) all payments distributions, disbursements or proceeds due,
owing, payable or required to be delivered to Borrower in respect of the
Interest Rate Cap Agreement (Second Mezzanine) or arising out of the Interest
Rate Cap Agreement (Second Mezzanine), whether as contractual obligations,
damages or otherwise; and (iii) all of Mezzanine Borrower’s claims, rights,
powers, privileges, authority, options, security interests, liens and remedies,
if any, under or arising out of the Interest Rate Cap Agreement (Second
Mezzanine), in each case including all accessions and additions to,
substitutions for and replacements, products and proceeds of any or all of the
foregoing.

 

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9.3 Covenants. Mezzanine Borrower shall comply with all of its obligations under
the terms and provisions of the Interest Rate Cap Agreement (Second Mezzanine).
All amounts paid by the Counterparty under the Interest Rate Cap Agreement
(Second Mezzanine) to Mezzanine Borrower or Mezzanine Lender shall be deposited
immediately into the Mezzanine Account pursuant to Section 3.1. Subject to terms
hereof, provided no Event of Default has occurred and is continuing, Mezzanine
Borrower shall be entitled to exercise all rights, powers and privileges of
Mezzanine Borrower under, and to control the prosecution of all claims with
respect to, the Interest Rate Cap Agreement (Second Mezzanine) and the other
Rate Cap Collateral. Mezzanine Borrower shall take all actions reasonably
requested by Mezzanine Lender to enforce Mezzanine Borrower’s rights under the
Interest Rate Cap Agreement (Second Mezzanine) in the event of a default by the
Counterparty thereunder and shall not waive, amend or otherwise modify any of
its rights thereunder.

 

(a) Mezzanine Borrower shall defend Mezzanine Lender’s right, title and interest
in and to the Rate Cap Collateral pledged by Mezzanine Borrower pursuant hereto
or in which it has granted a security interest pursuant hereto against the
claims and demands of all other Persons.

 

(b) In the event of any downgrade, withdrawal or qualification of the rating of
the Counterparty such that it ceases to qualify as an “Approved Counterparty”,
unless the Counterparty shall have posted collateral on terms acceptable to each
Rating Agency, Borrower shall replace the Interest Rate Cap Agreement (Second
Mezzanine) with a Replacement Interest Rate Cap Agreement (Second Mezzanine) not
later than ten (10) Business Days following receipt of notice from Mezzanine
Lender, Servicer or any other Person of such downgrade, withdrawal or
qualification. In the event that the Counterparty is downgraded to A2 or lower
by Moody’s, a Replacement Interest Rate Cap Agreement (Second Mezzanine) shall
be required regardless of the posting of collateral.

 

(c) In the event that Mezzanine Borrower fails to purchase and deliver to
Mezzanine Lender the Interest Rate Cap Agreement (Second Mezzanine) as and when
required hereunder, Mezzanine Lender may upon written notice to Borrower
purchase the Interest Rate Cap Agreement (Second Mezzanine) and the actual cost
incurred by Mezzanine Lender in purchasing the Interest Rate Cap Agreement shall
upon written demand be paid by Mezzanine Borrower to Mezzanine Lender with
interest thereon at the Default Rate from the date such cost was incurred by
Mezzanine Lender and demand made until such cost is paid by Mezzanine Borrower
to Mezzanine Lender.

 

(d) Mezzanine Borrower shall not sell, assign, or otherwise dispose of, or
mortgage, pledge or grant a security interest in, any of the Rate Cap Collateral
or any interest therein, and any sale, assignment, mortgage, pledge or security
interest whatsoever made in violation of this covenant shall be a nullity and of
no force and effect, and upon demand of Mezzanine Lender, shall forthwith be
cancelled or satisfied by an appropriate instrument in writing.

 

(e) Mezzanine Borrower shall not (i) without the prior written consent of
Mezzanine Lender, modify, amend or supplement the terms of the Interest Rate Cap

 

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Agreement (Second Mezzanine), (ii) without the prior written consent of
Mezzanine Lender, except in accordance with the terms of the Interest Rate Cap
Agreement (Second Mezzanine), cause the termination of the Interest Rate Cap
Agreement prior to its stated maturity date, (iii) without the prior written
consent of Mezzanine Lender, except as aforesaid, waive or release any
obligation of the Counterparty (or any successor or substitute party to the
Interest Rate Cap Agreement (Second Mezzanine)) under the Interest Rate Cap
Agreement (Second Mezzanine), (iv) without the prior written consent of
Mezzanine Lender, consent or agree to any act or omission to act on the part of
the Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement (Second Mezzanine)), which, without such consent or agreement, would
constitute a default under the Interest Rate Cap Agreement (Second Mezzanine),
(v) fail to exercise promptly and diligently each and every material right which
it may have under the Interest Rate Cap Agreement (Second Mezzanine), (vi) take
or intentionally omit to take any action or intentionally suffer or permit any
action to be omitted or taken, the taking or omission of which would result in
any right of offset against sums payable under the Interest Rate Cap Agreement
(Second Mezzanine) or any defense by the Counterparty (or any successor or
substitute counterparty to the Interest Rate Cap Agreement (Second Mezzanine))
to payment or (vii) fail to give prompt notice to Mezzanine Lender of any notice
of default given by or to Mezzanine Borrower under or with respect to the
Interest Rate Cap Agreement (Second Mezzanine), together with a complete copy of
such notice.

 

(f) In connection with an Interest Rate Cap Agreement (Second Mezzanine),
Mezzanine Borrower shall obtain and deliver to Mezzanine Lender an Opinion of
Counsel from counsel (which counsel may be in-house counsel for the
Counterparty) for the Counterparty upon which Mezzanine Lender and its
successors and assigns may rely (the “Counterparty Opinion”) under New York law
and, if the Counterparty is a non-U.S. entity, the applicable foreign law in
such form approved by the Mezzanine Lender.

 

9.4 Powers of Mezzanine Borrower Prior to an Event of Default. Subject to the
provisions of Section 9.3, provided no Event of Default has occurred and is
continuing, Mezzanine Borrower shall be entitled to exercise all rights, powers
and privileges of Mezzanine Borrower under, and to control the prosecution of
all claims with respect to, the Interest Rate Cap Agreement (Second Mezzanine)
and the other Rate Cap Collateral.

 

9.5 Representations and Warranties. Mezzanine Borrower hereby covenants with,
and represents and warrants to, Mezzanine Lender as follows:

 

(a) The Interest Rate Cap Agreement (Second Mezzanine) constitutes the legal,
valid and binding obligation of Mezzanine Borrower, enforceable against
Mezzanine Borrower in accordance with its terms, subject only to applicable
bankruptcy, insolvency and similar laws generally affecting the enforcement of
creditors’ rights and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

 

(b) The Rate Cap Collateral is free and clear of all claims or security
interests of every nature whatsoever, except such as are created pursuant to
this Agreement and

 

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the other Mezzanine Loan Documents, and Mezzanine Borrower has the right to
pledge and grant a security interest in the same as herein provided without the
consent of any other Person other than any such consent that has been obtained
and is in full force and effect.

 

(c) The Rate Cap Collateral has been duly and validly pledged hereunder. All
consents and approvals required to be obtained by Borrower for the consummation
of the transactions contemplated by this Agreement have been obtained.

 

(d) Giving effect to the aforesaid grant and assignment to Mezzanine Lender,
Mezzanine Lender has, as of the date of this Agreement, and as to Rate Cap
Collateral acquired from time to time after such date, shall have, a valid, and
upon proper filing, perfected and continuing first priority lien upon and
security interest in the Rate Cap Collateral; provided that no representation or
warranty is made with respect to the perfected status of the security interest
of Mezzanine Lender in the proceeds of Rate Cap Collateral consisting of “cash
proceeds” or “non-cash proceeds” as defined in the UCC except if, and to the
extent, the provisions of Section 9-306 of the UCC shall be complied with.

 

(e) Except for financing statements filed or to be filed in favor of Mezzanine
Lender as secured party, there are no financing statements under the UCC
covering any or all of the Rate Cap Collateral and Mezzanine Borrower shall not,
without the prior written consent of Mezzanine Lender, until payment in full of
all of the Obligations (Second Mezzanine), execute and file in any public
office, any enforceable financing statement or statements covering any or all of
the Rate Cap Collateral, except financing statements filed or to be filed in
favor of Mezzanine Lender as secured party.

 

9.6 Payments. If Mezzanine Borrower at any time shall be entitled to receive any
payments with respect to the Interest Rate Cap Agreement (Second Mezzanine),
such amounts shall, immediately upon becoming payable to Mezzanine Borrower, be
deposited by Counterparty into the Mezzanine Account.

 

9.7 Remedies. Subject to the provisions of the Interest Rate Cap Agreement
(Second Mezzanine), if an Event of Default shall occur and then be continuing:

 

(a) Mezzanine Lender, without obligation to resort to any other security, right
or remedy granted under any other agreement or instrument, shall have the right
to, in addition to all rights, powers and remedies of a secured party pursuant
to the UCC, at any time and from time to time, sell, resell, assign and deliver,
in its sole discretion, any or all of the Rate Cap Collateral (in one or more
parcels and at the same or different times) and all right, title and interest,
claim and demand therein and right of redemption thereof, at public or private
sale, for cash, upon credit or for future delivery, and in connection therewith
Mezzanine Lender may grant options and may impose reasonable conditions such as
requiring any purchaser to represent that any “securities” constituting any part
of the Rate Cap Collateral are being purchased for investment only, Mezzanine
Borrower hereby waiving and releasing any and all equity or right of redemption
to the fullest extent permitted by the UCC or applicable law. If all or any of
the Rate Cap Collateral is

 

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sold by Mezzanine Lender upon credit or for future delivery, Mezzanine Lender
shall not be liable for the failure of the purchaser to purchase or pay for the
same and, in the event of any such failure, Mezzanine Lender may resell such
Rate Cap Collateral. It is expressly agreed that Mezzanine Lender may exercise
its rights with respect to less than all of the Rate Cap Collateral, leaving
unexercised its rights with respect to the remainder of the Rate Cap Collateral,
provided, however, that such partial exercise shall in no way restrict or
jeopardize Mezzanine Lender’s right to exercise its rights with respect to all
or any other portion of the Rate Cap Collateral at a later time or times.

 

(b) Mezzanine Lender may exercise, either by itself or by its nominee or
designee, in the name of Mezzanine Borrower, all of Mezzanine Lender’s rights,
powers and remedies in respect of the Rate Cap Collateral, hereunder and under
law.

 

(c) Mezzanine Borrower hereby irrevocably, in the name of Mezzanine Borrower or
otherwise, authorizes and empowers Mezzanine Lender and assigns and transfers
unto Mezzanine Lender, and constitutes and appoints Mezzanine Lender its true
and lawful attorney-in-fact, and as its agent, irrevocably, with full power of
substitution for Mezzanine Borrower and in the name of Mezzanine Borrower, (i)
to exercise and enforce every right, power, remedy, authority, option and
privilege of Mezzanine Borrower under the Interest Rate Cap Agreement, including
any power to subordinate or modify the Interest Rate Cap Agreement (but not,
unless an Event of Default exists and is continuing, the right to terminate or
cancel the Interest Rate Cap Agreement), or to give any notices, or to take any
action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Mezzanine Lender the rights
and remedies provided for herein, to exercise all of the rights, remedies and
powers granted to Mezzanine Lender in this Agreement, and Mezzanine Borrower
further authorizes and empowers Mezzanine Lender, as Mezzanine Borrower’s
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for Mezzanine Borrower and in the name of Mezzanine Borrower, to give any
authorization, to furnish any information, to make any demands, to execute any
instruments and to take any and all other action on behalf of and in the name of
Mezzanine Borrower which in the opinion of Mezzanine Lender may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest
Rate Cap Agreement, in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by Mezzanine Borrower thereunder or
to enforce any of the rights of Mezzanine Borrower thereunder. These
powers-of-attorney are irrevocable and coupled with an interest, and any similar
or dissimilar powers heretofore given by Mezzanine Borrower in respect of the
Rate Cap Collateral to any other Person are hereby revoked.

