LOAN AGREEMENT

 

Dated as of August 27, 2004

 

Between

 

TRIZEC 333 LA, LLC

as Borrower

 

and

 

MORGAN STANLEY MORTGAGE CAPITAL INC. and

METROPOLITAN LIFE INSURANCE COMPANY

collectively, as Lender

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I     PRINCIPLES OF CONSTRUCTION     Section 1.1
Definitions 1 Section 1.2 Principles of Construction 19       ARTICLE II     THE
LOAN     Section 2.1 The Loan 19 Section 2.2 Interest Rate 20 Section 2.3 Loan
Payments 21 Section 2.4 Prepayments 21 Section 2.5 Defeasance 22       ARTICLE
III     REPRESENTATIONS AND WARRANTIES       Section 3.1 Borrower
Representations 25 Section 3.2 Survival of Representations 36       ARTICLE IV  
  BORROWER COVENANTS     Section 4.1 Borrower Affirmative Covenants 36 Section
4.2 Borrower Negative Covenants 45       ARTICLE V     INSURANCE, CASUALTY AND
CONDEMNATION.     Section 5.1 Insurance 48 Section 5.2 Casualty and Condemnation
53 Section 5.3 Delivery of Net Proceeds 54

 

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ARTICLE VI     RESERVE FUNDS     Section 6.1 Required Repair Funds 58 Section
6.2 Tax Funds 59 Section 6.3 Insurance Funds 59 Section 6.4 Capital Expenditure
Funds 60 Section 6.5 Rollover Funds 61 Section 6.6 Release of Reserve Funds upon
Termination of Cash Sweep Period 63 Section 6.7 Security Interest in Reserve
Funds 63       ARTICLE VII     PROPERTY MANAGEMENT.     Section 7.1 The
Management Agreement 63 Section 7.2 Prohibition Against Termination or
Modification 64 Section 7.3 Replacement of Manager 65       ARTICLE VIII    
TRANSFERS     Section 8.1 Transfer or Encumbrance of Property 65 Section 8.2
Transfer of Equity Interests 67 Section 8.3 Subordinate Mezzanine Loan Option 69
      ARTICLE IX     SALE AND SECURITIZATION OF MORTGAGE     Section 9.1 Sale of
Mortgage and Securitization 70 Section 9.2 Securitization Indemnification 71
Section 9.3 Mezzanine Loans 74       ARTICLE X     DEFAULTS     Section 10.1
Event of Default 74 Section 10.2 Remedies 77 Section 10.3 Right to Cure Defaults
78 Section 10.4 Remedies Cumulative 78

 

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ARTICLE XI     MISCELLANEOUS     Section 11.1 Successors and Assigns 79 Section
11.2 Lender’s Discretion 79 Section 11.3 Governing Law 79 Section 11.4
Modification, Waiver in Writing 81 Section 11.5 Delay Not a Waiver 81 Section
11.6 Notices 81 Section 11.7 Trial by Jury 82 Section 11.8 Headings 83 Section
11.9 Severability 83 Section 11.10 Preferences 83 Section 11.11 Waiver of Notice
83 Section 11.12 Remedies of Borrower 83 Section 11.13 Expenses; Indemnity 84
Section 11.14 Schedules Incorporated 85 Section 11.15 Offsets, Counterclaims and
Defenses 85 Section 11.16 No Joint Venture or Partnership; No Third Party
Beneficiaries 85 Section 11.17 Publicity 86 Section 11.18 Waiver of Marshalling
of Assets 86 Section 11.19 Waiver of Offsets/Defenses/Counterclaims 86 Section
11.20 Conflict; Construction of Documents; Reliance 86 Section 11.21 Brokers and
Financial Advisors 87 Section 11.22 Exculpation 87 Section 11.23 Prior
Agreements 89 Section 11.24 Servicer 89 Section 11.25 Joint and Several
Liability 90 Section 11.26 Creation of Security Interest 90 Section 11.27
Assignments and Participations 90 Section 11.28 Set-Off 91 Section 11.29
Component Notes 91 Section 11.30 Approvals; Third Parties; Conditions 92 Section
11.31 Limitation on Liability of Lender’s Officers, Employees, etc 92 Section
11.32 Qualified Intermediary 92

 

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SCHEDULES           Schedule I - Rent Roll Schedule II - Required Repairs
Schedule III - Organizational Chart Schedule IV - Form of Subordination,
Non-Disturbance and Attornment Agreement Schedule V - Sample Calculation of
Actual Net Cash Flow Schedule VI - List of Exchange Documents Schedule VII -
Form of Subordination of Management Agreement

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of August 27, 2004 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), by and between MORGAN STANLEY MORTGAGE CAPITAL INC., a New York
corporation, having an address at 1221 Avenue of the Americas, 27th Floor, New
York, New York 10020 (“Morgan” and METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation, having an address at 10 Park Avenue, Morristown, New Jersey
07962 (“MetLife”); and together with Morgan, collectively, “Lender”), and TRIZEC
333 LA, LLC, a Delaware limited liability company, having an address at 233
South Wacker Drive, Suite 4600, Chicago, Illinois 60606 (“Borrower”).

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

ARTICLE I

 

PRINCIPLES OF CONSTRUCTION

 

Section 1.1        Definitions.

 

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

 

“Access Laws” shall have the meaning set forth in Section 4.1.16(a).

 

“Acquired Property Statements” shall have the meaning set forth in
Section 9.1(c)(i).

 

“Actual Debt Service Coverage Ratio” shall mean a ratio for the applicable
period in which:

 

(a)      the numerator is the Actual Net Cash Flow for such period as set forth
in the financial statements required in accordance with this Agreement; and

 

 

 

  

(b)     the denominator is the aggregate amount of principal and interest due
and payable on the Loan for such period.

 

“Actual Net Cash Flow” shall mean, for any period, the amount obtained by
subtracting Actual Operating Expenses for such period from Gross Income from
Operations for such period; provided, however, that for purposes of determining
whether or not a NOI Trigger Event has occurred (a) the Rents from the Property
will be annualized based upon Leases in existence as of the date immediately
following the applicable Actual NOI Determination Date, based upon the rent roll
delivered to Lender by Borrower under Section 4.16 hereof and (b) Actual
Operating Expenses and Gross Income from Operations (other than Rents) will each
be based upon the trailing 12-month period preceding the Actual NOI
Determination Date. An example of each calculation is attached hereto and made a
part hereof as Schedule V.

 

“Actual NOI Determination Date” shall mean the last day of each calendar quarter
that Lender determines the Actual Net Cash Flow in accordance with this
Agreement.

 

“Actual Operating Expenses” shall mean for any period, the total of all costs
and expenses, computed in accordance with GAAP, of whatever kind during such
period relating to the operation, maintenance and management of the Property
that are actually incurred, including without limitation, utilities, ordinary
repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees (if any), payroll and related
taxes, computer processing charges, operational equipment, lease payments, “bad
debt” expenses and other similar costs, but excluding depreciation, tenant
improvements and leasing commissions, Debt Service, Capital Expenditures, and
contributions to the Capital Expenditure Funds, the Tax Funds, Insurance Funds,
the Rollover Funds and any other reserves required under the Loan Documents.

 

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, owns more than forty percent (40%) of, is in Control of, is
Controlled by or is under common ownership or Control with such Person or is a
director or officer of such Person or of an Affiliate of such Person.

 

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

 

“Alteration Final Notice” shall have the meaning specified in Section 4.1.10(b).

 

“Alteration Request” shall have the meaning specified in Section 4.1.10(b).

 

“Alteration Response” shall have the meaning specified in Section 4.1.10(b).

 

“Alteration Threshold” shall mean Seven Million Two Hundred and Sixty Thousand
and No/100 Dollars ($7,260,000).

 

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

 

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“Appraisal” shall mean an appraisal of the Property in its then “as is”
condition, prepared not more than ninety (90) days prior to the Closing Date (or
other relevant date with respect to an updated Appraisal or an Appraisal with
respect to the Property) by a member of the American Institute of Real Estate
Appraisers selected by Lender, which appraisal (i) shall meet the minimum
appraisal standards for national banks promulgated by the Comptroller of the
Currency pursuant to Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, as amended (FIRREA), and (ii) otherwise shall be in
both form and substance satisfactory to Lender in its sole and absolute
discretion.

 

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

 

“Assignment of Management Agreement” shall mean that any Assignment of
Management Agreement and Subordination of Management Fees in the form attached
hereto as Schedule VII to be entered into any time after the date hereof among
Borrower, Manager and Lender in accordance with the provisions of Section 7.2
hereof, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

 

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

 

“Bankruptcy Action” shall mean with respect to any Person (i) such Person filing
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (ii) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition against such Person; (iii) such Person
filing an answer consenting to or otherwise acquiescing in or joining in any
involuntary petition filed against it, by any other Person under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or soliciting
or causing to be solicited petitioning creditors for any involuntary petition
from any Person; (iv) such Person consenting to or acquiescing in or joining in
an application for the appointment of a custodian, receiver, trustee, or
examiner for such Person or any portion of the Property or (v) such Person
making an assignment for the benefit of creditors, or admitting, in writing or
in any legal proceeding, its insolvency or inability to pay its debts as they
become due.

 

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

 

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

 

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“Borrower” shall mean Trizec 333 LA, LLC, a Delaware limited liability company
together with its permitted successors and permitted assigns.

 

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

 

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

 

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

 

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

 

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

 

“Cash Sweep Cure” shall mean any one of the following: (a) if the Cash Sweep
Event is caused solely by the occurrence of the Event of Default that such Event
of Default has been cured or no longer exists or has been waived in writing by
Lender or (b) if the Cash Sweep Event is caused solely by the occurrence of a
NOI Trigger Event (defined below),the Actual Net Cash Flow for two (2)
consecutive calendar quarters is equal to or greater than $19,685,954.00, as set
forth in the financial statements required under this Agreement; provided, that,
no new Cash Sweep Event shall have occurred and be continuing under this
Agreement.

 

“Cash Sweep Event” shall mean any one of the following: (a) the occurrence of an
Event of Default or (b) as of any Actual NOI Determination Date, the Actual Net
Cash Flow, as determined in the manner described in the definition of Actual Net
Cash Flow is less than $19,685,954.00 (a “NOI Trigger Event”).

 

“Cash Sweep Period” shall mean the period from and after a Cash Sweep Event
until a Cash Sweep Cure has occurred.

 

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

 

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

 

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

 

“Clearing Account” shall mean that certain collection account established by
Borrower with Clearing Account Bank into which Borrower shall cause all Rents to
be deposited in accordance with the terms and conditions of the Clearing Account
Agreement.

 

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“Clearing Account Agreement” shall mean that certain Multi-Party Agreement
Relating to Lockbox Services dated as of the date hereof, among Borrower, Lender
and Clearing Account Bank.

 

“Clearing Account Bank” shall mean Bank of America, N.A., a national banking
association together with its permitted successors and assigns.

 

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

 

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

 

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

 

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

 

“Debt” shall mean the outstanding principal amount of the Loan together with all
interest accrued and unpaid thereon and all other sums (including any Yield
Maintenance Premium payable pursuant to the terms of this Agreement) due to
Lender in respect of the Loan under the Note, this Agreement, the Mortgage, the
Environmental Indemnity or any other Loan Document.

 

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

 

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

 

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

 

“Defeasance Collateral” shall mean U.S. Obligations, which provide payments
(i) on or prior to, but as close as possible to, the Business Day immediately
preceding all Monthly Payment Dates and other scheduled payment dates, if any,
under the Note after the Defeasance Date and up to and including the Permitted
Prepayment Date, and (ii) in amounts equal to or greater than the Scheduled
Defeasance Payments relating to such Monthly Payment Dates and other scheduled
payment dates.

 

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“Defeasance Collateral Account” shall have the meaning set forth in Section
2.5.3.

 

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

 

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

 

“Disclosure Document” shall have the meaning set forth in Section 9.2(a).

 

“Disclosure Document Date” shall have the meaning set forth in Section
9.1(c)(iv).

 

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

 

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

 

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

 

“Environmental Report” shall mean that certain Report on Bank of America Plaza
ASTM Phase I Environmental Site Assessment, dated as of July 1, 2004, prepared
by Haley & Aldrich, Inc. in connection with the making of the Loan.

 

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

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

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

 

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“Exchange” shall mean a transaction intended to qualify as a “partial deferred
exchange” and a “reverse exchange” under Section 1031 of the Internal Revenue
Code of 1986, as amended, and Revenue Procedure 2000-37 promulgated thereunder,
pursuant to which Qualified Intermediary shall acquire and hold 100% of the
indirect interests in Borrower and, upon consummation of the Exchange, transfer
100% of the indirect interests in Borrower to THI all in accordance with the
terms of Section 8.2(e) of this Agreement and with those certain agreements,
documents and instruments in the form reviewed and approved by Lender prior to
the closing of the Loan, a list of which is attached hereto as Schedule VI,
(collectively, the “Exchange Documents”).

 

“Exchange Act” shall have the meaning set forth in Section 9.2(a).

 

“Exchange Act Filing” shall have the meaning set forth in Section 9.1(c)(vi).

 

“Executive Order” shall have the meaning set forth in the definition of
“Prohibited Person”.

 

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

 

“Fitch” shall mean Fitch, Inc.

 

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

 

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

 

“Gross Income from Operations” shall mean, for any period, all revenues,
computed in accordance with GAAP (excluding straight lining of Rents and items
of “Extraordinary Gain” as determined in accordance with GAAP), derived from the
ownership and operation of the Property from whatever source during such period,
including, but not limited to, Rents, service fees or charges, license fees,
parking fees and other pass-through or reimbursements paid by tenants under the
Leases of any nature, but excluding rent concessions or credits, rent
abatements, sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Net Proceeds
(other than from business interruption or other loss of income insurance), and
any disbursements to Borrower from the Tax Funds, Insurance Funds, the Capital
Expenditure Funds, the Rollover Funds, or any other escrow fund established by
the Loan Documents.

 

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

 

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

 

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

 

“Independent Manager” shall have the meaning set forth in Section 3.1.24(p).

 

“Insolvency Opinion” shall mean that certain bankruptcy nonconsolidation opinion
letter, dated the date hereof, rendered by Edwards & Angell, LLP in connection
with the Loan.

 

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

 

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

 

“Interest Rate” shall mean, the Note A-1 Interest Rate, the Note A-2 Interest
Rate, the Note A-3 Interest Rate, the Note A-4 Interest Rate, the Note A-5
Interest Rate and the Note B Interest Rate, as applicable.

 

“Lease” shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which Borrower or any of its predecessors in
interest grants or has granted to any Person 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 guarantee of the performance
and observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.

 

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

 

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“Lender” shall mean, collectively, Morgan Stanley Mortgage Capital Inc., a New
York corporation, and Metropolitan Life Insurance Company, a New York
corporation, together with their respective successors and assigns.

 

“Lender Group” shall have the meaning set forth in Section 9.2(b).

 

“Lender Indemnitees” shall have the meaning set forth in Section 11.13(b).

 

“Letter of Credit” shall mean an irrevocable, unconditional, transferable
(without cost or fee), clean sight draft letter of credit acceptable to Lender
and the Rating Agencies (either an evergreen letter of credit or one which does
not expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Lender and entitling Lender to draw thereon in New York, New York,
issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible Institution. If at any time the bank issuing any such Letter of
Credit shall cease to be an Eligible Institution, Lender shall have the right
immediately to draw down the same in full and hold the proceeds of such draw in
accordance with the applicable provisions hereof.

 

“Liabilities” shall have the meaning set forth in Section 9.2(b).

 

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

 

“Loan” shall mean the loan in the original principal amount of Two Hundred
Forty-Two Million and No/100 Dollars ($242,000,000.00) made by Lender to
Borrower pursuant to this Agreement evidenced by the Note and secured by the
Mortgage, together with all sums due or to become due thereunder.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing
Account Agreement, the Environmental Indemnity and any other document pertaining
to the Property as well as all other documents now or hereafter executed and/or
delivered in connection with the Loan.

 

“Loan-to-Value Ratio” shall mean the ratio, as of a particular date, in which
the numerator is equal to the outstanding principal balance of the Debt and the
denominator is equal to the appraised value of the Property as determined by an
appraisal prepared in accordance with the requirements for the Appraisal.

 

“Major Lease” shall mean any Lease (i) demising 50,000 square feet or more at
the Property or (ii) made with a Tenant that is a Tenant under another Lease at
the Property, if the Leases together cover 50,000 square feet or more at the
Property.

 

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“Management Agreement” shall mean any management agreement with respect to the
Property entered into by Borrower in accordance with the terms and conditions of
the Loan Documents pursuant to which the Manager is to provide management and
other services with respect to the Property.

 

“Manager” shall mean any manager of the Property approved in accordance with the
terms and conditions of the Loan Documents.

 

“Master Lease” shall mean that certain Master Lease Agreement dated as of the
date hereof, by and between Borrower, as master lessor, and Trizec 333, as
master lessee.

 

“Material Adverse Effect” shall mean any material adverse effect upon (i) the
business operations, economic performance or financial condition of Borrower or
the Property, (ii) the ability of Borrower to perform, in all material respects,
its obligations under each of the Loan Documents or (iii) the enforceability or
validity of any Loan Document, the perfection or priority of any Lien created
under any Loan Document or the remedies of the Lender under any Loan Document.

 

“Material Agreements” shall mean each contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Property, (other than the Management Agreement and the
Leases) which (i) require Borrower to pay more than $1,000,000 per annum and
(ii) has a term that exceeds one year, and cannot be terminated by Borrower
without cause upon 90 days’ notice or less without payment of a termination fee.

 

“Maturity Date” shall mean September 7, 2014 or such other date on which the
final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.

 

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

 

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

 

“Monthly Debt Service Payment Amount” shall mean from the first Monthly Payment
Date through and including September 7, 2006 a monthly payment of interest only
and thereafter a constant monthly payment of $1,345,340.00.

 

“Monthly Payment Date” shall mean the seventh (7th) day of every calendar month
occurring during the term of the Loan, provided, however, that, prior to a
Securitization, Lender shall have the right to change the Monthly Payment Date
to any other day (or such other day of a calendar month selected by Lender, in
its sole and absolute discretion, to collect debt service payments under loans
which it makes and securitizes) upon at least ten (10) days prior written notice
to Borrower (in which event such change shall then be deemed effective) and, if
requested by Lender, Borrower shall promptly execute an amendment to this
Agreement to evidence such change.

 

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

 

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

 

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

 

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

 

“New Mezzanine Borrower” shall have the meaning set forth in Section 9.3.

 

“New Mezzanine Loan” shall have the meaning set forth in Section 9.3.

 

“Non-Material Lease Modification” shall mean with respect to a Major Lease, any
modification or amendment thereto which (i) does not reduce the rental rate
payable thereunder or adversely affect in any manner any of the other economic
terms thereunder, (ii) does not shorten the term of such Major Lease, (iii) does
not involve the expansion or addition of more than 50,000 square feet of space
to such Major Lease, and (iv) does not otherwise have a material adverse effect
with respect to such Major Lease.

 

“Note” shall mean, collectively, Note A and Note B.

 

“Note A” shall mean, collectively (i) that certain Promissory Note A-1, dated
the date hereof, made by Borrower to Morgan in the original principal amount of
$75,000,000.00 (such note, together with all extensions, renewals, replacements,
restatements or modifications thereof hereinafter referred to as “Note A-1”),
(ii) that certain Promissory Note A-2, dated the date hereof, made by Borrower
to Morgan in the original principal amount of $50,000,000.00 (such note,
together with all extensions, renewals, replacements, restatements or
modifications thereof hereinafter referred to as “Note A-2”), (iii) that certain
Promissory Note A-3, dated the date hereof, made by Borrower to Morgan in the
original principal amount of $35,000,000.00 (such note, together with all
extensions, renewals, replacements, restatements or modifications thereof
hereinafter referred to as “Note A-3”), (iv) that certain Promissory Note A-4,
dated the date hereof, made by Borrower to Morgan in the original principal
amount of $20,000,000.00 (such note, together with all extensions, renewals,
replacements, restatements or modifications thereof hereinafter referred to as
“Note A-4”), and (v) that certain Promissory Note A-5, dated the date hereof,
made by Borrower to Morgan in the original principal amount of $12,000,000.00
(such note, together with all extensions, renewals, replacements, restatements
or modifications thereof hereinafter referred to as “Note A-5”).