 

(d) Mezzanine Lender may, without notice to, or assent by, Mezzanine Borrower or
any other Person (to the extent permitted by law), but without affecting any of
the Obligations (Second Mezzanine), in the name of Mezzanine Borrower or in the
name of Mezzanine Lender, notify the Counterparty, or if applicable, any other
counterparty to the Interest Rate Cap Agreement, to make payment and performance
directly to Mezzanine Lender; extend the time of payment and performance of,
compromise or settle for cash, credit or otherwise, and upon any terms and
conditions, any obligations owing to Mezzanine Borrower, or claims of Mezzanine
Borrower, under

 

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the Interest Rate Cap Agreement; file any claims, commence, maintain or
discontinue any actions, suits or other proceedings deemed by Mezzanine Lender
necessary or advisable for the purpose of collecting upon or enforcing the
Interest Rate Cap Agreement; and execute any instrument and do all other things
deemed necessary and proper by Mezzanine Lender to protect and preserve and
realize upon the Rate Cap Collateral and the other rights contemplated hereby.

 

(e) Pursuant to the powers-of-attorney provided for above, Mezzanine Lender may
take any action and exercise and execute any instrument which it may deem
necessary or advisable to accomplish the purposes hereof; provided, however,
that Mezzanine Lender shall not be permitted to take any action pursuant to said
power-of-attorney that would conflict with any limitation on Mezzanine Lender’s
rights with respect to the Rate Cap Collateral. Without limiting the generality
of the foregoing, Mezzanine Lender, after the occurrence of an Event of Default,
shall have the right and power to receive, endorse and collect all checks and
other orders for the payment of money made payable to Mezzanine Borrower
representing: (i) any payment of obligations owed pursuant to the Interest Rate
Cap Agreement, (ii) interest accruing on any of the Rate Cap Collateral or (iii)
any other payment or distribution payable in respect of the Rate Cap Collateral
or any part thereof, and for and in the name, place and stead of Mezzanine
Borrower, to execute endorsements, assignments or other instruments of
conveyance or transfer in respect of any property which is or may become a part
of the Rate Cap Collateral hereunder.

 

(f) Mezzanine Lender may exercise all of the rights and remedies of a secured
party under the UCC.

 

(g) Without limiting any other provision of this Agreement or any of Mezzanine
Borrower’s rights hereunder, and without waiving or releasing Mezzanine Borrower
from any obligation or default hereunder, Mezzanine Lender shall have the right,
but not the obligation, to perform any act or take any appropriate action, as
it, in its reasonable judgment, may deem necessary to protect the security of
this Agreement, to cure such Event of Default or to cause any term, covenant,
condition or obligation required under this Agreement or the Interest Rate Cap
Agreement to be performed or observed by Mezzanine Borrower to be promptly
performed or observed on behalf of Mezzanine Borrower. All amounts advanced by,
or on behalf of, Mezzanine Lender in exercising its rights under this Section
9.7(g) (including, but not limited to, reasonable legal expenses and
disbursements incurred in connection therewith), together with interest thereon
at the Default Rate from the date of each such advance, shall be payable by
Mezzanine Borrower to Mezzanine Lender upon demand and shall be secured by this
Agreement.

 

9.8 Sales of Rate Cap Collateral. No demand, advertisement or notice, all of
which are, to the fullest extent permitted by law, hereby expressly waived by
Mezzanine Borrower, shall be required in connection with any sale or other
disposition of all or any part of the Rate Cap Collateral following and during
the continuance of an Event of Default, except that Mezzanine Lender shall give
Mezzanine Borrower at least thirty (30) Business Days’ prior written notice of
the time and place of any public sale or of the time

 

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when and the place where any private sale or other disposition is to be made,
which notice Mezzanine Borrower hereby agrees is reasonable, all other demands,
advertisements and notices being hereby waived. To the extent permitted by law,
Mezzanine Lender shall not be obligated to make any sale of the Rate Cap
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale may have been given, and Mezzanine Lender may without notice or
publication adjourn any public or private sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of the Rate Cap Collateral of a type
customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Mezzanine Lender
(or its nominee or designee) may purchase any or all of the Rate Cap Collateral
being sold, free and discharged from any trusts, claims, equity or right of
redemption of Mezzanine Borrower, all of which are hereby waived and released to
the extent permitted by law, and may make payment therefor by credit against any
of the Obligations (Second Mezzanine) in lieu of cash or any other obligations.
In the case of all sales of the Rate Cap Collateral, public or private,
Mezzanine Borrower shall pay all reasonable out-of-pocket costs and expenses of
every kind for sale or delivery, including brokers’ and attorneys’ fees and
disbursements and any tax imposed thereon. However, the proceeds of sale of Rate
Cap Collateral shall be available to cover such costs and expenses, and, after
deducting such costs and expenses from the proceeds of sale, Mezzanine Lender
shall apply any residue to the payment of the Obligations (Second Mezzanine) in
the order of priority as set forth in Section 11 of the Security Instrument.

 

9.9 Public Sales Not Possible. Mezzanine Borrower acknowledges that the terms of
the Interest Rate Cap Agreement (Second Mezzanine) may prohibit public sales,
that the Rate Cap Collateral may not be of the type appropriately sold at public
sales, and that such sales may be prohibited by law. As a result, Borrower
agrees that private sales of the Rate Cap Collateral shall not be deemed to have
been made in a commercially unreasonably manner by mere virtue of having been
made privately.

 

9.10 Receipt of Sale Proceeds. Upon any sale of the Rate Cap Collateral by
Mezzanine Lender hereunder (whether by virtue of the power of sale herein
granted, pursuant to judicial process or otherwise), the receipt by Mezzanine
Lender or the officer making the sale of the proceeds of such sale shall be a
sufficient discharge to the purchaser or purchasers of the Rate Cap Collateral
so sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Mezzanine Lender or
such officer or be answerable in any way for the misapplication or
non-application thereof.

 

9.11 Replacement Interest Rate Cap Agreement. If, in connection with Mezzanine
Borrower’s exercise of any extension option pursuant to Section 5 of the
Mezzanine Note, Mezzanine Borrower delivers a Replacement Interest Rate Cap
Agreement (Second Mezzanine), all the provisions of this Article IX applicable
to the Interest Rate Cap Agreement (Second Mezzanine) delivered on the Closing
Date shall be applicable to the Replacement Interest Rate Cap Agreement (Second
Mezzanine).

 

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X. RESERVED.

 

XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION

 

11.1 Books and Records. Mezzanine Borrower shall cause Mortgage Borrower to keep
and maintain on a fiscal year basis proper books and records separate from any
other Person, in which accurate and complete entries shall be made of all
dealings or transactions of or in relation to the Mortgage Note, the Mezzanine
Note, the Property and the business and affairs of Borrower and Mezzanine
Borrower relating to the Property which shall reflect all items of income and
expense in connection with the operation of the Property and in connection with
any services, equipment or furnishings provided in connection with the operation
of the Property, in accordance with GAAP. Subject to Section 11.3, Mezzanine
Lender and its authorized representatives shall have the right at reasonable
times and upon reasonable notice to examine the books and records of Mortgage
Borrower and Mezzanine Borrower relating to the operation of the Property and to
make such copies or extracts thereof as Mezzanine Lender may reasonably require.

 

11.2 Financial Statements.

 

11.2.1 Monthly Reports. Commencing in January 2006 (or, in the case of sales
reports, commencing October 2005), not later than thirty (30) days following the
end of each calendar month, Mezzanine Borrower shall cause Mortgage Borrower to
cause Master Lessee, pursuant to the Master Lease, to deliver to Mezzanine
Lender monthly sales reports in respect of the Property for such month, for the
corresponding month of the previous Fiscal Year and for the year to date, and
financial statements, internally prepared on an accrual basis for such month,
reporting Portfolio Four-Wall EBITDAR as of the end of such month, for the
corresponding month of the previous Fiscal Year and for the Fiscal Year to date
and a comparison of the year to date results with (i) the results for the same
period of the previous year, (ii) the results that had been projected by
Mezzanine Borrower, Mortgage Borrower and Master Lessee for such period and
(iii) the Annual Budget for such period and the Fiscal Year, and a calculation
of the DSCR, LTV Ratio, Master Lease Variable Additional Rent and Master Lease
Recurrent Additional Rent for such period. Such statements for each month shall
be accompanied by an Officer’s Certificate (or in the case of the sales reports
a Master Lessee Officer’s Certificate) certifying to the best of the signer’s
knowledge, (A) that such statements fairly represent the financial condition and
results of operations of Mezzanine Borrower, Mortgage Borrower and Master
Lessee, as applicable, (B) that as of the date of such Officer’s Certificate, no
Event of Default exists under this Agreement, the Notes or any other Loan
Document or, if so, specifying the nature and status of each such Event of
Default and the action then being taken by Mezzanine Borrower, Mortgage Borrower
or proposed to be taken to remedy such Event of Default and (C) that as of the
date of each Officer’s Certificate, no litigation exists involving Mezzanine
Borrower, Mortgage Borrower, Master Lessee or the Property in which the amount
involved is $2,000,000 (in the aggregate) or more or in which all or
substantially all of the potential liability is not covered by insurance, or, if
so, specifying such litigation and the actions being taking in relation thereto
and (D) the amount by which actual operating expenses were greater than

 

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or less than the operating expenses anticipated in the applicable Annual Budget.
Such financial statements shall contain such other information as shall be
reasonably requested by Mezzanine Lender for purposes of calculations to be made
by Mezzanine Lender pursuant to the terms hereof. Notwithstanding the foregoing,
Mezzanine Borrower shall cause Mortgage Borrower to deliver promptly to
Mezzanine Lender reports detailing any non recurring charges of Mezzanine
Mortgage Borrower or Master Lessee including, among other things, any charges
assessed under any Operation Agreement. Sales reports and Portfolio Four-Wall
EBITDAR shall each be prepared on an aggregate basis for all of the Individual
Properties.

 

11.2.2 Quarterly Reports. Commencing not later than forty-five (45) days
following the end of each Fiscal Quarter (commencing with the Fiscal Quarter
ending in January 2006), Mezzanine Borrower shall cause Mortgage Borrower to
cause Master Lessee pursuant to the Master Lease, to deliver to Mezzanine Lender
quarterly sales reports in respect of the Property and unaudited financial
statements, internally prepared on an accrual basis, reporting Portfolio
Four-Wall EBITDAR as of the end of such Fiscal Quarter and for the corresponding
Fiscal Quarter of the previous year, including a statement of net operating
income for the year to date and a statement of revenues and expenses for such
Fiscal Quarter, and a comparison of the year to date results with (i) the
results for the same period of the previous year, (ii) the results that had been
projected by Mortgage Borrower and Master Lessee for such period and (iii) the
Annual Budget for such period and the Fiscal Year, and a calculation of the
DSCR, LTV Ratio, Master Lease Variable Additional Rent and Master Lease
Recurrent Additional Rent for such period. Such statements for each Fiscal
Quarter shall be accompanied by an Officer’s Certificate (or in the case of the
sales reports a Master Lessee Officer’s Certificate) certifying to the best of
the signer’s knowledge, (A) that such statements fairly represent the financial
condition and results of operations of Mortgage Borrower and Master Lessee, (B)
that as of the date of such Officer’s Certificate, no Event of Default exists
under this Agreement, the Mezzanine Note or any other Mezzanine Loan Document or
Loan Document (Mortgage) or, if so, specifying the nature and status of each
such Event of Default and the action then being taken by Mortgage Borrower or
proposed to be taken to remedy such Event of Default, (C) that as of the date of
each Officer’s Certificate, no litigation exists involving Mezzanine Borrower,
Master Lease or the Property in which the amount involved is $2,000,000 (in the
aggregate) or more or in which all or substantially all of the potential
liability is not covered by insurance, or, if so, specifying such litigation and
the actions being taking in relation thereto and (D) the amount by which actual
operating expenses were greater than or less than the operating expenses
anticipated in the applicable Annual Budget. Such financial statements shall
contain such other information as shall be reasonably requested by Mezzanine
Lender for purposes of calculations to be made by Mezzanine Lender pursuant to
the terms hereof.

 

11.2.3 Annual Reports. Concurrently with the public filings of any financial
statements of Mortgage Borrower and in any event not later than one-hundred
twenty (120) days after the end of each Fiscal Year of Mortgage Borrower’s
operations (commencing with the Fiscal Year ending in January 2006), Mezzanine
Borrower shall cause Mortgage Borrower to cause Master Lessee, pursuant to the
Master Lease, to deliver to Mezzanine Lender annual sales reports in respect of
the Property, audited

 

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financial statements for both Mortgage Borrower and audited financial statements
for Master Lessee certified by an Independent Accountant in accordance with
GAAP, which shall contain unaudited schedules as follows: a statement of
Mortgage Borrower’s net income for the Fiscal Year and for the fourth Fiscal
Quarter thereof and a statement of Mortgage Borrower’s revenues and expenses for
such year, and stating in comparative form the figures for the previous fiscal
year, and a calculation of the DSCR, LTV Ratio, Master Lease Variable Additional
Rent and Master Lease Recurrent Additional Rent for such period and copies of
all federal income tax returns to be filed. Such annual financial statements
shall also be accompanied by an Officer’s Certificate (or in the case of the
sales reports a Master Lessee Officer’s Certificate) in the form required
pursuant to Section 11.2.1.

 

11.2.4 Disclosure Restrictions. Notwithstanding anything to the contrary
contained in this Article XI, unless such information is otherwise disclosed
publicly by Mezzanine Borrower, Mezzanine Borrower shall not be required to
deliver financial information hereunder to Mezzanine Lender to the limited
extent and only during any such period that any applicable federal or state
securities laws or regulations promulgated thereunder (a) expressly prohibit
such delivery or (b) permit such delivery to be made to Mezzanine Lender only
when also disclosed publicly.

 

11.2.5 Capital Expenditures Summaries. Without duplication of any other
provision of this Agreement or any other Loan Documents, Mezzanine Borrower
shall, or shall cause Mortgage Borrower, to cause Master Lessee to, within
ninety (90) days after the end of each calendar year during the term of the
Note, to deliver to Mezzanine Lender an annual summary of any and all capital
expenditures made at the Property during the prior twelve (12) month period.

 

11.2.6 Master Lease. Without duplication of any other provision of this
Agreement or any other Loan Documents, Mezzanine Borrower shall cause Mortgage
Borrower, to deliver to Mezzanine Lender, within ten (10) Business Days of the
receipt thereof by Mortgage Borrower, a copy of all reports prepared by Master
Lessee pursuant to the Master Lease, including, without limitation, the Annual
Budget and any inspection reports.

 

11.2.7 Annual Budget; Operating Agreement.

 

Mezzanine Borrower shall or shall cause Mortgage Borrower to cause Master Lessee
to deliver to Mezzanine Lender the Annual Budget for Mezzanine Lender’s review,
but not approval, not more than ninety (90) days after the end of each Fiscal
Year. Any proposed modifications to such Annual Budget shall be delivered to
Mezzanine Lender for its review, but not approval. Mezzanine Borrower shall or
shall cause Mortgage Borrower to cause Master Lessee to deliver to Mezzanine
Lender the annual budget and any modifications thereto under any Operating
Agreement for Mezzanine Lender’s review, but not approval, prior to Mortgage
Borrower’s or Master Lessee’s approval of any such annual budget or
modification. Notwithstanding the foregoing, upon the occurrence and during the
continuation of an Event of Default and if there is a Master Lease Tenant
Default, Mezzanine Lender shall have the right to exercise

 

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any right of approval that Borrower may have to approve the annual budgets and
any amendments thereto under any Operating Agreements subject to any constraints
in the Operating Agreement in question, in its sole and absolute discretion.

 

11.2.8 Other Information.

 

Mezzanine Borrower shall cause Mortgage Borrower to, promptly after written
request by Mezzanine Lender or, if a Securitization shall have occurred, the
Rating Agencies, furnish or cause to be furnished to Mezzanine Lender, in such
manner and in such detail as may be reasonably requested by Mezzanine Lender,
such reasonable additional information as may be reasonably requested with
respect to the Property, Mortgage Borrower, Master Lessee or Guarantor.

 

11.3 Proprietary Information.

 

(a) The Mezzanine Lender shall keep confidential all sales reports and any other
proprietary information delivered to Mezzanine Lender pursuant to this Agreement
(provided any such other proprietary information is clearly marked by Mortgage
Borrower as confidential) (collectively, “Proprietary Information”), including
specifically, but not limited to, any financial information provided pursuant to
this Article XI and any information provided in connection with a securitization
pursuant to Article XIV. Notwithstanding the foregoing, Mezzanine Lender shall
be permitted to freely deliver Proprietary Information to Rating Agencies,
Servicer and securitization trustees, to prospective participants and purchasers
of the Mortgage Loan and interests therein and to prospective holders of
securities backed by the Mortgage Loan, and to its and their respective agents
and representatives provided that Mezzanine Lender shall inform such parties of
the confidential nature of such information.

 

(b) Notwithstanding anything to the contrary contained herein, Mezzanine
Borrower shall not cause Mortgage Borrower to identify any specific property to
which any Proprietary Information relates (“Asset-Specific Proprietary
Information”) (and shall not be required to permit inspection property-specific
information contained in its books and records) unless requested by holders or
prospective holders of (a) the Mezzanine Loan or any interest therein or (b) the
unrated or lower-rated securities backed by the Mortgage Loan (collectively,
“Requesting Parties”). Mezzanine Lender shall be permitted to deliver
Asset-Specific Proprietary Information to Requesting Parties that request such
information (and such Requesting Parties shall be permitted to inspect
property-specific information contained in Mezzanine Borrower’s or Mortgage
Borrower’s books and records), provided that each such Person (i) executes a
commercially reasonable confidentiality agreement with respect to such
information for the benefit of Mezzanine Borrower, Mortgage Borrower, and Master
Lessee and (ii) is not a business competitor of Mortgage Borrower, Mezzanine
Borrower, Master Lessee or any Sponsor.

 

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XII. RESERVED

 

XIII. ENVIRONMENTAL MATTERS.

 

13.1 Representations. Mezzanine Borrower hereby represents and warrants that
except as set forth in the environmental reports and studies delivered to
Mezzanine Lender (the “Environmental Reports”), (i) Mezzanine Borrower, Senior
Mezzanine Borrower, and Mortgage Borrower has not engaged in or knowingly
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials on, under, in or about
the Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) to
Mezzanine Borrower’s knowledge, no tenant, occupant or user of the Property, or
any other Person, has engaged in or permitted any operations or activities upon,
or any use or occupancy of the Property, or any portion thereof, for the purpose
of or in any material way involving the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
any Hazardous Materials on, in or about the Property, or transported any
Hazardous Materials to, from or across the Property, except in all cases in
material compliance with Environmental Laws and only in the course of legitimate
business operations at the Property; (iii) no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the
Property except in material compliance with Environmental Laws; (iv) to
Mezzanine Borrower’s knowledge, no Hazardous Materials have migrated from the
Property upon or beneath other properties which would reasonably be expected to
result in material liability for Mezzanine Borrower, any Senior Mezzanine
Borrower or Mortgage Borrower; and (v) to Mezzanine Borrower’s knowledge, no
Hazardous Materials have migrated or threaten to migrate from other properties
upon, about or beneath the Property which would reasonably be expected to result
in material liability for Mezzanine Borrower, any Senior Mezzanine Borrower or
Mortgage Borrower.

 

13.2 Covenants.

 

13.2.1 Compliance with Environmental Laws. Subject to Mortgage Borrower’s right
to contest under Section 7.3 of the Loan Agreement (Mortgage), Mezzanine
Borrower covenants and agrees with Mezzanine Lender that it shall comply and
shall cause each Senior Mezzanine Borrower and Mortgage Borrower to comply in
all material respects with all Environmental Laws. If at any time prior to the
repayment in full of the Obligations (Second Mezzanine), a Governmental
Authority having jurisdiction over the Property requires remedial action to
correct the presence of Hazardous Materials in, around, or under the Property
(an “Environmental Event”), Mezzanine Borrower shall deliver prompt notice of
the occurrence of such Environmental Event to Mezzanine Lender. Within thirty
(30) days after Mezzanine Borrower has knowledge of the occurrence of an
Environmental Event, Mezzanine Borrower shall deliver to Mezzanine Lender an
Officer’s Certificate (an “Environmental Certificate”) explaining the
Environmental Event in reasonable detail and setting forth the proposed remedial
action,

 

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if any. Mezzanine Borrower shall promptly provide Mezzanine Lender with copies
of all notices which allege or identify any actual or potential violation or
noncompliance received by or prepared by or for Mezzanine Borrower in connection
with any Environmental Law. For purposes of this paragraph, the term “notice”
shall mean any summons, citation, directive, order, claim, pleading, letter,
application, filing, report, findings, declarations or other materials pertinent
to compliance of the Property and Mezzanine Borrower with such Environmental
Laws. If the Pledge is foreclosed, Mezzanine Borrower shall cause Mortgage
Borrower to deliver the Property in compliance with all applicable Environmental
Laws.

 

13.3 Environmental Reports. Upon the occurrence and during the continuance of an
Environmental Event with respect to the Property or any Event of Default,
Mezzanine Lender shall have the right to have its consultants perform an
environmental audit of the Property. Such audit shall be conducted by an
environmental consultant chosen by Mezzanine Lender and may include a visual
survey, a record review, an area reconnaissance assessing the presence of
hazardous or toxic waste or substances, PCBs or storage tanks at the Property,
an asbestos survey of the Property, which may include random sampling of the
Improvements and air quality testing, and such further site assessments as
Mezzanine Lender may reasonably require due to the results obtained from the
foregoing. Mezzanine Borrower grants (and shall cause each Senior Mezzanine
Borrower to cause Mortgage Borrower to grant) to Mezzanine Lender, its agents,
consultants and contractors the right to enter the Property as reasonable or
appropriate for the circumstances for the purposes of performing such studies
and the reasonable cost of such studies shall be due and payable by Mezzanine
Borrower to Mezzanine Lender upon demand and shall be secured by the Lien of
this Agreement and the Pledge. Mezzanine Lender shall not unreasonably interfere
with (and shall cause each Senior Mezzanine Borrower to cause Mortgage Borrower
not to unreasonably interfere with), and Mezzanine Lender shall direct the
environmental consultant to use its commercially reasonable efforts not to
hinder, Mortgage Borrower’s, Master Lessee’s, any Tenant’s, or other occupant’s
upon the Property when conducting such audit, sampling or inspections. By
undertaking any of the measures identified in and pursuant to this Section 13.3,
Mezzanine Lender shall not be deemed to be exercising any control over the
operations of Mezzanine Borrower or Mortgage Borrower or the handling of any
environmental matter or hazardous wastes or substances of Mezzanine Borrower or
Mortgage Borrower for purposes of incurring or being subject to liability
therefor.