 

“Note A-1 Interest Rate” shall mean a rate per annum equal to 5.0626% payable
with respect to Note A-1.

 

-11-

 

  

“Note A-2 Interest Rate” shall mean a rate per annum equal to 5.0626% payable
with respect to Note A-2.

 

“Note A-3 Interest Rate” shall mean a rate per annum equal to 5.0626% payable
with respect to Note A-3.

 

“Note A-4 Interest Rate” shall mean a rate per annum equal to 5.0626% payable
with respect to Note A-4.

 

“Note A-5 Interest Rate” shall mean a rate per annum equal to 5.0626% payable
with respect to Note A-5.

 

“Note B” shall mean that certain Promissory Note B, dated the date hereof, made
by Borrower to MetLife in the original principal amount of $50,000,000.00 (such
note, together with all extensions, renewals, replacements, restatements or
modifications thereof).

 

“Note B Interest Rate” shall mean a rate per annum equal to 6.2600% payable with
respect to Note B.

 

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

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized officer of Borrower.

 

“Operating Agreements” shall mean any material covenants, restrictions or
agreements of record relating to the construction, operation or use of the
Property.

 

“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes, and any other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Property, now or hereafter levied or assessed or imposed against
the Property or any part thereof.

 

“Patriot Act” shall mean collectively all laws of the United States federal
government relating to terrorism or money laundering, including Executive Order
No. 13224 on Terrorist Financing (effective September 24, 2001) and the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001 (Public Law 107 56).

 

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, (ii) all Liens, encumbrances and other
matters expressly set forth in the Title Insurance Policy, (iii) Liens, if any,
for Taxes imposed by any Governmental Authority not yet due or delinquent,
(iv) mechanics’, materialmen’s or similar Liens for delinquent taxes, if being
contested by Borrower in accordance with the terms of this Agreement, (v) Liens
on personal property securing financing leases, (vi) rights of tenants, as
tenants only, under Leases in existence on the Closing Date and any Leases
(including the Master Lease) entered into thereafter in accordance with the
requirements of this Agreement, (vii)  easements, rights-of-way, restrictions,
minor encroachments, or other similar encumbrances not impairing the
marketability of the Property and not interfering with the use of the Property
for uses permitted under this Agreement or in the ordinary conduct of the
business of Borrower, and (viii) such other title and survey exceptions as
Lender has approved or may approve in writing in Lender’s reasonable discretion.

 

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

 

“Permitted Prepayment Date” shall have the meaning set forth in Section 2.4.1.

 

“Permitted Transfer” shall have the meaning set forth in Section 8.2.

 

“Permitted Transferee” shall mean a corporation, partnership, limited liability
company or other Person (a) which is a Trizec Affiliate or (b) which, or the
parent entity of which, (i) owns a minimum of eight (8) office buildings
comparable in quality to the Property with an aggregate of at least 6,000,000
square feet (excluding the Property) and (ii) has, together with its Affiliates,
a net worth of not less than $500,000,000 (excluding the Property), (ii) which
is not, and the principals of which are not, (a) in default on any indebtedness
or loan from Lender, (b) the subject of any Bankruptcy Action, (c) the subject
of any criminal charges or proceedings which is deemed significant as reasonably
determined by Lender, (d) involved, or whose parent or Affiliates are involved,
in litigation which would impair its ability to own, manage or lease the
Property as reasonably determined by Lender, (e) on any list maintained by the
Office of Foreign Assets Control or (f) in violation of the Patriot Act,
(iii) that qualifies as a single purpose, bankruptcy remote entity under
criteria established by the Rating Agencies; and (iv) whose counsel has
delivered to Lender a non-consolidation opinion reasonably acceptable to Lender
and acceptable to the Rating Agencies in their sole discretion.

 

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

 

“Policy” shall have the meaning specified in Section 5.1.1(b).

 

“Principal” shall mean, Trizec 333 Mezz, LLC, a Delaware limited liability
company.

 

“Prohibited Person” shall mean any Person:

 

(a)          listed in the Annex to, or is otherwise subject to the provisions
of, the Executive Order No. 13224 on Terrorist Financing, effective September
24, 2001, and relating to Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive
Order”);

 

(b)          that is owned or Controlled by, or acting for or on behalf of, any
person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of the Executive Order;

 

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 (c)          with whom Lender is prohibited from dealing or otherwise engaging
in any transaction by the Patriot Act;

 

(d)          who commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order;

 

(e)          that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website or at any replacement
website or other replacement official publication of such list; or

 

(f)          who is an Affiliate of a Person listed above.

 

“Property” shall mean the parcel of real property, the Improvements thereon and
all personal property owned by Borrower and encumbered, from time to time, by
the Mortgage, together with all rights of Borrower pertaining to such property
and Improvements, all as more particularly described in the granting clauses of
the Mortgage.

 

“Property Condition Report” shall mean that certain Property Condition
Assessment, Bank of America Plaza, dated as of June 28, 2004, prepared by
Property Condition Assessments, LLC in connection with the making of the Loan.

 

“Proposed Alterations” shall have the meaning specified in Section 4.1.10(b).

 

“Qualified Intermediary” shall mean Trizec 333, whose sole member is CDECRE,
Inc., an Illinois corporation, in its capacity as an “Exchange Accommodation
Titleholder,” as defined in Revenue Procedure 2000-37, 2000-2 C.B. 308
promulgated under the Internal Revenue Code of 1986, as amended, and, in such
capacity, the owner of one hundred percent (100%) of the indirect ownership
interests in Borrower.

 

“Qualified Lender” shall mean one or more of the following: (i) a real estate
investment trust, bank, saving and loan association, investment bank, insurance
company, trust company, commercial credit corporation, pension plan, pension
fund or pension advisory firm, mutual fund, government entity or plan,
(ii) investment company, money management firm or “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933, as
amended, or an institutional “accredited investor” within the meaning of
Regulation D under the Securities Act of 1933, as amended, which is regularly
engaged in the business of making or owning loans of similar types to the
proposed mezzanine loan or the Loan, (iii) an investment fund, limited liability
company, limited partnership or general partnership (a “Permitted Investment
Fund”) where the mezzanine lender acts as the general partner, managing member
or fund manager and at least 50% of the equity interests in such Permitted
Investment Fund are owned, directly or indirectly, by one or more of the
following: an institutional “accredited investor,” within the meaning of
Regulation D promulgated under the Securities Act of 1933, as amended, and/or a
“qualified institutional buyer” or both within the meaning of Rule 144A
promulgated under the Securities Exchange Act of 1934 (provided each
institutional “accredited investor” or “qualified institutional buyer” meets the
test set forth in clause (v)(A) below), as amended, (iv) any other lender or
entity (including any opportunity funds) regularly engaged in the business of
making mezzanine loans which has been approved as a Qualified Lender by the
Rating Agencies, (v) an institution substantially similar to any of the
foregoing entities described in clauses (i) or (ii) of this definition, and as
to each of the entities described in clauses (i), (ii) and (v) provided such
entity (A) has total assets (in name or under management) in excess of
$650,000,000 and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000 and
(B) is regularly engaged in the business of making or owning commercial real
estate loans or commercial loans secured by a pledge of interests in a mortgage
borrower, or (vi) any entity Controlled (as defined below) by any one or more of
the entities described above. For purposes of this definition only, “Control”
means the ownership, directly or indirectly, in the aggregate of more than fifty
percent (50%) of the beneficial ownership interest of an entity and the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ability to exercise voting power, by contract or otherwise.

 

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“Qualified Manager” shall mean any of the following provided such Person is not
the subject of any Bankruptcy Action: (a) any Trizec Affiliate or (b) a
reputable and experienced professional management organization which manages,
together with its Affiliates, exclusive of the Property, at least 6,000,000
square feet of office buildings comparable to the Property on a national basis;
provided, however, that Borrower shall have delivered to Lender (i) in the case
of (b) above, a Rating Agency Confirmation (or, if a Securitization shall not
have occurred and notwithstanding Section 7.2 hereof, Borrower shall have
obtained the prior written consent of Lender not to be unreasonably withheld or
delayed) and (ii) in the case of (a) above, a new and/or updated Insolvency
Opinion which shall be in form, scope and substance reasonably acceptable in all
respects to Lender and acceptable in all respects to the Rating Agencies.

 

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

 

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

 

“Registration Statement” shall have the meaning set forth in Section 9.2(b).

 

“Release Date” shall mean the earlier to occur of (i) the third (3rd)
anniversary of the Closing Date and (ii) the date that is two (2) years from the
“startup day” (within the meaning of Section 860G(a)(9) of the Code) of the
REMIC Trust established in connection with the last Securitization involving any
portion of this Loan.

 

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

 

-15-

 

  

“Rents” shall mean all rents (including, without limitation, percentage rents),
rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Property, and proceeds, if any, from
business interruption or other loss of income insurance.

 

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

 

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

 

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

 

“Restoration Threshold” shall mean Seven Million Two Hundred and Sixty Thousand
and No/100 Dollars $7,260,000.

 

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

 

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

 

“Scheduled Defeasance Payments” shall mean all scheduled payments of interest
and principal under the Note for all Monthly Payment Dates occurring after the
Defeasance Date and up to and including the Permitted Prepayment Date
(including, the outstanding principal balance on the Note as of the Permitted
Prepayment Date).

 

“Secondary Market Transaction” shall have the meaning set forth in Section
9.1(a).

 

“Securities” shall have the meaning set forth in Section 9.1(a).

 

“Securities Act” shall have the meaning set forth in Section 9.2(a).

 

“Securitization” shall have the meaning set forth in Section 9.1(a).

 

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

 

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

 

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

 

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

 

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

 

-16-

 

  

“Specified Decisions” shall mean, with respect to the Borrower or any SPC Party,
decisions to (a) refinance, (b) amend the organizational documents of Borrower
or any SPC Party, (c) alter voting rights of the owners of the Borrower or any
SPC Party, (d) merge with, consolidate with or acquire another entity,
(e) transfer ownership interests in such Person, (f) dissolve, (g) reorganize or
change or remove a managing member or general partner of such Person, as
applicable, or (h) similar decisions affecting such Person, as reasonably
determined by Lender; provided, however, in no event shall any decision with
respect to the day-to-day control, operation and/or management of Borrower or
the Property be deemed to constitute a Specified Decision for purposes hereof.

 

“Standard Statements” shall have the meaning set forth in Section 9.1(c)(i).

 

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

 

“Subordinate Mezzanine Lender” shall have the meaning set forth in Section 8.3.

 

“Subordinate Mezzanine Loan” shall have the meaning set forth in Section 8.3.

 

“Subordinate Mezzanine Intercreditor Agreement” shall have the meaning set forth
in Section 8.3.

 

“Subordination Agreement” shall mean that certain Subordination and Attornment
Agreement dated the date hereof by and between Trizec 333 and Lender, with
respect to the Master Lease, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

“Successor Borrower” shall have the meaning set forth in Section 2.5.4.

 

“Survey” shall mean a current land survey for the Property, certified to the
title company and Lender and its successors and assigns, in form and content
reasonably satisfactory to Lender.

 

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

 

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

 

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

 

“Terrorism Losses” shall be those types of losses which result from perils of
terrorism and acts of terrorism as are currently “certified” under TRIA whether
or not TRIA is in effect excluding losses for nuclear, biological or chemical
acts.

 

-17-

 

  

“Terrorism Premium Limit” shall mean an annual Insurance Premium equal to or
greater than (but not less than) the premium paid for the “All Risk” insurance
described in Section 5.1.1(a)(i) hereof, but, in no event, less than
$437,500.00.

 

“THI” shall mean Trizec Holdings, Inc. or any successor thereto by merger,
conversion, consolidation, reorganization or other form of business combination.

 

“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in
the form reasonably acceptable to Lender issued with respect to the Property and
insuring the lien of the Mortgage together with such endorsements and
affirmative coverages as Lender may reasonably require.

 

“TPI” shall mean Trizec Properties, Inc. or any successor thereto by merger,
conversion, consolidation, reorganization or other form of business combination.

 

“Transferee” shall have the meaning set forth in Section 8.1.1(f)(ii) .

 

“TRIA” shall mean the Terrorism Risk Insurance Act of 2002, as amended, or
similar Federal statute.

 

“Trizec Affiliate” shall mean (a) THI, (b) TPI, or (c) any entity which directly
or indirectly has Control over, is Controlled by or is under common Control with
THI or TPI.

 

“Trizec 333” shall mean Trizec 333 Holdings, LLC, a Delaware limited liability
company.

 

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

 

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

 

“Underwriter Group” shall have the meaning set forth in Section 9.2(b).

 

“Updated Information” shall have the meaning set forth in Section 9.1(b)(i).

 

“U.S. Obligations” shall mean non redeemable securities evidencing an obligation
to timely pay principal and/or interest in a full and timely manner that are
(a) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged, (b) other non-callable “government
securities” as defined in Treasury Regulations Section 1.860G-2(a)(8)(i), as
amended which will not result in a reduction, downgrade or withdrawal of the
ratings for the Securities or any class thereof issued in connection with a
Security and which are then outstanding or (c) other instruments, which if a
Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code and which
will not result in a reduction, downgrade or withdrawal of the ratings for the
Securities or any class thereof issued in connection with a Security and which
are then outstanding.

 

-18-

 

  

“Yield Maintenance Premium” shall mean an amount equal to: (i) one percent (1%)
of the principal amount of the Loan being prepaid plus (ii) the present value as
of the Prepayment Date of the Calculated Payments from the Prepayment Date
through the Permitted Prepayment Date determined by discounting such payments at
the Discount Rate. As used in this definition, the term “Prepayment Date” shall
mean the date on which prepayment is made. As used in this definition, the term
“Calculated Payments” shall mean the monthly payments of interest only which
would be due based on the principal amount of the Loan being prepaid on the
Prepayment Date and assuming an interest rate per annum equal to the difference
(if such difference is greater than zero) between (y) the Interest Rate and
(z) the Yield Maintenance Treasury Rate. As used in this definition, the term
“Discount Rate” shall mean the rate which, when compounded monthly, is
equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term “Yield Maintenance Treasury
Rate” shall mean the yield calculated by Lender by the linear interpolation of
the yields, as reported in the Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury
Constant Maturities with maturity dates (one longer or one shorter) most nearly
approximating the Maturity Date. In the event Release H.15 is no longer
published, Lender shall select a comparable publication to determine the Yield
Maintenance Treasury Rate. In no event, however, shall Lender be required to
reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise.

 

Section 1.2       Principles of Construction.

 

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

 

ARTICLE II

 

THE LOAN

 

Section 2.1       The Loan.

 

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

 

2.1.2           Single Disbursement to Borrower.    Borrower shall receive only
one (1) borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.

 

2.1.3           Note, Mortgage and Loan Documents.   The Loan shall be evidenced
by the Note and secured by the Mortgage, the Assignment of Leases and the other
Loan Documents.

 

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2.1.4           Use of Proceeds. Borrower shall use proceeds of the Loan to
(a) acquire the Property and/or pay and refinance any existing loans relating to
the Property, (b) pay all past due Basic Carrying Costs, if any, in respect of
the Property, (c) deposit the Reserve Funds, as applicable, (d) pay costs and
expenses incurred in connection with the closing of the Loan, (e) fund any
working capital requirements of the Property and (f) distribute the balance of
the proceeds, if any to Borrower and its members.

 

Section 2.2           Interest Rate.

 

2.2.1           Interest Rate. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date up to and including the Maturity
Date at the Interest Rate.

 

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

 

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

 

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

 

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Section 2.3       Loan Payments.

 

2.3.1           Payment Before Maturity Date. Borrower shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through the last day of the month in which the Closing Date occurs (unless the
Closing Date is the first (1st) day of a calendar month, in which case no such
separate payment of interest shall be due). Borrower shall make a payment to
Lender in the amount of the Monthly Debt Service Payment Amount on the Monthly
Payment Date occurring on October 7, 2004 and on each Monthly Payment Date
thereafter to and including the Maturity Date. Each payment shall be applied
first to accrued and unpaid interest and the balance to principal, as
applicable. The principal portion of the Monthly Debt Service Payment Amount
required hereunder is based upon a thirty (30) year amortization schedule.

 

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

 

2.3.3           Late Payment Charge. If any principal, interest or any other sum
due under the Loan Documents, other than the payment of principal due on the
Maturity Date, is not paid by Borrower on the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of (a) five
percent (5%) of such unpaid sum or (b) the Maximum Legal Rate in order to defray
the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgage and the other Loan
Documents.

 

2.3.4           Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 2:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender’s office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.

 

(b)          Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be the first Business Day that is immediately preceding such
due date (notwithstanding such adjustment of due dates, Borrower shall not be
entitled to any deduction of interest due under the Note, this Agreement or any
of the other Loan Documents) and, with respect to payments of principal due on
the Maturity Date, interest shall be payable at the Interest Rate or the Default
Rate, as the case may be, during such extension.

 

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

 

Section 2.4           Prepayments.

 

2.4.1           Voluntary Prepayments. Except as otherwise provided herein,
Borrower shall not have the right to prepay the Loan in whole or in part. On and
after June 7, 2014 (the “Permitted Prepayment Date”), Borrower may, at its
option and upon not less than fifteen (15) days (or such shorter period of time
if permitted by Lender in its reasonable discretion) prior notice to Lender,
prepay the Debt in whole but not in part, on any date without payment of the
Yield Maintenance Premium. Any prepayment received by Lender on a date other
than a Monthly Payment Date shall include interest which would have accrued
thereon to the next Monthly Payment Date. Any partial prepayment shall be
applied to the last payments of principal due under the Loan. Lender shall not
be obligated to accept such prepayment made pursuant to this Section 2.4.1
unless it is accompanied with a payment of all interest which would have accrued
on the outstanding principal amount of such prepayment and remains unpaid
through but excluding the next succeeding Monthly Payment Date, together with
other amounts due under the Loan Documents. Borrower shall have the right to
revoke any notice of prepayment under this Section 2.4.1 provided that Borrower
pays to Lender any and all actual out-of-pocket third party costs and expenses
incurred by Lender arising as a result of any such revocation.

 

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2.4.2           Mandatory Prepayments. On each date on which Lender actually
receives a distribution of Net Proceeds, and if Lender does not make such Net
Proceeds available to Borrower for a Restoration, Borrower shall, at Lender’s
option, prepay the outstanding principal balance of the Note in an amount equal
to one hundred percent (100%) of such Net Proceeds together with interest that
would have accrued on such amounts through the next Monthly Payment Date. No
Yield Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2. Any prepayment of the Loan received by Lender
pursuant to the terms of this Section 2.4.2 shall be first applied to reduction
of the outstanding principal balance, on a pari passu basis, of Note A, until
Note A is paid in full and, second, to reduction of the outstanding principal
balance of Note B.

 

2.4.3           Prepayments After Default. If during the continuance of an Event
of Default, payment of all or any part of the principal of the Loan is tendered
by Borrower (which tender Lender may reject to the extent permitted under
applicable Legal Requirements), a purchaser at foreclosure or any other Person,
such tender shall be deemed an attempt to circumvent the prohibition against
prepayment set forth in Section 2.4.1 and Borrower, such purchaser at
foreclosure or other Person shall pay the Yield Maintenance Premium, in addition
to the outstanding principal balance, all accrued and unpaid interest and other
amounts payable under the Loan Documents. Any prepayment of the Loan received by
Lender pursuant to the terms of this Section 2.4.3 may be retained and applied
by Lender toward the payment of the Debt in such order, priority and proportions
as Lender in its sole discretion shall determine.