 

13.4 Environmental Indemnification. Mezzanine Borrower shall protect, indemnify,
save, defend, and hold harmless the Indemnified Parties from and against any and
all liability, loss, damage, actions, causes of action, costs or out-of-pocket
expenses whatsoever (including reasonable attorneys’ fees and expenses) and any
and all claims, suits and judgments which any Indemnified Party may suffer, as a
result of or with respect to: (a) any Environmental Claim relating to or arising
from the Property; (b) the violation of any Environmental Law in connection with
the Property; (c) any release, spill, or the presence of any Hazardous Materials
affecting the Property; and (d) the presence at, in, on or under, or the
release, escape, seepage, leakage, discharge or migration at or from, the
Property of any Hazardous Materials, whether or not such condition was known or
unknown to Mezzanine Borrower; provided that, in each case,

 

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Mezzanine Borrower shall be relieved of its obligation under this subsection if
any of the matters referred to in clauses (a) through (d) above did not occur
(but need not have been discovered) prior to the foreclosure of the Pledge or
transfer in lieu thereof. If any such action or other proceeding shall be
brought against Mezzanine Lender, upon written notice from Mezzanine Borrower to
Mezzanine Lender (given reasonably promptly following Mezzanine Lender’s notice
to Mezzanine Borrower of such action or proceeding), Mezzanine Borrower shall be
entitled to assume the defense thereof, at Mezzanine Borrower’s expense, with
counsel reasonably acceptable to Mezzanine Lender; provided, however, Mezzanine
Lender may, at its own expense, retain separate counsel to participate in such
defense, but such participation shall not be deemed to give Mezzanine Lender a
right to control such defense, which right Mezzanine Borrower expressly retains.
Notwithstanding the foregoing, each Indemnified Party shall have the right to
employ separate counsel at Mezzanine Borrower’s expense if, in the reasonable
opinion of legal counsel, a conflict or potential conflict exists between the
Indemnified Party and Mezzanine Borrower that would make such separate
representation advisable. Mezzanine Borrower shall have no obligation to
indemnify an Indemnified Party for damage or loss resulting from any Indemnified
Party’s gross negligence or willful misconduct.

 

13.5 Recourse Nature of Certain Indemnifications. Notwithstanding anything to
the contrary provided in this Agreement or in any other Mezzanine Loan Document,
the indemnification provided in Section 13.4 shall be fully recourse to
Mezzanine Borrower and shall be independent of, and shall survive, the discharge
of the Indebtedness, the release of the Liens created by this Agreement and the
Pledge, and/or the conveyance of title to the Collateral to Mezzanine Lender or
any purchaser or designee in connection with a foreclosure of this Agreement and
the Pledge or conveyance in lieu of foreclosure.

 

XIV.  ASSIGNMENTS AND PARTICIPATIONS.

 

14.1 Assignment and Acceptance. Mezzanine Lender may assign to one or more
Persons all or a portion of its rights and obligations under this Agreement and
the other Mezzanine Loan Documents (including, without limitation, all or a
portion of one or more of the Mezzanine Notes); provided that the parties to
each such assignment shall execute and deliver to Mezzanine Lender, for its
acceptance and recording in the Register (as hereinafter defined), an Assignment
and Acceptance. In addition, Mezzanine Lender may participate to one or more
Persons all or any portion of its rights and obligations under this Agreement
and the other Mezzanine Loan Documents (including without limitation, all or a
portion of one or more of the Mezzanine Notes) utilizing such documentation to
evidence such participation and the parties’ respective rights thereunder as
Mezzanine Lender, in its sole discretion, shall elect.

 

14.2 Effect of Assignment and Acceptance. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of Mezzanine Lender, as the case may

 

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be, hereunder and such assignee shall be deemed to have assumed such rights and
obligations, and (ii) Mezzanine Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement and the other Mezzanine Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of Mezzanine
Lender’s rights and obligations under this Agreement and the other Mezzanine
Loan Documents, Mezzanine Lender shall cease to be a party hereto) accruing from
and after the effective date of the Assignment and Acceptance, except with
respect to (A) any payments made by Mezzanine Borrower to Mezzanine Lender
pursuant to the terms of the Mezzanine Loan Documents after the effective date
of the Assignment and Acceptance and (B) any letter of credit, cash deposit or
other deposits or security (other than the Liens of this Agreement and the
Pledge and the other Mezzanine Loan Documents) delivered to or for the benefit
of or deposited with German American Capital Corporation, on behalf of the
holders of the Mezzanine Notes, as Mezzanine Lender, for which German American
Capital Corporation, as Mezzanine Lender, on behalf of the holders of the
Mezzanine Notes, shall remain responsible for the proper disposition thereof
until such items are delivered to a party who is qualified as an Approved Bank
and agrees to hold the same in accordance with the terms and provisions of the
agreement pursuant to which such items were deposited.

 

14.3 Content. By executing and delivering an Assignment and Acceptance,
Mezzanine Lender and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, Mezzanine Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Mezzanine Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Mezzanine Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (ii) Mezzanine Lender makes no representation or warranty and assumes
no responsibility with respect to the financial condition of Mezzanine Borrower
or the performance or observance by Mezzanine Borrower of any of its obligations
under any Mezzanine Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon Mezzanine Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Mezzanine Loan Documents; (v) such assignee appoints and authorizes
Mezzanine Lender to take such action as agent on its behalf and to exercise such
powers and discretion under the Mezzanine Loan Documents as are delegated to
Mezzanine Lender by the terms hereof together with such powers and discretion as
are reasonably incidental thereto; and (vi) such assignee agrees that it will
perform, in accordance with their terms, all of the obligations which by the
terms of this Agreement and the other Mezzanine Loan Documents are required to
be performed by Mezzanine Lender.

 

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14.4 Register. Mezzanine Lender shall on behalf of Mezzanine Borrower, maintain
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of Mezzanine Lender and
each assignee pursuant to this Article XIV and the principal amount of the Loan
owing to each such assignee from time to time (the “Register”). The entries in
the Register shall, with respect to such assignees, be conclusive and binding
for all purposes, absent manifest error. The Register shall be available for
inspection by Mezzanine Borrower or any assignee pursuant to this Article XIV at
any reasonable time and from time to time upon reasonable prior written notice.

 

14.5 Substitute Mezzanine Notes. Upon its receipt of an Assignment and
Acceptance executed by an assignee, together with any Mezzanine Note or
Mezzanine Notes subject to such assignment, Mezzanine Lender shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt written
notice thereof to Mezzanine Borrower. Within five (5) Business Days after its
receipt of such notice, Mezzanine Borrower, at Mezzanine Lender’s own expense,
shall execute and deliver to Mezzanine Lender in exchange and substitution for
the surrendered Mezzanine Note or Mezzanine Notes a new Mezzanine Note to the
order of such assignee in an amount equal to the portion of the Loan assigned to
it and a new Mezzanine Note to the order of Mezzanine Lender in an amount equal
to the portion of the Loan retained by it hereunder. Such new Mezzanine Note or
Mezzanine Notes shall be in an aggregate principal amount equal to the aggregate
then outstanding principal amount of such surrendered Mezzanine Note or
Mezzanine Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Mezzanine
Note (modified, however, to the extent necessary so as not to impose duplicative
or increased obligations on Mezzanine Borrower and to delete obligations
previously satisfied by Mezzanine Borrower). Notwithstanding the provisions of
this Article XIV, Mezzanine Borrower shall not be responsible or liable for any
additional taxes, reserves, adjustments or other costs and expenses that are
related to, or arise as a result of, any transfer of the Loan (except as
provided in Article XIV) or any interest or participation therein that arise
solely and exclusively from the transfer of the Loan or any interest or
participation therein or from the execution of the new Mezzanine Note
contemplated by this Section 14.5, including, without limitation, any mortgage
tax. Mezzanine Lender and/or the assignees, as the case may be, shall from time
to time designate one agent through which Mezzanine Borrower shall request all
approvals and consents required or contemplated by this Agreement and on whose
statements Mezzanine Borrower may rely.

 

14.6 Participations. Each assignee pursuant to this Article XIV may sell
participations to one or more Persons (other than Mezzanine Borrower or any of
its Affiliates) in or to all or a portion of its rights and obligations under
this Agreement and the other Mezzanine Loan Documents (including, without
limitation, all or a portion of the Mezzanine Note held by it); provided,
however, that (i) such assignee’s obligations under this Agreement and the other
Mezzanine Loan Documents shall remain unchanged, (ii) such assignee shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such assignee shall remain the holder of any such

 

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Mezzanine Note for all purposes of this Agreement and the other Mezzanine Loan
Documents, (iv) Mezzanine Borrower, Mezzanine Lender and the assignees pursuant
to this Article XIV shall continue to deal solely and directly with such
assignee in connection with such assignee’s rights and obligations under this
Agreement and the other Mezzanine Loan Documents. In the event that more than
one (1) party comprises Mezzanine Lender, Mezzanine Lender shall designate one
party to act on the behalf of all parties comprising Mezzanine Lender in
providing approvals and all other necessary consents under the Mezzanine Loan
Documents and on whose statements Mezzanine Borrower may rely.

 

14.7 Disclosure of Information. Any assignee pursuant to this Article XIV may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Article XIV, disclose to the assignee or
participant or proposed assignee or participant, any information relating to
Mezzanine Borrower furnished to such assignee by or on behalf of Mezzanine
Borrower; provided, however, that, prior to any such disclosure, (a) the
assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of Mezzanine Borrower to preserve the confidentiality of
any confidential information received by it, and (b) with respect to any
Asset-Specific Proprietary Information, the terms of Section 11.3 shall be
complied with.

 

14.8 Security Interest in Favor of Federal Reserve Bank. Notwithstanding any
other provision set forth in this Agreement or any other Mezzanine Loan
Document, any assignee pursuant to this Article XIV may at any time create a
security interest in all or any portion of its rights under this Agreement or
the other Mezzanine Loan Documents (including, without limitation, the amounts
owing to it and the Mezzanine Note or Mezzanine Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.

 

XV.  INTENTIONALLY BLANK

 

XVI.  ADDITIONAL RIGHTS; COSTS

 

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

 

(a) the right, upon not less than fifteen (15) Business Days’ prior written
notice to Mezzanine Borrower, to request and to hold a meeting, no more often
than once during each fiscal year of Mezzanine Borrower, and only in conjunction
with all any other Lender that wishes any such meeting, at Mezzanine Borrower’s
office in New York, New York, with the president and chief operating officer or
the executive vice president and chief financial officer of Mezzanine Borrower,
to discuss such significant business activities and business and financial
developments of Mezzanine Borrower as are specified by Lender in writing in the
request for such meeting;

 

(b) the right, in accordance with the terms of Section 11.1, to examine the
books and records of Mezzanine Borrower;

 

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(c) the right, in accordance with the terms of Section 11.2, to receive such
financial data and information set forth therein;

 

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

 

(e) the right, in accordance with the Pledge, during the continuance of an Event
of Default, to vote Mezzanine Borrower’s interests in Mortgage Borrower; and

 

(f) the right, in accordance with this Agreement and the Pledge, including,
without limitation, the provisions of Article VIII, to restrict the Transfer of
interests in Mortgage Borrower, it being understood that no such restrictions
can be made on such Transfers to the extent such Transfers are permitted by the
terms hereof or the Pledge.

 

The rights described above may be exercised by Mezzanine Lender until the
Principal Amount and all other Obligations (Second Mezzanine) hereunder have
been repaid in full.

 

16.2 Costs. Mezzanine Lender shall reimburse Mezzanine Borrower for all
reasonable out-of-pocket expenses incurred by Mezzanine Borrower in connection
with Mezzanine Borrower’s compliance with the provisions of Section 16.1 unless
Mezzanine Borrower would otherwise have incurred such costs pursuant to any
other provision of this Agreement or the other Mezzanine Loan Documents.

 

XVII. RESERVED.

 

XVIII. DEFAULTS.

 

18.1 Event of Default.

 

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

 

(i) if (A) the Indebtedness is not paid in full on the Maturity Date, (B) any
regularly scheduled monthly payment of interest due under the Mezzanine Note is
not paid in full on the applicable Payment Date, (C) any prepayment of principal
due under this Agreement or the Mezzanine Note is not paid when due, (D) the
Prepayment Fee is not paid when due, (E) any deposit to the Mezzanine Account is
not made on the required deposit date therefor; or (F) except as to any amount
included in (A), (B), (C), (D), (E), and/or (F) of this clause (i) or in clause
(ii), any other amount payable pursuant to this Agreement, the Mezzanine Note or
any other Mezzanine Loan Document is not paid in full when due and payable in
accordance with the provisions of the applicable Mezzanine Loan Document, with
such failure continuing for ten (10) Business Days after Mezzanine Lender
delivers written notice thereof to Mezzanine Borrower;

 

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(ii) subject to Mortgage Borrower’s right to contest as set forth in Section 7.3
of the Loan Agreement (Mortgage), if any of the Impositions or Other Charges are
not paid prior to the imposition of any interest, penalty, charge or expense for
the non-payment thereof; provided, that Mezzanine Borrower shall not be deemed
to be in default hereunder in the event funds sufficient for a required payment
of such Imposition or Other Charge under are held in the Tax Reserve Account (as
defined in the Loan Agreement (Mortgage) and Mortgage Lender or Cash Management
Bank (Mortgage) fails to timely make payment from such account as contemplated
by the Loan Agreement (Mortgage) unless due to the negligence or willful
misconduct of Mortgage Borrower;

 

(iii) if the insurance policies required by Section 6.1 are not kept in full
force and effect, or if Mezzanine Borrower fails to deliver to Mezzanine Lender
evidence of the insurance required by Section 6.1 at the times required in such
Section with such failure continuing for five (5) Business Days after the
Mezzanine Lender delivers written notice thereof to Mezzanine Borrower;
provided, that Mezzanine Borrower shall not be deemed to be in default hereunder
in the event funds sufficient for a required payment of the premiums required to
keep the insurance policies in full force and effect are held in the Insurance
Reserve Account (as defined in the Loan Agreement (Mortgage) and Mortgage Lender
or Cash Management Bank (Mortgage) fails to timely make payment from such
account as contemplated by the Loan Agreement (Mortgage) unless due to the
negligence or willful misconduct of Mortgage Borrower;

 

(iv) if, except as expressly permitted pursuant to Article VIII, or the other
provisions hereof, any of the following shall occur: (a) any Transfer of any
direct or indirect legal, beneficial or equitable interest in all or any portion
of the Property, (b) any Transfer of any direct or indirect interest in Mortgage
Borrower, Mezzanine Borrower, any Senior Mezzanine Borrower, Junior Mezzanine
Borrower, Master Lessee, Guarantor or any SPE Entity, (c) the Mezzanine Borrower
permits Mortgage Borrower to grant any Lien or encumbrance against all or any
portion of the Property, (d) any pledge, hypothecation, creation of a security
interest in or other encumbrance of any direct or indirect interests in any
Borrower, Master Lessee, Guarantor or any SPE Entity, or (e) Mortgage Borrower’s
filing of a declaration of condominium with respect to the Property other than
the Condominium Properties;

 

(v) if (i) any representation or warranty made by Mortgage Borrower in Section
4.1.24 of the Loan Agreement (Mortgage) shall have been false or misleading in
any material respect as of the date the representation or warranty was made
which incorrect, false or misleading statement is not cured within thirty (30)
days after receipt by Mezzanine Borrower of notice from Mezzanine Lender in
writing of such breach or a longer period of time not to exceed thirty (30)
additional days if Borrower has commenced to cure but cannot cure within the
initial thirty (30) day period or (ii) if any, representation or warranty made
by Mezzanine Borrower herein or by Mortgage Borrower, Senior Mezzanine Borrower,
Junior Mezzanine Borrower, Guarantor or any Affiliate of Mezzanine

 

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Borrower in any other Mezzanine Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Mezzanine Lender shall have been false or misleading in any material respect as
of the date the representation or warranty was made; provided, however, that if
such representation or warranty which was false or misleading in any material
respect is, by its nature, curable and is not reasonably likely to have a
Material Adverse Effect, and such representation or warranty was not, to the
best of Mezzanine Borrower’s knowledge, false or misleading in any material
respect when made, then same shall not constitute an Event of Default unless
Mezzanine Borrower has not cured same within ten (10) days after receipt by
Mezzanine Borrower of notice from Mezzanine Lender in writing of such breach;

 

(vi) if Mezzanine Borrower, any Senior Mezzanine Borrower, Mortgage Borrower,
Master Lessee, Guarantor or any SPE Entity shall make an assignment for the
benefit of creditors;

 

(vii) if a receiver, liquidator or trustee shall be appointed for Mezzanine
Borrower, Mortgage Borrower, Master Lessee, Guarantor or any SPE Entity or
Mortgage Borrower, Senior Mezzanine Borrower, Mezzanine Borrower, Master Lessee,
Guarantor or any SPE Entity 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, Mezzanine Borrower, any Senior
Mezzanine Borrower, Mortgage Borrower, Master Lessee, Guarantor or any SPE
Entity, or if any proceeding for the dissolution or liquidation of Mezzanine
Borrower, any Senior Mezzanine Borrower, Mortgage Borrower, Master Lessee,
Guarantor or any SPE Entity shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgage Borrower, any Senior Mezzanine Borrower, Master Lessee,
Guarantor or any SPE Entity upon the same not being discharged, stayed or
dismissed within ninety (90) days;

 

(viii) if Mortgage Borrower, Mezzanine Borrower, any Senior Mezzanine Borrower,
Guarantor or any SPE Entity, as applicable, attempts to assign its rights under
this Agreement or any of the other Mezzanine Loan Documents or any interest
herein or therein in contravention of the Mezzanine Loan Documents;

 

(ix) Intentionally Omitted;

 

(x) the occurrence of a Mortgage Event of Default or the occurrence of an “Event
of Default” (as defined in such Senior Mezzanine Loan Agreement) under any
Senior Mezzanine Loan;

 

(xi) if any of the assumptions contained in the Non-Consolidation Opinion, in
any Additional Non-Consolidation Opinion or in any other non-consolidation
opinion delivered to Mezzanine Lender in connection with the

 

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Loan, or in any other non-consolidation opinion delivered subsequent to the
closing of the Loan, is untrue in any material respect;

 

(xii) if any of the assumptions contained in the True Lease Opinion is untrue in
any material respect;

 

(xiii) if Mezzanine Borrower, having notified Mezzanine Lender of its election
to extend the Maturity Date as set forth in Section 5 of the Mezzanine Note,
fails to deliver the Replacement Interest Rate Cap Agreement to Mezzanine Lender
not later than one (1) Business Day prior to the first day of the extended term
of the Loan and Mezzanine Borrower has not prepaid the Loan pursuant to the
terms of the Mezzanine Note prior to such first day of the extended term;

 

(xiv) if Mezzanine Borrower shall fail to comply in any material respect with
any covenants set forth in Sections 5.1.4, 5.2.9 and 5.2.22;

 

(xv) except as provided in clause (xiv) above, if Mezzanine Borrower shall fail
to comply with any covenants set forth in Article V or Article XI with such
failure continuing for ten (10) Business Days after Mezzanine Lender delivers
written notice thereof to Mezzanine Borrower;

 

(xvi) Mezzanine Borrower shall fail to deposit any sums required to be deposited
in the Mezzanine Account pursuant to Section 3.1.5 when due (solely with respect
to deposits that are made by third parties that are not Affiliates of Mortgage
Borrower, with such failure continuing for three (3) days after Mezzanine Lender
delivers notice thereof to Mezzanine Borrower;

 

(xvii) if this Agreement or any other Mezzanine Loan Document or any Lien
granted hereunder or thereunder, in whole or in part, shall terminate or shall
cease to be effective or shall cease to be a legally valid, binding and
enforceable obligation of Mezzanine Borrower or any Guarantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be a perfected
first priority Lien, subject to the Permitted Encumbrances (except in any of the
foregoing cases in accordance with the terms hereof or under any other Mezzanine
Loan Document or by reason of any affirmative act of Mezzanine Lender);

 

(xviii) except as expressly permitted pursuant to the Mezzanine Loan Documents,
if Mezzanine Borrower allows the Mortgage Borrower to grant any easement,
covenant or restriction (other than the Permitted Encumbrances) over the
Property;

 

(xix) if Mezzanine Borrower allows the Senior Mezzanine Borrower to allow
Mortgage Borrower or Mortgage Borrower allows the Master Lessee to permit any
event within its control to occur that would cause any REA to terminate without
notice or action by any party thereto or would entitle any party to terminate
any REA and the term thereof by giving notice to Mortgage Borrower or Master
Lessee; or any REA shall be surrendered, terminated or canceled for any reason
or under any circumstance whatsoever except as provided

 

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for in such REA; or any material term of any REA shall be modified or
supplemented (other than in accordance with its terms) and such modification or
supplementation is reasonably likely to have a Material Adverse Effect; or
Borrower shall fail or shall permit Master Lessee to shall fail, within ten (10)
Business Days after demand by Mezzanine Lender, to exercise its option to renew
or extend the term of any REA or shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to such REA except as
provided for in such REA, in all cases where such surrender, termination,
cancellation, modification, supplement or failure to renew or extend is
reasonably expected to have a Material Adverse Effect;

 

(xx) if Mezzanine Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or of any Mezzanine Loan
Document not specified in subsection (i) above, for thirty (30) days after
notice from Mezzanine Lender; provided, however, that if such Default is
susceptible of cure but cannot reasonably be cured within such thirty (30) day
period and provided further that Mezzanine Borrower shall have commenced to cure
such Default within such thirty (30) day period and thereafter diligently
proceeds to cure the same, such thirty (30) day period shall be extended for
such time as is reasonably necessary for Mezzanine Borrower in the exercise of
due diligence to cure such Default, such additional period not to exceed ninety
(90) days.

 

(b) Unless waived in writing by Mezzanine Lender, upon the occurrence and during
the continuance of an Event of Default (other than an Event of Default described
in clauses (a)(vi), (vii) or (viii) above in respect of Mezzanine Borrower)
Mezzanine Lender may, without notice or demand, in addition to any other rights
or remedies available to it pursuant to this Agreement and the other Mezzanine
Loan Documents or at law or in equity, take such action that Mezzanine Lender
deems advisable to protect and enforce its rights against Mezzanine Borrower and
in the Collateral, including, without limitation, (i) declaring immediately due
and payable the entire Principal Amount together with interest thereon and all
other sums due by Mezzanine Borrower under the Mezzanine Loan Documents, (ii)
collecting interest on the Principal Amount at the Default Rate whether or not
Mezzanine Lender elects to accelerate the Mezzanine Note and (iii) enforcing or
availing itself of any or all rights or remedies set forth in the Mezzanine Loan
Documents against Mezzanine Borrower and the Collateral, including, without
limitation, all rights or remedies available at law or in equity; and upon any
Event of Default described in subsections (a)(vi), (vii) or (viii) above in
respect of Mezzanine Borrower, the Indebtedness and all other obligations of
Mezzanine Borrower hereunder and under the other Mezzanine Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Mezzanine Borrower hereby expressly waives any such notice or demand,
anything contained herein or in any other Mezzanine Loan Document to the
contrary notwithstanding. The foregoing provisions shall not be construed as a
waiver by Mezzanine Lender of its right to pursue any other remedies available
to it under this Agreement, the Pledge or any other Mezzanine Loan Document. Any
payment hereunder may be enforced and recovered in

 

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whole or in part at such time by one or more of the remedies provided to
Mezzanine Lender in the Mezzanine Loan Documents.