 

Section 2.5       Defeasance.

 

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

 

(i)          Borrower shall provide Lender not less than thirty (30) days prior
written notice (or such shorter period of time if permitted by Lender in its
reasonable discretion) specifying a date (the “Defeasance Date”) on which the
Defeasance Event is to occur;

 

(ii)         Borrower shall pay to Lender (A) all payments of principal and
interest due on the Loan to and including the Defeasance Date (including,
without limitation, interest accrued but not paid or payable through and
including the Defeasance Date, if any) and (B) all other sums, then due under
the Note, this Agreement, the Mortgage and the other Loan Documents;

 

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(iii)        Borrower shall deposit the Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Sections 2.5.3 and 2.5.4 hereof;

 

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

 

(v)         Borrower shall deliver to Lender an opinion of counsel for Borrower
that is standard in commercial lending transactions and subject only to
customary qualifications, assumptions and exceptions opining, among other
things, that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Defeasance Collateral,
(B) if a Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a result
of a Defeasance Event pursuant to this Section 2.5.1, (C) the Defeasance Event
will not result in a deemed exchange for purposes of the Code and will not
adversely affect the status of the Note as indebtedness for federal income tax
purposes and (D) a non consolidation opinion with respect to the Successor
Borrower;

 

(vi)        Borrower shall deliver to Lender a Rating Agency Confirmation as to
the Defeasance Event;

 

(vii)       Borrower shall deliver an Officer’s Certificate certifying that the
requirements set forth in this Section 2.5.1 and in Sections 2.5.3 and 2.5.4
have been satisfied;

 

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

 

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

 

(x)          Borrower shall pay all third-party, out-of-pocket costs and
expenses of Lender actually incurred in connection with the Defeasance Event,
including Lender’s reasonable attorneys’ fees and expenses and Rating Agency
fees and expenses.

 

(b)          If Borrower has elected to defease the Note and the requirements of
this Section 2.5 have been satisfied, the Property shall be released from the
lien of the Mortgage and the other Loan Documents and the Defeasance Collateral
pledged pursuant to the Security Agreement shall be the sole source of
collateral securing the Note. In connection with the release of the Lien,
Borrower shall submit to Lender, not less than fifteen (15) days prior to the
Defeasance Date (or such shorter time as is acceptable to Lender in its
reasonable discretion), a release of Lien (and related Loan Documents) for
execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Property is located. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer’s Certificate
certifying that such documentation (i) is in compliance with all Legal
Requirements, and (ii) will effect such release in accordance with the terms of
this Agreement. Borrower shall pay all costs, taxes and expenses associated with
the release of the lien of the Mortgage, including Lender’s reasonable
attorneys’ fees actually incurred. Except as set forth in this Section 2.5 or
Section 11.33 hereof, no repayment, prepayment or defeasance of all or any
portion of the Note shall cause, give rise to a right to require, or otherwise
result in, the release of the Lien of the Mortgage on the Property.

 

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2.5.2           Intentionally Omitted.

 

2.5.3           Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower shall open at any Eligible
Institution the defeasance collateral account (the “Defeasance Collateral
Account”) which shall at all times be an Eligible Account. The Defeasance
Collateral Account shall contain only (a) Defeasance Collateral and (b) cash
from interest and principal paid on the Defeasance Collateral. All cash from
interest and principal payments paid on the Defeasance Collateral shall be paid
over to Lender on each Monthly Payment Date and applied first to accrued and
unpaid interest and then to principal. Any cash from interest and principal paid
on the Defeasance Collateral not needed to pay the Scheduled Defeasance Payments
shall be paid to Borrower. Borrower shall cause the Eligible Institution at
which the Defeasance Collateral is deposited to enter an agreement with Borrower
and Lender, satisfactory to Lender in its reasonable discretion, pursuant to
which such Eligible Institution shall agree to hold and distribute the
Defeasance Collateral in accordance with this Agreement. The Borrower or
Successor Borrower, as applicable, shall be the owner of the Defeasance
Collateral Account and shall report all income accrued on Defeasance Collateral
for federal, state and local income tax purposes in its income tax return.
Borrower shall prepay all cost and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account.

 

2.5.4           Successor Borrower. In connection with a Defeasance Event under
this Section 2.5, Borrower shall, if required by the Rating Agencies or if
Borrower elects to do so, establish or designate a successor entity (the
“Successor Borrower”) which shall be a single purpose bankruptcy remote entity
and which shall be approved by the Rating Agencies. Any such Successor Borrower
may, at Borrower’s option, be an Affiliate of Borrower unless the Rating
Agencies shall require otherwise. Borrower shall transfer and assign all
obligations, rights and duties under and to the Note together with the
Defeasance Collateral to such Successor Borrower. Such Successor Borrower shall
assume the obligations under the Note and the Security Agreement and Borrower
shall be relieved of its obligations under such documents. Borrower shall pay a
minimum of One Thousand and No/100 ($1,000) to any such Successor Borrower as
consideration for assuming the obligations under the Note and the Security
Agreement. Borrower shall pay all out of pocket costs and expenses actually
incurred by Lender, including Lender’s reasonable attorney’s fees and expenses
incurred in connection therewith.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1       Borrower Representations.

 

Borrower represents and warrants that:

 

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

 

(b)          Borrower’s exact legal name is correctly set forth in the first
paragraph of this Agreement. Borrower is an organization of the type specified
in the first paragraph of this Agreement. Borrower is incorporated or organized
under the laws of the state specified in the first paragraph of this Agreement.
Borrower’s principal place of business and chief executive office, and the place
where Borrower keeps its books and records, including recorded data of any kind
or nature, regardless of the medium of recording, including software, writings,
plans, specifications and schematics, has been for the preceding four (4) months
(or, if less than four (4) months, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth in the first
paragraph of this Agreement and/or the address of the Property (unless Borrower
notifies Lender in writing at least thirty (30) days prior to the date of such
change). Borrower’s organizational identification number, if any, assigned by
the state of its incorporation or organization is 3840510. Borrower’s federal
tax identification number is 20-1518512.

 

3.1.2           Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute a legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

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

 

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3.1.4       Litigation. There is no action, suit, proceeding or investigation
pending or, to Borrower’s knowledge, threatened against Borrower in any court or
by or before any other Governmental Authority that would have a Material Adverse
Effect.

 

3.1.5       Agreements. Borrower is not in default with respect to any order or
decree of any court or any order, regulation or demand of any Governmental
Authority, which default might have a Material Adverse Effect.

 

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

 

3.1.7       Title. Borrower has good, marketable and insurable fee simple title
to the real property comprising part of the Property and good title to the
balance of the Property owned by it, free and clear of all Liens whatsoever
except the Permitted Encumbrances. The Mortgage, when properly recorded in the
appropriate records, together with any UCC financing statements required to be
filed in connection therewith will create (a) a valid, first priority, perfected
lien on the Property, subject only to Permitted Encumbrances and (b) perfected
security interests in and to, and perfected collateral assignments of, all
personalty (including the Leases), all in accordance with the terms thereof, in
each case subject only to any Permitted Encumbrances. Except as disclosed in the
Title Insurance Policy, there are no mechanics’, materialman’s or other similar
liens or claims which have been filed for work, labor or materials affecting the
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the Mortgage. None of the Permitted Encumbrances, individually or in the
aggregate, materially interfere with the benefits of the security intended to be
provided by the Mortgage and this Loan Agreement, materially and adversely
affect the value of the Property, materially impair the use or operations of the
Property or impair Borrower’s ability to pay its obligations in a timely manner.

 

3.1.8       No Plan Assets.

 

(a)          As of the date hereof (a) Borrower is not an “employee benefit
plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA,
(b) none of the assets of Borrower constitutes “plan assets” of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101, (c) Borrower is not a
“governmental plan” within the meaning of Section 3(32) of ERISA, and
(d) transactions by or with Borrower are not subject to any state statute
regulating investments of, or fiduciary obligations with respect to,
governmental plans.

 

(b)          Neither Borrower nor any general partner, director, member or
officer of Borrower is (i) a director or officer of Lender, (ii) a parent, son
or daughter of a director or officer of Lender, or a descendent of any of them,
(iii) a stepparent, adopted child, step-son or step-daughter of a director or
officer of Lender, or (iv) a spouse of a director or officer of Lender. This
Section 3.1.8 shall only be applicable during the period that MetLife shall be
the holder of Note B.

 

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3.1.9       Compliance. Except as described in the Title Insurance Policy or the
Physical Condition Report delivered to Lender, 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, the noncompliance of which would have a Material Adverse Effect. Borrower
will comply with the Patriot Act and Borrower is not in default or violation of
any order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which would have a Material Adverse Effect. Borrower has not
committed any act which may give any Governmental Authority the right to cause
Borrower to forfeit the Property or any part thereof or any monies paid in
performance of Borrower’s obligations under any of the Loan Documents.

 

3.1.10     Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered by Borrower to Lender in respect of the Property (a) are
true, complete and correct in all material respects, (b) accurately represent
the financial condition of the Property in all material respects as of the date
of such reports, and (c) have been prepared in accordance with GAAP throughout
the periods covered, except as disclosed therein. Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a Material Adverse
Effect.

 

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

 

3.1.12     Utilities and Public Access. The Property has rights of access to
public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service the Property for its intended uses.

 

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

 

3.1.14     Assessments. Borrower has not received any notice of any pending or
proposed special or other assessments for public improvements or otherwise
affecting the Property and there are no contemplated improvements to the
Property that may result in any such special or other assessments.

 

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

 

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

 

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3.1.17     Insurance. Borrower has obtained and has delivered to Lender original
or certified copies of all of the Policies, with all premiums prepaid
thereunder, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement. No Person, including Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies.

 

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

 

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

 

3.1.20     Physical Condition. Except as set forth in the Property Condition
Report and the Environmental Report delivered to Lender, 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; except as set forth
in the Property Condition Report and the Environmental Report, there exists no
structural or other material defects or damages in the Property, whether latent
(to Borrower’s knowledge) or otherwise, and Borrower has not received notice
from any insurance company or bonding company of any defects or inadequacies in
the Property, or any part thereof, which would adversely affect the insurability
of the same or cause the imposition of extraordinary premiums or charges thereon
or of any termination or threatened termination of any policy of insurance or
bond.

 

3.1.21     Boundaries. Except as set forth on the Survey, all of the
Improvements lie wholly within the boundaries and building restriction lines of
the Property, and no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances affecting the Property encroach
upon any of the improvements, so as to affect the value or marketability of the
Property except those which are insured against by title insurance.

 

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3.1.22     Leases. Borrower represents and warrants to Lender with respect to
the Leases that: (a) the rent roll attached hereto as Schedule I is true,
complete and correct and the Property is not subject to any Leases other than
the Leases described in Schedule I, (b) except as set forth in the estoppel
letters to Lender or as set forth on Schedule I the Leases identified on
Schedule I are in full force and effect to Borrower’s knowledge and there are no
defaults thereunder by Borrower, or to the knowledge of Borrower, any Tenant,
(c) the copies of the Leases delivered to Lender are true and complete, and
there are no oral agreements with respect thereto, (d) except as otherwise
disclosed on Schedule I, no Rent (including security deposits) has been paid
more than one (1) month in advance of its due date, (e) except as otherwise
disclosed on Schedule I, any free rent or other allowances required to be given
by Borrower to any Tenant has already been received by such Tenant, (f) all
security deposits are being held in accordance with Legal Requirements,
(g) Borrower has no knowledge of any notice of termination or default with
respect to any Lease, (h) Borrower has not assigned or pledged any of the
Leases, the rents or any interests therein except to Lender, (i) no Tenant or
other party has an option or right of first refusal or offer, to purchase all or
any portion of the Property; and (j) except as otherwise disclosed on Schedule
I, no Tenant under any Lease that is not a Major Lease has the right to
terminate its Lease prior to expiration of the stated term of such Lease. For
purposes hereof, the term “Lease” shall not include any sublease or other
occupancy agreement to which Borrower is not a party.

 

3.1.23     Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Property to Borrower have been paid or are being paid simultaneously herewith.
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid under applicable Legal Requirements in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid or are being paid simultaneously herewith. All taxes
and governmental assessments due and owing in respect of the Property have been
paid, or an escrow of funds in an amount sufficient to cover such payments has
been established hereunder.

 

3.1.24     Single Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that as of the date hereof and until such time as the
Debt shall be paid in full:

 

(a)          Borrower does not own and will not own any asset or property other
than (i) the Property, and (ii) incidental personal property necessary for the
ownership, operation, leasing, management and/or maintenance of the Property.

 

(b)          Borrower will not engage in any business other than the ownership,
financing, management, operation, leasing, maintenance and sale of the Property
and other activities incidental thereto (in each case in accordance with the
terms and provisions of this Agreement and the other Loan Documents).

 

(c)          Borrower will not enter into any contract or agreement (other than
the Exchange Documents) with any Affiliate of Borrower, any constituent party of
Borrower or any Affiliate of any constituent party, except upon terms and
conditions that are commercially reasonable and substantially similar to those
that would be available on an arms-length basis with third parties other than
any such party.

 

(d)          Borrower has not incurred and will not incur any Indebtedness other
than (i) the Debt, (ii) unsecured trade payables and operational debt not
evidenced by a note and (iii) Indebtedness incurred in the financing of
equipment and other personal property used on the Property; provided that
(A) any Indebtedness incurred pursuant to subclause (ii) shall be (x) not more
than sixty (60) days past the date incurred and (y) incurred in the ordinary
course of business, and (B) any Indebtedness incurred pursuant to subclauses
(ii) and (iii) in an aggregate amount not to exceed, at any one time, three
percent (3%) of the original principal balance of the Loan. No Indebtedness
other than the Debt may be secured (subordinate or pari passu) by the Property.

 

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(e)          Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party), and shall not
acquire obligations or securities of its Affiliates.

 

(f)          Intentionally Omitted.

 

(g)          Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will not, nor will Borrower permit any constituent party to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, operating agreement, trust or other
organizational documents of Borrower without the prior consent of Lender in any
manner that (i) violates the single purpose covenants set forth in this Section
3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that
by its terms cannot be modified at any time when the Loan is outstanding or by
its terms cannot be modified without Lender’s consent.

 

(h)          Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates and any
constituent party. Borrower’s assets will not be listed as assets on the
financial statement of any other Person, provided, however, that Borrower’s
assets may be included in a consolidated financial statement of its Affiliates
(or its member’s Affiliates) provided that (i)  appropriate notation shall be
made on such consolidated financial statements to indicate the separateness of
Borrower from such Affiliates and to indicate that Borrower’s assets and credit
are not available to satisfy the debts and other obligations of such Affiliates
or any other Person and (ii) such assets shall be listed on Borrower’s own
separate balance sheet. Borrower will file its own tax returns, except to the
extent that (i) Borrower is treated as a disregarded entity for tax purposes and
is not required to file tax returns under applicable law, or (ii) Borrower is
allowed to file consolidated tax returns, in which case Borrower may include its
taxable income, loss, deductions, gains or other items as part of a consolidated
tax return, provided that each consolidated tax return will make clear that the
assets of Borrower are not available to satisfy the liabilities of any other
Person or that the assets of such Person are not available to satisfy the
liabilities of Borrower. Borrower shall observe organizational formalities with
respect to its books, records, resolutions and agreements.

 

(i)          Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate of Borrower or any constituent party of Borrower), shall correct
any known misunderstanding regarding its status as a separate entity, shall
conduct business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other and shall maintain and utilize
separate stationery, invoices and checks bearing its own name.

 

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(j)          Borrower will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.

 

(k)         Neither Borrower nor any constituent party will seek or effect the
liquidation, termination, dissolution, winding up, consolidation or merger, in
whole or in part, of Borrower.

 

(l)          Borrower will not commingle the funds and other assets of Borrower
with those of any Affiliate or constituent party or any other Person, and will
hold all of its assets in its own name.

 

(m)        Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any other
Person.

 

(n)         Borrower will not guarantee or become obligated for the debts of any
other Person and does not and will not hold itself out to be responsible for or
have its credit available to satisfy the debts or obligations of any other
Person.

 

(o)         (i) If Borrower is a limited partnership or a limited liability
company (other than a single member limited liability company), each general
partner or managing member (each, an “SPC Party”) shall be a corporation or
limited liability company whose sole asset is its interest in Borrower and each
such SPC Party will at all times comply, and will cause Borrower to comply, with
each of the representations, warranties, and covenants contained in this Section
3.1.24 as if such representation, warranty or covenant was made directly by such
SPC Party. Upon the withdrawal or the disassociation of an SPC Party from
Borrower, Borrower shall immediately appoint a new SPC Party whose
organizational documents are substantially similar to those of such SPC Party
and deliver a new non-consolidation opinion to the Rating Agency or Rating
Agencies, as applicable, with respect to the new SPC Party and its equity
owners.

 

(ii)         If Borrower is a single member limited liability company, Borrower
shall have at least two (2) springing members, one of which, upon the
dissolution of such sole member or the withdrawal or the disassociation of the
sole member from Borrower, shall immediately become the sole member of Borrower.

 

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(p)          SPC Party or Borrower shall at all times cause there to be at least
two duly appointed managers of SPC Party or Borrower (each, an “Independent
Manager”) who shall not have been at the time of such individual’s appointment
or at any time while serving as a manager of SPC Party or Borrower, and may not
have been at any time during the preceding five years (i) a stockholder,
director or manager (other than as an Independent Manager of SPC Party or
Borrower), officer, employee, partner, attorney or counsel of Borrower or any
Affiliate of Borrower, (ii) a customer, creditor, supplier or other Person who
derives any of its purchases or revenues from its activities with Borrower or
any Affiliate of Borrower, (iii) a Person or other entity Controlling or under
common Control with any such stockholder, partner, customer, creditor, supplier
or other Person, or (iv) a member of the immediate family of any such
stockholder, director, officer, employee, partner, customer, creditor, supplier
or other Person. A natural person who satisfies the foregoing definition other
than subparagraph (ii) shall not be disqualified from serving as an Independent
Manager of the SPC Party if such individual is an independent director or
manager provided by a nationally recognized company that provides professional
independent directors or managers and that also provides other corporate
services in the ordinary course of its business. A natural person who otherwise
satisfies the foregoing definition except for being the independent director or
manager of a “special purpose entity” affiliated with the Borrower that does not
own a direct or indirect equity interest in the Borrower or any co-borrower
shall not be disqualified from serving as an Independent Manager of the SPC
Party or Borrower, as applicable, if such individual is at the time of initial
appointment, or at any time while serving as an Independent Manager, provided by
a nationally recognized company that provides professional independent
directors/managers and other corporate services in the ordinary course of its
business. As used in this paragraph, a “special purpose entity” is an entity,
whose organizational documents contain restrictions on its activities and impose
requirements intended to preserve its separateness that are substantially
similar to those of Borrower, and provide, inter alia, that it (A) is organized
for a limited purpose, (B) has restrictions on its ability to incur
indebtedness, dissolve, liquidate, consolidate, merge and/or sell assets,
(C) may not file voluntarily a bankruptcy petition without the consent of the
Independent Manager and (D) shall conduct itself in accordance with certain
“separateness covenants,” including, but not limited to, the maintenance of its
books, records, bank accounts and assets separate from those of any other person
or entity.

 

(q)          Borrower shall not cause or permit the board of directors or
managers of any SPC Party and/or Borrower, as applicable, to take any action
which, under the terms of any certificate of incorporation, by laws or any
voting trust agreement with respect to any common stock or under any
organizational document of Borrower or SPC Party (if any), as applicable,
requires a vote of the board of directors or board of managers of each SPC Party
(if any) and Borrower, as applicable, unless at the time of such action there
shall be at least two (2) members who are each an Independent Manager.

 

(r)          Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion shall be true and correct in
all respects. In connection with the foregoing, Borrower hereby covenants and
agrees that it will comply with or cause the compliance with, (i) all of the
facts and assumptions (whether regarding the Borrower or any other Affiliate)
set forth in the Insolvency Opinion except as otherwise provided in Article VIII
herein, (ii) all the representations, warranties and covenants in this Section
3.1.24, and (iii) all the organizational documents of the Borrower and any SPC
Party.

 

(s)          Borrower will not permit any Affiliate (other than a property
manager which is an Affiliate of Borrower or its members and then only in
accordance with the terms and provisions of the applicable Management Agreement
and this Agreement) or constituent party independent access to its bank
accounts; provided, however, that certain authorized employees of THI who
perform administrative duties with respect to the operation and management of
bank accounts and in such capacity identify themselves as Borrower’s agent,
under the supervision and direction of Borrower’s officers or members, may
perform such duties with respect to Borrower’s bank accounts.

 

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(t)          Borrower shall pay the salaries of its own employees (if any) from
its own funds and maintain a sufficient number of employees (if any) in light of
its contemplated business operations.

 

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

 

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

 

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

 

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

 

3.1.29    Bank Holding Company. Borrower is not a “bank holding company” or a
direct or indirect subsidiary of a “bank holding company” as defined in the Bank
Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

 

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

 

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

 

3.1.32    Access/Utilities. All public utilities necessary to the continued use
and enjoyment of the Property as presently used and enjoyed are located in the
public right-of-way abutting the Property. All roads necessary for the full
utilization of the Property for its current purpose have been completed and
dedicated to public use and accepted by all governmental authorities or are the
subject of access easements for the benefit of the Property.

 

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

 

3.1.34    Full and Accurate Disclosure. To the best of Borrower’s knowledge, no
information contained in this Agreement, the other Loan Documents, or any
written statement furnished by or on behalf of Borrower pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
There is no fact or circumstance presently known to Borrower which has not been
disclosed to Lender and which will have a Material Adverse Effect.

 

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

 

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

 

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

 

3.1.38    Perfection of Accounts. Borrower hereby represents and warrants to
Lender that:

 

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

 

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(b)         The Accounts and the Clearing Account constitute “deposit accounts”
and the Accounts constitute “securities accounts” within the meaning of the
Uniform Commercial Code;

 

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

 

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

 

3.1.39    Intentionally Omitted.

 

3.1.40    Patriot Act.

 

(a)         None of Borrower or any of its Affiliates is a Prohibited Person.

 

(b)         Borrower covenants and agrees to deliver to Lender any certification
or other evidence requested from time to time by Lender in its reasonable
discretion, confirming Borrower’s compliance with the Patriot Act.

 

3.1.41    Single Purpose - Trizec 333. Until consummation of the Exchange,
Borrower warrants, represents and agrees that Trizec 333 shall comply with the
provisions of 3.1.24 of this Agreement, substituting the term “Trizec 333” for
the term “Borrower” throughout Section 3.1.24, except that Trizec 333 shall not
be required to comply with Sections 3.1.24(a), (b), and (d), but shall instead
comply with the following:

 

(a)         Trizec 333 does not own and will not own any asset or property other
than (i) its leasehold interest in the Property under the Master Lease, and
(ii) incidental personal property necessary for the operation, leasing,
management and/or maintenance of the Property.

 

(b)         Trizec 333 will not engage in any business other than the owning of
a leasehold interest in, managing, operating, and maintaining the Property and
other activities incidental thereto (in each case in accordance with the terms
and provisions of this Agreement and the other Loan Documents).

 

(c)         Trizec 333 will not enter into any contract or agreement (other than
the Exchange Documents) with any Affiliate of Trizec 333, any constituent party
of Trizec 333 or any Affiliate of any constituent party, except upon terms and
conditions that are commercially reasonable and substantially similar to those
that would be available on an arms-length basis with third parties other than
any such party.

 

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(d)         Trizec 333 has not incurred and will not incur any Indebtedness
other than as is reasonable and necessary in the ordinary course of Trizec 333’s
business as owner of a leasehold interest in the Property.

 

Section 3.2           Survival of Representations.

 

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

 

ARTICLE IV

 

BORROWER COVENANTS

 

Section 4.1           Borrower Affirmative Covenants.

 

Borrower hereby covenants and agrees with Lender that:

 

4.1.1           Existence; Compliance with Legal Requirements. Borrower shall do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
comply with all Legal Requirements applicable to it and the Property to the
extent failure of same would result in a Material Adverse Effect. Borrower will
not commit any act which may give any Governmental Authority the right to cause
Borrower to forfeit the Property or any part thereof or any monies paid in
performance of Borrower’s obligations under any of the Loan Documents.

 

4.1.2           Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof as the same become due and payable; provided, however,
Borrower’s obligation to directly pay Taxes shall be suspended for so long as
Borrower complies with the terms and provisions of Section 6.2 hereof. Borrower
shall furnish to Lender receipts for the payment of the Taxes and the Other
Charges within five (5) Business Days after payment by Borrower provided such
payment shall in any event be made prior to the date such Taxes and/or Other
Charges shall become delinquent; provided, however, that Borrower is not
required to furnish such receipts for payment of Taxes in the event that such
Taxes have been paid by Lender pursuant to Section 6.2 hereof. Borrower shall
not permit or suffer and shall promptly discharge any lien or charge against the
Property. Notwithstanding the foregoing, after prior notice to Lender, Borrower,
at its own expense, may contest by appropriate legal proceeding, conducted in
good faith and with due diligence, the amount or validity of any Taxes or Other
Charges, provided that (a) no Event of Default has occurred and remains uncured;
(b) such proceeding shall be permitted under and be conducted in accordance with
all applicable statutes, laws and ordinances; (c) neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost; (d) Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (e) such proceeding shall suspend the collection of Taxes
or Other Charges from the Property; (f) Borrower shall, if requested by Lender,
deposit with Lender cash, or other security as may be reasonably approved by
Lender, in an amount equal to one hundred twenty-five percent (125%) of the
contested amount, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon; and (g) such contest by
Borrower is not in violation of Leases or Operating Agreements. Lender may pay
over any such cash or other security held by Lender to the claimant entitled
thereto at any time when, in the good faith judgment of Lender, the entitlement
of such claimant is established.

 

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4.1.3      Litigation.

 

Borrower shall give prompt notice to Lender of any litigation or governmental
proceedings pending or threatened against Borrower which if adversely determined
would have a Material Adverse Effect.

 

4.1.4      Access to Property. Borrower shall permit agents, representatives and
employees of Lender to inspect the Property or any part thereof at reasonable
hours upon reasonable advance notice, subject to the rights of Tenants under
their respective Leases.

 

4.1.5      Reserved.

 

4.1.6      Financial Reporting.

 

(a)          GAAP. Borrower shall keep and maintain or shall cause to be kept
and maintained, in accordance with GAAP proper and accurate books, records and
accounts reflecting all of the financial affairs of Borrower and all items of
income and expense in connection with the operation on an individual basis of
the Property. All financial statements delivered to Lender in accordance with
this Section 4.1.6 shall be prepared in accordance with GAAP in the United
States of America as in effect on the date so indicated and consistently applied
(or such other accounting basis reasonably acceptable for Lender).

 

(b)         Monthly Reports. Prior to a Securitization, within forty-five (45)
days after the end of each calendar month, Borrower shall furnish to Lender a
current balance sheet, a detailed operating statement (showing monthly activity
and year to date) and a rent roll for the subject month.

 

(c)         Quarterly Reports. Within ninety (90) days after the end of each
calendar quarter, Borrower shall furnish to Lender a detailed operating
statement (showing quarterly activity and year to date) stating Gross Income
from Operations, Actual Operating Expenses, Actual Net Cash Flow for such
calendar quarter and a balance sheet for such quarter for Borrower. Borrower’s
quarterly statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for such calendar
quarter, (ii) a calculation reflecting the Actual Debt Service Coverage Ratio as
of the last day of such quarter for such quarter; (iii) a current rent roll for
the Property; and (iv) an Officer’s Certificate stating that each such quarterly
statement presents fairly the financial condition and the results of operations
of the Borrower and the Property in all material respects and has been prepared
in accordance with GAAP.

 

-37-

 

 

(d)         Annual Reports. Within one hundred twenty (120) days after the end
of each calendar year of Borrower’s operation of the Property, Borrower will
furnish to Lender a complete copy of Borrower’s annual financial statements
audited by a “big four” accounting firm or other independent certified public
accountant reasonably acceptable to Lender in accordance with GAAP for such
calendar year which financial statements shall contain a balance sheet, a
detailed operating statement stating Gross Income from Operations, Actual
Operating Expenses and Actual Net Cash Flow for the Property. Borrower’s annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior calendar
year, (ii) an Officer’s Certificate stating that each such annual financial
statement presents fairly the financial condition and the results of operations
of Borrower and the Property in all material respects and has been prepared in
accordance with GAAP, and (iii) an unqualified opinion of a “big four”
accounting firm or other independent certified public accountant reasonably
acceptable to Lender.

 

(e)         Certification; Supporting Documentation. Each such financial
statement shall be in scope and detail reasonably satisfactory to Lender and
certified by an officer of Borrower.

 

(f)          Additional Reports. Borrower shall deliver to Lender as soon as
reasonably available but in no event later than thirty (30) days after such
items become available to Borrower in final form:

 

(i)          copies of any final engineering or environmental reports prepared
for Borrower with respect to the Property;

 

(ii)         a copy of any notice received by Borrower from any environmental
authority having jurisdiction over the Property with respect to a condition
existing or alleged to exist or emanate from or at the Property; and

 

(iii)        if requested by Lender, a summary report listing only Tenants and
square footage occupied by such Tenants.

 

(g)         Access. Lender shall have the right from time to time at all times
during normal business hours, upon reasonable prior written notice to Borrower,
to examine such books, records and accounts at the office of Borrower or other
Person maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. After the occurrence and during the
continuance of an Event of Default, Borrower shall pay any costs and expenses
incurred by Lender to examine Borrower’s accounting records with respect to the
Property, as Lender shall determine to be necessary or appropriate in the
protection of Lender’s interest.

 

(h)         Format of Delivery. Any reports, statements or other information
required to be delivered under this Agreement shall be delivered (i) in paper
form, (ii) if requested by Lender and if within the capabilities of Borrower’s
data system without change or modification thereto, on a diskette and (iii) if
requested by Lender and within the capabilities of Borrower’s data systems
without change or modification thereto, in electronic form reasonably acceptable
to Lender.

 

(i)         Annual Budget. Borrower shall submit the Annual Budget to Lender not
later than thirty (30) days prior to the commencement of each Fiscal Year.

 

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(j)         Other Required Information. Borrower shall furnish to Lender, within
five (5) Business Days after request (or as soon thereafter as may be reasonably
possible), such further detailed information with respect to the operation of
the Property and the financial affairs of Borrower as may be reasonably
requested by Lender, including, without limitation, a comparison of the budgeted
income and expenses and the actual income and expenses for a quarter and year to
date for the Property, together with a detailed explanation of any variances
exceeding the greater of (i) $100,000, and (ii) five percent (5%) between
budgeted and actual amounts for such period and year to date.

 

4.1.7     Title to the Property.

 

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

 

4.1.8     Estoppel Statement.

 

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

 

(b)        After request by Borrower, but not more than two (2) times in any
calendar year, Lender shall within ten (10) Business Days furnish Borrower with
a statement, duly acknowledged and certified, stating (i) the unpaid principal
amount of the Note, (ii) the Interest Rate of the Note, (iii) the date
installments of interest and/or principal were last paid and (iv) whether or not
Lender has sent any notice of default under the Loan Documents which remains
uncured in the opinion of Lender.

 

(c)        Borrower shall use commercially reasonable efforts to obtain and
deliver to Lender, upon request, an estoppel certificate from each Tenant under
any Lease; provided that such certificate may be in the form required under such
Lease or in the form delivered to Lender in connection with the closing of the
Loan; provided further that Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.

 

4.1.9      Leases.

 

(a)          Except as otherwise provided in this Agreement to the contrary, all
Leases executed after the date hereof shall in all respects be approved by
Lender and shall be on a standard Lease form previously approved by Lender with
no material modifications (the “Lease Form”) (except as approved by Lender;
provided, that, Lender shall not unreasonably withhold its consent to changes to
the Lease Form). Such Lease Form shall provide that (i) the Lease is subordinate
to the Mortgage, and (ii) the tenant shall attorn to Lender following an Event
of Default, provided that the Lender has delivered to the tenant a commercially
reasonably form of non-disturbance and attornment agreement. To the extent
required by applicable law, Borrower shall hold, in trust, all tenant security
deposits in a segregated account and shall not commingle any such funds with any
other funds of Borrower. Within ten (10) Business Days after Lender’s request,
Borrower shall furnish to Lender a statement of all tenant security deposits,
and copies of all Leases not previously delivered to Lender, certified by
Borrower as being true and correct. Notwithstanding anything contained in the
Loan Documents, Lender’s approval shall not be required for future Leases or
Lease modifications or extensions if the following conditions are satisfied:

 

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(A)         no Event of Default has occurred and is continuing;

 

(B)         the Lease is in effect as of the date of this Agreement or is on the
Lease Form with no modifications, except for commercially reasonable changes
agreed to in the ordinary course of Borrower’s business, provided, that, in no
event shall there be any material modifications to the subordination,
attornment, estoppel clauses or “so-called” exculpation clauses that limit the
landlord’s liability to the Landlord’s interest in the Property without the
prior written consent of Lender, which consent will not be unreasonably
withheld;

 

(C)         with respect to the modifications of any Lease, such Lease and such
modification(s) (w) is entered into in the ordinary course of business,
consistent with prudent property management practices, (x) would not cause such
Lease to constitute a Major Lease (subject to clause (z) below), (y) would not
have a Material Adverse Effect and (z) if the Lease is a Major Lease, such
modification constitutes a Non-Material Lease Modification;

 

(D)         the Lease does not conflict with any Operating Agreements affecting
the Property or any other Lease for space in the Property;

 

(E)         the Lease is not a Major Lease;

 

(F)         the Lease shall provide for rental rates and landlord concessions
comparable to existing local market rates and shall be an arm’s-length
transaction, provided, that in no event shall the Lease be with an Affiliate of
Borrower;

 

(G)         the Lease shall not contain any options for renewal or expansion by
the tenant at rental rates which are below reasonable comparable market levels
for renewals or expansions at the time the Lease is executed;

 

(H)         the Lease shall be to a tenant which Borrower, in its professional
and commercially reasonable judgment, has determined is creditworthy taking into
account the obligations of the landlord and the tenant thereunder; and

 

(I)         the Lease is for a term of not more than fifteen (15) years
(exclusive of renewal options which together with the initial lease term shall
not exceed twenty (20) years).

 

Lender shall execute and deliver a Subordination Non-Disturbance and Attornment
Agreement in the form annexed hereto as Schedule IV to Tenants under any future
Lease demising in excess of 10,000 square feet promptly upon request with such
commercially reasonable changes as may be requested by Tenants, from time to
time, and which are reasonably acceptable to Lender.

 

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(b)          Borrower (i) shall perform the obligations which Borrower is
required to perform under the Leases in a commercially reasonable manner;
(ii) shall enforce the obligations to be performed by the tenants in a
commercially reasonable manner; (iii) shall promptly furnish to Lender any
notice of material default or termination received by Borrower from any tenant
whose Lease demises 30,000 square feet or more at the Property, and any notice
of material default or termination given by Borrower to any tenant whose Lease
demises 30,000 square feet or more at the Property; (iv) shall not collect any
rents for more than thirty (30) days in advance of the time when the same shall
become due, except for bona fide security deposits; (v) shall not enter into any
ground lease of any part of the Property; (vi) shall not further assign or
encumber any Lease; (vii) shall not, except with Lender’s prior written consent
(which consent will not be unreasonably withheld and it shall be deemed
reasonable for Lender to withhold its consent to any such Lease cancellation or
acceptance of termination or surrender if after giving effect thereof, such
cancellation, surrender or termination would cause an NOI Trigger Event to
occur), cancel or accept surrender or termination of (A) any Lease other than a
Major Lease unless such cancellation, termination or acceptance of surrender is
entered into in the ordinary course of business, consistent with prudent
property management practices or (B) any Major Lease, provided, that, the
Borrower shall be permitted to accept such cancellation, surrender or
termination of a Major Lease if such action is being taken in accordance with
the express provisions of such Major Lease which is in existence as of the date
of this Agreement, or has been approved by the Lender (such approval not to be
unreasonably withheld) in accordance with the terms hereof or; provided, that,
if no Cash Sweep Period is then in effect, such termination or surrender is
contemporaneous with the releasing of the space demised under such Major Lease
(or applicable portion thereof) at a rental rate equal to or greater than such
Major Lease; (viii) shall not, except with Lender’s prior written consent (such
consent not to be unreasonably withheld), modify or amend any Lease unless such
modification or amendment complies with the provisions of Section 4.1.9(a)(C)
hereof, (ix) during a Cash Sweep Period shall deposit any Lease termination or
cancellation fees with Lender, to be held by Lender as Rollover Funds; and
(ix) shall not enter into any Major Lease without the prior written consent of
Lender (such consent not to be unreasonably withheld). Any action in violation
of clauses (v), (vi), (vii), (viii) or (ix) of this Section 4.1.9(b) shall be
void at the election of Lender.

 

(c)          Lender shall respond to a request for Lender’s approval to any
Lease or other matter under Section 4.1.9 hereof delivered, if applicable,
together with copies of the applicable lease documents, and, if applicable, a
budget setting forth the applicable tenant improvement costs and leasing
commissions for which Lender’s consent is required (i) within ten (10) Business
Days after Borrower’s written request therefore, or (ii) within five (5)
Business Days after Borrower’s written request therefore, provided, that, prior
to such five (5) Business Day period Lender has approved all of the economic
material terms of such Lease as set forth in a written summary thereof provided
by Borrower to Lender. If the correspondence from Borrower requesting such
approval contains the following statement at the top of the first page thereof
in capitalized, bold faced, 14 point type stating that “IF YOU FAIL TO RESPOND
TO OR TO EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) or
FIVE (5) BUSINESS DAYS (as the case may be), YOUR APPROVAL SHALL BE DEEMED
GIVEN,” and if Lender shall fail to respond to or to expressly deny such request
for approval in writing (stating in reasonable detail the reason for such
disapproval) within ten (10) or five (5) Business Days (as the case may be)
after receipt of Borrower’s written request then Lender’s consent to the action
or matter in question with respect to such Lease shall be deemed given. Borrower
shall also provide any other information reasonably requested by Lender in
writing prior to the expiration of such ten (10) or five (5) Business Day (as
the case may be) period in order to adequately review the same.

 

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4.1.10     Alterations.