 

(c) Upon the occurrence of a Mortgage Default or an Event of Default pursuant to
Section 18.1(a)(ix), Mezzanine Borrower shall cause each Senior Mezzanine
Borrower to cause Mortgage Borrower to deliver to Mezzanine Lender within five
(5) Business Days after the first to occur of (a) receipt by Mortgage Borrower
of notice of such Mortgage Default or Mortgage Event of Default from Mortgage
Lender or (b) the date Mortgage Borrower obtains actual knowledge of the
occurrence of such Mortgage Default or Mortgage Event of Default, a detailed
description of the actions to be taken by Mortgage Borrower to cure such
Mortgage Default or Mortgage Event of Default and the dates by which each such
action shall occur. Such schedule shall be subject to the approval of Mezzanine
Lender. Mezzanine Borrower shall cause Mortgage Borrower to take all such
actions as are necessary to cure such Mortgage Default or Mortgage Event of
Default by the date approved by Mezzanine Lender and shall deliver to Mezzanine
Lender not less frequently than weekly thereafter written updates concerning the
status of Mortgage Borrower’s efforts to cure such Mortgage Default or Mortgage
Event of Default. Mezzanine Lender shall have the right, but not the obligation,
to pay any sums or to take any action which Mezzanine Lender deems necessary or
advisable to cure any default or alleged default under the Loan Documents
(Mortgage) (whether or not Mortgage Borrower is undertaking efforts to cure such
default), and such payment or such action is hereby authorized by Mezzanine
Borrower, and any sum so paid and any expense incurred by Mezzanine Lender in
taking any such action shall be evidenced by this Agreement and secured by this
Agreement and the Pledge and shall be immediately due and payable by Mezzanine
Borrower to Mezzanine Lender with interest at the Default Rate until paid.
Mezzanine Borrower shall cause Mortgage Borrower to permit Mezzanine Lender to
enter upon the Property for the purpose of curing any default or alleged default
under the Loan Documents (Mortgage) or hereunder. Mezzanine Borrower hereby
transfers and assigns any excess proceeds arising from any foreclosure or sale
under power pursuant to the Loan Documents (Mortgage) or any instrument
evidencing the indebtedness secured thereby, and Mezzanine Borrower hereby
authorizes and directs the holder or holders of the Loan Documents (Mortgage) to
pay such excess proceeds directly to Mezzanine Lender up to the amount of the
Obligations (Second Mezzanine).

 

(d) Notwithstanding anything contained herein or in the other Mezzanine Loan
Documents, if an Event of Default is caused by a Default in respect of a
Property (such as, without limitation, a Default arising from an inability to
maintain a material license for the operation of a Property), then, provided (i)
Mezzanine Lender shall have not accelerated the Loan, and (ii) the elimination
of the Ownership Interest relating to such Property from the collateral securing
the Loan would eliminate the condition or circumstance giving rise to the Event
of Default, then Mezzanine Borrower may, by notice to Mezzanine Lender, elect to
prepay the Loan in the manner provided in (and subject to the requirements of)
Section 2.3.4 in an amount equal to the Release Amount of such Ownership
Interest, so as to obtain the release thereof from the Lien of the Mezzanine
Loan Documents. Upon such prepayment and release, such Event of Default shall be
deemed cured hereunder.

 

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18.2 Remedies. Unless waived in writing by Mezzanine Lender, upon the occurrence
and during the continuance of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Mezzanine Lender
against Mezzanine Borrower and Guarantor under this Agreement or any of the
other Mezzanine Loan Documents executed and delivered by, or applicable to,
Mezzanine Borrower or Guarantor or at law or in equity may be exercised by
Mezzanine Lender at any time and from time to time, whether or not all or any of
the Indebtedness shall be declared due and payable, and whether or not Mezzanine
Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Mezzanine Loan Documents
with respect to the Collateral. Any such actions taken by Mezzanine Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Mezzanine
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
Mezzanine Lender permitted by law, equity or contract or as set forth herein or
in the other Mezzanine Loan Documents. Without limiting the generality of the
foregoing, Mezzanine Borrower agrees that if an Event of Default is continuing
(i) Mezzanine Lender shall not be subject to any one action or election of
remedies law or rule and (ii) all liens and other rights, remedies or privileges
provided to Mezzanine Lender shall remain in full force and effect until
Mezzanine Lender has exhausted all of its remedies against the Collateral and
this Agreement and the Pledge have been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Indebtedness or the Indebtedness has been
paid in full.

 

(a) Upon the occurrence of any Event of Default, Mezzanine Lender may, but
without any obligation to do so and without notice to or demand on Mezzanine
Borrower and without releasing Mezzanine Borrower from any obligation hereunder,
take any action to cure such Event of Default. Mezzanine Lender may appear in,
defend, or bring any action or proceeding to protect its interests in the
Collateral or to foreclose its security interest under this Agreement and the
Pledge or under any of the other Mezzanine Loan Documents or collect the
Indebtedness.

 

(b) Upon the occurrence and during the continuance of an Event of Default, with
respect to the Account Collateral (Second Mezzanine), the Mezzanine Lender may:

 

(i) without notice to Mezzanine Borrower, except as required by law, and at any
time or from time to time, charge, set-off and otherwise apply all or any part
of the Account Collateral (Second Mezzanine) against the Obligations (Second
Mezzanine), operating expenses and/or capital expenditures for the Property or
any part thereof;

 

(ii) in Mezzanine Lender’s sole discretion, at any time and from time to time,
exercise any and all rights and remedies available to it under this Agreement,
and/or as a secured party under the UCC;

 

(iii) demand, collect, take possession of or receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon the Account Collateral

 

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(Second Mezzanine) (or any portion thereof) as Mezzanine Lender may determine in
its sole discretion; and

 

(iv) take all other actions provided in, or contemplated by, this Agreement.

 

(c) With respect to Mezzanine Borrower, the Account Collateral (Second
Mezzanine), the Rate Cap Collateral and the Collateral, nothing contained herein
or in any other Mezzanine Loan Document shall be construed as requiring
Mezzanine Lender to resort to the Collateral for the satisfaction of any of the
Indebtedness, and Mezzanine Lender may seek satisfaction out of the Collateral
or any part thereof, in its absolute discretion in respect of the Indebtedness.
In addition, Mezzanine Lender shall have the right from time to time to
partially foreclose this Agreement and the Pledge in any manner and for any
amounts secured by this Agreement or the Pledge then due and payable as
determined by Mezzanine Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Mezzanine Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal or interest, Mezzanine Lender may foreclose this
Agreement and the Pledge to recover such delinquent payments, or (ii) in the
event Mezzanine Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Mezzanine Lender may foreclose this Agreement and
the Pledge to recover so much of the principal balance of the Loan as Mezzanine
Lender may accelerate and such other sums secured by this Agreement or the
Pledge as Mezzanine Lender may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement and the
Pledge to secure payment of sums secured by this Agreement and the Pledge and
not previously recovered.

 

18.3 Remedies Cumulative; Waivers. The rights, powers and remedies of Mezzanine
Lender under this Agreement and the Mezzanine Loan Documents shall be cumulative
and not exclusive of any other right, power or remedy which Mezzanine Lender may
have against Mezzanine Borrower pursuant to this Agreement or the other
Mezzanine Loan Documents, or existing at law or in equity or otherwise.
Mezzanine Lender’s rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Mezzanine Lender
may determine in Mezzanine 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 Mezzanine Borrower or any Guarantor shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Mezzanine Borrower or any Guarantor or to impair any remedy, right or power
consequent thereon.

 

18.4 Costs of Collection. In the event that after an Event of Default: (i) the
Mezzanine Note or any of the Mezzanine Loan Documents is placed in the hands of
an attorney for collection or enforcement or is collected or enforced through
any legal proceeding; (ii) an attorney is retained to represent Mezzanine Lender
in any bankruptcy, reorganization, receivership, or other proceedings affecting
creditors’ rights and involving

 

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a claim under this Agreement, the Mezzanine Note or any of the Mezzanine Loan
Documents; or (iii) an attorney is retained to protect or enforce the lien or
any of the terms of this Agreement, the Pledge or any of the Mezzanine Loan
Documents; then Mezzanine Borrower shall pay to Mezzanine Lender all reasonable
attorney’s fees, costs and expenses actually incurred in connection therewith,
including costs of appeal, together with interest on any judgment obtained by
Mezzanine Lender at the Default Rate (collectively, “Enforcement Costs”).

 

18.5 Distribution of Collateral Proceeds. In the event that, following the
occurrence and during the continuance of any Event of Default, any monies are
received in connection with the enforcement of any of the Mezzanine Loan
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:

 

(a) First, to the payment of, or (as the case may be) the reimbursement of,
Mezzanine Lender for or in respect of all reasonable out-of-pocket costs,
expenses, disbursements and losses which shall have been incurred or sustained
by Mezzanine Lender to protect or preserve the Collateral or in connection with
the collection of such monies by Mezzanine Lender (including without limitation,
Enforcement Costs), for the exercise, protection or enforcement by Mezzanine
Lender of all or any of the rights, remedies, powers and privileges of Mezzanine
Lender under this Agreement or any of the other Mezzanine Loan Documents or in
respect of the Collateral or in support of any provision of adequate indemnity
to Mezzanine Lender against any taxes or liens which by law shall have, or may
have, priority over the rights of Mezzanine Lender to such monies;

 

(b) Second, to all other Obligations (Second Mezzanine) in such order or
preference as Mezzanine Lender shall determine in its reasonable discretion;

 

(c) Third, the excess, if any, shall be deposited in the Third Mezzanine Account
for distribution or application under the Third Mezzanine Loan Documents, or if
the Third Mezzanine Loan has been repaid, shall be deposited in the Fourth
Mezzanine Account for distribution or application under the Fourth Mezzanine
Loan Documents, or if the Fourth Mezzanine Loan has been repaid, shall be
distributed to the Mezzanine Borrower.

 

XIX. SPECIAL PROVISIONS

 

19.1 Exculpation.

 

19.1.1 Exculpated Parties. Except as set forth in this Section 19.1, the
Recourse Guaranty (Mezzanine) and the Environmental Indemnity, no personal
liability shall be asserted, sought or obtained by Mezzanine Lender or
enforceable against (i) Mezzanine Borrower, (ii) any Affiliate of Mezzanine
Borrower, (iii) any Person owning, directly or indirectly, any legal or
beneficial interest in Mezzanine Borrower or any Affiliate of Mezzanine Borrower
or (iv) any direct or indirect partner, member, principal, officer, Controlling
Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate

 

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or director of any Persons described in clauses (i) through (iii) above
(collectively, the “Exculpated Parties”) and none of the Exculpated Parties
shall have any personal liability (whether by suit, deficiency judgment or
otherwise) in respect of the Obligations (Second Mezzanine), this Agreement, the
Pledge, the Mezzanine Note, the Collateral or any other Mezzanine Loan Document,
or the making, issuance or transfer thereof, all such liability, if any, being
expressly waived by Mezzanine Lender. The foregoing limitation shall not in any
way limit or affect Mezzanine Lender’s right to any of the following and
Mezzanine Lender shall not be deemed to have waived any of the following:

 

(a) Foreclosure of the lien of this Agreement and the Pledge in accordance with
the terms and provisions set forth herein and in the Pledge;

 

(b) Action against any other security at any time given to secure the payment of
the Mezzanine Note and the other Obligations (Second Mezzanine);

 

(c) Exercise of any other remedy set forth in this Agreement or in any other
Mezzanine Loan Document which is not inconsistent with the terms of this Section
19.1;

 

(d) Any right which Mezzanine Lender may have under Sections 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for the
full amount of the Indebtedness secured by this Agreement and the Pledge or to
require that all collateral shall continue to secure all of the Indebtedness
owing to Mezzanine Lender in accordance with the Mezzanine Loan Documents; or

 

(e) The liability of any given Exculpated Party with respect to any separate
written guaranty or agreement given by any such Exculpated Party in connection
with the Loan (including, without limitation, the Recourse Guaranty (Mezzanine)
and the Environmental Indemnity).