 

(a)          Lender’s prior approval shall be required in connection with any
alterations to any Improvements (except improvements required under any Lease
approved by Lender or under any Lease for which approval was not required by
Lender under this Agreement) (a) that may have a Material Adverse Effect or
(b) the cost of which (including any related alteration, improvement or
replacement) is reasonably anticipated to exceed the Alteration Threshold, which
approval shall not be unreasonably withheld or delayed. If (x) the total unpaid
amounts incurred and to be incurred with respect to such alterations to the
Improvements shall at any time exceed the Alteration Threshold and such
alterations are not of the type intended to be reimbursed out of the Rollover
Funds or the Capital Expenditure Funds or (y) if the alterations are of the type
intended to be reimbursed from Rollover Funds or Capital Expenditure Funds, as
applicable, and the total unpaid amounts incurred and to be incurred with
respect to such alterations to the Improvements shall at any time exceed the
Alteration Threshold and the amount of Rollover Funds and/or Capital
Expenditures Funds, as the case may be, on deposit with Lender for the
reimbursement of the cost of such alterations, then, to the extent such cost of
alteration exceeds the amount of the Reserve Funds available, Borrower shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for Borrower’s obligations under the Loan Documents any of
the following: (i) cash, (ii) Letters of Credit, (iii) U.S. Obligations,
(iv) other securities reasonably acceptable to Lender, provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same, or (v) a completion bond, provided that Lender shall have received a
Rating Agency Confirmation as to the form and issuer of same. Such security
shall be in an amount equal to the excess of the total unpaid amounts incurred
and to be incurred with respect to such alterations to the Improvements (other
than such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold, less the amount of the Rollover Funds and the Capital
Expenditure Funds to the extent that the alterations are of the type intended to
be reimbursed from Rollover Funds or Capital Expenditure Reserve Funds, as
applicable.

 

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(b)          With respect to any alterations to the Improvements which require
Lender’s prior approval pursuant to this Section 4.1.10, Borrower shall deliver
to Lender via a nationally recognized overnight courier for overnight delivery
its request for approval of such proposed alterations (the “Proposed
Alterations”), together with all materials, plans, specifications, documents and
any other information (and in such detail) as reasonably requested by Lender in
order to evaluate such Proposed Alterations (each, an “Alteration Request”).
Each Alteration Request shall contain a legend on the top of the cover page
thereof, which legend shall be in boldface type and in a font size of not less
than 20 points, stating that Lender’s failure to respond to the Alteration
Request within twenty (20) Business Days shall be deemed to be an approval by
Lender of the Proposed Alterations set forth therein. In the event that Lender
fails to notify Borrower within twenty (20) Business Days of Lender’s receipt of
an Alteration Request that Lender (i) requires additional information or
documentation to evaluate the Proposed Alterations, (ii) requires modifications,
amendments or other changes to be made to the plans and specifications with
respect to such Proposed Alterations as a condition to the approval thereof,
(iii) consents to such Proposed Alterations, or (iv) withholds its consent to
such Proposed Alterations (each of items (i) through (iii) above, an “Alteration
Response”), Borrower shall send to Lender a written notice (an “Alteration Final
Notice”) via a nationally recognized overnight courier for overnight delivery,
which notice shall contain a legend on the top of the cover page thereof, which
legend shall be capitalized, bold faced, not less than 14 points type, stating
that “IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR APPROVAL
IN WRITING WITHIN TWENTY (20) BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED
GIVEN.” In the event that Lender fails to provide an Alteration Response to
Borrower within twenty (20) Business Days of Lender’s receipt of the Alteration
Final Notice, Lender shall be deemed to have approved of such Proposed
Alterations; provided, that, with respect to any Proposed Alterations which are
approved or deemed approved by Lender, such approval or deemed approval shall
not extend to any material changes or modifications to the plans and
specifications or other materials submitted to Lender in the Alteration Request,
and Borrower shall be required to submit to Lender any such material changes or
modifications for approval in accordance with this Section 4.1.10; provided
further, that, in the case of clauses (i) and (ii) above, Lender shall have a
period of time to respond to Borrower, as provided herein, equal to the greater
of (A) the unexpired portion of the period of time in which Lender is otherwise
entitled to provide an Alteration Response to Borrower as set forth above, and
(B) ten (10) Business Days after receipt by Lender of any requested additional
information or documentation, or any modification, amendment or other change to
the plans and specifications for any Proposed Alteration requested by Lender,
and the failure by Lender to so respond within such time period shall constitute
deemed approval by Lender. In the event Lender shall withhold its consent to any
Proposed Alteration, Lender shall provide Borrower with a reasonably detailed
description of the reasons therefor.

 

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

 

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

 

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

 

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

 

4.1.15    Intentionally Omitted.

 

4.1.16    Handicapped Access.

 

(a)         Borrower covenants and agrees that the Property shall at all times
comply in all material respects, to the extent applicable, with the requirements
of the Americans with Disabilities Act of 1990, all state and local laws and
ordinances related to handicapped access and all rules, regulations, and orders
issued pursuant thereto including, without limitation, the Americans with
Disabilities Act Accessibility Guidelines for Buildings and Facilities
(collectively, “Access Laws”).

 

(b)         Notwithstanding any provisions set forth herein or in any other
document regarding Lender’s approval of alterations of the Property,
(i) Borrower shall make and shall require all Tenants to make, any alterations
to the Property in material compliance with all applicable Access Laws and
(ii) Lender may condition any approval of alterations hereunder upon receipt of
a certificate of Access Law compliance from an architect, engineer, or other
person acceptable to Lender.

 

(c)         Borrower covenants and agrees to give prompt notice to Lender of the
commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.

 

4.1.17    Notice of Certain Events. Borrower shall promptly notify Lender of
(a) any Default or Event of Default, together with a detailed statement of the
steps being taken to cure such Default or Event of Default; (b) any notice of
default received by Borrower under other material obligations relating to the
Property or otherwise material to Borrower’s business; and (c) any pending
legal, judicial or regulatory proceedings, including any dispute between
Borrower and any Governmental Authority, affecting Borrower or the Property,
which, if adversely determined, would have a Material Adverse Effect.

 

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4.1.18    Further Assurances.    Borrower shall promptly (a) cure any defects in
the execution and delivery of the Loan Documents, (b) execute and deliver, or
cause to be executed and delivered, all such other documents, agreements,
certificates, assignments and other writings as Lender may reasonably request to
further evidence and more fully describe the collateral for the Loan, to correct
any omissions in the Loan Documents, to perfect, protect or preserve the
collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents and any Liens created under any of the Loan
Documents, or to make any recordings, file any notices, or obtain any consents,
as may be necessary or appropriate in connection therewith and (c) do and
execute all and such further lawful and reasonable acts, conveyances and
assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time. Borrower grants Lender an irrevocable
power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender under the Loan
Documents, at law and in equity, provided, that, the Lender shall not act under
such power of attorney unless Borrower has failed to act within five (5) days of
Lender’s written request for action by Borrower.

 

4.1.19    Taxes on Security.    Borrower shall pay all taxes, charges, filing,
registration and recording fees, excises and levies payable with respect to the
Note or the Liens created or secured by the Loan Documents, other than income,
franchise and doing business taxes imposed on Lender. If there shall be enacted
any law (a) deducting the Loan from the value of the Property for the purpose of
taxation, (b) affecting any Lien on the Property, or (c) changing existing laws
of taxation of mortgages, deeds of trust, security deeds, or debts secured by
real property, or changing the manner of collecting any such taxes, Borrower
shall promptly pay to Lender, on demand, all taxes, costs and charges for which
Lender is or may be liable as a result thereof; however, if such payment would
be prohibited by law or would render the Loan usurious, then instead of
collecting such payment, Lender may declare all amounts owing under the Loan
Documents due and payable to Lender within ninety (90) days of Lender’s demand
therefor.

 

4.1.20   Qualified Intermediary.    Prior to consummation of the Exchange,
Qualified Intermediary shall not pledge its indirect interests in Borrower,
except as permitted by the terms of this Agreement.

 

Section 4.2           Borrower Negative Covenants.

 

Borrower covenants and agrees with Lender that:

 

4.2.1     Liens.    Borrower shall not create, incur, assume or, subject to
Borrower’s rights in this Agreement and the other Loan Documents to contest the
validity and application of Liens, suffer to exist any Lien on any portion of
the Property except for Permitted Encumbrances.

 

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4.2.2           Dissolution. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Property, (c) transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the property or assets
of Borrower except to the extent expressly permitted by the Loan Documents, or
(d) cause, permit or suffer any SPC Party to (i) dissolve, wind up or liquidate
or take any action, or omit to take an action, as a result of which such SPC
Party would be dissolved, wound up or liquidated in whole or in part, or
(ii) amend, modify, waive or terminate the certificate of incorporation or
bylaws of such SPC Party, in each case without obtaining the prior consent of
Lender in any matter that (i) violates the single purpose covenants set forth in
Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision
thereof that by its terms cannot be modified at any time when the Loan is
outstanding or by its terms cannot be modified without Lender’s consent.

 

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

 

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

 

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

 

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

 

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

 

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

 

4.2.9           Principal Place of Business. Borrower shall not change its
principal place of business from the address set forth on the first page of this
Agreement without first giving Lender twenty (20) days prior notice.

 

4.2.10         ERISA. (a) Throughout the term of the Loan (A) Borrower will not
be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to
Title I of ERISA, (B) none of the assets of Borrower will constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101, (C) Borrower will not be a “governmental plan” within the meaning of
Section 3(32) of ERISA, and (D) transactions by or with Borrower will not be
subject to any state statute regulating investments of, or fiduciary obligations
with respect to, governmental plans.

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE V

 

INSURANCE, CASUALTY AND CONDEMNATION.

 

Section 5.1           Insurance.

 

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

 

(i)          comprehensive “All Risk” or “Special Perils” insurance on the
Improvements and the personal property at the Property (A) in an amount equal to
one hundred percent (100%) of the “Full Replacement Cost,” which for purposes of
this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and personal property at the Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of One Hundred Thousand
and No/100 Dollars ($100,000.00) for all such insurance coverage; and
(D) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if
any of the Improvements or the use of the Property shall at any time constitute
legal non-conforming structures or uses. In addition, Borrower shall obtain:
(y) if any portion of the Improvements is currently or at any time in the future
located in a federally designated “special flood hazard area,” flood hazard
insurance in an amount equal to the lesser of (1) the outstanding principal
balance of the Note or (2) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be amended
or such greater amount as Lender shall reasonably require; and (z) earthquake
insurance in amounts and in form and substance satisfactory to Lender
(notwithstanding anything to the contrary set forth in Section 5.1.2 hereof,
such insurance shall be provided by insurance companies having a claims paying
ability rating reasonably acceptable to Lender) in the event the Property is
located in an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall otherwise be on terms
consistent with the comprehensive “All Risk: or “Special Perils” insurance
policy required under this subsection (i).

 

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

 

(iii)        business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above for a period commencing at the time of loss for such length
of time as it takes to repair or replace with the exercise of due diligence and
dispatch; (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and Personal Property
has been repaired, the continued loss of income will be insured until such
income either returns to the same level it was at prior to the loss, or the
expiration of twelve (12) months from the date that the Property is repaired or
replaced and operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an amount
equal to one hundred percent (100%) of the projected gross income from the
Property for a period from the date of loss to a date (assuming total
destruction) which is twenty-four (24) months from the date that the Property is
repaired or replaced and operations are resumed. The amount of such business
income insurance shall be determined prior to the date hereof and at least once
each year thereafter based on Borrower’s reasonable estimate of the gross income
from the Property for the succeeding twenty-four (24) month period. All proceeds
payable to Lender pursuant to this subsection shall be held by Lender and shall
be applied to the obligations secured by the Loan Documents from time to time
due and payable hereunder and under the Note; provided, however, that nothing
herein contained shall be deemed to relieve Borrower of its obligations to pay
the obligations secured by the Loan Documents on the respective dates of payment
provided for in the Note and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income insurance;

 

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

 

(v)         workers’ compensation, subject to the statutory limits of the state
in which the Property is located, and employer’s liability insurance with a
limit of at least One Million and No/100 Dollars ($1,000,000) per accident and
per disease per employee, and statutory limits for disease aggregate in respect
of any work or operations on or about the Property, or in connection with the
Property or its operation (if applicable);

 

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

 

(vii)       umbrella liability insurance in addition to primary coverage in an
amount not less than Seventy-Five Million and No/100 Dollars ($75,000,000) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above and (viii) below;

 

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

 

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

 

(x)          insurance against employee dishonesty in an amount not less than
one (1) month of gross revenue from the Property and with a deductible not
greater than Twenty-Five Thousand and No/100 Dollars ($25,000); and

 

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(xi)         insurance coverage at all times during the term of the Loan for
Terrorism Losses and the loss of business income resulting from Terrorism
Losses, which may be maintained by Borrower, at its option, either (A) as part
of its “All Risk” or “Special Perils” and business income insurance required
under Sections 5.1.1(a)(i) and (iii) above on terms consistent with those
required under Sections 5.1.1(a)(i) and (iii) above except that such coverage
shall be at least equal to the lesser of (a) the outstanding principal balance
of the Loan (provided such policy contains a waiver of coinsurance) or (b) the
sum of the business income insurance equal to 100% of the projected gross income
from the Property for a period of twenty-four (24) months from the date that the
Property is repaired or replaced and operations are resumed plus the Full
Replacement Cost; (B) through a policy or policies covering multiple locations
so long as such coverage is on terms consistent with those required under
Sections 5.1.1(a)(i) and (iii) above with a deductible of not greater than
$250,000 and such coverage is in an amount equal to, the lesser of (a) the
outstanding principal balance of the Loan (provided such policy contains a
waiver of coinsurance) or (b) the sum of the business income insurance equal to
100% of the projected gross income from the Property for a period of twenty-four
(24) months from the date that the Property is repaired or replaced and
operations are resumed plus the Full Replacement Cost and further provided that
if any claim is made (unless on a per occurrence basis) under such policy or
policies reducing the amount of coverage below that which is required to be
maintained under this Section 5.1.1(a)(xi), then Borrower shall increase the
amount of such policy or policies to an amount that satisfies the requirements
of Section 5.1.1(a)(xi); or (C) as a stand-alone policy or policies that covers
solely the Property against Terrorism Losses, which stand-alone policy or
policies shall be on terms consistent with those required under Sections
5.1.1(a)(i) and (iii) above with a deductible of not greater than $5,000,000.00
and such coverage is in an amount equal to, the lesser of (a) the outstanding
principal balance of the Loan (provided such policy contains a waiver of
coinsurance) or (b) the sum of the business income insurance equal to 100% of
the projected gross income from the Property for a period of twenty-four (24)
months from the date that the Property is repaired or replaced and operations
are resumed plus the Full Replacement Cost. Notwithstanding the foregoing, in no
event shall Borrower be required to pay annual premiums for such stand-alone
policy insurance covering Terrorism Losses in excess of the Terrorism Premium
Limit (i.e. if the cost exceeds the Terrorism Premium Limit, Borrower shall
obtain as much coverage as is available at a cost equal to the Terrorism Premium
Limit);

 

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

 

       (b)          All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the “Policies” or,
in the singular, the “Policy”) and, to the extent not specified above, shall be
subject to the reasonable approval of Lender as to deductibles, loss payees and
insureds. Not less than five (5) Business Days prior to the expiration dates of
the Policies theretofore furnished to Lender, certificates of insurance
evidencing the Policies accompanied by evidence satisfactory to Lender of
payment of the premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender.

 

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

 

       (d)          All Policies of insurance provided for or contemplated by
Section 5.1.1(a) shall be primary coverage and, except for the Policy referenced
in Section 5.1.1(a)(v), shall name Borrower as the insured and Lender and its
successors and/or assigns as the additional insured, as its interests may
appear, and in the case of property damage, boiler and machinery, flood,
earthquake and terrorism insurance, shall contain a so-called New York standard
non contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender. Borrower shall not procure or permit any
of its constituent entities to procure any other insurance coverage which would
be on the same level of payment as the Policies or would adversely impact in any
way the ability of Lender or Borrower to collect any proceeds under any of the
Policies.

 

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

 

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

 

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

 

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

 

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

 

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

 

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5.1.2           Insurance Company. The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the state
in which the Property is located and having a claims paying ability rating with
the issuing companies and or within the reinsurance companies/organizations that
reinsure 100% of the risks of the issuing companies, of “AA” or better by S&P
and Fitch and an insurance financial strength rating of “Aa2” by Moody’s
(provided, however, (A) if more than one (1) but less than five (5) insurance
companies issue the Policies required hereunder, then at least seventy-five
percent (75%) of the applicable insurance coverages represented by the Policies
required hereunder must be provided by insurance companies having a credit
rating of “AA” or better by S&P (or the equivalent rating by Moody and Fitch)
and the balance of the applicable insurance coverages represented by the
Policies required hereunder must be provided by insurance companies having a
credit rating of “A” or better by S&P (or the equivalent rating by Moody and
Fitch), or (B) if five (5) or more insurance companies issue the Policies
required hereunder, then at least seventy percent (70%) of the applicable
insurance coverages required hereunder must be provided by insurance companies
having a credit rating of “A-” or better by S&P (or the equivalent rating by
Moody and Fitch) and at least 95% of the total of the applicable insurance
coverages required hereunder must be provided by insurance companies having a
credit rating of “BBB” or better by S&P (or the equivalent rating by Moody and
Fitch); provided, further, however that in no event shall any insurance company
providing primary insurance coverage hereunder have a credit rating of less than
“AA” by S&P (or the equivalent rating by Moody and Fitch)). If a Securitization
occurs, the foregoing required insurance company rating by a Rating Agency not
rating any Securities shall be disregarded. If a Securitization occurs and S&P
is not a Rating Agency, each of the insurance companies shall have the ratings
from Fitch and Moody’s as provided above; provided, however, if Fitch or Moody’s
shall not provide a rating for an insurance company, then an A.M. Best rating of
A(X) shall be substituted for an S&P rating of “A-” or better and an A.M. Best
rating of A-VIII for each of the other foregoing rating requirements of S&P,
Fitch or Moody’s, as applicable. Notwithstanding the foregoing, Borrower shall
be permitted to maintain the Policies required hereunder with insurance
companies which do not meet the foregoing requirements (an “Otherwise Rated
Insurer”), provided Borrower obtains a “cut-through” endorsement (that is, an
endorsement which permits recovery against the provider of such endorsement)
with respect to any Otherwise Rated Insurer from an insurance company which
meets the claims paying ability ratings required above. Moreover, if Borrower
desires to maintain insurance required hereunder from an insurance company which
does not meet the claims paying ability ratings set forth herein but the parent
of such insurance company, which owns at least fifty-one percent (51%) of such
insurance company, maintains such ratings, Borrower may use such insurance
companies if approved by the Rating Agencies (such approval may be conditioned
on items required by the Rating Agencies including a requirement that the parent
guarantee the obligations of such insurance company).

 

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5.1.3      Concord Insurance Limited. Notwithstanding anything to the contrary
contained in Section 5.1.2, with respect to insurance required to be maintained
by Borrower pursuant to Section 5.1.1(a)(xi) hereof, Concord Insurance Limited
(“Concord”) shall be an acceptable insurer of perils of terrorism and acts of
terrorism so long as (i) the policy issued by Concord has (a) no aggregate
limit, (b) a per occurrence limit of no less than $500,000,000 and (c) a
deductible of no greater than $100,000, (ii) other than the $100,000 deductible,
the portion of such insurance which is not reinsured by TRIA, is reinsured by an
insurance carrier rated no less than “A” (or its equivalent) by all of the
Rating Agencies rating the Securities, (iii) TRIA or a similar federal statute
is in effect and provides that the federal government must reinsure that portion
of any terrorism insurance claim above (a) the applicable deductible payable by
Concord and (b) those amounts which are reinsured pursuant to clause (ii) above,
(iv) Concord is not the subject of a bankruptcy or similar insolvency proceeding
and (v) no Governmental Authority issues any statement, finding or decree that
insurers of perils of terrorism similar to Concord (i.e., captive insurers
arranged similar to Concord) do not qualify for the payments or benefits of
TRIA. In the event that Concord is providing insurance coverage (A) to other
properties immediately adjacent to the Property, and/or (B) to other properties
owned by a Person(s) who is not an Affiliate of Borrower, and such insurance is
not subject to the same reinsurance and other requirements of this Section
5.1.3, then Lender may reasonably re-evaluate the limits and deductibles of the
insurance required to be provided by Concord hereunder. In the event any of the
foregoing conditions are not satisfied, Concord shall not be deemed an
acceptable insurer of Terrorism Losses. Borrower represents, warrants and
covenants to Lender on behalf of Concord that the insurance premiums for the
insurance coverages provided to Borrower by Concord are fair market value
insurance premiums.

 

Section 5.2           Casualty and Condemnation.

 

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

 

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5.2.2      Condemnation. Borrower shall give Lender prompt notice of any actual
or threatened Condemnation by any Governmental Authority of all or any part of
the Property and shall deliver to Lender a copy of any and all papers served in
connection with such proceedings. Provided no Event of Default has occurred and
is continuing, in the event of a Condemnation where the amount of the taking
does not exceed the Restoration Threshold, Borrower may settle and compromise
such Condemnation; provided that the same is effected in a commercially
reasonable and timely manner. In the event of a Condemnation where the amount of
the taking exceeds the Restoration Threshold or if an Event of Default then
exists, Borrower may settle and compromise the Condemnation only with prior
written the consent of Lender (which consent shall not be unreasonably withheld
or delayed) and Lender shall have the opportunity to participate, at Borrower’s
cost, in any litigation and settlement discussions in respect thereof and
Borrower shall from time to time deliver to Lender all instruments requested by
Lender to permit such participation. Borrower shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Lender, its attorneys and
experts, and cooperate with them in the carrying on or defense of any such
proceedings. Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any Award and to make any compromise or settlement in
connection with any such Condemnation that Lender is otherwise permitted to
settle pursuant to the terms of this Agreement. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement. Lender shall
not be limited to the interest paid on the Award by any Governmental Authority
but shall be entitled to receive out of the Award interest at the rate or rates
provided herein or in the Note. If the Property or any portion thereof is taken
by any Governmental Authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 5.3. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.

 

5.2.3      Casualty Proceeds. Notwithstanding the last sentence of Section
5.1.1(a)(iii) and provided no Event of Default then exists hereunder, proceeds
received by Lender on account of the business interruption insurance specified
in Section 5.1.1(a)(iii) above with respect to any Casualty shall be deposited
by Lender directly into the Borrower Account (as defined in the Clearing Account
Agreement) but (a) only to the extent it reflects a replacement for (i) lost
Rents that would have been due under Leases existing on the date of such
Casualty, and/or (ii) lost Rents under Leases that had not yet been executed and
delivered at the time of such Casualty which Borrower has proven to the
insurance company would have been due under such Leases (and then only to the
extent such proceeds disbursed by the insurance company reflect a replacement
for such past due Rents) and (b) only to the extent necessary to fully make the
disbursements required by Section 3.3(a)(i) through (a)(vi) of the Cash
Management Agreement. All other such proceeds shall be held by Lender and
disbursed in accordance with Section 5.3 hereof.

 

Section 5.3           Delivery of Net Proceeds.

 

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

 

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

 

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

 

(ii)          (A) in the event the Net Proceeds are insurance proceeds, less
than thirty percent (30%) of the total floor area of the Improvements at the
Property has been damaged, destroyed or rendered unusable as a result of such
Casualty or (B) in the event the Net Proceeds are an Award, less than ten
percent (10%) of the land constituting the Property is taken, and such land is
located along the perimeter or periphery of the Property, and no portion of the
Improvements is the subject of the Condemnation;

 

(iii)         Leases requiring payment of annual rent equal to sixty-five (65%)
of the Gross Income from Operations received by Borrower during the twelve (12)
month period immediately preceding the Casualty or Condemnation and all Major
Leases shall remain in full force and effect during and after the completion of
the Restoration without abatement of rent beyond the time required for
Restoration, notwithstanding the occurrence of such Casualty or Condemnation;

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)          all Operating Agreements shall remain in full force and effect.

 

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

 

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

 

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(d)          In no event shall Lender be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term “Casualty Retainage”
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until such time as the Casualty Consultant certifies to Lender that
fifty percent (50%) or more of the Restoration has been completed following
which the Casualty Retainage shall be reduced to five percent (5%) until the
Restoration has been completed. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section
5.3.2(d), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 5.3.2(d) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, notwithstanding the foregoing,
Lender will release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
issuing the Title Insurance Policy, and Lender receives an endorsement to the
Title Insurance Policy insuring the continued priority of the lien of the
Mortgage and evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty Retainage
shall be approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or materialman.

 

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

 

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

 

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

 

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

 

ARTICLE VI

 

RESERVE FUNDS

 

Section 6.1           Required Repair Funds.

 

Borrower shall perform the repairs and remediation at the Property as set forth
on Schedule II hereto (such repairs and remediation hereinafter referred to as
“Required Repairs”) and shall complete each of the Required Repairs on or before
the respective deadline for each repair as set forth on Schedule II. Upon
Borrower’s completion of the Required Repairs, Borrower shall deliver to Lender
an Officer’s Certificate (i) stating that all Required Repairs been completed in
a good and workmanlike manner and in accordance with all applicable Legal
Requirements, such certificate to be accompanied by a copy of any license,
permit or other approval by any Governmental Authority required in connection
with the Required Repairs, (ii) identifying each Person that supplied materials
or labor in connection with the Required Repairs, and (iii) stating that each
such Person has been paid in full, such certificate to be accompanied by lien
waivers or other evidence of payment satisfactory to Lender, (d) at Lender’s
option, if the cost of the Required Repairs exceeds One Million Dollars
($1,000,000), a title search for the Property indicating that the Property is
free from all liens, claims and other encumbrances not previously approved by
Lender, (e) at Lender’s option, if the cost of the Required Repairs exceeds One
Million Dollars ($1,000,000), Lender shall have received a report satisfactory
to Lender in its reasonable discretion from an architect or engineer approved by
Lender in respect of such architect or engineer’s inspection of the Required
Repairs, and (f) Lender shall have received such other evidence as Lender shall
reasonably request that the Required Repairs. Lender shall have the right, but
not the obligation, to make any of the Required Repairs in the event Borrower
fails to perform same in accordance with this Section 6.1 within thirty (30)
days after Lender’s notice to Borrower of its failure to timely perform such
Required Repairs.

 

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Section 6.2           Tax Funds.

 

6.2.1       Deposits of Tax Funds. At all times during a Cash Sweep Period,
Borrower shall, pursuant to the Cash Management Agreement, make deposits on each
Monthly Payment Date in an amount equal to one-twelfth of the Taxes that Lender
reasonably estimates will be payable with respect to the Property during the
next ensuing twelve (12) months in order to accumulate sufficient funds to pay
all such Taxes at least ten (10) days prior to their respective due dates.
Amounts deposited pursuant to this Section 6.2.1 are referred to herein as the
“Tax Funds”. If at any time deposits are required to be made pursuant to this
Section 6.2.1 and Lender reasonably determines that the Tax Funds will not be
sufficient to pay the Taxes, Lender shall notify Borrower of such determination
and the monthly deposits for Taxes shall be increased by the amount that Lender
estimates is sufficient to make up the deficiency at least ten (10) days prior
to the respective due dates for the Taxes; provided that if Borrower receives
notice of any deficiency after the date that is ten (10) days prior to the date
that Taxes are due, Borrower will deposit such amount within one (1) Business
Day after its receipt of such notice.

 

6.2.2       Release of Tax Funds. Lender shall apply the Tax Funds to payments
of Taxes before the date Taxes are due and payable, provided that no Event of
Default is continuing and subject to Lender’s receipt of all necessary bills for
Taxes to be so paid at least ten (10) Business Days prior to the date the same
are due and payable. In making any payment relating to Taxes, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds
shall exceed the amounts due for Taxes, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax Funds. Any Tax Funds remaining after the Debt has been paid
in full shall be returned to Borrower.

 

Section 6.3           Insurance Funds.

 

6.3.1       Deposits of Insurance Funds. At all times during a Cash Sweep
Period, Borrower shall, pursuant to the Cash Management Agreement, make deposits
on each Monthly Payment Date in an amount equal to one-twelfth of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies. Amounts deposited pursuant to this
Section 6.3.1 are referred to herein as the “Insurance Funds”. If at any time
deposits are required to be made pursuant to this Section 6.3.1 and Lender
reasonably determines that the Insurance Funds will not be sufficient to pay the
Insurance Premiums, Lender shall notify Borrower of such determination and the
monthly deposits for Insurance Premiums shall be increased by the amount that
Lender estimates is sufficient to make up the deficiency at least thirty (30)
days prior to expiration of the Policies. Notwithstanding the foregoing,
deposits of Insurance Funds under this Section 6.3.1 shall not be required in
respect of Insurance Premiums payable under Blanket Policies maintained by
Borrower in accordance with Section 5.1 hereof.

 

6.3.2       Release of Insurance Funds. Lender shall apply the Insurance Funds
to payment of Insurance Premiums before the date Insurance Premiums are due and
payable, provided that no Event of Default is continuing and subject to Lender’s
receipt of all necessary bills and/or invoices for Insurance Premiums to be so
paid at least ten (10) Business Days prior to the date the same are due and
payable. In making any payment relating to Insurance Premiums, Lender may do so
according to any bill, statement or estimate procured from the insurer or its
agent, without inquiry into the accuracy of such bill, statement or estimate. If
the amount of the Insurance Funds shall exceed the amounts due for Insurance
Premiums, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Insurance Funds.
Any Insurance Funds remaining after the Debt has been paid in full shall be
returned to Borrower.

 

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Section 6.4           Capital Expenditure Funds.

 

6.4.1       Deposits of Capital Expenditure Funds. At all times during a Cash
Sweep Period, Borrower shall make deposits on each Monthly Payment Date in an
amount equal to Seventeen Thousand Seven Hundred Fifty and No/100 Dollars
$17,750.00 for Capital Expenditures. Amounts deposited pursuant to this Section
6.4.1 are referred to herein as the “Capital Expenditure Funds”.

 

6.4.2       Release of Capital Expenditure Funds. (a) Lender shall disburse
Capital Expenditure Funds only for Capital Expenditures.

 

(b)          Lender shall disburse to Borrower the Capital Expenditure Funds
upon satisfaction by Borrower of each of the following conditions: (i) Borrower
shall submit a request for payment to Lender at least ten (10) days prior to the
date on which Borrower requests such payment be made and specifies the Capital
Expenditures to be paid, (ii) on the date such request is received by Lender and
on the date such payment is to be made, no Event of Default shall exist and
remain uncured and Lender shall not have exercised its right to cause the
Borrower to replace the Manager (if any) pursuant to Section 7.3 hereof,
provided, that, the condition set forth in this clause (ii) below shall not be
applicable in the event that the Capital Expenditure for which a request for
payment has been submitted relates to the installation, maintenance or
improvement of fire or smoke alarms, sprinklers or other life safety systems,
(iii) Lender shall have received an Officer’s Certificate (A) stating that the
items to be funded by the requested disbursement are Capital Expenditures,
(B) stating that all Capital Expenditures at the Property to be funded by the
requested disbursement have been completed or, subject to clause (D) below,
performed, in a good and workmanlike manner and in accordance with all
applicable Legal Requirements, such Officer’s Certificate to be accompanied by a
copy of any license, permit or other approval required by any Governmental
Authority in connection with the Capital Expenditures, (C) identifying each
Person that supplied materials or labor in connection with the Capital
Expenditures to be funded by the requested disbursement, and (D) stating that
each such Person has been paid in full or will be paid in full upon such
disbursement for all costs relating to such Capital Expenditure as of the date
identified in such Certificate, or in the event that the cost of the Capital
Expenditure to be funded by the requested disbursement is in excess of $250,000
and the underlying contract requires payment before such Capital Expenditure is
fully completed, stating that such Person has been paid in full or will be paid
in full for the work performed upon such disbursement, such Officer’s
Certificate to be accompanied by lien waivers or other evidence of payment
satisfactory to Lender, (iv) at Lender’s option, if the cost of any individual
Capital Expenditure exceeds One Million Dollars ($1,000,000), a title search for
the Property indicating that the Property is free from all Liens, claims and
other encumbrances not previously approved by Lender, (v) at Lender’s option, if
the cost of any individual Capital Expenditure exceeds One Million and No/100
Dollars ($1,000,000), Lender shall have received a report reasonably
satisfactory to Lender in its reasonable discretion from an architect or
engineer approved by Lender in respect of such architect or engineer’s
inspection of the required repairs, and (vi) Lender shall have received such
other evidence as Lender shall reasonably request that the Capital Expenditures
at the Property to be funded by the requested disbursement have been completed
or, subject to clause (D) above, performed, and are paid for or will be paid
upon such disbursement to Borrower. Lender shall not be required to disburse
Capital Expenditure Funds more frequently than once each calendar month, unless
such requested disbursement is in an amount greater than the Minimum
Disbursement Amount (or a lesser amount if the total amount of Capital
Expenditure Funds is less than the Minimum Disbursement Amount, in which case
only one disbursement of the amount remaining in the account shall be made).

 

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

 

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

 

(e)          If a disbursement will exceed One Million and No/100 Dollars
($1,000,000), Lender may require an inspection of the Property at Borrower’s
expense prior to making a disbursement of Capital Expenditure Funds in order to
verify completion of the Capital Expenditures Work for which reimbursement is
sought. Lender may require that such inspection be conducted by an appropriate
independent qualified professional selected by Lender and may require a
certificate of completion by an independent qualified professional architect
reasonably acceptable to Lender prior to the disbursement of Capital Expenditure
Funds. Borrower shall pay the reasonable, out of pocket costs and expenses
actually incurred by Lender in connection with such inspection required
hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional architect.

 

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

 

Section 6.5           Rollover Funds.

 

6.5.1           Deposits of Rollover Funds. Borrower shall make deposits during
a Cash Sweep Period, on each Monthly Payment Date in an amount equal to One
Hundred and Seventy-Seven Thousand and No/100 Dollars $177,000, for tenant
improvements and leasing commissions, lease cancellation fees, buy-out fees or a
similar cost that may be incurred following the date hereof. All amounts
deposited pursuant to this Section 6.5.1 are referred to herein as the “Rollover
Funds”.

 

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6.5.2           Release of Rollover Funds. Lender shall disburse to Borrower the
Rollover Funds upon satisfaction by Borrower of each of the following
conditions: (a) Borrower shall submit a request for payment to Lender at least
ten (10) days prior to the date on which Borrower requests such payment be made
and specifies the tenant improvement costs and leasing commissions to be paid,
(b) on the date such request is received by Lender and on the date such payment
is to be made, no Event of Default shall exist and remain uncured, (c) if such
Lease is subject to Lender’s approval, Lender shall have reviewed and approved
the Lease in accordance with the terms hereof in respect of which Borrower is
obligated to pay or reimburse certain tenant improvement costs and leasing
commissions, (d) if such Lease is subject to Lender’s approval, Lender shall
have received and approved (which approval will not be unreasonably withheld) a
budget for tenant improvement costs and a schedule of leasing commissions
payments and the requested disbursement will be used to pay all or a portion of
such costs and payments, (e) Lender shall have received an Officer’s Certificate
(i) stating that the tenant improvements (or applicable portion thereof) at the
Property to be funded by the requested disbursement have been or, subject to
clause (iii) below, performed, in good and workmanlike manner and in accordance
with all applicable federal, state and local laws, rules and regulations, such
Officer’s Certificate to be accompanied by a copy of any license, permit or
other approval by any Governmental Authority required in connection with such
tenant improvements or leasing commissions, as applicable, (ii) identifying each
Person that supplied materials or labor in connection with the tenant
improvements to be funded by the requested disbursement, and (iii) stating that
each such Person has been paid in full or will be paid in full upon such
disbursement for work completed as of the date identified in such certificate,
or in the event that the cost of the tenant improvements to be funded by the
requested disbursement is in excess of $250,000 and the underlying contract
requires payment before such tenants improvements are fully completed, stating
that such Person has been paid in full or will be paid in full for the work
performed upon such disbursement for work completed as of the date identified in
such certificate, such Officer’s Certificate to be accompanied by lien waivers
or other evidence of payment satisfactory to Lender, (f) at Lender’s option, if
the cost of any individual disbursement exceeds One Million Dollars
($1,000,000), a title search for the Property indicating that the Property is
free from all Liens, claims and other encumbrances not previously approved by
Lender, (g) as a condition to the final disbursement with respect to a
particular Lease, Lender shall have received an estoppel certificate from the
applicable tenant stating that (i) all required work is complete and refunds or
reimbursements are due Tenant pursuant to its Lease and (ii) such tenant is in
occupancy or has taken possession of the demised premises, and (h) Lender shall
have received such other evidence as Lender shall reasonably request that the
tenant improvements at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Rollover Funds more
frequently than once each calendar month unless such requested disbursement is
in an amount greater than the Minimum Disbursement Amount (or a lesser amount if
the total amount of Rollover Funds is less than the Minimum Disbursement Amount,
in which case only one disbursement of the amount remaining in the account shall
be made).

 

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Section 6.6           Release of Reserve Funds upon Termination of Cash Sweep
Period. Upon the occurrence of a Cash Sweep Cure, Lender shall disburse to
Borrower the Tax Fund, Insurance Funds, Capital Expenditure Funds, the Rollover
Funds and any other amounts then remaining on deposit in the Accounts (as
defined in the Cash Management Agreement).

 

Section 6.7           Security Interest in Reserve Funds.

 

6.7.1      Grant of Security Interest. Borrower hereby pledges to Lender, and
grants a security interest in, any and all monies now or hereafter deposited in
the Reserve Funds as additional security for the payment of the Loan. The
Reserve Funds shall be held in Lender’s name for the benefit of Borrower, shall
be assigned the federal tax identification number of Borrower, and may be
commingled with any of Lender’s other funds then being held by the Lender or
Servicer. Upon the occurrence of an Event of Default, Lender may apply any sums
then on deposit in the Reserve Funds to the payment of the Loan in any order in
its sole discretion, provided, that, if any Capital Expenditure Funds have not
been otherwise applied to amounts payable under the Loan Documents, Borrower
shall be entitled to obtain disbursements thereof for life safety purposes to
the extent provided in Section 6.4.2. Until expended or applied as above
provided, the Reserve Funds shall constitute additional security for the Loan.
Lender shall have no obligation to release any of the Reserve Funds while any
Event of Default then exists.

 

6.7.2      Income Taxes. Interest shall accrue on the Reserve Funds for the
benefit and account of Borrower. Borrower shall report on its federal, state and
local income tax returns all interest or income earned on the applicable Reserve
Funds.

 

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

 

ARTICLE VII

 

PROPERTY MANAGEMENT.

 

Section 7.1           The Management Agreement.

 

(a)          Borrower represents, warrants and covenants to Lender that, as of
the date hereof, (i) the Property is managed by Borrower and no other Person,
(ii) there exists no management or other agreement pursuant to which the
Property or any portion thereof is managed, and (iii) any individuals engaged in
the management of the Property are (and at all times during which Borrower shall
be the Manager shall continue to be) the direct employees or consultants of an
Affiliate of Borrower and are directly compensated for their services by
Borrower.

 

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(b)          Borrower shall cause the Property to be managed in accordance with
any Management Agreement; provided, that, at all times during which Borrower
shall be the Manager, Borrower shall manage the Property in a manner consistent
with other prudent owners of real estate similar to the Property and in
accordance with the terms and provisions of this Agreement. Borrower shall
(i) diligently perform and observe all of the terms, covenants and conditions of
any Management Agreement on the part of Borrower to be performed and observed,
(ii) promptly notify Lender of any notice to Borrower of any default by Borrower
in the performance or observance of any of the terms, covenants or conditions of
any Management Agreement on the part of Borrower to be performed and observed,
and (iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, report and estimate received by it
under any Management Agreement as it relates to the Property. If Borrower shall
default in the performance or observance of any material term, covenant or
condition of any Management Agreement on the part of Borrower to be performed or
observed (beyond the expiration of any applicable notice and/or grace periods),
then, without limiting Lender’s other rights or remedies under this Agreement or
the other Loan Documents, and without waiving or releasing Borrower from any of
its obligations hereunder or under such Management Agreement, Lender shall have
the right, but shall be under no obligation, to pay any sums and to perform any
act as may be appropriate to cause all the material terms, covenants and
conditions of such Management Agreement on the part of Borrower to be performed
or observed.