 

19.1.2 Carveouts From Non-Recourse Limitations. Notwithstanding the foregoing or
anything in this Agreement or any of the Mezzanine Loan Documents to the
contrary, there shall at no time be any limitation on Mezzanine Borrower’s or
any Guarantor’s liability for the payment, in accordance with the terms of this
Agreement, the Mezzanine Note, the Pledge and the other Mezzanine Loan
Documents, to Mezzanine Lender of:

 

(a) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of the fraudulent acts of Mezzanine Borrower or any Affiliate
of Mezzanine Borrower;

 

(b) Proceeds which Mortgage Borrower, any Affiliate of Mortgage Borrower,
Mezzanine Borrower or any Affiliate of Mezzanine Borrower has received and to
which Mezzanine Lender is entitled pursuant to the terms of this Agreement or
any of the Mezzanine Loan Documents to the extent the same have not been applied
toward payment of the Indebtedness, or used for the repair or replacement of the
Property in accordance with the Loan Agreement (Mortgage);

 

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(c) all loss, damage, cost or expense as incurred by Mezzanine Lender and
arising from any intentional misrepresentation of Mortgage Borrower, Mezzanine
Borrower or any Affiliate of Mezzanine Borrower;

 

(d) any misappropriation of Rents or security deposits by Mortgage Borrower,
Master Lessee, Mezzanine Borrower or any of their respective Affiliates;

 

(e) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of all or any part of the Collateral, the Account Collateral or
the Rate Cap Collateral being encumbered by a Lien by reason of the acts of
Mezzanine Borrower or any Affiliate of Mezzanine Borrower from and after the
date hereof (other than as provided in this Agreement, the Pledge and/or any
other Mezzanine Loan Document) in violation of the Mezzanine Loan Documents;

 

(f) after the occurrence and during the continuance of an Event of Default by
Mezzanine Borrower hereunder or under any other Mezzanine Loan Document, any
Rents belonging to Mortgage Borrower or any Senior Mezzanine Borrower, issues,
profits and/or income from the Property collected by Mortgage Borrower,
Mezzanine Borrower or any Affiliate of Mezzanine Borrower other than Rent sent
to the Holding Account pursuant to the Loan Agreement (Mortgage) (and not paid
directly to Mortgage Lender pursuant to any notice of direction delivered to
tenants of the Property) and not applied to payment of the Obligations or used
to pay normal and verifiable operating expenses of the Property or otherwise are
not applied in a manner permitted under the Loan Documents (Mortgage) or the
Mezzanine Loan Documents;

 

(g) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of any physical damage to the Property from intentional waste
committed by Mortgage Borrower, any Affiliate of Mortgage Borrower, Mezzanine
Borrower or any Affiliate of Mezzanine Borrower;

 

(h) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of the failure of Borrower to comply with any of the provisions
of Article XIII;

 

(i) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of any breach of a representation by Mortgage Borrower set
forth in Section 4.1.31 of the Loan Agreement (Mortgage).

 

(j) any loss, damage, cost or expense incurred by or on behalf of Mezzanine
Lender by reason of the failure of Mezzanine Borrower to deliver to Mezzanine
Lender the net sales proceeds of a Transfer of an Individual Property together
with any shortfall necessary to pay in full the Release Price for such
Individual Property in accordance with the provisions set forth herein;

 

(k) any loss, damage, cost, or expense incurred by or on behalf of Mezzanine
Lender arising from any misrepresentation of Mezzanine Borrower in Section 4.1.6
(c) or (d) to the extent Mezzanine Lender claims or asserts such amounts are
covered or insured

 

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by the Mortgage Borrower’s owner’s title policy or the Owner’s Title Policy Loss
Payment Direction Letter;

 

(l) any and all liabilities, obligations, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys’ fees, causes of action,
suits, claims, demands and adjustments of any nature or description whatsoever)
which may at any time be imposed upon, incurred by or awarded against Mezzanine
Lender, in the event (and arising out of such circumstances) that (x) Mezzanine
Borrower should raise any defense, counterclaim and/or allegation in any
foreclosure action by Mezzanine Lender relative to the Property, the Account
Collateral or the Rate Cap Collateral or any part thereof which is found by a
court to have been raised by Mezzanine Borrower in bad faith or to be without
basis in fact or law, or (y) an involuntary case is commenced against Mezzanine
Borrower or Guarantor under the Bankruptcy Code with the collusion of Mezzanine
Borrower or Guarantor or any of their Affiliates or (z) an order for relief is
entered with respect to the Mezzanine Borrower or Guarantor under the Bankruptcy
Code through the actions of the Mezzanine Borrower or Guarantor or any of their
Affiliates at a time when the Mezzanine Borrower or Guarantor, as applicable, is
able to pay its debts as they become due unless Mezzanine Borrower or Guarantor,
as applicable, shall have (i) received an opinion of independent counsel that
the Mezzanine Borrower or Guarantor or such Affiliate, as applicable, has a
fiduciary duty to seek such an order for relief;

 

(m) all liabilities, obligations, claims, damages, loss, penalties, costs and
expenses imposed upon, incurred by or asserted against Mezzanine Lender or any
Ground Lease Property and arising from or in connection with any inaccuracy or
misrepresentation contained in any Clean Borrower Estoppel Certificate,
provided, however, that as and when a Property is no longer a Deficient GL
Property, as provided in the definition of the term “Deficient GL Property”, the
recourse liability of Mezzanine Borrower under the Clean Borrower Estoppel
Certificate and the recourse liability of Mezzanine Borrower and Guarantor under
this clause (m) shall be automatically released in its entirety with with
respect to such Property (or to the extent of the substance of any matter which
is certified in the Clean Ground Lessor Estoppel Certificate without material
exception, revision or supplement, as applicable) (and upon request by Mezzanine
Borrower, Mezzanine Lender shall promptly confirm any such release in writing);
or

 

(n) reasonable attorney’s fees and expenses actually incurred by Mezzanine
Lender in connection with any successful suit filed on account of any of the
foregoing clauses (a) through (m).

 

XX. MISCELLANEOUS

 

20.1 Survival. This Agreement and all covenants, indemnifications, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Mezzanine Lender of the Loan and the
execution and delivery to Mezzanine Lender of the Mezzanine Note, and shall
continue in full force and effect so long as all or any of the Indebtedness is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Mezzanine Loan

 

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Documents. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Mezzanine Borrower, shall inure to the benefit of the successors and assigns
of Mezzanine Lender. If Mezzanine Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder and under the other
Mezzanine Loan Documents shall be joint and several.

 

20.2 Mezzanine Lender’s Discretion. Whenever pursuant to this Agreement,
Mezzanine Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Mezzanine Lender, the decision
of Mezzanine 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 Mezzanine Lender and
shall be final and conclusive.

 

20.3 Governing Law.

 

(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
MEZZANINE LENDER AND ACCEPTED BY MEZZANINE BORROWER IN THE STATE OF NEW YORK
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS (SECOND MEZZANINE)
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
MEZZANINE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
MEZZANINE NOTE, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.

 

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

 

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IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. MEZZANINE BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

   

CORPORATION SERVICE COMPANY

80 STATE STREET

ALBANY, NEW YORK 12207-2543

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO MEZZANINE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MEZZANINE BORROWER IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MEZZANINE BORROWER
(I) SHALL GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.

 

20.4 Modification, Waiver in Writing. No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of the
Mezzanine Note, or of any other Mezzanine Loan Document, or consent to any
departure by Mezzanine 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 Mezzanine Borrower shall
entitle Mezzanine Borrower to any other or future notice or demand in the same,
similar or other circumstances.

 

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

 

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amounts due under this Agreement, the Mezzanine Note or the other Mezzanine Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

 

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

 

If to Mezzanine Lender:    German American Capital Corporation, on behalf of the
holders of the Notes      60 Wall Street, 10th floor      New York, NY 10005  
   Attention: Todd Sammann and General Counsel      Telecopy No.: (212) 797-4489
     Confirmation No.: (212) 250-2748 With a copy to:    Bank of America, N.A.,
as Servicer, at such notice address as shall be designated by notice delivered
in accordance with this Section. With a copy to:    Skadden, Arps, Slate,
Meagher & Flom LLP      Four Times Square      New York, New York 10036     
Attention: Harvey R. Uris, Esq.      Telecopy No.: (917) 777-2212     
Confirmation No.: (212) 735-3000 With a copy to:   

Bank of America, N.A.

9 West 57th Street

New York, NY 10019

Attention: Mr. Dean Ravosa

Telecopy No.: (212) 847-5695

Confirmation No.: (212) 847-6398

With a copy to:   

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036-2787

Attention: Tom Higgins, Esq.

Telecopy No.: (212) 354-8113

Confirmation No.: (212) 819-8813

 

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If to Mezzanine Borrower:   

MPO Intermediate Holdings, LLC

c/o Toys “R” Us, Inc.

One Geoffrey Way

Wayne, New Jersey 07470

Attention: Chief Financial Officer

Telecopy No.: (973) 617 4006

Confirmation No.: (973) 617-5755

    

Bain Capital Partners, LLC

111 Huntington Avenue

Boston, MA 02199

Attention: Mr. John Tudor

Telecopy No.: (617) 516-2010

Confirmation No.: (617) 516-2194

    

Kohlberg Kravis Roberts & Co.

2800 Sand Hill Road, Suite 200

Menlo Park, CA 94025

Attention: Mr. David Kerko

Telecopy No.: (650) 233-6538

Confirmation No.: (650) 233-6519

    

Vornado Realty Trust

888 Seventh Avenue

New York, New York 10106

Attention: Wendy Silverstein

Telecopy No.: (212) 894-7073

Confirmation No.: (212) 894-7000

With a copy to:   

Sullivan & Cromwell LLP

125 Broad Street

New York, N.Y. 10004-2498

Attention: Arthur Adler, Esq.

Telecopy No.: (212) 558-3588

Confirmation No.: (212) 558-3960

    

Kirkland and Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Attention: Chris Butler, Esq.

Telecopy No.: (312) 861-2200

Confirmation No.: (312) 861-2298

 

All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal

 

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delivery or otherwise, (ii) one (1) Business Day after being deposited with a
nationally recognized overnight courier service as required above, (iii) three
(3) Business Days after being deposited in the United States mail as required
above, or (iv) on the day sent if sent by facsimile with confirmation on or
before 5:00 p.m. New York time on any Business Day or on the next Business Day
if so delivered after 5:00 p.m. New York time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall
be deemed to be receipt of the notice, election, request, or demand sent.

 

20.7 TRIAL BY JURY. EACH OF MEZZANINE BORROWER AND MEZZANINE LENDER AND ALL
PERSONS CLAIMING BY, THROUGH OR UNDER EITHER OF THE FOREGOING, HEREBY EXPRESSLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT,
THE PLEDGE, THE MEZZANINE NOTE OR ANY OTHER MEZZANINE LOAN DOCUMENT, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE PLEDGE, THE MEZZANINE
NOTE OR ANY OTHER MEZZANINE LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH OF
MEZZANINE BORROWER AND MEZZANINE LENDER HEREBY AGREES AND CONSENTS THAT AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY
JURY. EACH OF MEZZANINE BORROWER AND MEZZANINE LENDER ACKNOWLEDGES THAT IT HAS
CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

 

20.8 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.

 

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

 

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20.10 Preferences. To the extent Mezzanine Borrower makes a payment or payments
to Mezzanine 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
Mezzanine Lender.

 

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

 

20.12 Expenses; Indemnity. Mezzanine Borrower covenants and agrees to pay or, if
Mezzanine Borrower fails to pay, to reimburse, Mezzanine Lender upon receipt of
written notice from Mezzanine Lender for all reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees and disbursements), except as may
be otherwise expressly provided in Article XIV or elsewhere in this Agreement or
the Loan Documents incurred by Mezzanine Lender in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement and the other
Mezzanine Loan Documents and the consummation of the transactions contemplated
hereby and thereby and all the costs of furnishing all opinions by counsel for
Mezzanine Borrower (including without limitation any opinions requested by
Mezzanine Lender pursuant to this Agreement); (ii) Mezzanine Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Mezzanine Loan Documents on its part to be performed or
complied with after the Closing Date; (iii) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to this Agreement and the other Mezzanine Loan Documents and
any other documents or matters as required herein or under the other Mezzanine
Loan Documents; (iv) securing Mezzanine Borrower’s compliance with any requests
made pursuant to the provisions of this Agreement; (v) the filing and recording
fees and expenses, mortgage recording taxes, title insurance and reasonable fees
and expenses of counsel for providing to Mezzanine Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Lien in favor of Mezzanine Lender pursuant to this Agreement and the other
Mezzanine 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
Mezzanine Borrower, this Agreement, the other Mezzanine Loan Documents, the
Property, or any other security given for the Loan; (vii) enforcing any
obligations of or collecting any payments due from Mezzanine Borrower under this

 

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Agreement, the other Mezzanine 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 and (viii) procuring insurance policies pursuant to
Section 6.1; provided, however, that Borrower shall not be liable for the
payment of (A) any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Mezzanine Lender. Any cost and expenses due and payable to Mezzanine Lender may
be paid from any amounts in the Mezzanine Account.