 

Section 7.2           Prohibition Against Termination or Modification.

 

Borrower shall not surrender, terminate, cancel, modify, renew, amend or extend
any Management Agreement or cause or consent to the surrender, termination,
cancellation, modification, renewal amendment or extension (unless such renewal
or extension is commercially reasonably), or enter into any other agreement
relating to the management or operation of the Property with Manager or any
other Person, or consent to the assignment by the Manager of its interest under
any Management Agreement, in each case without the express consent of Lender,
which consent shall not be unreasonably withheld; provided, however, (i) with
respect to a new manager, such new manager shall be a Qualified Manager (and
Borrower shall have satisfied each of the conditions set forth in the definition
of Qualified Manager which are applicable to such new manager, i.e., delivery of
a Rating Agency Confirmation and/or a new or updated Insolvency Opinion, as
applicable), and (ii) with respect to a new management agreement, Lender’s
consent to such new management agreement may be conditioned upon Borrower
delivering a Rating Agency Confirmation as to such new management agreement if a
Securitization shall have occurred. If at any time Lender consents to the
appointment of a new manager (except in the case where such new manager is
Borrower), such new manager and Borrower shall, as a condition of Lender’s
consent, execute an Assignment of Management Agreement.

 

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Section 7.3           Replacement of Manager. In the event that the Property is
managed by a Manager after the date hereof, Lender shall have the right to
require Borrower to replace such Manager with a Person which is not an Affiliate
of, but is chosen by, Borrower and approved by Lender upon the occurrence of any
one or more of the following events: (a) at any time following the occurrence of
and during the continuance of a monetary Event of Default, (b) a Bankruptcy
Action with respect to the Manager and/or (c) if Manager (who is not a Trizec
Affiliate) shall be in default under the Management Agreement beyond any
applicable notice and cure period.

 

ARTICLE VIII

 

TRANSFERS

 

Section 8.1           Transfer or Encumbrance of Property.

 

(a)          Without the prior written consent of Lender, neither Borrower nor
any other Person having an ownership or beneficial interest in Borrower shall
(i) directly or indirectly sell, transfer, convey, mortgage, pledge, or assign
the Property, any part thereof or any interest therein (including any
partnership or any other ownership interest in Borrower); (ii) further encumber,
alienate, grant a Lien or grant any other interest in the Property or any part
thereof (including any partnership or other ownership interest in Borrower),
whether voluntarily or involuntarily; or (iii) enter into any easement or other
agreement granting rights in or restricting the use or development of the
Property.

 

(b)          As used in this Article VIII, “transfer” shall include (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower’s right, title and interest
in and to any Leases or any Rents; (iii) if Borrower or any general partner or
managing member of Borrower is a corporation, the voluntary or involuntary sale,
conveyance or transfer of such corporation’s stock (or the stock of any
corporation directly or indirectly Controlling such corporation by operation of
law or otherwise) or the creation or issuance of new stock such that such
corporation’s stock shall be vested in a party or parties who are not now
stockholders or any change in the Control of such corporation; and (iv) if
Borrower or any general partner or managing member of Borrower is a limited or
general partnership, joint venture or limited liability company, the change,
removal, resignation or addition of a general partner, managing partner, limited
partner, joint venturer, managing member or member or the transfer of the
partnership interest of any general partner, managing partner or limited partner
or the transfer of the interest of any joint venture or member.

 

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(c)          Lender shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to declare
the Debt immediately due and payable upon Borrower’s sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Property without
Lender’s consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Property regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer
of the Property.

 

(d)          Lender’s consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property shall not be deemed to be a
waiver of Lender’s right to require such consent to any future occurrence of
same. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Property made in contravention of this paragraph shall be null
and void and of no force and effect.

 

(e)          Borrower agrees to bear and shall pay or reimburse Lender on demand
for all reasonable expenses (including, without limitation, reasonable
attorneys’ fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Lender in connection with the review, approval
and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.

 

(f)          Lender shall not withhold its consent to a one time sale or
transfer of the entire Property; provided that the following conditions are
satisfied as reasonably determined by Lender:

 

(i)          no Event of Default or material Default shall have occurred and
remain uncured;

 

(ii)         the proposed transferee (the “Transferee”) is a Permitted
Transferee;

 

(iii)        after such conveyance of the Property, any Manager shall be a
Qualified Manager;

 

(iv)        after a Securitization, Lender shall have received a Rating Agency
Confirmation as to such transfer;

 

(v)         Lender shall have received evidence satisfactory to it (which shall
include a legal non-consolidation opinion acceptable to Lender) that the single
purpose nature and bankruptcy remoteness of Borrower its shareholders, partners,
or members, as the case may be, following such transfers are in accordance with
the standards of the Rating Agencies;

 

(vi)        the Transferee shall have executed and delivered to Lender an
assumption agreement in form and substance acceptable to Lender in its
reasonable discretion, evidencing such Transferee’s agreement to assume
Borrower’s obligations under, abide and be bound by the terms of this Agreement,
the Note, the Mortgage and the other Loan Documents after the date of such
conveyance, together with such legal opinions, Officer’s Certificates, documents
and title insurance endorsements as may be reasonably requested by Lender; and

 

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(vii)       Lender shall have received on or prior to the date of the sale or
transfer (A) a rating confirmation fee for each of the Rating Agencies
delivering a confirmation pursuant to clause (iv) above, which confirmation fees
shall be equal to the then customary fees charged by each applicable Rating
Agency for such a confirmation and (B) the payment of all reasonable third party
costs and expenses actually incurred by Lender and Servicer and all costs and
expenses of the Rating Agencies in connection with such assumption.

 

Upon satisfaction of each of the conditions set forth in subparagraphs
(f)(i)-(vii) above, Lender shall release Borrower from any liability or
obligation under the Loan Documents which arises from any act, omission or event
that occurs from and after the date of the conveyance of the Property to a
Transferee.

 

Section 8.2           Transfer of Equity Interests. Notwithstanding the
restrictions on transfers set forth in Section 8.1(a) above, the following
transfers of ownership interests in the Borrower shall not be deemed to be a
violation of such restrictions on transfers (each of the following is a
“Permitted Transfer”):

 

(a)          the transfer of the direct or indirect ownership interests in
Borrower to any Trizec Affiliate, provided, that, the following conditions are
satisfied:

 

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

 

(ii)         if, after giving effect to such proposed transfer and all prior
transfers, more than forty-nine percent (49%) in the aggregate of direct or
indirect interests in Borrower are owned by any Person and/or its Affiliates
that owned less than a forty-nine percent (49%) direct or indirect interest in
Borrower as of the date of this Agreement, Lender receives a non-consolidation
opinion reasonably acceptable to Lender and acceptable to the Rating Agencies in
their sole discretion;

 

(iii)        such transfer shall not affect the single purpose, bankruptcy
remote nature of Borrower as required pursuant to this Agreement and in its
organizational documents;

 

(iv)        Borrower shall have paid all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable and actual attorney’s fees)
incurred by Lender, Servicer or the Rating Agencies in connection with such
transfer; and

 

(v)         following such transfer, (A) Borrower continues to be Controlled
directly or indirectly by a Trizec Affiliate and (B) the Property shall continue
to be managed by a Qualified Manager; or

 

(b)          any transfer not otherwise permitted pursuant to clause (a) above
of the direct or indirect ownership interests in Borrower to any Person,
provided, that, the following conditions are satisfied:

 

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

 

(ii)         if, after giving effect to such proposed transfer and all prior
transfers, more than forty-nine percent (49%) in the aggregate of direct or
indirect interests in Borrower are owned by any Person and/or its Affiliates
that owned less than a forty-nine percent (49%) direct or indirect interest in
Borrower as of the date of this Agreement, Lender receives a non-consolidation
opinion reasonably acceptable to Lender and acceptable to the Rating Agencies in
their sole discretion; and

 

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(iii)        such transfer shall not affect the single purpose, bankruptcy
remote nature of Borrower as required hereunder and in its organizational
documents; and

 

(iv)        Borrower shall have paid all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable and actual attorney’s fees)
incurred by Lender, Servicer and the Rating Agencies in connection with such
transfer; and

 

(v)         following such transfer, (A) Borrower continues to be Controlled
directly or indirectly by a Trizec Affiliate (provided that Specified Decisions
may be subject to customary approval by a Permitted Transferee if the direct or
indirect ownership interests in Borrower are being transferred to a Permitted
Transferee), (B)  an aggregate of 50.1% or more of the interests in Borrower are
owned directly or indirectly by a Trizec Affiliate and (C) the Property shall
continue to be managed by a Qualified Manager; or

 

(c)          transfers of direct or indirect interest in TPI, THI or any Person
that owns a direct or indirect interest in TPI or THI, provided, that, (i) the
Property continues to be managed by a Qualified Manager or (ii) Lender shall
have received a Rating Agency Confirmation with respect to such transfer(s) (and
Borrower shall have paid all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable and actual attorney’s fees) incurred
by Lender, Servicer and the Rating Agencies in connection with obtaining such
Rating Agency Confirmation;

 

(d)          the conversion of THI or TPI into a limited liability company; or

 

(e)          Notwithstanding anything to the contrary herein contained, the sale
or transfer of 100% of the indirect interests in Borrower owned by Qualified
Intermediary to THI is permitted provided the following conditions have been
satisfied:

 

(i)          in the event that in connection with such sale or conveyance,
Manager (if any) will not thereafter continue to manage the Property, then the
Person who will manage the Property following such sale or conveyance must be
Borrower or a Qualified Manager;

 

(ii)         such sale or transfer occurs not later than one hundred eighty-five
(185) days after the Closing Date;

 

(iii)        Lender shall have received not less than ten (10) days’ prior
written notice of such sale or transfer;

 

(iv)        after giving effect to such sale or conveyance, Borrower will be in
compliance with the requirements of this Agreement and the Mortgage;

 

(v)         after giving effect to such sale or conveyance, the ownership
structure of Borrower will be as depicted on Schedule III; and

 

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(vi)        Lender shall have received such other documents, instruments,
certificates and legal opinions as Lender may reasonably require which shall be
in form, scope and substance reasonably acceptable in all respects to Lender.

 

Section 8.3           Subordinate Mezzanine Loan Option.

 

Notwithstanding anything to contrary contained in this Article VIII, certain
owners of Borrower shall be permitted to obtain mezzanine financing (the
“Subordinate Mezzanine Loan”), which Subordinate Mezzanine Loan shall be secured
by the membership or partnership interests in Borrower or the owner’s of
Borrower, subject to the following conditions and requirements:

 

(a)          the Subordinate Mezzanine Loan shall be junior and subordinate to
any New Mezzanine Loan made by Lender pursuant to Section 9.3 hereof;

 

(b)          Lender’s review and approval in its reasonable discretion of the
terms and conditions of the Subordinate Mezzanine Loan and the documents
evidencing the Subordinate Mezzanine Loan;

 

(c)          the Subordinate Mezzanine Loan shall only be payable out of any
excess cash flow from the Property;

 

(d)          the Subordinate Mezzanine Loan together with the Loan (and any New
Mezzanine Loan) shall have a combined Loan to Value Ratio of no greater than
65%;

 

(e)          the Actual Debt Service Coverage Ratio of the Subordinate Mezzanine
Loan together with the Loan and any New Mezzanine Loan shall not be less than
the Actual Debt Service Coverage Ratio of the Loan on the date hereof (computed
in all cases assuming (i) the Loan and the Subordinate Mezzanine Loan and any
New Mezzanine Loan are beyond any initial interest only or reduced amortization
periods and (ii) an interest rate with respect to the Subordinate Mezzanine Loan
is equal to the rate at which such interest rate is capped if such interest rate
is a variable rate);

 

(f)          the lender under the Subordinate Mezzanine Loan (the “Subordinate
Mezzanine Lender”) shall be a Qualified Lender and shall at all times during the
term of the Loan be the sole owner and holder of the Subordinate Mezzanine Loan
and shall not assign or pledge all or any portion thereof to any other third
party other than a Qualified Lender;

 

(g)          the Subordinate Mezzanine Lender shall enter into an intercreditor
agreement in the form and substance reasonably satisfactory to Lender and any
subsequent holder of the New Mezzanine Loan in their reasonable discretion (the
“Subordinate Mezzanine Intercreditor Agreement”);

 

(h)          the Subordinate Mezzanine Loan shall be nonrecourse as to principal
and interest required to be paid under the Mezzanine Loan and shall not be
secured by a lien against the Property;

 

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(i)          Borrower shall reimburse Lender for all out-of-pocket expenses
incurred by Lender in reviewing the Subordinate Mezzanine Loan documents and
negotiating and documenting the Subordinate Mezzanine Intercreditor Agreement;
and

 

(j)          if required by Lender, Borrower shall deliver a Rating Agency
Confirmation to Lender at Borrower’s sole cost and expense.

 

The final capital structure of the Subordinate Mezzanine Loan is subject in all
respects to Lender’s and the Rating Agencies’ approval, including, without
limitation, the organizational structure of Borrower and the Mezzanine Lender.

 

ARTICLE IX

 

SALE AND SECURITIZATION OF MORTGAGE

 

Section 9.1           Sale of Mortgage and Securitization.

 

(a)          Lender shall have the right (i) to sell or otherwise transfer the
Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transactions
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as “Secondary Market Transactions” and the transaction referred to
in clause (iii) shall hereinafter be referred to as a “Securitization”. Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as “Securities”).

 

(b)          If requested by Lender, Borrower shall use commercially reasonable,
good faith efforts to assist Lender in satisfying the market standards to which
Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with any Secondary Market
Transactions, including, without limitation, to:

 

(i)          (A) provide updated financial and other information with respect to
the Property, the business operated at the Property, Borrower and the Manager
(if any), (B) provide updated budgets relating to the Property and (C) at
Lender’s expense, provide updated appraisals, market studies, environmental
reviews (Phase I’s and, if appropriate, Phase II’s), property condition reports
and other due diligence investigations of the Property (the “Updated
Information”), together, if customary, with appropriate verification of the
Updated Information through letters of auditors or opinions of counsel
acceptable to Lender and the Rating Agencies;

 

(ii)         provide opinions of counsel, at Lender’s expense, which may be
relied upon by Lender, the Rating Agencies and their respective counsel, agents
and representatives, as to non-consolidation, fraudulent conveyance, and “true
sale” or any other opinion customary in Secondary Market Transactions or
required by the Rating Agencies with respect to the Property and Borrower and
Affiliates, which counsel and opinions shall be satisfactory to Lender and the
Rating Agencies;

 

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

 

(iv)        execute such amendments to the Loan Documents and Borrower’s
organizational documents reasonably requested by Lender, including, without
limitation, amending the Monthly Payment Date, the execution of one or more
replacement loan agreements, as may be requested by Lender or the Rating
Agencies to effect the Securitization and/or deliver one or more new component
notes to replace the original note or modify the original note to reflect
multiple components of the Loan (and such new notes or modified note shall have
the same weighted average coupon and amortization of the original note, but such
new notes or modified note may change the interest rate, Monthly Payment Date
and amortization of the Loan after the occurrence of an Event of Default), and
modify the Cash Management Agreement with respect to the newly created
components such that the pricing and marketability of the Securities and the
size of each class of Securities and the rating assigned to each such class by
the Rating Agencies shall provide the most favorable rating levels and achieve
the optimum rating levels for the Loan; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (A) change the interest rate, the stated maturity or the
amortization of principal except as set forth above, (B) modify or amend any
other material economic term of the Loan or (C) otherwise have a material
adverse effect on any of Borrower’s rights and obligations under the Loan
Documents; and

 

(v)         attend management meetings and conduct tours of the Property.

 

(c)          The Lender whose Note shall be the subject of the Securitization
shall reimburse Borrower for all of its reasonable costs and expenses (including
Borrower’s legal fees in excess of an aggregate amount of $30,000) incurred in
connection with its cooperation with such Lender pursuant to this Section 9.1,
Section 9.3 and Section 11.29 (except that such Lender shall have no obligation
to reimburse Borrower with respect to any of the foregoing which Borrower is
otherwise required to perform and/or deliver at its cost under another provision
of this Agreement); it being the agreement of the parties that no other Lender
shall be obligated to reimburse Borrower for such costs and expenses.

 

Section 9.2           Securitization Indemnification.

 

(a)          Borrower understands that information provided to Lender by
Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, a “Disclosure Document”)
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.

 

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(b)          Borrower shall provide in connection with each of (i) a preliminary
and a final private placement memorandum or (ii) a preliminary and final
prospectus or prospectus supplement, as applicable, an agreement (A) certifying
that Borrower has examined such Disclosure Documents specified by Lender and
that each such Disclosure Document, as it relates to Borrower, Borrower
Affiliates, the Property and Manager (if any), does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading, (B) indemnifying Lender (and for purposes of this
Section 9.2, Lender hereunder shall include its officers and directors), the
Affiliate of Lender that has filed the registration statement relating to the
Securitization (the “Registration Statement”), each of its directors, each of
its officers who have signed the Registration Statement and each Person that
Controls the Affiliate within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the “Lender Group”), and Lender,
and any other placement agent or underwriter with respect to the Securitization,
each of their respective directors and each Person who Controls Lender or any
other placement agent or underwriter within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any losses, claims, damages or liabilities
(collectively, the “Liabilities”) to which Lender, the Lender Group or the
Underwriter Group may become subject insofar as the Liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in such sections or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated in
such sections or necessary in order to make the statements in such sections, in
light of the circumstances under which they were made, not misleading and
(C) agreeing to reimburse Lender, the Lender Group and/or the Underwriter Group
for any legal or other expenses reasonably incurred by Lender, the Lender Group
and the Underwriter Group in connection with investigating or defending the
Liabilities; provided, however, that Borrower will be liable in any such case
under clauses (B) or (C) above only to the extent that any such loss claim,
damage or liability arises out of or is based upon any such untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of Borrower in connection with the
preparation of the Disclosure Document or in connection with the underwriting or
closing of the Loan, including, without limitation, financial statements of
Borrower, operating statements and rent rolls with respect to the Property. This
indemnity agreement will be in addition to any liability which Borrower may
otherwise have.

 

(c)          In connection with Exchange Act Filings, Borrower shall
(i) indemnify Lender, the Lender Group and the Underwriter Group for Liabilities
to which Lender, the Lender Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document relating to Borrower, the
Property, the Manager (if any), the Principal or the Trizec Affiliates a
material fact required to be stated in the Disclosure Document in order to make
the statements in the Disclosure Document, in light of the circumstances under
which they were made, not misleading and (ii) reimburse Lender, the Lender Group
or the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Lender Group or the Underwriter Group in connection with defending
or investigating the Liabilities; provided, however, that Borrower will be
liable in any such case above only to the extent that any such Liability arises
out of, or is based upon, any such untrue statement or omission made in the
Disclosure Document in reliance upon, and in conformity with, information
furnished to Lender by or at the direction of Borrower, any Affiliate of
Borrower, any Trizec Affiliate pursuant to the Loan Documents, whether in
connection with the preparation of a Disclosure Document, or in connection with
the underwriting or closing of the Loan or otherwise, including, without
limitation, the financial statements of Borrower and THI and the operating
statements and rent rolls with respect to the Property.

 

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

 

(e)          In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) Lender’s and Borrower’s relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.