 

(a) Subject to the non-recourse provisions of Section 19.1, Mezzanine Borrower
shall protect, indemnify and save harmless Mezzanine Lender, and all officers,
directors, stockholders, members, partners, employees, agents, successors and
assigns thereof (collectively, the “Indemnified Parties”) from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including all reasonable attorneys’ fees and expenses actually
incurred) imposed upon or incurred by or asserted against the Indemnified
Parties, the Collateral or the Property or any part of its interest therein, by
reason of the occurrence or existence of any of the following (to the extent
Proceeds payable on account of the following shall be inadequate; it being
understood that in no event will the Indemnified Parties be required to actually
pay or incur any costs or expenses as a condition to the effectiveness of the
foregoing indemnity) prior to (i) the acceptance by Mezzanine Lender or its
designee of a transfer-in-lieu of foreclosure with respect to the Collateral,
(ii) an Indemnified Party or its designee or a receiver taking possession or
control of the Property, or (iii) the foreclosure of the Pledge, except to the
extent caused by the actual willful misconduct or gross negligence of the
Indemnified Parties (other than such willful misconduct or gross negligence
imputed to the Indemnified Parties because of their interest in the Property):
(1) ownership of Mezzanine Borrower’s interest in Mortgage Borrower, or any
interest therein, or receipt of any Rents or other sum therefrom, (2) any
accident, injury to or death of any persons or loss of or damage to property
occurring on or about the Property or any Appurtenances thereto, (3) any design,
construction, operation, repair, maintenance, use, non-use or condition of the
Property or Appurtenances thereto, including claims or penalties arising from
violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by
Mezzanine Lender, any claim the insurance as to which is inadequate, and any
Environmental Claim, (4) any Default under this Agreement or any of the other
Mezzanine Loan Documents or any failure on the part of Mezzanine Borrower to
perform or comply or to cause Mortgage Borrower to perform or comply with any of
the terms of any Operating Agreement within the applicable notice or grace
periods, (5) any performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof, (6)
any negligence or tortious act or omission on the part of Mezzanine Borrower or
any of its agents, contractors, servants, employees, sublessees, licensees or
invitees, (7) any contest referred to in Section 7.3 of the Loan Agreement
(Mortgage) hereof, (8) any obligation or undertaking relating to the performance
or discharge of any of the terms, covenants and conditions of the landlord
contained in the Subleases or the Master Lease, or (9) the presence at, in or
under the Property or the Improvements of any Hazardous Materials in violation
of any Environmental Law. Any amounts the Indemnified Parties are legally

 

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entitled to receive under this Section which are not paid within fifteen (15)
Business Days after written demand therefor by the Indemnified Parties or
Mezzanine Lender, setting forth in reasonable detail the amount of such demand
and the basis therefor, shall bear interest from the date of demand at the
Default Rate, and shall, together with such interest, be part of the
Indebtedness and secured by this Agreement and the Pledge. In case any action,
suit or proceeding is brought against the Indemnified Parties by reason of any
such occurrence, Mezzanine Borrower shall at Mezzanine Borrower’s expense resist
and defend such action, suit or proceeding or will cause the same to be resisted
and defended by counsel at Mezzanine Borrower’s reasonable expense for the
insurer of the liability or by counsel designated by Mezzanine Borrower (unless
reasonably disapproved by Mezzanine Lender promptly after Mezzanine Lender has
been notified of such counsel); provided, however, that nothing herein shall
compromise the right of Mezzanine Lender (or any Indemnified Party) to appoint
its own counsel at Mezzanine Borrower’s expense for its defense with respect to
any action which in its reasonable opinion presents a conflict or potential
conflict between Mezzanine Lender and Mezzanine Borrower that would make such
separate representation advisable; provided further that if Mezzanine Lender
shall have appointed separate counsel pursuant to the foregoing, Mezzanine
Borrower shall not be responsible for the expense of additional separate counsel
of any Indemnified Party unless in the reasonable opinion of Mezzanine Lender a
conflict or potential conflict exists between such Indemnified Party and
Mezzanine Lender. So long as Mezzanine Borrower is resisting and defending such
action, suit or proceeding as provided above in a prudent and commercially
reasonable manner, Mezzanine Lender and the Indemnified Parties shall not be
entitled to settle such action, suit or proceeding without Borrower’s consent
which shall not be unreasonably withheld or delayed, and claim the benefit of
this Section 20.12 with respect to such action, suit or proceeding and Mezzanine
Lender agrees that it will not settle any such action, suit or proceeding
without the consent of Mezzanine Borrower; provided, however, that if Mezzanine
Borrower is not diligently defending such action, suit or proceeding in a
prudent and commercially reasonable manner as provided above, and Mezzanine
Lender has provided Mezzanine Borrower with thirty (30) days’ prior written
notice, or shorter period if mandated by the requirements of applicable law, and
opportunity to correct such determination, Mezzanine Lender may settle such
action, suit or proceeding and claim the benefit of this Section 20.12 with
respect to settlement of such action, suit or proceeding. Any Indemnified Party
will give Mezzanine Borrower prompt notice after such Indemnified Party obtains
actual knowledge of any potential claim by such Indemnified Party for
indemnification hereunder. The Indemnified Parties shall not settle or
compromise any action, proceeding or claim as to which it is indemnified under
this Section 20.12 without notice to and reasonable consent of Mezzanine
Borrower.

 

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

 

20.14 Offsets, Counterclaims and Defenses. Any assignee of Mezzanine Lender’s
interest in and to this Agreement, the Mezzanine Note and the other Mezzanine
Loan Documents shall take the same free and clear of all offsets, counterclaims
or

 

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defenses which are unrelated to such documents which Mezzanine Borrower may
otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Mezzanine 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 Mezzanine
Borrower.

 

20.15 Liability of Assignees of Mezzanine Lender. No assignee of Mezzanine
Lender shall have any personal liability, directly or indirectly, under or in
connection with this Agreement or any other Mezzanine Loan Document or any
amendment or amendments hereto made at any time or times, heretofore or
hereafter, any different than the liability of Mezzanine Lender hereunder. In
addition, no assignee shall have at any time or times hereafter any personal
liability, directly or indirectly, under or in connection with or secured by any
agreement, lease, instrument, encumbrance, claim or right affecting or relating
to the Property or to which the Property is now or hereafter subject any
different than the liability of Mezzanine Lender hereunder. The limitation of
liability provided in this Section 20.15 is (i) in addition to, and not in
limitation of, any limitation of liability applicable to the assignee provided
by law or by any other contract, agreement or instrument, and (ii) shall not
apply to any assignee’s gross negligence or willful misconduct.

 

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

 

(a) Mezzanine Borrower and Mezzanine Lender intend that the relationships
created hereunder and under the other Mezzanine 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
Mezzanine Borrower and Mezzanine Lender nor to grant Mezzanine Lender any
interest in the Property other than that of mortgagee, beneficiary or lender.

 

(b) This Agreement and the other Mezzanine Loan Documents are solely for the
benefit of Mezzanine Lender and Mezzanine Borrower and nothing contained in this
Agreement or the other Mezzanine Loan Documents shall be deemed to confer upon
anyone other than Mezzanine Lender and Mezzanine Borrower any right to insist
upon or to enforce the performance or observance of any of the obligations
contained herein or therein. All conditions to the obligations of Mezzanine
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Mezzanine 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 Mezzanine 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 Mezzanine Lender if, in
Mezzanine Lender’s sole discretion, Mezzanine Lender deems it advisable or
desirable to do so.

 

20.17 Publicity. Each party shall endeavor to permit the other to review the
initial press release relating to the Mezzanine Loan in order to provide the
other with a reasonable opportunity to comment thereon.

 

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20.18 Waiver of Marshaling of Assets. To the fullest extent permitted by law,
Mezzanine Borrower, for itself and its successors and assigns, waives all rights
to a marshaling of the assets of Mezzanine Borrower, Mezzanine Borrower’s
members or partners, as applicable, and others with interests in Mezzanine
Borrower and of the Collateral, and agrees not to assert any right under any
laws pertaining to the marshaling 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 Mezzanine
Lender under the Mezzanine Loan Documents to a sale of the Collateral for the
collection of the Indebtedness without any prior or different resort for
collection or of the right of Mezzanine Lender to the payment of the
Indebtedness out of the net proceeds of the Collateral in preference to every
other claimant whatsoever.

 

20.19 Waiver of Counterclaim and other Actions. Mezzanine Borrower hereby
expressly and unconditionally waives, in connection with any suit, action or
proceeding brought by Mezzanine Lender on this Agreement, the Mezzanine Note,
the Pledge or any Mezzanine Loan Document, any and every right it may have to
(i) interpose any counterclaim therein (other than a counterclaim which can only
be asserted in the suit, action or proceeding brought by Mezzanine Lender on
this Agreement, the Mezzanine Note, the Pledge or any Mezzanine Loan Document
and cannot be maintained in a separate action) and (ii) have any such suit,
action or proceeding consolidated with any other or separate suit, action or
proceeding.

 

20.20 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Mezzanine
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 Mezzanine Loan Documents and
that such Mezzanine Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Mezzanine
Borrower acknowledges that, with respect to the Loan, Mezzanine 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
Mezzanine Lender or any parent, subsidiary or Affiliate of Mezzanine Lender.
Mezzanine Lender shall not be subject to any limitation whatsoever in the
exercise of any rights or remedies available to it under any of the Mezzanine
Loan Documents or any other agreements or instruments which govern the Loan by
virtue of the ownership by it or any parent, subsidiary or Affiliate of
Mezzanine Lender of any equity interest any of them may acquire in Mezzanine
Borrower, and Mezzanine Borrower hereby irrevocably waives the right to raise
any defense or take any action on the basis of the foregoing with respect to
Mezzanine Lender’s exercise of any such rights or remedies. Mezzanine Borrower
acknowledges that Mezzanine 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 Mezzanine Borrower or
its Affiliates.

 

20.21 Prior Agreements. This Agreement and the other Mezzanine Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or

 

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between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Mezzanine Loan Documents and unless specifically
set forth in a writing contemporaneous herewith the terms, conditions and
provisions of any and all such prior agreements do not survive execution of this
Agreement.

 

20.22 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original, but all of which shall constitute
one document.

 

20.23 Direction of Mortgage Borrower with Respect to the Property. Mezzanine
Borrower and Mezzanine Lender acknowledge and agree that, as to any clauses or
provisions contained in this Agreement or any of the other Mezzanine Loan
Documents to the effect that (i) Mezzanine Borrower shall cause Mortgage
Borrower to act or to refrain from acting in any manner, or (ii) Mezzanine
Borrower shall cause to occur or not to occur, or otherwise be obligated in any
manner with respect to, any matters pertaining to Mortgage Borrower or the
Property, or (iii) other similar effect, such clause or provisions, in each
case, is intended to mean, and shall be construed as meaning, that Mezzanine
Borrower has undertaken to act and is obligated to act only in Mezzanine
Borrower’s capacity as the direct or indirect sole member of Mortgage Borrower
(which Mortgage Borrower, in turn, is the fee owner of the Property) but not
directly with respect to Mortgage Borrower or the Property or in any other
manner which would violate any of the covenants contained in Section 5.1.4
hereof or other similar covenants contained in Mezzanine Borrower’s
Organizational Documents.

 

[NO FURTHER TEXT ON THIS PAGE]

 

126

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

 

MEZZANINE BORROWER:

MPO INTERMEDIATE HOLDINGS, LLC,

a Delaware limited liability company

By:  

/s/ Jon W. Kimmins

Name: Jon W. Kimmins

Title: Senior Vice President-Treasurer

 

[Mezzanine Lender’s signature appears on following page]

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MEZZANINE LENDER: GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation
By:  

/s/ Todd O. Sammann

Name: Todd O. Sammann

Title: Vice President

By:  

/s/ Eric M. Schwartz

Name: Eric M. Schwartz

Title: Vice President