 

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

 

Section 9.3           Mezzanine Loans.

 

Notwithstanding the provisions of Article IX to the contrary, Borrower covenants
and agrees that after the Closing Date and prior to a Securitization, Lender
shall have the right to create one or more mezzanine loans (each, a “New
Mezzanine Loan”), to establish different interest rates and to reallocate the
amortization, and principal balances of the Loan and any New Mezzanine Loan
amongst each other and to require the payment of the Loan and any New Mezzanine
Loan in such order of priority as may be designated by Lender; provided, that in
no event shall the weighted average spread and amortization of the Loan and any
New Mezzanine Loan following any such reallocation or modification change from
the weighted average spread and amortization for all in effect immediately
preceding such reallocation, modification or creation of any New Mezzanine Loan.
Borrower shall execute and deliver such documents as shall reasonably be
required by Lender as promptly as possible under the circumstances in connection
with this Section 9.3, all in form and substance reasonably satisfactory to
Lender and the Rating Agencies, including, without limitation, in connection
with the creation of any New Mezzanine Loan, a promissory note and loan
documents necessary to evidence such New Mezzanine Loan, and Borrower shall
execute such amendments to the Loan Documents as are necessary in connection
with the creation of such New Mezzanine Loan. In addition, Borrower shall cause
the formation of one or more special purpose, bankruptcy remote entities as
required by Lender in order to serve as the borrower under any New Mezzanine
Loan (each, a “New Mezzanine Borrower”) and the applicable organizational
documents of Borrower shall be amended and modified as necessary or required in
the formation of any New Mezzanine Borrower. Further, in connection with any New
Mezzanine Loan, Borrower shall deliver to Lender opinions of legal counsel with
respect to due execution, authority and enforceability of the New Mezzanine Loan
and the Loan Documents, as amended and an additional Insolvency Opinion for the
Loan and a substantive non-consolidation opinion with respect to any New
Mezzanine Loan, each as reasonably acceptable to Lender, prospective investors
and/or the Rating Agencies.

 

ARTICLE X

 

DEFAULTS

 

Section 10.1         Event of Default.

 

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

 

(i)          if (A) any monthly installment of principal and/or interest due
under the Note is not paid when due or (B) the payment due on the Maturity Date
is not paid when due or (C) any other portion of the Debt is not paid when due
and such non-payment continues for five (5) days following notice to Borrower
that the same is due and payable;

 

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(ii)         if any of the Taxes or Other Charges are not paid when due subject,
however, to the provisions of Section 4.1.2;

 

(iii)        if the Policies are not kept in full force and effect;

 

(iv)        if Borrower breaches or permits or suffers a breach of Article 6 of
the Mortgage and same is not cured within five (5) Business Days after notice
thereof from Lender;

 

(v)         if any representation or warranty made by Borrower herein or in any
other Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made and same is not cured within five (5) Business Days after notice
thereof from Lender;

 

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

 

(vii)       reserved;

 

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

 

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

 

(x)          a default under any agreement creating a Lien or encumbrance on the
Property, subject to Borrower’s right to contest such Lien or encumbrance in
strict accordance with the terms of the Loan Documents;

 

(xi)         if any of the assumptions contained in the Insolvency Opinion, or
in any other non-consolidation opinion delivered to Lender in connection with
the Loan, or in any other non-consolidation delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect; provided,
however, such assumption which has become untrue in such material respect (an
“Untrue Material Assumption”) shall not constitute an Event of Default in the
event that (1) such Untrue Material Assumption is not intentional, (2) such
Untrue Material Assumption is immaterial, (3) such Untrue Material Assumption
shall be remedied within a timely manner and (4) within fifteen (15) Business
Days of the request of Lender, Borrower delivers to Lender an additional
Insolvency Opinion, or a modification of the Insolvency Opinion, to the effect
that such Untrue Material Assumption shall not in any way impair, negate or
adversely change the opinions rendered in the Insolvency Opinion, which opinion
or modification and any counsel delivering such opinion or modification shall be
acceptable to Lender in its reasonable discretion;

 

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(xii)        if Borrower breaches any representation, warranty or covenant
contained in Section 3.1.24 hereof; provided, however, such violation or breach
shall not constitute an Event of Default in the event that (1) such violation or
breach is not intentional, (2) such violation or breach is immaterial, (3) such
violation or breach shall be remedied within a timely manner and (4) within
fifteen (15) Business Days of the request of Lender, Borrower delivers to Lender
an additional Insolvency Opinion, or a modification of the Insolvency Opinion,
to the effect that such breach or violation shall not in any way impair, negate
or adversely change the opinions rendered in the Insolvency Opinion, which
opinion or modification and any counsel delivering such opinion or modification
shall be acceptable to Lender in its reasonable discretion;

 

(xiii)       if Borrower breaches any of the negative covenants contained in
Section 4.2.10;

 

(xiv)      if Borrower or any owner of Borrower violates any of the covenants
set forth in Sections 8.1 or 8.2 hereof and same is not cured within five (5)
Business Days after notice thereof from Lender;

 

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

 

(xvi)      if, not later than one hundred eighty-five (185) days from the
Closing Date, (A) Qualified Intermediary shall not have sold or transferred to
THI 100% of the indirect interests in Borrower owned by Qualified Intermediary
and (B) the Master Lease shall not have been terminated.

 

(b)          Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 10.1(a) (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in and to the
Property, including, without limitation, declaring the Debt to be immediately
due and payable, and Lender may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents against Borrower and the Property,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in Section 10.1(a) (vi), (vii)
or (viii) above, the Debt and all other obligations of Borrower hereunder and
under the other Loan Documents shall immediately and automatically become due
and payable, without notice or demand, and Borrower hereby expressly waives any
such notice or demand, anything contained herein or in any other Loan Document
to the contrary notwithstanding.

 

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Section 10.2         Remedies.

 

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

 

(b)          Lender shall have the right from time to time to partially
foreclose the Mortgage in any manner and for any amounts secured by the Mortgage
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose the Mortgage
to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose the Mortgage to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the Mortgage as
Lender may elect. Notwithstanding one or more partial foreclosures, the Property
shall remain subject to the Mortgage to secure payment of sums secured by the
Mortgage and not previously recovered.

 

(c)          Lender shall have the right from time to time to sever the Note and
the other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power. Except as may be required in connection with a
Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.

 

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

 

Section 10.3         Right to Cure Defaults.

 

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

 

Section 10.4         Remedies Cumulative.

 

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

 

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ARTICLE XI

 

MISCELLANEOUS

 

Section 11.1         Successors and Assigns.

 

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

 

Section 11.2         Lender’s Discretion.

 

Whenever pursuant to this Agreement Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, or the
requirement for delivery of a Rating Agency Confirmation exists, the decision of
Lender (a) to approve or disapprove, (b) to decide whether arrangements or terms
are satisfactory or not satisfactory or (c) to determine whether it is
reasonably likely that a Rating Agency Confirmation would be issued, based upon
Lender’s determination of Rating Agency criteria, shall be substituted
therefore.

 

Section 11.3         Governing Law.

 

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

 

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

 

CORPORATION SERVICE COMPANY

80 STATE STREET

ALBANY, NEW YORK 12207

 

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

 

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Section 11.4      Modification, Waiver in Writing.

 

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

 

Section 11.5      Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under any other Loan Document,
shall operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement or any other Loan Document, Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement or the other Loan Documents, or to declare a default
for failure to effect prompt payment of any such other amount. Lender shall have
the right to waive or reduce any time periods that Lender is entitled to under
the Loan Documents in its sole and absolute discretion.

 

Section 11.6      Notices.

 

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

 

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If to Morgan: Morgan Stanley Mortgage Capital Inc.   1221 Avenue of the
Americas, 27th Floor   New York, New York  10020   Attention:  Steven Maeglin,
Executive Director   Facsimile No.:  (212) 507-4129     with a copy to:
Cadwalader, Wickersham & Taft LLP 100 Maiden Lane   New York, New York  10038  
Attention:  Fredric L. Altschuler, Esq.   Facsimile No.:  (212) 504-6666     If
to MetLife: Metropolitan Life Insurance Company   10 Park Avenue   Morristown,
New Jersey 07962   Attention:  Senior Vice President, Real Estate Investments  
Facsimile No.: (973) 355-4460     with a copy to: Metropolitan Life Insurance
Company   10 Park Avenue   Morristown, New Jersey 07962   Attention:  Associate
General Counsel   Facsimile No.: (973) 355-4920     If to Borrower: Trizec 333
LA, LLC   c/o Trizec Properties, Inc.   233 South Wacker Drive, Suite 4600  
Chicago, Illinois  60606   Attention:  Finance Department   Facsimile No.:
 (312) 466-0185     with a copy to: Paul, Hastings, Janofsky & Walker LLP   515
South Flower Street   25th Floor   Los Angeles, California  90071  
Attention:  Philip N. Feder   Facsimile No.:  (213) 627-0705

 

Section 11.7      Trial by Jury.

 

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

 

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Section 11.8      Headings.

 

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

 

Section 11.9      Severability.

 

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

 

Section 11.10    Preferences.

 

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

 

Section 11.11    Waiver of Notice.

 

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

 

Section 11.12    Remedies of Borrower.

 

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

 

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Section 11.13    Expenses; Indemnity.

 

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

 

(b)          Borrower shall indemnify, defend and hold harmless Lender and its
officers, directors, agents, employees (and the successors and assigns of the
foregoing) (the “Lender Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for the
Lender Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not the Lender
Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against the Lender Indemnitees in any manner relating
to or arising out of (i) any breach by Borrower of its obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that Borrower
shall not have any obligation to the Lender Indemnitees hereunder to the extent
that such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of the Lender Indemnitees. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Lender Indemnitees.

 

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Section 11.14    Schedules Incorporated.

 

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

 

Section 11.15    Offsets, Counterclaims and Defenses.

 

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

 

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

 

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

 

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

 

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Section 11.17    Publicity.

 

All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender or any of
its Affiliates shall be subject to the prior written approval of Lender. All
news releases, publicity or advertising by Lender or its Affiliates through any
media intended to reach the general public which refers to the Loan, the
Property, Borrower, any Trizec Affiliate shall be subject to the prior approval
of Borrower (other than any information and disclosure in connection with or in
furtherance of any actual or proposed Secondary Market Transaction, and other
than any standard so-called “tombstone” announcements referring to the financing
evidenced by the Loan Documents).

 

Section 11.18    Waiver of Marshalling of Assets.

 

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

 

Section 11.19    Waiver of Offsets/Defenses/Counterclaims.

 

Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents or otherwise to offset any obligations to make the payments
required by the Loan Documents. No failure by Lender to perform any of its
obligations hereunder shall be a valid defense to, or result in any offset
against, any payments which Borrower is obligated to make under any of the Loan
Documents.

 

Section 11.20    Conflict; Construction of Documents; Reliance.

 

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

 

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Section 11.21    Brokers and Financial Advisors.

 

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

 

Section 11.22    Exculpation.

 

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

 

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(i)          fraud or intentional misrepresentation by Borrower or any guarantor
in connection with the Loan;

 

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

 

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

 

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

 

(v)         the misapplication or conversion by Borrower of (A) any insurance
proceeds paid by reason of any loss, damage or destruction to the Property,
(B) any Awards or other amounts received in connection with the Condemnation of
all or a portion of the Property, or (C) any Rents following an Event of Default
or any Rents collected for more than one month in advance to the extent such
Rents or any other payments in respect of the Leases and other income of the
Property or any other collateral are not applied to the costs of maintenance and
operation of the Property and to the payment of taxes, lien claims, insurance
premiums, Debt Service and other amounts due under the Loan Documents;

 

(vi)        failure to pay charges for labor or materials or other charges that
can create Liens on any portion of the Property other than Liens specifically
permitted by the terms of this Agreement and the other Loan Documents;

 

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

 

(viii)      Borrower’s indemnification of Lender set forth in Section 9.2
hereof;

 

(ix)         Borrower’s failure to maintain insurance as required by this
Agreement or to pay any taxes or assessments affecting the Property;

 

(x)          any intentional damage or destruction to the Property caused by the
acts or omissions of Borrower, its agents, employees, or contractors;

 

(xi)         any failure of Borrower to maintain its status as a single purpose
entity as required by, and in accordance with, the terms hereof; or

 

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(xii)        Borrower’s commission of a criminal act.

 

Notwithstanding anything to the contrary in this Agreement, the Note or any of
the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) the first full monthly payment
of interest under the Note is not paid when due; (ii) Borrower fails to permit
on-site inspections of the Property, fails to provide financial information,
fails to maintain its status as a single purpose entity or fails to appoint a
new property manager upon the request of Lender after an Event of Default, each
as required by, and in accordance with the terms and provisions of, this
Agreement and the Mortgage; (iii) Borrower fails to obtain Lender’s prior
consent to any subordinate financing or other voluntary Lien encumbering the
Property; (iv) Borrower fails to obtain Lender’s prior consent to any
assignment, transfer, or conveyance of the Property or any interest therein as
required by the Mortgage or this Agreement; (v) Borrower files a voluntary
petition under the Bankruptcy code or any other Federal or state bankruptcy or
insolvency law; (vi) an Affiliate, officer, director, or representative which
controls, directly or indirectly, Borrower files, or joins in the filing of, an
involuntary petition against Borrower under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against Borrower
from any Person; (vii)  Borrower files an answer consenting to or otherwise
acquiescing in or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; (viii) any Affiliate, officer,
director, or representative which controls Borrower consents to or acquiesces in
or joins in an application for the appointment of a custodian, receiver,
trustee, or examiner for Borrower or any portion of the Property; or
(ix) Borrower makes an assignment for the benefit of creditors, or admits, in
writing or in any legal proceeding, its insolvency or inability to pay its debts
as they become due.

 

Section 11.23    Prior Agreements.

 

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

 

Section 11.24    Servicer.

 

(a)          At the option of Lender, the Loan may be serviced by a servicer
(the “Servicer”) selected by Lender and Lender may delegate all or any portion
of its responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender and Servicer. Servicer shall be entitled to reimbursement of reasonable
out of pocket costs and expenses actually incurred as and to the same extent
(but without duplication) as Lender is entitled thereto under the applicable
provisions of this Agreement and the other Loan Documents.

 

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

 

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

 

(d)          Notwithstanding anything to the contrary contained herein or in any
other Loan Documents, if the Loan is subject to multiple Securitizations,
Borrower shall only be required to deal with one primary Servicer with respect
to any consents, approvals, notices, required from, or to, Lender pursuant to
the Loan Documents (it being understood that such primary Servicer may need to
consult with other Persons that hold a portion of Lender’s rights and
obligations under the Loan or with the Rating Agencies in connection with any
such consent, approval or notice). Lender may replace such primary Servicer with
another single primary Servicer at any time in Lender’s sole discretion. Lender
agrees that promptly after the date hereof it shall appoint such primary
Servicer.

 

Section 11.25    Joint and Several Liability.

 

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

 

Section 11.26    Creation of Security Interest.

 

Notwithstanding any other provision set forth in this Agreement, the Note, the
Mortgage or any of the other Loan Documents, Lender may at any time create a
security interest in all or any portion of its rights under this Agreement, the
Note, the Mortgage and any other Loan Document (including, without limitation,
the advances owing to it) in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System.

 

Section 11.27    Assignments and Participations.

 

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

 

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

 

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

 

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Section 11.28   Set-Off.

 

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

 

Section 11.29         Component Notes.

 

Prior to the last Securitization, Lender, without in any way limiting Lender’s
other rights hereunder, in its sole and absolute discretion, shall have the
right at any time to require Borrower to execute and deliver “component” notes
(including senior and junior notes) in replacement of the Note as evidence of
the Loan, which notes may be paid in such order of priority as may be designated
by Lender, provided that (i) the aggregate principal amount of such “component”
notes shall equal the outstanding principal balance of the Loan immediately
prior to the creation of such “component” notes, (ii) the weighted average
interest rate of all such “component” notes shall on the date created equal the
interest rate which was applicable to the Loan immediately prior to the creation
of such “component” notes, (iii) the debt service payments and the amortization
on all such “component” notes shall on the date created equal the debt service
payment which was due under the Loan immediately prior to the creation of such
component notes and (iv) the other terms and provisions of each of the
“component” notes shall be identical in substance and substantially similar in
form to the Loan Documents. Subject to the next paragraph of this Section, at
Borrower’s cost and expense, Borrower shall cooperate with all reasonable
requests of Lender in order to establish the “component” notes and shall execute
and deliver such documents as shall reasonably be required by Lender and any
Rating Agency in connection therewith, all in form and substance reasonably
satisfactory to Lender and satisfactory to any Rating Agency, including, without
limitation, the severance of security documents if requested. In the event
Borrower fails to execute and deliver such documents to Lender within five (5)
Business Days following such request by Lender, Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect such transactions, Borrower ratifying all that such attorney
shall do by virtue thereof.

 

Lender shall reimburse Borrower for all of its reasonable costs and expenses
(including Borrower’s legal fees in excess of $30,000) incurred in connection
with its cooperation with Lender pursuant to this Section 11.29, Section 9.3 and
Section 9.1 (except that Lender shall have no obligation to reimburse Borrower
with respect to any of the foregoing which Borrower is otherwise required to
perform and/or deliver at its cost under another provision of this Agreement).

 

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It shall be an Event of Default under this Agreement, the Note, the Mortgage and
the other Loan Documents if Borrower fails to comply with any of the terms,
covenants or conditions of this Section 11.29 within ten (10) Business Days of
notice thereof.

 

Section 11.30    Approvals; Third Parties; Conditions.

 

All approval rights retained or exercised by Lender with respect to Leases,
contracts, plans, studies and other matters are solely to facilitate Lender’s
credit underwriting, and shall not be deemed or construed as a determination
that Lender has passed on the adequacy thereof for any other purpose and may not
be relied upon by Borrower or any other Person. This Agreement is for the sole
and exclusive use of Lender and Borrower and may not be enforced, nor relied
upon, by any Person other than Lender and Borrower. All conditions of the
obligations of Lender hereunder, including the obligation to make advances, if
any, are imposed solely and exclusively for the benefit of Lender, its
successors and assigns, and no other Person shall have standing to require
satisfaction of such conditions or be entitled to assume that Lender will refuse
to make advances in the absence of strict compliance with any or all of such
conditions, and no other Person shall, under any circumstances, be deemed to be
a beneficiary of such conditions, any and all of which may be freely waived in
whole or in part by Lender at any time in Lender’s sole discretion.

 

Section 11.31    Limitation on Liability of Lender’s Officers, Employees, etc.

 

Any obligation or liability whatsoever of Lender which may arise at any time
under this Agreement or any other Loan Document shall be satisfied, if at all,
out of Lender’s interest in the Property only. No such obligation or liability
shall be personally binding upon, nor shall resort for the enforcement thereof
be had to, the property of any of Lender’s shareholders, directors, officers,
employees or agents, regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.

 

Section 11.32    Qualified Intermediary.

 

Borrower shall cause the sale from Qualified Intermediary described in Section
8.2(e) to occur on or prior to the date which is one hundred eighty-five (185)
days after the Closing Date.

 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

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

 

  LENDER:       MORGAN STANLEY MORTGAGE CAPITAL INC., a New York corporation    
    By: [Illegible]     Name:     Title:         METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation         By: /s/ Kenneth A. McIntyne, Jr.    
Name:  Kenneth A. McIntyne, Jr.     Title:    Director

 

 

 

 

  BORROWER:       Trizec 333 LA, LLC, a Delaware limited liability company      
  By: Trizec 333 Mezz, LLC, a Delaware limited liability company, its sole
member

 

  By: Trizec 333, LLC, a Delaware limited liability company, its sole member

 

  By: CDECRE, Inc., an Illinois corporation, its Manager

 

  By: [Illegible]     Name:     Title: