EXHIBIT 10-8

 

 

LOAN AGREEMENT

Dated as of November 9, 2012

Between

TNP SRT LAHAINA GATEWAY, LLC,

as Borrower

and

DOF IV REIT HOLDINGS, LLC,

as Lender

 

 

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TABLE OF CONTENTS

 

         Page   ARTICLE 1: DEFINITIONS; PRINCIPLES OF CONSTRUCTION      1   

Section 1.1

 

Definitions.

     1   

Section 1.2

 

Principles of Construction.

     1    ARTICLE 2: THE LOAN      1   

Section 2.1

 

The Loan.

     1   

2.1.1

  Agreement to Lend and Borrow.      1   

2.1.2

  The Note.      2   

2.1.3

  Use of Proceeds.      2   

Section 2.2

 

Interest Rate.

     2   

2.2.1

  Interest Rate.      2   

2.2.2

  Default Rate.      2   

2.2.3

  Interest Calculation.      2   

2.2.4

  Usury Savings.      2   

Section 2.3

 

Loan Payments; Term of Loan.

     3   

2.3.1

  Payments Before Stated Maturity Date.      3   

2.3.2

  Payment on Maturity Date.      3   

2.3.3

  Late Payment Charge.      3   

2.3.4

  Closing Payment      4   

2.3.5

  Method and Place of Payment.      4   

Section 2.4

 

Prepayments.

     4   

2.4.1

  Voluntary Prepayments.      4   

2.4.2

  Mandatory Prepayments.      5   

2.4.3

  Prepayments After Default.      5   

Section 2.5

 

Intentionally Omitted.

     6   

Section 2.6

 

Intentionally Omitted.

     6    ARTICLE 3: REPRESENTATIONS AND WARRANTIES      6   

Section 3.1

 

Borrower Representations.

     6   

3.1.1

  Organization.      6   

 

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3.1.2

  Proceedings.      6   

3.1.3

  No Conflicts.      6   

3.1.4

  Litigation.      6   

3.1.5

  Agreements.      6   

3.1.6

  Consents.      7   

3.1.7

  Title.      7   

3.1.8

  No Plan Assets.      7   

3.1.9

  Compliance.      7   

3.1.10

  Financial Information.      8   

3.1.11

  Condemnation.      8   

3.1.12

  Easements; Utilities and Public Access.      8   

3.1.13

  Separate Lots.      8   

3.1.14

  Taxes and Assessments.      9   

3.1.15

  Enforceability.      9   

3.1.16

  Assignment of Leases.      9   

3.1.17

  Insurance.      9   

3.1.18

  Licenses.      9   

3.1.19

  Flood Zone.      9   

3.1.20

  Physical Condition.      9   

3.1.21

  Boundaries.      10   

3.1.22

  Leases.      10   

3.1.23

  Filing and Recording Taxes.      10   

3.1.24

  Single Purpose.      11   

3.1.25

  Tax Filings.      11   

3.1.26

  Solvency.      11   

3.1.27

  Federal Reserve Regulations.      11   

3.1.28

  Organizational Chart.      11   

3.1.29

  Organizational Status.      12   

3.1.30

  Bank Holding Company.      12   

3.1.31

  No Casualty.      12   

3.1.32

  Purchase Options.      12   

3.1.33

  FIRPTA.      12   

3.1.34

  Illegal Activity.      12   

3.1.35

  Investment Company Act.      12   

3.1.36

  Use of Property.      12   

3.1.37

  Fiscal Year.      12   

3.1.38

  No Other Financing.      12   

3.1.39

  Contracts.      12   

3.1.40

  Full and Accurate Disclosure; No Change in Facts.      13   

3.1.41

  Other Obligations and Liabilities.      13   

3.1.42

  Ground Lease.      13   

3.1.43

  Operating Agreements.      14   

3.1.44

  Bankruptcy Filings.      15   

3.1.45

  Pledged Collateral.      15   

Section 3.2

 

Survival of Representations; Reliance.

     16   

 

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ARTICLE 4: BORROWER COVENANTS      16    Section 4.1   

Borrower Affirmative Covenants.

     16    4.1.1      Payment and Performance of Obligations.      16    4.1.2  
   Existence; Compliance with Legal Requirements.      16    4.1.3      Taxes
and Other Charges.      16    4.1.4      Litigation.      17    4.1.5     
Access to Property.      17    4.1.6      Further Assurances; Supplemental
Mortgage Affidavits.      17    4.1.7      Financial Reporting.      18   
4.1.8      Title to the Property.      20    4.1.9      Estoppel Statement.     
20    4.1.10    Leases.      20    4.1.11    Alterations.      23    4.1.12   
Approval of Material Agreements and Affiliate Agreements.      23    4.1.13   
After Acquired Property.      23    4.1.14    PATRIOT Act.      23    4.1.15   
Special Purpose.      24    4.1.16    Ground Lease.      24    4.1.17   
Intentionally Deleted      25    4.1.18    Equity Requirement.      25    4.1.19
   Major Decisions.      25    4.1.20    Compliance with Material Agreements and
Affiliate Agreements.      26    Section 4.2   

Borrower Negative Covenants.

     26    4.2.1      Due on Sale and Encumbrance; Transfers of Interests.     
26    4.2.2      Liens.      27    4.2.3      Dissolution.      27    4.2.4     
Change in Use.      27    4.2.5      Debt Cancellation.      27    4.2.6     
Intentionally Omitted.      27    4.2.7      Zoning.      27    4.2.8     
Intentionally Omitted.      28    4.2.9      No Joint Assessment.      28   
4.2.10    Principal Place of Business.      28    4.2.11    Change of Name,
Identity or Structure.      28    4.2.12    Intentionally Omitted.      28   
4.2.13    ERISA.      28    4.2.14    Compliance with Restrictive Covenants,
Etc.      29    4.2.15    Operating Agreements.      29    4.2.16    Embargoed
Person.      29    ARTICLE 5: INSURANCE, CASUALTY AND CONDEMNATION      30   

 

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Section 5.1    

Insurance.

     30    5.1.1   Insurance Policies.      30    5.1.2   Insurance Company.   
  34    Section 5.2    

Casualty and Condemnation.

     34    5.2.1   Casualty.      34    5.2.2   Condemnation.      35    5.2.3  
Casualty Proceeds.      35    Section 5.3    

Delivery of Net Proceeds.

     36    5.3.1   Minor Casualty or Condemnation.      36    5.3.2   Major
Casualty or Condemnation.      36    ARTICLE 6: CASH MANAGEMENT AND RESERVE
FUNDS      40    Section 6.1    

Cash Management Arrangements.

     40    Section 6.2    

Required Repairs Funds.

     40    6.2.1   Deposit of Required Repairs Funds.      40    6.2.2   Release
of Required Repairs Funds.      41    Section 6.3    

Tax Funds.

     42    6.3.1   Deposits of Tax Funds.      42    6.3.2   Release of Tax
Funds.      42    Section 6.4    

Insurance Funds.

     42    6.4.1   Deposits of Insurance Funds.      42    6.4.2   Release of
Insurance Funds.      43    Section 6.5    

Intentionally Omitted.

     43    Section 6.6    

Rollover Funds.

     43    6.6.1   Deposits of Rollover Funds.      43    6.6.2   Release of
Rollover Funds.      44    Section 6.7    

Ground Rent Funds.

     44    6.7.1   Deposits of Ground Rent Funds.      44    6.7.2   Release of
Ground Rent Funds.      44    Section 6.8    

Operating Expenses.

     45    Section 6.9    

Excess Cash Flow Funds.

     45    Section 6.10  

Security Interest in Reserve Funds.

     45   

 

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6.10.1

  Grant of Security Interest.      45   

6.10.2

  Interest on Certain Reserve Funds; Income Taxes.      45   

6.10.3

  Prohibition Against Further Encumbrance.      46   

Section 6.11

  Property Cash Flow Allocation.      46   

6.11.1

  Order of Priority of Funds in Cash Management Account.      46   

6.11.2

  Failure to Make Payments.      47   

6.11.3

  Application After Event of Default.      47   

Section 6.12

  Security Deposits.      47   

6.12.1

  Deposits into Tenant Security Account.      47   

6.12.2

  Disbursements from Tenant Security Account.      48   

6.12.3

  Delivery of Lease Letter of Credit.      48   

6.12.4

  Draws Upon Lease Letters of Credit.      48   

6.12.5

  Expiring Lease Letters of Credit.      49   

6.12.6

  Indemnity.      49   

ARTICLE 7: PROPERTY MANAGEMENT

     49   

Section 7.1

  The Management Agreement.      49   

Section 7.2

  Prohibition Against Termination or Modification.      49   

Section 7.3

  Replacement of Manager.      50   

ARTICLE 8: PERMITTED TRANSFERS

     50   

Section 8.1

  Permitted Transfer of the Property.      50   

Section 8.2

  Permitted Equity Transfers.      51   

Section 8.3

  Replacement Guarantor.      51   

Section 8.4

  Costs and Expenses.      52   

ARTICLE 9: SALE AND SECURITIZATION OF MORTGAGE; LOAN REFINANCE

     53   

Section 9.1

  Sale of Mortgage and Securitization.      53   

Section 9.2

  Securitization Indemnification.      54   

Section 9.3

  Severance Documentation.      56   

Section 9.4

  Secondary Market Transaction Costs.      57   

Section 9.5

  Loan Refinance.      57   

ARTICLE 10: DEFAULTS

     57   

Section 10.1

  Events of Default.      57   

Section 10.2

  Remedies.      61   

Section 10.3

  Lender’s Right to Perform.      62   

 

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Section 10.4

  Remedies Cumulative.      62   

ARTICLE 11: MISCELLANEOUS

     62   

Section 11.1

  Successors and Assigns; Assignments and Participations.      62   

Section 11.2

  Lender’s Discretion.      63   

Section 11.3

  Governing Law.      63   

Section 11.4

  Modification, Waiver in Writing.      64   

Section 11.5

  Delay Not a Waiver.      65   

Section 11.6

  Notices.      65   

Section 11.7

  Trial by Jury.      66   

Section 11.8

  Headings.      67   

Section 11.9

  Severability.      67   

Section 11.10

  Preferences.      67   

Section 11.11

  Waiver of Notice.      67   

Section 11.12

  Remedies of Borrower.      67   

Section 11.13

  Expenses; Indemnity.      68   

Section 11.14

  Schedules Incorporated.      69   

Section 11.15

  Offsets, Counterclaims and Defenses.      69   

Section 11.16

  No Joint Venture or Partnership; No Third Party Beneficiaries.      70   

Section 11.17

  Publicity.      70   

Section 11.18

  Waiver of Marshalling of Assets.      70   

Section 11.19

  Waiver of Offsets/Defenses/Counterclaims.      70   

Section 11.20

  Conflict; Construction of Documents; Reliance.      71   

Section 11.21

  Brokers and Financial Advisors.      71   

Section 11.22

  Exculpation.      71   

Section 11.23

  Prior Agreements.      75   

Section 11.24

  Servicer.      75   

Section 11.25

  Joint and Several Liability.      76   

Section 11.26

  Creation of Security Interest.      76   

Section 11.27

  Counterparts.      77   

Section 11.28

  Set-Off.      77   

Section 11.29

  Certain Additional Rights of Lender (VCOC).      77   

 

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SCHEDULES

 

Schedule I

     -         Definitions

Schedule II

     -         Rent Roll

Schedule III

     -         Intentionally Deleted

Schedule IV

     -         Organizational Chart

Schedule V

     -         Required Repairs

Schedule VI

     -         Secondary Market Transaction Information

Schedule VII

     -         Material Agreements and Affiliate Agreements

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of November             , 2012 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between DOF IV REIT HOLDINGS, LLC, a Delaware limited liability
company, having an address at 230 Park Avenue, 12th Floor, New York, New York
10169 (together with its successors and assigns, “Lender”) and TNP SRT LAHAINA
GATEWAY, LLC, a Delaware limited liability company, having an address at 1900
Main Street, Suite 700, Irvine, California 92614 (together with its successors
and permitted assigns, “Borrower”).

W I T N E S S E T H :

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

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the conditions and terms of the 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 1: DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Definitions.

For all purposes of this Agreement, except as otherwise expressly provided
herein, all capitalized terms used in this Agreement shall have the respective
meanings set forth on Schedule I attached hereto.

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 and the word “including” shall mean “including but
not limited to”. 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 2: 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.

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2.1.2 The Note. The Loan shall be evidenced by that certain Promissory Note of
even date herewith in the stated principal amount of Twenty Nine Million and
00/100 Dollars ($29,000,000.00) executed by Borrower and payable to the order of
Lender in evidence of the Loan (as the same may hereafter be amended,
supplemented, restated, increased, extended or consolidated from time to time,
the “Note”) and shall be repaid in accordance with the terms of this Agreement
and the Note.

2.1.3 Use of Proceeds. Borrower shall use the proceeds of the Loan to:
(a) acquire the Property; (b) pay and discharge any existing loans, if any,
relating to the Property; (c) pay all past-due Taxes, insurance premiums and
Other Charges, if any, in respect of the Property; (d) make initial deposits of
the Reserve Funds; (e) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender; and (f) fund any working capital
requirements of the Property, as approved by Lender. Any excess proceeds may be
used for any lawful purpose.

Section 2.2 Interest Rate.

2.2.1 Interest Rate. Subject to the further provisions of this Agreement,
including, without limitation, Sections 2.2.2 and 2.2.4 hereof, the Outstanding
Principal Balance shall bear interest throughout the Term 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 and, to
the extent permitted by law, overdue interest in respect of the Loan, shall
accrue interest at the Default Rate, calculated from the date the Default
occurred which led to such Event of Default, without regard to any grace or cure
periods contained herein. Interest at the Default Rate shall be paid immediately
upon demand, which demand may be made as frequently as Lender shall elect.

2.2.3 Interest Calculation. Interest on the Outstanding Principal Balance 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 Interest Period immediately prior to
such Monthly Payment Date.

2.2.4 Usury Savings. The 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 the 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 any Legal Requirements, be amortized, prorated, allocated and
spread throughout the full

 

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stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate from time
to time in effect and applicable to the Loan for so long as the Loan is
outstanding.

Section 2.3 Loan Payments; Term of Loan.

2.3.1 Payments Before Stated Maturity Date. Borrower shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through and including the next succeeding thirtieth (30th) day of a calendar
month, whether such thirtieth (30th) day shall occur in the calendar month in
which the Closing Date occurs or in the month immediately succeeding the month
in which the Closing Date occurs. Each interest accrual period (the “Interest
Period”) thereafter shall commence on the first (1st) day of each calendar month
during the Term and shall end on and include the last calendar day of the same
calendar month. Commencing on the Monthly Payment Date occurring on January 1,
2013 and on each Monthly Payment Date thereafter through the twelfth
(12th) calendar month of the Term, Borrower shall make the monthly payment set
forth on Exhibit A to Lender (each such payment, a “Monthly Debt Service
Payment”), which payments shall be applied in accordance with the terms of the
Cash Management Agreement. Commencing on the Monthly Payment Date occurring on
December 1, 2013, and on each Monthly Payment Date thereafter through the
remainder of the Term, the Monthly Debt Service Payment that Borrower shall make
to Lender shall be an interest only payment calculated on the Outstanding
Principal Balance determined pursuant to Section 2.2.3 hereof, which payments
shall be applied in accordance with the terms of the Cash Management Agreement.
All amounts due under this Agreement and the Note shall be payable without
setoff, counterclaim or any other deduction whatsoever.

2.3.2 Payment on Maturity Date. The Loan shall mature on the Maturity Date.
Borrower shall pay to Lender on the Maturity Date the Outstanding Principal
Balance, all accrued and unpaid interest and all other amounts due under the
Loan Documents.

2.3.3 Late Payment Charge. If any principal, interest or any other sum due under
the Loan Documents, including 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 five percent (5%) of such
unpaid sum or the maximum amount permitted by any Legal Requirements, 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.

 

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2.3.4 Closing Payment. Simultaneously with the execution of this Agreement,
Borrower shall pay the Closing Payment to Lender. Each of Borrower and Lender
hereby agree to treat he Closing Payment as a reduction in the issue price (as
the term is used in Section 1273(a)(1)(B) of the Code) of the Loan for (and
solely for) U.S. federal, state and local income tax purposes.

2.3.5 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 4:00 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 or at such other place as Lender shall from time to time
designate, 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 under any Loan Document shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be the
immediately preceding Business Day.

(c) All payments required to be made by Borrower under the 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. Subject to Section 2.4.3 hereof, Borrower may
prepay on any Business Day, at its option and upon not less than thirty
(30) days irrevocable prior notice to Lender, the Outstanding Principal Balance
in whole only. Any prepayment received by Lender under this Section 2.4.1 shall
be accompanied by: (a) all interest which would have accrued on the principal
amount prepaid through, but not including, the next occurring Monthly Payment
Date (or, if such prepayment occurs on a Monthly Payment Date, through, but not
including, such Monthly Payment Date); (b) all other sums due and payable under
the Loan Documents, (c) all reasonable out-of-pocket costs and expenses actually
incurred by Lender in connection with such prepayment; and (d) to the extent
that any such prepayment is made prior to the last calendar month of the Term of
the Loan, an amount equal to the Yield Maintenance Premium. For purposes hereof,
the term “Yield Maintenance Premium” shall mean the sum that shall be sufficient
(as determined by Lender, which determination shall be conclusive in the absence
of manifest error) to ensure that Lender shall have earned a minimum of total
return of 1.50x multiple on the Loan. The Yield Maintenance Premium shall be
deemed earned by Lender upon the funding of the Loan, shall be required whether
payment is made by Borrower or any other Person, and may be included in any bid
by Lender at a foreclosure sale. Notwithstanding the foregoing, a portion of the
Yield Maintenance Premium that is calculated based upon a loan amount of
$20,000,000 shall not be due and payable by Borrower in the event that the
prepayment of the Loan is in connection with a refinance of Loan in accordance
with Section 9.5 hereof. Borrower acknowledges that the provisions of this
Section 2.4.1 were independently bargained for and constitute a specific
material part of the consideration given by Borrower to Lender for the making of
the Loan. Notwithstanding any provision of this Agreement or the Note

 

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to the contrary, Borrower’s notice of prepayment in accordance with this
Section 2.4.1 shall be irrevocable, and the Outstanding Principal Balance shall
be absolutely and unconditionally due and payable on the date specified in such
notice.

2.4.2 Mandatory Prepayments.

(a) On the next occurring Monthly Payment Date following the date on which
Lender actually receives a distribution of Net Proceeds, 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 in an amount equal to
one hundred percent (100%) of such Net Proceeds; provided, however, if an Event
of Default has occurred and is continuing, Lender may apply such Net Proceeds to
the Debt in any order, proportion and priority as Lender may determine in its
sole and absolute discretion. Any prepayment received by Lender under this
Section 2.4.2 shall be (a) subject to Section 2.4.3 hereof and (b) accompanied
by (i) all interest which would have accrued on the principal amount prepaid
through, but not including, such Monthly Payment Date, (ii) all other sums due
and payable under the Loan Documents, and (iii) all reasonable out-of-pocket
costs and expenses actually incurred by Lender in connection with such
prepayment. Provided that no Event of Default shall have occurred and be
continuing, no Yield Maintenance Premium shall be due in connection with any
prepayment made pursuant to this Section 2.4.2.

(b) On each of December 1, 2012 and January 1, 2013, Borrower shall make to
Lender a mandatory prepayment of Three Hundred Thirty Three Thousand Three
Hundred Thirty Three and No/100 Dollars ($333,333). In addition to the
foregoing, on February 1, 2013, Borrower shall make to Lender a mandatory
prepayment of Three Hundred Thirty Three Thousand Three Hundred Thirty Four and
No/100 Dollars ($333,334). For avoidance of doubt, Borrower acknowledges and
agrees that, pursuant to this subsection (b), Borrower is required to prepay the
Outstanding Principal Balance by One Million ($1,000,000) Dollars, in the
aggregate, no later than February 1, 2013.

2.4.3 Prepayments After Default. If, after the occurrence and during the
continuance of an Event of Default, prepayment of all or any part of the Debt is
tendered by Borrower (which tender may be rejected by Lender to the extent
permitted by applicable Legal Requirements) or otherwise recovered by Lender
(including through application of any Reserve Funds), such tender or recovery
shall be deemed: (a) to have been made on the next occurring Monthly Payment
Date and such prepayment shall be applied first to the Monthly Debt Service
Payment due on such date; and (b) to be a voluntary prepayment by Borrower in
violation of the prohibition against prepayment set forth in Section 2.4.1
hereof, and Borrower shall pay, in addition to the Debt, or portion thereof then
being prepaid or satisfied: (i) an amount equal to the greater of: (x) five
percent (5%) of the Outstanding Principal Balance, or portion thereof then being
prepaid or satisfied; or (y) the Yield Maintenance Premium on the Outstanding
Principal Balance, or portion thereof then being prepaid or satisfied, as of the
date such prepayment is paid to Lender; (ii) all interest which would have
accrued on the principal amount prepaid through, but not including, such Monthly
Payment Date; (iii) if such prepayment occurs prior to the sale of the Loan in a
Secondary Market Transaction, Hedge Losses; (iv) all other sums due and payable
under the Loan Documents; and (v) all reasonable out-of-pocket costs and
expenses actually incurred by Lender in connection with such prepayment.

 

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Section 2.5 Intentionally Omitted.

Section 2.6 Intentionally Omitted.

ARTICLE 3: REPRESENTATIONS AND WARRANTIES

Section 3.1 Borrower Representations.

Borrower represents and warrants to Lender that:

3.1.1 Organization. Each of Borrower, Sole Member and Holdings 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, and Borrower, Sole Member
and Holdings have each taken all necessary action to authorize the execution,
delivery and performance of the Loan Documents by it, and has the power and
authority to execute, deliver and perform under the Loan Documents and all the
transactions contemplated by the Loan Documents.

3.1.2 Proceedings. The Loan Documents have been duly authorized, executed and
delivered by Borrower, Sole Member and Holdings, as applicable, and constitute a
legal, valid and binding obligation of Borrower, Sole Member and Holdings
enforceable against Borrower, Sole Member and Holdings 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 the Loan Documents by
Borrower, Sole Member and Holdings and the performance of their Obligations
under the Loan Documents will not conflict with any provision of any law or
regulation to which Borrower, Sole Member or Holdings 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, Sole Member’s or Holdings’
organizational documents or any agreement or instrument to which Borrower, Sole
Member or Holdings is a party or by which it is bound, or any order or decree
applicable to Borrower, Sole Member or Holdings, or result in the creation or
imposition of any Lien on any of Borrower’s, Sole Member’s or Holdings assets or
property (other than pursuant to the Loan Documents).

3.1.4 Litigation. There is no action, suit, proceeding or investigation pending
or, to Borrower’s knowledge, threatened against Borrower, Sole Member, Holdings,
any Guarantor, Manager or the Property in any court or by or before any other
Governmental Authority which, if adversely determined, might have a Material
Adverse Effect.

3.1.5 Agreements. Neither Borrower, Sole Member nor Holdings is in default with
respect to any order or decree of any court or any order, regulation or demand
of any

 

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Governmental Authority, which default might have a Material Adverse Effect.
Neither Borrower, Sole Member nor Holdings is in default in any material respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Property is
bound.

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, Sole Member or Holdings of, or compliance by Borrower, Sole Member
or Holdings with, the Loan Documents or the consummation of the transactions
contemplated hereby.

3.1.7 Title. Borrower has good, marketable and insurable leasehold 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. None of the Permitted Encumbrances, individually or in
the aggregate, (a) materially interfere with the benefits of the security
intended to be provided by the Loan Documents, (b) materially and adversely
affect the value of the Property, (c) impair the use or operation of the
Property, or (d) impair Borrower’s ability to pay its Obligations in a timely
manner. The Mortgage, when properly recorded in the appropriate records,
together with any Uniform Commercial Code financing statements required to be
filed in connection therewith, will create (i) a valid, first priority,
perfected Lien on Borrower’s interest in the Property, subject only to Permitted
Encumbrances, and (ii) 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 the Permitted
Encumbrances. There are no mechanics’, materialman’s or other similar Liens or
claims which have been filed for work, labor or materials affecting the Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
Mortgage.

3.1.8 No Plan Assets. As of the date hereof and throughout the Term,
(a) Borrower does not sponsor, is not obligated to contribute to and is not and
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 constitutes or
will constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101, as amended by Section 3(42) of ERISA, (c) Borrower is
not and will not be or constitute the assets of a “governmental plan” within the
meaning of Section 3(32) of ERISA, and (d) transactions by or with Borrower are
not and will not be subject to any statute, rule or regulation regulating
investment of, or fiduciary obligations with respect to, governmental plans.

3.1.9 Compliance. Borrower, Sole Member, Holdings and the Property and the use
thereof comply in all material respects with all applicable Legal Requirements,
including parking, building and zoning and land use laws, ordinances,
regulations and codes. None of Borrower, Sole Member of Holdings is in default
or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, the violation of which might have a Material Adverse
Effect. There has not been committed by Borrower, Sole Member or Holdings or, to
the knowledge of Borrower, on its behalf and on behalf of Sole Member or
Holdings, any other Person in occupancy of or involved with the operation or use
of the Property any act or omission which may give any Governmental Authority
the right to cause Borrower, Sole Member or

 

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Holdings to forfeit the Property or any part thereof or any monies paid in
performance of Borrower’s, Sole Member’s or Holding’s Obligations under any of
the Loan Documents. The Property is used exclusively for a shopping center and
other appurtenant and related uses. In the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits. No legal proceedings are pending or, to the
knowledge of Borrower, threatened with respect to the zoning of the Property.
Neither the zoning nor any other right to construct, use or operate the Property
is in any way dependent upon or related to any property other than the Property.
The use being made of the Property is in conformity with the certificate of
occupancy issued for the Property and all other restrictions, covenants and
conditions affecting the Property.

3.1.10 Financial Information. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender
in respect of Borrower, Sole Member, Holdings, Guarantor and the Property
(a) are true, complete and correct in all material respects, (b) accurately
represent the financial condition of the Property as of the date of such
reports, and (c) have been prepared in accordance with GAAP throughout the
periods covered, except as disclosed therein. None of Borrower, Sole Member,
Guarantor or Holdings has 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, except as referred to or reflected in
said financial statements. Since the date of the financial statements, there has
been no material adverse change in the financial condition, operations or
business of Borrower, Sole Member, Holdings, Guarantor or the Property from that
set forth in said financial statements.

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

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

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.

 

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3.1.14 Taxes and Assessments. All Taxes and governmental assessments 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. There are no
pending or proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements to
the Property that may result in such special or other assessments.

3.1.15 Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, Sole Member or
Holdings, 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 none of Borrower, Sole Member and Holdings has
not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.

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

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

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

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 a physical condition report
prepared by National Due Diligence Services, dated September 24, 2012, a copy of
which has been delivered to Lender, the Property, including all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; there exists no structural or other material defects
or damages in the Property, whether latent or otherwise, and Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy
of insurance or bond.

 

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

3.1.22 Leases. Borrower represents and warrants to Lender with respect to the
Leases that: (a) the rent roll attached hereto as Schedule II is true, complete
and correct and the Property is not subject to any Leases other than the Leases
described in Schedule II, (b) the Leases identified on Schedule II are in full
force and effect, there are no defaults thereunder by either party, and Borrower
has not received any notice of termination with respect to any such Leases,
(c) the copies of the Leases delivered to Lender are true and complete, and
there are no oral agreements with respect thereto, (d) no Rent (excluding
security deposits) has been paid more than one (1) month in advance of its due
date, (e) all work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable Tenant, (f) any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any Tenant has
already been received by such Tenant, (g) the Tenants under the Leases have
accepted possession and are in occupancy of, and are open for business and
conducting normal business operations at, all of their respective demised
premises, and are paying full, unabated rent under the Leases, (h) Borrower has
delivered to Lender a true, correct and complete list of all security deposits
made by Tenants at the Property which have not been applied (including accrued
interest thereon), all of which are held by Borrower in accordance with the
terms of the applicable Lease and applicable Legal Requirements, (i) each Tenant
under a Major Lease is free from bankruptcy or reorganization proceedings,
(j) no Tenant under any Lease (or any sublease) is an Affiliate of Borrower, any
Guarantor or Manager, (k) no Tenant under any Lease is in default under the
terms and conditions of such Lease, (l) there are no brokerage fees or
commissions due and payable in connection with the leasing of space at the
Property, except as has been previously disclosed to Lender in writing, and no
such fees or commissions will become due and payable in the future in connection
with the Leases, including by reason of any extension of such Lease or expansion
of the space leased thereunder, except as has previously been disclosed to
Lender in writing, (m) Borrower has not assigned or pledged any of the Leases,
the rents thereunder or any interest therein except to Lender, (n) no Tenant or
other Person has any option, right of first refusal or offer or any other
similar right to purchase all or any portion of, or interest in, the Property,
(o) no Tenant has the right to terminate its Lease prior to the expiration of
the stated term thereof except, to the extent contained in the Lease, in the
event of the destruction or condemnation of substantially all of the Property,
(p) no Tenant has assigned its Lease or sublet all or any portion of the
premises demised thereby, and (q) all existing Leases are subordinate to the
Mortgage and the Assignment of Leases and provide that the Tenant thereunder
will attorn to Lender and any purchaser at a foreclosure sale.

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

 

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execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including the Mortgage, have been paid
or are being paid simultaneously herewith. All taxes and governmental
assessments due and owing in respect of the Property have been paid, or an
escrow of funds in an amount sufficient to cover such payments has been
established hereunder or are insured against by the Title Insurance Policy.

3.1.24 Single Purpose. Borrower hereby represents and warrants to, and covenants
with, Lender that since Borrower’s creation, as of the date hereof and until
such time as the Obligations shall be paid and performed in full, Borrower has
complied with, is in compliance with, and shall comply with the requirements of
a Special Purpose Entity.

3.1.25 Tax Filings. To the extent required, Borrower, Sole Member and Holdings
have each filed (or has obtained effective extensions for filing) all federal,
state, commonwealth, district and local tax returns required to be filed and has
paid or made adequate provision for the payment of all federal, state,
commonwealth, district and local taxes, charges and assessments payable by
Borrower, Sole Member or Holdings, as applicable. 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, Sole Member, Holdings and Guarantor: (a) have 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 subordinated, unliquidated, disputed and contingent
liabilities. The fair saleable value of Borrower’s assets is and immediately
following the making of the Loan, will be greater than Borrower’s probable
liabilities, including the maximum amount of its contingent liabilities on its
debts as such debts become absolute and matured. Borrower’s assets do not and,
immediately following the 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 the 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 Regulations T, U or X of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulations T, U or X or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements or by the terms and conditions
of the Loan Documents.

3.1.28 Organizational Chart. The organizational chart attached as Schedule IV
hereto, relating to Borrower and certain Affiliates and other parties, is true,
complete and correct on and as of the date hereof. No Person other than those
Persons shown on Schedule IV have any ownership interest in, or right of
control, directly or indirectly, in Borrower.

 

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3.1.29 Organizational Status. Borrower’s exact legal name is: TNP SRT Lahaina
Gateway, LLC. Borrower is a limited liability company, and the jurisdiction in
which Borrower is organized is Delaware. Borrower’s Tax I.D. number is
45-5552343 and Borrower’s Delaware Organizational I.D. number is 5173792.

3.1.30 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.

3.1.31 No Casualty. The Improvements have suffered no material casualty or
damage which has not been fully repaired and the cost thereof fully paid.

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

3.1.33 FIRPTA. Borrower is not a “foreign person” within the meaning of Sections
1445 or 7701 of the Code.

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

3.1.35 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, or (b) subject to any other United
States federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.

3.1.36 Use of Property. The Property consists solely of a retail shopping center
and related operations and is used for no other purpose.

3.1.37 Fiscal Year. Each fiscal year of Borrower commences on January 1.

3.1.38 No Other Financing. Borrower has not borrowed any funds which have not
heretofore been repaid in full, except for the Loan.

3.1.39 Contracts.

(a) Neither Borrower, Sole Member nor Holdings has entered into, or is bound by,
any Material Agreement or Affiliate Agreement which continues in existence,
except those disclosed on Schedule VII.

(b) Each of the Material Agreements or Affiliate Agreements is in full force and
effect, there are no monetary or other material defaults by Borrower, Sole
Member or Holdings thereunder and, to the knowledge of Borrower, there are no
monetary or other material defaults thereunder by any other party thereto. None
of Borrower, Sole Member, Holdings, Manager or any other Person acting on
Borrower’s behalf has given or received any notice of default under any of the
Major Agreements or Affiliate Agreements that remains uncured or in dispute.

 

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(c) Borrower has delivered true, correct and complete copies of the Material
Agreements or Affiliate Agreements (including all amendments and supplements
thereto) to Lender.

(d) Except for the Affiliate Agreements, no Material Agreement has as a party an
Affiliate of Borrower. All Management Agreements were entered into on
commercially reasonable terms. All fees and other compensation for services
previously performed under the Management Agreement have been paid in full.

3.1.40 Full and Accurate Disclosure; No Change in Facts. All information
submitted by and on behalf of Borrower, Sole Member, Holdings or Guarantor to
Lender and in all financial statements, rent rolls, reports, certificates and
other documents submitted in connection with the Loan or in satisfaction of the
terms of the Loan Documents is true, correct and complete in all material
respects. No statement of fact made by Borrower, Sole Member, Holdings or
Guarantor in any of the Loan Documents or in any written statement or document
furnished by or on behalf of Borrower, Sole Member, Holdings or Guarantor in
connection with the Loan or pursuant to the Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no fact
presently known to Borrower, Sole Member, Holdings or Guarantor which has not
been disclosed to Lender which could have a Material Adverse Effect, other than
with regard to market risk inherent in projecting future operations, and there
has been no material adverse change in any condition, fact or circumstance that
would make any of the information or statements of fact referenced above
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise could have a Material Adverse Effect.

3.1.41 Other Obligations and Liabilities. None of Borrower, Sole Member and
Holdings has any liabilities or other obligations that arose or accrued prior to
the date hereof that, either individually or in the aggregate, could have a
Material Adverse Effect. Each of Borrower, Sole Member and Holdings has no known
contingent liabilities.

3.1.42 Ground Lease. Borrower hereby represents and warrants to Lender the
following with respect to the Ground Lease:

(a) Recording; Modification. A memorandum of the Ground Lease has been duly
recorded. The Ground Lease permits the interest of Borrower to be encumbered by
a mortgage. There have not been amendments or modifications to the terms of the
Ground Lease since its recordation, with the exception of written instruments
which have been recorded. The Ground Lease may not be canceled, terminated or
surrendered, and none of the terms and provisions of the Ground Lease may be
modified, changed, supplemented, altered, amended or waived, without in each
case the prior written consent of Lender, except in accordance with Article V.C
of the Ground Lease.

 

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(b) No Liens. Except for the Permitted Encumbrances, Borrower’s interest in the
Ground Lease is not subject to any Liens or encumbrances superior to, or of
equal priority with, the Mortgage other than the ground lessor’s related fee
interest.

(c) Ground Lease Assignable. Borrower’s interest in the Ground Lease is
assignable to Lender upon notice to, but without the consent of, the ground
lessor (or, if any such consent is required, it has been obtained prior to the
Closing Date) in accordance with the terms thereof. The Ground Lease is further
assignable by Lender, its successors and assigns without the consent of the
ground lessor.

(d) Default. As of the date hereof, the Ground Lease is in full force and effect
and no default has occurred under the Ground Lease and there is no existing
condition which, but for the passage of time and/or the giving of notice, could
result in a default under the terms of the Ground Lease. All rents, additional
rents and other sums due and payable under the Ground Lease have been paid in
full. Neither Borrower nor the ground lessor under the Ground Lease has
commenced any action or given or received any notice for the purpose of
terminating the Ground Lease.

(e) Notice. The Ground Lease requires the ground lessor to give notice of any
default by Borrower to Lender. The Ground Lease, or estoppel letters received by
Lender from the ground lessor, further provides that notice of termination given
under the Ground Lease is not effective against Lender unless a copy of the
notice has been delivered to Lender in the manner described in the Ground Lease.

(f) Cure. Lender is permitted the opportunity (including, as expressly set forth
in the Ground Lease, sufficient time to gain possession of the interest of
Borrower under the Ground Lease) to cure any default under the Ground Lease
which is curable after the receipt of notice of the default before the ground
lessor thereunder may terminate the Ground Lease.

(g) Term. The Ground Lease has a term which extends not less than twenty
(20) years beyond the Stated Maturity Date.

(h) New Lease. The Ground Lease requires the ground lessor to enter into a new
lease with Lender upon termination of the Ground Lease for any reason, including
rejection of the Ground Lease in a bankruptcy proceeding.

(i) Insurance Proceeds. Under the terms of the Ground Lease and the Mortgage,
taken together, any related insurance and condemnation proceeds will be applied
either to the repair or restoration of all or part of the Property, with Lender
having the right to hold and disburse the proceeds as the repair or restoration
progresses, or to the payment of the Outstanding Principal Balance together with
any accrued interest thereon.

(j) Subleasing. Except as otherwise provided in Article XII, Paragraph F.4., the
Ground Lease does not impose any restrictions on subleasing.

3.1.43 Operating Agreements. The Operating Agreement for each of Borrower, Sole
Member and Holdings is in full force and effect and neither Borrower nor, to
Borrower’s knowledge, any other party to any Operating Agreement, is in default
thereunder, and to the best of Borrower’s knowledge, there are no conditions
which, with the passage of time or the giving of notice, or both, would
constitute a default under any Operating Agreement.

 

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3.1.44 Bankruptcy Filings. No petition in bankruptcy or insolvency has ever been
filed or is pending against Borrower, Sole Member, Holdings, Guarantor or any of
their respective shareholders, partners, members or non-member managers that,
directly or indirectly, own ten percent (10%) or more of the legal, beneficial
or economic interests in Borrower, Sole Member, Holdings or Guarantor or are in
control of Borrower, Sole Member, Holdings or Guarantor, and none of Borrower,
Sole Member, Holdings, Guarantor or any of their respective shareholders,
partners, members or non-member managers that, directly or indirectly, own ten
percent (10%) or more of the legal, beneficial or economic interests in
Borrower, Sole Member, Holdings or Guarantor or are in control of Borrower, Sole
Member, Holdings or Guarantor, has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency laws. None of Borrower, Sole
Member, Holdings, Guarantor or any of their respective shareholders, partners,
members or non-member managers that, directly or indirectly, own ten percent
(10%) or more of the legal, beneficial or economic interests in Borrower, Sole
Member, Holdings or Guarantor or are in control of Borrower, Sole Member,
Holdings or Guarantor, is contemplating either the filing of a petition under
any federal, state, local or foreign bankruptcy or insolvency laws or the
liquidation of all or a material portion of Borrower’s, Sole Member’s, Holdings’
or Guarantor’s or such shareholder’s, partner’s, member’s or non-member
manager’s assets or properties, and none of Borrower, Sole Member, Holdings,
Guarantor or any of their respective shareholders, partners, members or
non-member managers that, directly or indirectly, own ten percent (10%) or more
of the legal, beneficial or economic interests in Borrower, Sole Member,
Holdings or Guarantor or are in control of Borrower, Sole Member, Holdings or
Guarantor, has any knowledge of any Person contemplating the filing of any such
petition against Borrower, Sole Member, Holdings, Guarantor or any of their
respective shareholders, partners, members or non-member managers that, directly
or indirectly, own ten percent (10%) or more of the legal, beneficial or
economic interests in Borrower, Sole Member, Holdings or Guarantor or are in
control of Borrower, Sole Member, Holdings or Guarantor.

3.1.45 Pledged Collateral.

(a) Sole Member is the sole owner of one hundred percent (100%) of the equity in
Borrower and Holdings is the sole owner of one hundred percent (100%) of the
equity in Sole Member. No Lien exists or will exist upon the Pledged Collateral
at any time (and no right or option to acquire the same exists in favor of any
other Person). The Pledged Collateral is not and will not be subject to any
contractual restriction upon the transfer thereof (except for any such
restriction contained in the Pledge Agreement or the applicable organizational
documents).

(b) The chief place of business of Borrower, Sole Member and Holdings and the
office where they keep their records concerning the Pledged Collateral will be
located at all times at the address specified as Borrower’s address set forth
herein.

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

 

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(d) The Pledge Agreements create a valid security interest in the Pledged
Collateral, securing the payment of the Debt, and upon the filing in the
appropriate filing offices of the financing statements to be delivered pursuant
to this Agreement, such security interests will be perfected, first priority
security interests, and all filings and other actions necessary to perfect such
security interests will have been duly taken. Upon the exercise of its rights
and remedies under the Pledge Agreement, Lender will succeed to all of the
rights, titles and interests of (i) Sole Member in Borrower, and (ii) Holdings
in Sole Member, each without the consent of any other Person and will, without
the consent of any other Person, be admitted as the sole member in Sole Member
and Borrower, as applicable.

Section 3.2 Survival of Representations; Reliance.

The representations and warranties set forth in Section 3.1 shall survive until
the Obligations have been paid and performed in full. All representations,
warranties, covenants and agreements made in this Agreement or the other Loan
Documents by Borrower or any other Restricted Party shall be deemed to have been
relied upon by Lender regardless of any investigation made by or on behalf of
Lender either prior to or following the date hereof.

ARTICLE 4: BORROWER COVENANTS

Section 4.1 Borrower Affirmative Covenants.

Borrower hereby covenants and agrees with Lender that throughout the Term:

4.1.1 Payment and Performance of Obligations. Borrower shall pay and otherwise
perform the Obligations in accordance with the terms of this Agreement and the
other Loan Documents.

4.1.2 Existence; Compliance with Legal Requirements. Each of Borrower, Sole
Member and Holdings 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. There shall never be committed by Borrower,
and Borrower shall never permit any other Person in occupancy of or involved
with the operation or use of the Property to commit any act or omission
affording any Governmental Authority the right of forfeiture against the
Property or any part thereof or any monies paid in performance of Borrower’s
obligations under the Loan Documents. Borrower covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Loan Documents.

4.1.3 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges
now or hereafter levied, assessed or imposed as the same become due and payable,
and shall furnish to Lender receipts for the payment of the Taxes and the Other
Charges prior to the date the same shall become delinquent (provided, however,
that Borrower need not pay directly Taxes nor furnish such receipts for payment
of Taxes to the extent that funds to pay for such Taxes have

 

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been deposited into the Tax Account pursuant to Section 6.3 hereof). Borrower
shall not permit or suffer, and shall promptly discharge, any Lien or charge
against the Property, and shall promptly pay for all utility services provided
to the Property. 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 Default or Event of Default has occurred and remains uncured; (b) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or the Property is subject
and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable Legal Requirements; (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; and (f) Borrower shall deposit with Lender
cash or other security as may be required in the proceeding, or as may otherwise
be requested by Lender, to ensure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant is
established.

4.1.4 Litigation. Borrower shall give prompt notice to Lender of any litigation
or governmental proceedings pending or threatened against Borrower, Sole Member,
Holdings any Guarantor or Manager which might have a Material Adverse Effect.

4.1.5 Access to Property. Borrower shall permit agents, representatives,
consultants and employees of Lender to inspect the Property or any part thereof
at reasonable hours upon reasonable advance notice (which may be given orally)
and subject to the rights of Tenants under Leases. Lender or its agents,
representatives, consultants and employees as part of any inspection may take
soil, air, water, building material and other samples from the Property, subject
to the rights of Tenants under Leases.

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

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

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

(c) cooperate with Lender, and agree to such amendments, modifications and
supplements to this Agreement and the Loan Documents and take such further
actions as Lender shall reasonably request, in order for the Loan, and any
income from the Loan, to be treated as a qualifying asset and income of a real
estate investment trust under Sections 856(c)(3) and

 

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856(c)(4)(A) of the Internal Revenue Code of 1986, as amended, or to comply with
any request of Lender or Lender’s outside tax counsel, provided that any such
amendments, modifications or supplements, as applicable, will result in a
material adverse affect on the Borrower.

4.1.7 Financial Reporting.

(a) Borrower shall keep and maintain or will cause to be kept and maintained
proper and accurate books and records of account, on an accrual basis,
consistently applied in a manner reasonably acceptable to Lender, reflecting the
financial affairs of Borrower. Lender shall have the right from time to time
during normal business hours upon reasonable notice (which may be given orally)
to Borrower to examine such books and records at the office of Borrower or other
Person maintaining such books and records and to make such copies or extracts
thereof as Lender shall desire. After an Event of Default, Borrower shall pay
any costs incurred by Lender to examine such books, records and accounts, as
Lender shall determine to be necessary or appropriate in the protection of
Lender’s interest.

(b) Borrower shall furnish the following to Lender, each prepared in such detail
as reasonably requested by Lender and certified by the Chief Financial Officer
of Borrower (or his or her designee, which as of the date hereof is James M.
A’Hearn, Vice President of Finance and Loan Compliance, subject to Lender’s
prior written approval) to be true, complete and correct:

(i) as soon as available, but in any event within thirty (30) days after the end
of each calendar quarter, a monthly rent roll for the Property providing the
required information as of the end of such calendar quarter;

(ii) as soon as available, but in any event within thirty (30) days after the
end of each calendar quarter: (A) a monthly operating statement for the Property
detailing for the Property the Gross Revenue received and the Operating Expenses
incurred, and such other information pertaining to income and expenses for the
Property requested by Lender from time to time; and (B) a pre-leasing and
leasing status report for the Property;

(iii) as soon as available, but in any event within ninety (90) days after the
close of each Fiscal Year: (A) an annual rent roll, presented on an annual basis
consistent with the monthly rent rolls described above; (B) an annual operating
statement for the Property presented on an annual basis consistent with the
monthly operating statements described above; (C) an annual balance sheet and
profit and loss statement for Borrower; and (D) a statement of change of
financial position of Borrower, setting forth in comparative form the figures
for the previous Fiscal Year;

(iv) on or after the Closing Date, and thereafter as soon as available, but in
any event at least thirty (30) days prior to the close of each Fiscal Year, an
annual operating budget and forecast for the Property presented on a monthly
basis consistent with the information required in the monthly operating
statement described above which budgets shall be subject to Lender’s prior
written approval, which approval shall not be unreasonably withheld, condition
or delayed (such budgets once so approved by Lender, as aforesaid, the “Approved
Annual Budget”); and

 

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(v) such other financial information or property management or leasing
information (including, without limitation, copies of Borrower’s state and
federal tax returns, information on tenants under Leases to the extent such
information is available to Borrower or its Affiliates, and an accounting of
security deposits) as may be reasonably required by Lender from time to time.

(c) In the event that Borrower must incur an extraordinary Operating Expense
that is not set forth in the Approved Annual Budget (each an “Extraordinary
Expense”), then Borrower shall promptly deliver to lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval.
Notwithstanding the foregoing, so long as no Default or Event of Default then
exists, Lender shall not unreasonably withhold, condition or delay its consent
with respect to approving any Extraordinary Expense which is proposed by
Borrower with respect to the Property so long as such proposed Extraordinary
Expense: (i) ; (ii) will not materially interfere with the benefits of the
security intended to be provided by the Mortgage and this Agreement; (iii) will
not materially and adversely affect the value of the Property or the Collateral;
(iv) will not materially and adversely impair the use and/or operations of the
Property (as currently used); and (v) will not impair Borrower’s ability to pay
its Obligations in a timely manner.

(d) If requested by Lender, Borrower shall provide Lender, promptly upon
request, a list of tenants (including all affiliates of such tenants) that in
the aggregate: (i) occupy five percent (5%) or more (but less than ten percent
(10%)) of the total floor area of the Improvements or represent five percent
(5%) or more (but less than 10%)) of aggregate base rent; and (ii) occupy ten
percent (10%) or more of the total floor area of the Improvements or represent
ten percent (10%) or more of the aggregate base rent.

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

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

(g) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered: (i) in paper form; (ii) on a diskette or
so-called “flash” drive; or (iii) if requested by Lender and within the
capabilities of Borrower’s data systems without change or modification thereto,
in electronic form. Borrower agrees that Lender may disclose information
regarding the Property and Borrower that is provided to Lender pursuant to this
Section 4.1.7 in connection with any Securitization, Secondary Market
Transaction, sale, or assignment, in whole or in part, or grant of participation
in the Loan to any Person as Lender shall required in connection therewith, to
its accountants, attorneys, consultants and other advisors or as required by any
laws or regulations applicable to Lender.

 

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(h) Borrower shall cause each Guarantor to provide to Lender: (i) a semi-annual
personal financial statement to be delivered within forty-five (45) days after
the end of each six (6) month period during each calendar year or close of such
party’s fiscal year, as applicable; and (ii) such additional financial
information (including, without limitation, copies of state and federal income
tax returns) as Lender may reasonably require from time to time (but not more
frequently than annually unless an Event of Default exists). Each financial
report provided by Guarantor shall be certified by such party to be true,
complete and accurate.

4.1.8 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 the
Permitted Encumbrances.

4.1.9 Estoppel Statement.

(a) Each party hereunder shall, within ten (10) Business Days following a
request of the other party hereto, furnish a statement, duly acknowledged and
certified, stating (i) the Outstanding Principal Balance of the Note, (ii) the
Interest Rate, (iii) the date installments of interest and/or principal were
last paid, and (iv) in the case of a statement furnished by Borrower, any
offsets or defenses to the payment and performance of the Obligations.

(b) Borrower shall deliver to Lender, upon request, an estoppel certificate from
each Tenant under any Lease in form and substance reasonably satisfactory to
Lender (provided that Borrower shall only be required to use commercially
reasonable efforts to obtain an estoppel certificate from any Tenant not
required to provide an estoppel certificate under its Lease); provided that such
certificate may be in the form required under such Lease; and provided, further,
that Borrower shall not be required to deliver such certificates more frequently
than two (2) times in any calendar year.

4.1.10 Leases.

(a) All Leases and all renewals of Leases executed after the date hereof shall
(i) provide for economic terms, including rental rates, comparable to existing
local market rates for similar properties, (ii) be on commercially reasonable
terms, (iii) have a term of not less than three (3) years (unless Lender
approves in writing a shorter term) and not more than ten (10) years, including
extensions and renewals (unless Lender approves in writing a longer term),
(iv) provide that such Lease is subordinate to the Mortgage and the Assignment
of Leases and that the Tenant thereunder will attorn to Lender and any purchaser
at a foreclosure sale, (v) be to Tenants that are creditworthy, (vi) be written
substantially in accordance with the standard form of Lease which shall have
been approved by Lender (subject to any commercially reasonable changes made in
the course of negotiations with the applicable Tenant), (vii) not be to an
Affiliate of Borrower, any Guarantor or Manager, (viii) not contain any option
to purchase, any right of first refusal to purchase, any right to terminate
(except in the event of the destruction or condemnation of substantially all of
the Property), any requirement for a non-disturbance or recognition agreement,
or any other terms which would materially adversely affect Lender’s rights under
the Loan Documents. Further, all Major Leases and all renewals, amendments and
modifications thereof and waivers thereunder executed after the date hereof
shall be subject to Lender’s prior approval, which approval shall not, so long
as no Event of Default is continuing

 

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and so long as no Sweep Event has occurred, be unreasonably withheld or delayed.
Lender shall execute and deliver its standard form of subordination,
non-disturbance and attornment agreement to Tenants under any future Major Lease
approved by Lender promptly upon request, with such commercially reasonable
changes as may be requested by such Tenants, and which are reasonably acceptable
to Lender. Borrower shall pay Lender’s costs and expenses in connection with any
such subordination, non-disturbance and attornment agreement, including, without
limitation, reasonable legal fees and expenses.

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

(c) All security deposits of Tenants, whether held in cash or any other form,
shall not be commingled with any other funds of Borrower and, if cash, shall be
deposited by Borrower at a separately designated account under Borrower’s
control at the Clearing Bank. After the occurrence of a Sweep Event, Borrower
shall, upon Lender’s request, if permitted by applicable Legal Requirements,
cause all such security deposits (and any interest theretofore earned thereon)
to be transferred into the Cash Management Account (which shall then be held by
Cash Management Bank in a separate Account), which shall be held by Cash
Management Bank subject to the terms of the Leases. Any bond or other instrument
which Borrower is permitted to hold in lieu of cash security deposits under any
applicable Legal Requirements (i) shall be maintained in full force and effect
in the full amount of such deposits unless replaced by cash deposits as
hereinabove described, (ii) shall be issued by an institution reasonably
satisfactory to Lender, (iii) shall, if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or at Lender’s
option, be fully assignable to Lender), and (iv) shall in all respects comply
with any applicable Legal Requirements and otherwise be satisfactory to Lender.
Borrower shall, upon request, provide Lender with evidence satisfactory to
Lender of Borrower’s compliance with the foregoing.

(d) Borrower shall not permit or consent to any assignment or sublease of any
Major Lease without Lender’s prior approval (other than any assignment or
sublease expressly permitted under a Major Lease pursuant to a unilateral right
of Tenant thereunder not requiring the consent of Borrower).

 

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(e) Notwithstanding anything to the contrary contained in this Section 4.1.10:

(i) whenever Lender’s approval or consent is required pursuant to the provisions
of this Section 4.1.10, Borrower shall have the right to submit a term sheet of
such transaction to Lender for Lender’s approval, such approval not to be
unreasonably withheld or delayed. Any such term sheet submitted to Lender shall
set forth all material terms of the proposed transaction, including identity of
tenant, square footage, term, rent, rent credits, abatements, work allowances
and tenant improvements to be constructed by Borrower. Lender shall use good
faith efforts to respond within ten (10) Business Days after Lender’s receipt of
Borrower’s written request for approval or consent of such term sheet. If Lender
fails to respond to such request within ten (10) Business Days, and Borrower
sends a second request containing a legend clearly marked in not less than
fourteen (14) point bold face type, underlined, in all capital letters “REQUEST
DEEMED APPROVED IF NO RESPONSE WITHIN 10 BUSINESS DAYS”, Lender shall be deemed
to have approved or consented to such term sheet if Lender fails to respond to
such second written request before the expiration of such ten (10) Business Day
period;

(ii) whenever Lender’s approval or consent is required pursuant to the
provisions of this Section 4.1.10 for any matter with respect to which Lender
has not previously approved a term sheet pursuant to Section 4.1.10(e)(i) above,
Lender shall use good faith efforts to respond within ten (10) Business Days
after Lender’s receipt of Borrower’s written request for such approval or
consent. If Lender fails to respond to such request within ten (10) Business
Days, and Borrower sends a second request containing a legend clearly marked in
not less than fourteen (14) point bold face type, underlined, in all capital
letters “REQUEST DEEMED APPROVED IF NO RESPONSE WITHIN 10 BUSINESS DAYS”, Lender
shall be deemed to have approved or consented to such matter if Lender fails to
respond to such second written request before the expiration of such ten
(10) Business Day period;

(iii) whenever Lender’s approval or consent is required pursuant to the
provisions of this Section 4.1.10 for any matter that Lender has previously
approved a term sheet pursuant to Section 4.1.10(e)(i) above, Lender shall use
good faith efforts to respond within five (5) Business Days after Lender’s
receipt of Borrower’s written request for such approval or consent. If Lender
fails to respond to such request within five (5) Business Days, and Borrower
sends a second request containing a legend clearly marked in not less than
fourteen (14) point bold face type, underlined, in all capital letters “REQUEST
DEEMED APPROVED IF NO RESPONSE WITHIN BUSINESS 10 DAYS”, Lender shall be deemed
to have approved or consented to such matter if Lender fails to respond to such
second written request before the expiration of such ten (10) Business Day
period, provided that there have been no material deviations from the term sheet
and that the aggregate economics of the transaction are no less favorable to
Borrower than as set forth in the term sheet; and

(iv) in the event that Lender shall have approved (or be deemed to have
approved) a term sheet submitted by Borrower with respect to a certain Lease,
Lender shall not withhold its approval or consent with respect to such Lease on
the basis of any provisions of such Lease dealing with the items contained in
the approved term sheet.

(f) Notwithstanding anything to the contrary contained in this Section 4.1.10,
provided no Event of Default shall have occurred and remain uncured and not
Sweep Event shall have occurred, Borrower shall have the right, without the
consent or approval of Lender in any

 

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instance, to terminate or accept a surrender of any Lease that is not a Major
Lease, except that no termination by Borrower or acceptance of surrender by a
Tenant of any Leases shall be permitted unless by reason of a Tenant default and
then only in a commercially reasonable manner to preserve and protect the
Property.

4.1.11 Alterations. Lender’s prior approval shall be required in connection with
(a) any alterations to any Improvements (i) that may have a Material Adverse
Effect, (ii) that could adversely affect any structural component or the
exterior of any Improvements or any utility or HVAC system at the Property, or
(iii) the cost of which (including any related alteration, improvement or
replacement) is reasonably anticipated to exceed the Alteration Threshold or
(b) any alteration to any Improvements during the continuance of an Event of
Default (any of the foregoing, a “Material Alteration”). If the total unpaid
amounts incurred and to be incurred with respect to such alterations to the
Improvements shall at any time exceed the Alteration Threshold, Borrower shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for Borrower’s Obligations under the Loan Documents any of
the following: (1) cash, (2) a Letter of Credit, (3) U.S. Obligations, or
(4) other securities acceptable to Lender (including, but not limited to, a
payment and/or performance bond), provided that, to the extent applicable,
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. Upon
substantial completion of any Material Alteration, Borrower shall provide
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements, (ii) all contractors,
subcontractors, materialmen and professionals who provided work, materials or
services in connection with the Material Alteration have been paid in full and
have delivered unconditional releases of liens, and (iii) all material licenses
and permits necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued.

4.1.12 Approval of Material Agreements and Affiliate Agreements. Borrower shall
be required to obtain Lender’s prior written approval prior to entering into,
modifying, amending or terminating any and all Material Agreements or Affiliate
Agreements affecting the Property, which approval may be granted or withheld in
Lender’s sole discretion.

4.1.13 After Acquired Property. Borrower will grant to Lender a first lien
security interest in and to all equipment and other personal property owned by
Borrower, whether or not used in the construction, maintenance and/or operation
of the Improvements, immediately upon acquisition of same or any part of same.

4.1.14 PATRIOT Act. Borrower will comply with the Patriot Act and all applicable
requirements of Governmental Authorities having jurisdiction over Borrower
and/or the Property, including those relating to money laundering and
terrorism. Lender shall have the right to audit Borrower’s compliance with the
Patriot Act and all applicable requirements of Governmental Authorities having
jurisdiction over Borrower and/or the Property, including those relating to
money laundering and terrorism. In the event that Borrower fails to comply with
the Patriot Act or any such requirements of Governmental Authorities, then
Lender may, at its

 

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option, cause Borrower to comply therewith and any and all costs and expenses
incurred by Lender in connection therewith shall be secured by the Mortgage and
the other Loan Documents and shall be immediately due and payable.

4.1.15 Special Purpose. Borrower shall at all times comply with the requirements
of a Special Purpose Entity and shall not take or permit any action that would
result in Borrower not being in compliance with the representations, warranties
and covenants set forth in Section 3.1.24 and the definition of a Special
Purpose Entity.

4.1.16 Ground Lease. Borrower shall (a) pay all rents, additional rents and
other sums required to be paid by Borrower, as tenant under and pursuant to the
provisions of the Ground Lease as and when such rent or other charge is payable,
(b) diligently perform and observe all of the terms, covenants and conditions of
the Ground Lease on the part of Borrower, as tenant thereunder, to be performed
and observed at least three (3) days prior to the expiration of any applicable
grace period therein provided, and (c) promptly notify Lender of the giving of
any written notice by the lessor under the Ground Lease to Borrower of any
default by Borrower in the performance or observance of any of the terms,
covenants or conditions of the Ground Lease on the part of Borrower, as tenant
thereunder, to be performed or observed and deliver to Lender a true copy of
each such notice. Borrower shall not, without the prior consent of Lender,
surrender the leasehold estate created by the Ground Lease or terminate or
cancel the Ground Lease or modify, change, supplement, alter or amend, or waive
any of the terms or provisions of, the Ground Lease, in any material respect,
either orally or in writing, and Borrower hereby assigns to Lender, as further
security for the payment and performance of the Obligations and for the
performance and observance of the terms, covenants and conditions of the Loan
Documents, all of the rights, privileges and prerogatives of Borrower, as tenant
under the Ground Lease, to surrender the leasehold estate created by the Ground
Lease or to terminate, cancel, modify, change, supplement, alter or amend, or
waive any of the terms or provisions of, the Ground Lease in any material
respect and any such surrender of the leasehold estate created by the Ground
Lease or termination, cancellation, modification, change, supplement, alteration
or amendment of, or waiver of any of the terms or provisions of, the Ground
Lease in any material respect without the prior consent of Lender shall be void
and of no force and effect. If Borrower shall default in the performance or
observance of any material term, covenant or condition of the Ground Lease on
the part of Borrower, as tenant thereunder, to be performed or observed, then,
without limiting the generality of the other provisions of the Loan Documents,
and without waiving or releasing Borrower from any of its Obligations hereunder,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all of
the material terms, covenants and conditions of the Ground Lease on the part of
Borrower, as tenant thereunder, to be performed or observed or to be promptly
performed or observed on behalf of Borrower, to the end that the rights of
Borrower in, to and under the Ground Lease shall be kept unimpaired as a result
thereof and free from default, even though the existence of such event of
default or the nature thereof be questioned or denied by Borrower or by any
party on behalf of Borrower. If Lender shall make any payment or perform any act
or take action in accordance with the preceding sentence, Lender will notify
Borrower of the making of any such payment, the performance of any such act, or
the taking of any such action. In any such event, subject to the rights of
Tenants, subtenants and other occupants under the Leases or of parties to any
Operating Agreement, Lender and any Person designated as Lender’s agent by
Lender shall have, and are hereby granted, the right to enter

 

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upon the Property at any reasonable time, on reasonable notice (which may be
given orally) and from time to time for the purpose of taking any such action.
Lender may pay and expend such sums of money as Lender reasonably deems
necessary for any such purpose and upon so doing shall be subrogated to any and
all rights of the landlord under the Ground Lease. Borrower hereby agrees to pay
to Lender within five (5) days after demand, all such sums so paid and expended
by Lender, together with interest thereon from the day of such payment at the
Default Rate. All sums so paid and expended by Lender and the interest thereon
shall be secured by the legal operation and effect of the Mortgage. If the
lessor under the Ground Lease shall deliver to Lender a copy of any notice of
default sent by said lessor to Borrower, as tenant under the Ground Lease, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender, in good faith, in reliance thereon. Borrower
shall exercise each individual option, if any, to extend or renew the term of
the Ground Lease upon demand by Lender made at any time within one (1) year
prior to the last day upon which any such option may be exercised, and if
Borrower shall fail to do so, Borrower hereby expressly authorizes and appoints
Lender its attorney-in-fact to exercise any such option in the name of and upon
behalf of Borrower, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest. Borrower will not subordinate or consent
to the subordination of the Ground Lease to any mortgage, security deed, lease
or other interest on or in the landlord’s interest in all or any part of the
Property, unless, in each such case, the written consent of Lender shall have
been first had and obtained, which approval shall not unreasonably be withheld.

4.1.17 Intentionally Deleted

4.1.18 Equity Requirement.

(a) On or prior to the Closing Date, Borrower shall furnish Lender with written
evidence, satisfactory to Lender in its sole discretion, of equity in the
Property in the amount of the Initial Equity Requirement.

(b) Within ninety (90) days of the Closing Date, Borrower shall furnish Lender
with written evidence, satisfactory to Lender in its sole discretion, of equity
in the Property in the amount of the Equity Requirement (which amount shall be
inclusive of the Initial Equity Requirement).

4.1.19 Major Decisions. Notwithstanding anything contained herein to the
contrary, Borrower shall (and shall cause, suffer or permit Sole Member or
Holdings to) obtain Lender’s prior written consent before it takes or approves
any of the following actions: (i) changing the express purpose of Borrower, Sole
Member or Holdings as set forth in its respective operating agreement as of the
date hereof, (ii) the dissolution, liquidation or merger of Borrower, Sole
Member or Holdings with or into another entity; (iii) any sale or refinance of
all or a portion of the Property; (iv) the purchase by Borrower, Sole Member or
Holdings or the sale of any asset not in the ordinary course of business;
(v) the purchase by Borrower, Sole Member or Holdings of the stock, membership
interest or assets of another Person; (vi) the sale of all or substantially all
of Borrower’s, Sole Member’s or Holding’s assets; (vii) taking any action to
cancel or terminate any Material Agreement, Major Lease or Affiliate Agreement;
(viii) selling, assigning, pledging, transferring, mortgaging, hypothecating or
otherwise disposing of (by operation of law or otherwise) or encumbering any
part of its interest in any Material Agreement, Major Lease or

 

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Affiliate Agreement; (ix) waiving any default under or breach of any provisions
of any Material Agreement, Major Lease or Affiliate Agreement; (x) waiving,
failing to enforce, forgiving or releasing any right, interest or entitlement,
howsoever arising, under or in respect of any provisions of any Material
Agreement, Major Lease or Affiliate Agreement or varying or agreeing to the
variation in any material way of any provisions of any Material Agreement, Major
Lease or Affiliate Agreement or of the performance of any other Person under any
Material Agreement, Major Lease or Affiliate Agreement; (xi) modifying,
amending, restating or supplementing any Material Agreement, Major Lease or
Affiliate Agreement; (xii) giving any consent under any Material Agreement,
Major Lease or Affiliate Agreement; (xiii) petitioning, requesting or taking any
other legal or administrative action that seeks, or may reasonably be expected,
to rescind, terminate or suspend any Major Lease, Material Agreement or
Affiliate Agreement, (xiv) the borrowing of money from any Person, including
banks and other lending institutions, (xv) guaranteeing or becoming obligated
for the debt of any Person, and (xvi) entering into any contract, agreement or
lease which requires payments by Borrower, Sole Member or Holdings in excess of
$250,000 per annum.

4.1.20 Compliance with Material Agreements and Affiliate Agreements. Borrower
shall (and shall cause, suffer or permit Sole Member or Holdings to):
(a) perform and observe in all material respects all of its covenants and
agreements contained in any Material Agreement, or Affiliate Agreement to which
it is a party, (b) promptly give Lender copies of any default or other material
notices or documents given by or on behalf of Borrower, Sole Member or Holdings,
or received by or on behalf of Borrower, Sole Member or Holdings from any other
Person under any Material Agreement or Affiliate Agreement, (c) enforce each
material covenant or obligation of any Material Agreement or Affiliate Agreement
in accordance with its terms, (d) take all reasonable and necessary action to
prevent the termination of any Material Agreement or Affiliate Agreement in
accordance with the terms thereof or otherwise, (e) after obtaining knowledge of
any material default, or event (which with the giving of notice or the passage
of time, or both would reasonably constitute a material default) under any
Material Agreement or Affiliate Agreement, promptly deliver written notice to
Lender of such default, and (f) promptly notify Lender in writing of the
commencement (or threatened commencement) of any legal or arbitral proceedings,
and of all proceedings by or before any Governmental Authority, and any material
development in respect of such legal or other proceedings, affecting the
Property or any Material Agreement or Affiliate Agreement.

Section 4.2 Borrower Negative Covenants.

Borrower covenants and agrees with Lender that throughout the Term:

4.2.1 Due on Sale and Encumbrance; Transfers of Interests. Except to the extent
permitted pursuant to Article 8, neither Borrower nor any other Restricted Party
shall, without the prior written consent of Lender, sell, transfer, convey,
mortgage, grant, bargain, encumber, pledge, assign, alienate, lease (except to
Tenants under Leases that are not in violation of Section 4.1.10 hereof), grant
any option with respect to or grant any other interest in the Property or any
part thereof or interest therein, including any legal, beneficial, economic or
voting interest in Borrower or any other Restricted Party, whether directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise
(each, a “Transfer”). A Transfer within the meaning of this Section 4.2.1 shall
be deemed to include (a) an installment sales agreement

 

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wherein Borrower agrees to sell the Property or any part thereof or interest
therein for a price to be paid in installments; (b) an agreement by Borrower for
the leasing of all or a substantial part of the Property for any purpose other
than the 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; (c) if Borrower or any
other Restricted Party 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; (d) if Borrower
or any other Restricted Party 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 or member,
the voluntary or involuntary transfer of the partnership interest of any general
partner, managing partner or limited partner, the creation or issuance of new
limited partnership interests, the voluntary or involuntary transfer of the
interest of any joint venturer or member or the creation or issuance of new
non-managing member interests; and (e) if Borrower or any other Restricted Party
is a trust or nominee trust, the voluntary or involuntary transfer of the legal
or beneficial interest in such trust or nominee trust or the creation or
issuance of new legal or beneficial interests.

4.2.2 Liens. Borrower shall not create, incur, assume or permit to exist any
Lien on any direct or indirect interest in Borrower, Sole Member or Holdings or
any portion of the Property except for Permitted Encumbrances.

4.2.3 Dissolution. Neither 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 Sole Member or Holdings to (i) dissolve, wind up or
liquidate or take any action, or omit to take any action, as a result of which
Sole Member or Holdings would be dissolved, wound up or liquidated in whole or
in part or (ii) amend, modify, waive or terminate the operating agreement of
Sole Member or Holdings, in each case without obtaining the prior consent of
Lender.

4.2.4 Change in Use. Borrower shall not change the current use of the Property
in any material respect.

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

4.2.6 Intentionally Omitted.

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

 

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4.2.8 Intentionally Omitted.

4.2.9 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.

4.2.10 Principal Place of Business. Borrower shall not change its principal
place of business, or cause or allow Sole Member or Holdings to change its
principal place of business, from the address set forth on the first page of
this Agreement without first giving Lender thirty (30) days prior written
notice.

4.2.11 Change of Name, Identity or Structure. None of Borrower, Sole Member or
Holdings shall change their name, identity (including its trade name or names)
or corporate, partnership or other structure without notifying Lender of such
change in writing at least thirty (30) days prior to the effective date of such
change and, in the case of a change in Borrower’s, Sole Member’s or Holdings’
structure, without first obtaining the prior written consent of Lender. Borrower
shall, and shall cause Sole Member and Holdings to, execute and deliver to
Lender, prior to or contemporaneously with the effective date of any such
change, any financing statement or financing statement change required by Lender
to establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate the Property, and representing and warranting that
Borrower does business under no other trade name with respect to the Property.

4.2.12 Intentionally Omitted.

4.2.13 ERISA.

(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or
Section 4975 of the Code.

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

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

 

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

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

4.2.14 Compliance with Restrictive Covenants, Etc. Borrower will not modify,
waive in any material respect or release any easements, restrictive covenants or
other Permitted Encumbrances, or suffer, consent to or permit the foregoing,
without Lender’s prior written consent, which consent may be granted or denied
in Lender’s sole discretion.

4.2.15 Operating Agreements. Borrower agrees that without the prior consent of
Lender, Borrower will not execute modifications to any Operating Agreement or
allow or permit Sole Member or Holdings to execute modifications to any
Operating Agreement.

4.2.16 Embargoed Person.

(a) At all times, throughout the term of the Loan, including after giving effect
to any Transfers, (i) none of the funds or other assets of Borrower, Sole
Member, Holdings or any Guarantor shall constitute property of, or shall be
beneficially owned, directly or indirectly, by any Person subject to trade
restrictions under United States law, including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act (PATRIOT Act) of 2001 and any Executive Orders or
regulations promulgated thereunder, each as may be amended from time to time,
with the result that the investment in Borrower, Sole Member, Holdings or any
Guarantor, as applicable (whether directly or indirectly), would be prohibited
by law (each, an “Embargoed Person”), or the Loan made by Lender would be in
violation of law, (ii) no Embargoed Person shall have any interest of any nature
whatsoever in Borrower, Sole Member, Holdings or any Guarantor, as applicable,
with the result that the investment in Borrower, Sole Member, Holdings or any
Guarantor, as applicable (whether directly or indirectly), would be prohibited
by law or the Loan would be in violation of law, and (iii) none of the funds of
Borrower, Sole Member, Holdings or any Guarantor, as applicable, shall be
derived from any unlawful activity with the result that the investment in
Borrower, Sole Member, Holdings or any Guarantor, as applicable (whether
directly or indirectly), would be prohibited by law or the Loan would be in
violation of law.

(b) Neither Borrower nor, to Borrower’s knowledge, any owner of a direct or
indirect interest in Borrower (i) is listed on any Government Lists, (ii) is a
person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of the Office of Foreign Assets Control (“OFAC”) or in any enabling legislation
or other Presidential Executive Orders in respect thereof, (iii) has been
previously

 

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

ARTICLE 5: INSURANCE, CASUALTY AND CONDEMNATION

Section 5.1 Insurance.

5.1.1 Insurance Policies.

(a) Unless otherwise agreed to by Lender in its sole and absolute discretion,
Borrower, at its sole cost and expense, shall obtain and maintain during the
entire Term, or cause to be maintained, insurance policies for Borrower and the
Property providing at least the following coverages:

(i) Casualty insurance against loss or damage by fire, wind (including named
storms), lightning and such other perils as are included in a standard “all
risk” or “special form” policy, including riot and civil commotion, vandalism,
terrorist acts, malicious mischief, burglary and theft, in each case (A) in an
amount equal to one hundred percent (100%) of the “Full Replacement Cost” of the
Property, which for purposes of this Agreement shall mean actual replacement
value (exclusive of costs of excavations, foundations, underground utilities and
footings) waiving depreciation. The Full Replacement Cost must be adjusted
annually to reflect increased value due to inflation. If this is not provided,
Inflation Guard Coverage will be required; (B) written on a no co-insurance form
or 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 $10,000.00 (except for deductibles
for windstorm and earthquake coverage (except that coverage for loss caused by
earthquake shall not exceed $5,000,000.00), which deductibles may be up to five
percent (5%) of the total insurable value of the Property set forth in the
Policy); and (D) containing “Ordinance or Law Coverage” if any of the
Improvements or the use of the Property shall at any time constitute legal
non-conforming structures or uses, including coverage for Loss to the Undamaged
Portion, Demolition Costs and Increased Cost of Construction, all in amounts
acceptable to Lender. In

 

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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
maximum amount of such insurance available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended or such greater amount as
Lender shall require; and (z) earthquake insurance in amounts and in form and
substance satisfactory to Lender in the event 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 be on terms consistent with the comprehensive
all risk insurance policy required under this subsection (i);

(ii) commercial general liability insurance, including a broad form
comprehensive general liability endorsement and coverages 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
and containing minimum limits per occurrence of One Million and No/100 Dollars
($1,000,000.00), with a combined limit per policy year, excluding umbrella
coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00) per
location; (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 insured contracts; and (5) contractual liability covering the indemnities
contained in Article 8 of the Mortgage to the extent the same is available;

(iii) rental loss and/or business income interruption insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above, subsections (iv) (if
applicable), subsection (vi), subsection (x) and Section 5.1.1(h) below;
(C) containing an extended period of indemnity endorsement which provides 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 Revenue from the Property for a period of
eighteen (18) months from the date of the Casualty. 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
Revenue from the Property for the succeeding eighteen (18) month period. Subject
to Section 5.2.3(b), 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 Debt on the respective dates of payment
provided for in the Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

(iv) at all times during which structural construction, repairs or alterations
are being made with respect to the Improvements, and only if the Property and
Liability coverage forms do not otherwise apply, coverage all in form and
substance and with limits, terms and conditions acceptable to Lender including
(A) owner’s contingent or protective

 

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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, including coverage for one
hundred percent (100%) of the total insurable costs of construction (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsections (i), (iii), (vi), (x) and Section 5.1.1(h), (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 limits which
are required from time to time by Lender 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 Five Million and No/100 Dollars ($5,000,000.00) per occurrence on
terms consistent with the commercial general liability insurance policy required
under subsection (ii) and, if applicable, subsection (v) 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,
including umbrella coverage, with limits which are required from time to time by
Lender (if applicable);

(ix) 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 Ten Thousand and No/100 Dollars ($10,000.00) (if applicable); and

(x) upon sixty (60) days’ notice, such other insurance and in such amounts as
Lender from time to time may request against such other insurable hazards which
at the time are commonly insured against for properties 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 shall be subject to the approval of Lender as to form and
substance including deductibles, loss payees and insureds. Not less than ten
(10) days prior to the expiration dates of the Policies theretofore furnished to
Lender, certificates of insurance and, if requested by Lender, other
documentation, in each case acceptable to Lender 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.

(c) Any blanket insurance Policy shall be subject to Lender’s approval and shall
specifically allocate to the Property the amount of coverage from time to time
required hereunder or shall otherwise provide the same protection as would a
separate Policy insuring

 

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only the Property in compliance with the provisions of Section 5.1.1(a). Lender
shall have determined based on a review of the schedule of locations and values
that the amount of such coverage is sufficient in light of the other risks and
properties insured under the blanket policy.

(d) All Policies of insurance provided for or contemplated by Section 5.1.1(a)
shall name Borrower as a named insured and, in the case of liability coverages
(except for the Policies referenced in Sections 5.1.1(a)(v) and (viii)) shall
name Lender and its successors and/or assigns as the additional insured, as its
interests may appear, and in the case of property coverages, including but not
limited to boiler and machinery, terrorism, flood and earthquake insurance,
shall contain a standard non-contributing mortgagee clause in favor of Lender
providing that the loss thereunder shall be payable to Lender. Additionally, if
Borrower obtains property insurance coverage in addition to or in excess of that
required by Section 5.1.1(a)(i), then such insurance policies shall also contain
a standard non-contributing mortgagee clause in favor of Lender providing that
the loss thereunder shall be payable to Lender.

(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) 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 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 Obligations, 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.

(h) If any of the Policies include any exclusions for loss, cost, damage or
liability caused by “terrorism” or “terrorist acts”, Borrower shall obtain and
maintain terrorism coverage to cover such exclusion(s) from a carrier which
otherwise satisfies the rating criteria

 

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specified in Section 5.1.2 (a “Qualified Carrier”) or, in the event that such
terrorism coverage is not available from a Qualified Carrier, Borrower shall
obtain such terrorism coverage from the highest rated insurance company
providing such terrorism coverage.

5.1.2 Insurance Company. All Policies required pursuant to Section 5.1.1
(a) shall be issued by companies authorized to do business in the State where
the Property is located, with a financial strength and claims paying ability
rating of “A” or better by S&P; (b) shall, with respect to all property
insurance policies, name Lender and its successors and/or assigns as their
interest may appear as Lender and Mortgagee; (c) shall, with respect to all
property insurance policies and rental loss and/or business interruption
insurance policies, contain a Standard Mortgagee Clause and a Lender’s Loss
Payable Endorsement, or their equivalents, naming Lender as the person to which
all payments made by such insurance company shall be paid; (d) shall, with
respect to all liability policies, name Lender and its successors and/or assigns
as an additional insured; (e) shall contain a waiver of subrogation against
Lender; (f) shall contain such provisions as Lender deems reasonably necessary
or desirable to protect its interest including endorsements providing that
neither Borrower, Lender nor any other party shall be a co-insurer under said
Policies and that Lender shall receive at least thirty (30) days prior written
notice of any modification, reduction or cancellation; and (g) shall be
satisfactory in form and substance to Lender and shall be approved by Lender as
to amounts, form, risk coverage, deductibles, loss payees and insureds.
Certified copies of the Policies shall be delivered to Lender, at 230 Park
Avenue, 12th Floor, New York, New York 10169, Attention: Mr. Steve Altman, on
the date hereof with respect to the current Policies and within thirty (30) days
after the effective date thereof with respect to all renewal Policies; provided,
however, that if certified copies of the current Policies are not available on
the date hereof, Borrower shall deliver to Lender on the date hereof
documentation acceptable to Lender evidencing such Policies and shall deliver to
Lender certified copies of such Policies within ten (10) days after such
Policies are available. Borrower shall pay the Insurance Premiums annually in
advance as the same become due and payable and shall furnish to Lender evidence
of the renewal of each of the Policies with receipts for the payment of the
Insurance Premiums or other evidence of such payment reasonably satisfactory to
Lender (provided, however, that Borrower shall not be required to pay such
Insurance Premiums nor furnish such evidence of payment to Lender in the event
that the amounts required to pay such Insurance Premiums have been deposited
into the Insurance Account pursuant to Section 6.4 hereof). In addition to the
insurance coverages described in Section 5.1.1) above, Borrower shall obtain
such other insurance as may from time to time be reasonably required by Lender
in order to protect its interests. Within thirty (30) days after request by
Lender, Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like.

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

 

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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, submit proof of loss if
not submitted promptly by Borrower. In the event of a Casualty where the loss
does not exceed the Restoration Threshold, Borrower may settle and adjust such
claim; provided that (a) no Event of Default has occurred and is continuing, and
(b) such adjustment is carried out in a commercially reasonable and timely
manner. In the event of a Casualty where the loss exceeds the Restoration
Threshold or if an Event of Default then exists, Borrower may settle and adjust
such claim only with the consent of Lender (which consent shall not be
unreasonably withheld or delayed) and Lender shall have the opportunity to
participate, at Borrower’s cost, in any such adjustments; provided, however, if
Borrower fails to settle and adjust such claim within sixty (60) days after the
Casualty, Lender shall have the right to settle and adjust such claim at
Borrower’s cost and without Borrower’s consent. Notwithstanding any Casualty,
Borrower shall continue to pay the Debt at the time and in the manner provided
for its payment in the Note and in this Agreement.

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

(a) Subject to Section 5.2.3(b), payments received on account of the business
interruption insurance specified in Subsection 5.1.1(a)(iii) above shall be
deposited directly into the Casualty and Condemnation Account. Notwithstanding
the last sentence of Section 5.1.1(a)(iii) above, and provided that no Event of
Default shall exist and remain uncured,

 

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proceeds received by Lender on account of business or rental interruption or
other loss of income insurance specified in Section 5.1.1(a)(iii) above shall be
(a) deposited by Lender into the Cash Management Account (in installments
relating to the relevant period) to the extent such proceeds (or a portion
thereof) reflect a replacement for lost Rents for the relevant period, as
determined by Lender in good faith and such proceeds shall be applied by Lender
in accordance with Section 6.11 hereof, and (b) provided that no Sweep Event
shall have occurred, held by Lender and disbursed to Borrower (in installments
relating to the relevant period) to the extent such proceeds (or a portion
thereof) reflect a replacement for lost Rents for the relevant period, as
determined by Lender in good faith. All other such proceeds not reflecting a
replacement for lost Rents shall be held by Lender and disbursed in accordance
with Section 5.3 hereof.

(b) Notwithstanding anything to the contrary contained herein, if in connection
with a Casualty any insurance carrier makes a payment under a property insurance
Policy that Borrower proposes be treated as business or rental interruption
insurance, then, notwithstanding any designation (or lack of designation) by the
insurance carrier as to the purpose of such payment, as between Lender and
Borrower, such payment shall not be treated as business or rental interruption
Insurance Proceeds unless Borrower has demonstrated to Lender’s satisfaction
that the remaining Net Proceeds that will be received from the property
insurance carriers are sufficient to pay one hundred percent (100%) of the cost
of fully restoring the Improvements or, if such Net Proceeds are to be applied
repay the Loan in accordance with the terms hereof, that such remaining Net
Proceeds will be sufficient to pay off the Loan in full.

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, and that the condition in Section 5.3.2(a)(xiv) below has been
satisfied, 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 for the benefit of 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.

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 consists of Insurance Proceeds received in
connection with a Casualty, then less than twenty-five percent (25%) of the
total

 

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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 received in connection with a Condemnation, then 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 such Condemnation;

(iii) Leases requiring payment of annual rent equal to ninety percent (90%) of
the Gross Revenue received by Borrower during the twelve (12) month period
immediately preceding the Casualty or Condemnation and all Major Leases shall
remain in full force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required for Restoration,
notwithstanding the occurrence of such Casualty or Condemnation;

(iv) the Ground Lease, the Management Agreement and all Operating Agreements
shall remain in full force and effect during and after completion of the
Restoration, notwithstanding the occurrence of such Casualty or Condemnation;

(v) 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;

(vi) 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;

(vii) 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 Stated
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 Condemnation, as applicable, or (D) the
expiration of the insurance coverage referred to in Section 5.1.1(a)(iii),
without giving effect to any extended period of indemnity endorsement in respect
of such coverage;

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

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

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

(xi) Borrower shall deliver to Lender a signed, detailed budget approved in
writing by Borrower’s architect or engineer stating the entire cost of
completing the Restoration, which budget shall be acceptable to Lender;

 

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

(xiii) intentionally omitted; and

(xiv) notwithstanding anything to the contrary contained herein or in any other
Loan Document, if the Loan is included in a REMIC Trust and, immediately
following a release of any portion of the Lien of the Mortgage following a
Condemnation (taking into account any planned Restoration of the remaining
Property), the ratio of the unpaid principal balance of the Loan to the value of
the remaining Property is greater than one hundred twenty-five percent
(125%) (based solely on real property and excluding any personal property or
going concern value) (such value to be determined, in Lender’s sole discretion,
by any commercially reasonable method permitted to a REMIC Trust), no Net
Proceeds will be released to Borrower unless the principal balance of the Loan
is paid down by a “qualified amount” as such term is defined in IRS
Rev. Proc. 2010-30, as the same may be modified, supplemented, superseded or
amended from time to time, unless Lender receives an opinion of counsel that, if
the foregoing prepayment is not made, the applicable REMIC Trust will not fail
to maintain its status as a REMIC Trust as a result of such release.

(b) The Net Proceeds shall be paid directly to Lender for deposit into the
Casualty and Condemnation Account and, until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed
by, Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (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,
mechanics’ 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 the prior approval of Lender 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 reasonably practicable after taking
into account the consequences of such partial Condemnation), so that upon
completion thereof, the Property shall be at least equal in value and general
utility to the Property prior to the Casualty or Condemnation, as applicable; 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 or
Condemnation, as applicable, 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 or Condemnation, as applicable. Borrower
shall restore all Improvements such that when they are

 

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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
the approval of Lender and the Casualty Consultant. All costs and expenses
incurred by Lender in connection with recovering, holding and advancing the Net
Proceeds for the Restoration, including reasonable attorneys’ fees and
disbursements and the Casualty Consultant’s fees and disbursements, shall be
paid by Borrower.

(d) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term “Casualty Retainage”
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 5.3.2(d), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Article 5 and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which (i) the Casualty Consultant certifies to Lender that such contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of such contractor’s,
subcontractor’s or materialman’s contract, (ii) 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 (iii) 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 (for deposit into the Casualty and Condemnation
Account) before any further disbursement of the Net Proceeds shall be made. The
Net Proceeds Deficiency deposited with Lender shall be deposited by Lender into
the Casualty and

 

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Condemnation Account 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 Obligations.

(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 satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under
any of the Loan Documents; provided, however, the amount of such excess returned
to Borrower in the case of a Condemnation shall not exceed the amount of Net
Proceeds Deficiency deposited by Borrower with the balance being applied to the
Debt in the manner provided for in subsection 5.3.2(h).

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

ARTICLE 6: CASH MANAGEMENT AND RESERVE FUNDS

Section 6.1 Cash Management Arrangements.

Borrower shall cause all Rents and other Gross Revenue to be transmitted by
tenants of the Property directly into a trust account (the “Clearing Account”)
established and maintained by Borrower at a bank selected by Borrower and
reasonably approved by Lender (the “Clearing Bank”) as more fully described in
the Clearing Account Agreement. Without in any way limiting the foregoing, if
Borrower or Manager receive any Gross Revenue from the Property, then (a) such
amounts shall be deemed to be collateral for the Obligations and shall be held
in trust for the benefit, and as the property, of Lender, (b) such amounts shall
not be commingled with any other funds or property of Borrower or Manager, and
(c) Borrower or Manager shall deposit such amounts in the Clearing Account
within one (1) Business Day of receipt. Funds deposited into the Clearing
Account shall be disbursed in accordance with Section 6.11.1 hereof.

Section 6.2 Required Repairs Funds.

6.2.1 Deposit of Required Repairs Funds. Borrower shall perform the repairs and
other work at the Property as set forth on Schedule V attached hereto (such
repairs and other work 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 V. On the Closing Date, Borrower shall
deposit or cause to be deposited with or on behalf of Lender the amount set
forth on such Schedule V to perform the Required Repairs (the “Required Repairs
Funds”), which Required Repairs Funds shall be transferred by or at the
direction of Lender into an Account established to hold such funds (the
“Required Repairs Account”).

 

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6.2.2 Release of Required Repairs Funds.

(a) Lender shall, or shall direct Servicer to, disburse the Required Repairs
Funds to Borrower out of the Required Repairs Account upon satisfaction by
Borrower of each of the Reserve Disbursement Conditions with respect to each
such disbursement. Lender shall not be required to disburse Required Repairs
Funds more frequently than once each calendar month, and each disbursement of
Required Repairs Funds must be in an amount not less than the Minimum
Disbursement Amount (or a lesser amount if the total amount of Required Repairs
Funds is less than the Minimum Disbursement Amount, in which case only one
disbursement of the amount remaining in the account shall be made). Upon
Borrower’s completion of all Required Repairs in accordance with this
Section 6.2, Lender shall, or shall direct Servicer to, disburse any remaining
Required Repairs Funds held in the Required Repairs Account to Borrower, unless
a Sweep Event has occurred, in which event such funds shall be deposited into
the Cash Management Account to be applied in accordance with Section 6.11.1.

(b) Nothing in this Section 6.2.2 shall (i) make Lender responsible for
performing or completing any Required Repairs; (ii) require Lender to expend
funds in addition to the Required Repairs Funds to complete any Required
Repairs; (iii) obligate Lender to proceed with any Required Repairs; or
(iv) obligate Lender to demand from Borrower additional sums to complete any
Required Repairs.

(c) Borrower shall permit Lender and Lender’s agents and representatives
(including Lender’s engineer, architect or inspector) or third parties to enter
onto the Property during normal business hours (subject to the rights of Tenants
under their Leases) to inspect the progress of any Required Repairs and all
materials being used in connection therewith and to examine all plans and shop
drawings relating to such Required Repairs. Borrower shall cause all contractors
and subcontractors to cooperate with Lender or Lender’s representatives or such
other Persons described above in connection with inspections described in this
Section 6.2.2(c)).

(d) If a disbursement of Required Repair Funds will exceed $25,000.00, Lender
may require an inspection of the Property at Borrower’s expense prior to making
a disbursement of Required Repairs Funds in order to verify completion of the
Required Repairs 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 acceptable to Lender prior to the disbursement of
Required Repairs Funds. Borrower shall pay the expense of the inspection as
required hereunder, whether such inspection is conducted by Lender or by an
independent qualified professional.

(e) 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 insurance, public liability insurance and other insurance to the
extent required under applicable law in connection with the Required Repairs.
All such policies shall be in form and amount satisfactory to Lender.

 

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Section 6.3 Tax Funds.

6.3.1 Deposits of Tax Funds. Borrower shall deposit or cause to be deposited
with or on behalf of Lender (a) on the Closing Date, the amount of Fifty Five
Thousand Eight Hundred Thirty Two and No/100 Dollars ($55,832.00) and (b) on
each Monthly Payment Date, an amount equal to one-twelfth of the Taxes that
Lender estimates will be payable during the next ensuing twelve (12) months in
order to accumulate sufficient funds to pay all such Taxes at least ten
(10) days prior to their respective due dates, which amounts shall be
transferred by or at the direction of Lender into an Account established to hold
such funds (the “Tax Account”). Amounts deposited from time to time into the Tax
Account pursuant to this Section 6.3.1 are referred to herein as the “Tax
Funds”. If at any time, Lender reasonably determines that the Tax Funds will not
be sufficient to pay the Taxes, Lender shall notify Borrower of such
determination and the monthly deposits for Taxes shall be increased by the
amount that Lender estimates is sufficient to make up the deficiency at least
ten (10) days prior to the respective due dates for the Taxes; provided that if
Borrower receives notice of any deficiency after the date that is ten (10) days
prior to the date that Taxes are due, Borrower will deposit with or on behalf of
Lender, such amount within one (1) Business Day after its receipt of such
notice.

6.3.2 Release of Tax Funds. Provided no Event of Default shall exist and remain
uncured, Lender shall, or shall direct Servicer to, apply the Tax Funds, if any,
in the Tax Account to payments of Taxes. In making any payment relating to
Taxes, Lender may do so according to any bill, statement or estimate procured
from the appropriate public office (with respect to Taxes) without inquiry into
the accuracy of such bill, statement or estimate or into the validity of any
tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the
amount of the Tax Funds shall exceed the amounts due for Taxes, Lender shall, or
shall direct Servicer to, disburse such excess to Borrower, unless a Sweep Event
has occurred, in which event such excess shall be deposited into the Cash
Management Account to be applied in accordance with Section 6.11.1, or credit
such excess against future payments to be made to the Tax Funds, such election
to be made by Lender in its sole discretion. Any Tax Funds remaining in the Tax
Account after the Obligations have been paid in full shall be returned to
Borrower.

Section 6.4 Insurance Funds.

6.4.1 Deposits of Insurance Funds. Borrower shall deposit or cause to be
deposited with or on behalf of Lender on each Monthly Payment Date, 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, which amounts shall be transferred by or at the direction of Lender
into an Account established to hold such funds (the “Insurance Account”).
Amounts deposited from time to time into the Insurance Account pursuant to this
Section 6.4.1 are referred to herein as the “Insurance Funds”. If at any time,
Lender reasonably determines that the Insurance Funds will not be sufficient to
pay the Insurance Premiums, Lender shall notify Borrower of such determination
and the monthly deposits for Insurance Premiums shall be increased by the amount
that Lender estimates is sufficient to make up the deficiency at least thirty
(30) days prior to expiration of the Policies; provided that if Borrower
receives notice of any deficiency after the date that is thirty (30) days prior
to expiration of the Policies, Borrower will deposit with or on behalf of
Lender, such amount within one (1) Business Day after its receipt of such
notice.

 

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6.4.2 Release of Insurance Funds. Provided no Event of Default shall exist and
remain uncured, Lender shall, or shall direct Servicer to, apply the Insurance
Funds, if any, in the Insurance Account to payment of Insurance Premiums. In
making any payment relating to Insurance Premiums, Lender may do so according to
any bill, statement or estimate procured from the insurer or its agent, without
inquiry into the accuracy of such bill, statement or estimate. If the amount of
the Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender
shall, or shall direct Servicer to, disburse such excess to Borrower, unless a
Sweep Event has occurred, in which event such excess shall be deposited into the
Cash Management Account to be applied in accordance with Section 6.11.1, or
credit such excess against future payments to be made to the Insurance Funds,
such election to be made by Lender in its sole discretion. Any Insurance Funds
remaining in the Insurance Account after the Obligations have been paid in full
shall be returned to Borrower.

Section 6.5 Intentionally Omitted.

Section 6.6 Rollover Funds.

6.6.1 Deposits of Rollover Funds.

(a) Borrower shall deposit or cause to be deposited with or on behalf of Lender
(i) on each of January 1, 2013 and February 1, 2013, the amount of Five Hundred
Thousand and No/100 Dollars ($500,000), and (ii) on each Monthly Payment Date
thereafter, funds necessary to maintain a minimum balance in the Rollover
Account of One Million and No/100 Dollars ($1,000,000.00), for tenant
improvements and leasing commissions that may be incurred following the date
hereof, which amounts shall be transferred by or at the direction of Lender into
an Account established to hold such funds (the “Rollover Account”). The minimum
balance of the Rollover Account shall not be less than One Million Dollars
($1,000,000.00) during the Term of this Loan once the balance of the Rollover
Account is equal to One Million Dollars ($1,000.000.00). Amounts deposited from
time to time into the Rollover Account pursuant to this Section 6.6.1 are
referred to herein as the “Rollover Funds”. Lender may from time to time
reassess its estimate of the required monthly amount necessary for tenant
improvements and leasing commissions and, upon notice to Borrower, Borrower
shall be required to deposit with or on behalf of Lender each month such
reassessed amount, which shall be transferred by or at the direction of Lender
into the Rollover Account.

(b) In addition to the required deposit set forth in subsection (a) above, the
following items shall be deposited into the Rollover Account and held as
Rollover Funds and shall be disbursed and released as set forth in Section 6.6.2
below, and Borrower shall advise Lender at the time of receipt thereof of the
nature of such receipt so that Lender shall have sufficient time to instruct the
Cash Management Bank to deposit and hold such amounts in the Rollover Account
pursuant to this Agreement and the Cash Management Agreement:

(i) All sums paid with respect to (A) a modification of any Lease or otherwise
paid in connection with Borrower taking any action under any Lease (e.g.,
granting a

 

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consent) or waiving any provision thereof, (B) any settlement of claims of
Borrower against third parties in connection with any Lease, (C) any default,
rejection, termination, surrender or cancellation of any Lease (including in any
Bankruptcy Action), lease buy-out and surrender payments from any Tenant
(including any forfeited security deposit or payment relating to unamortized
tenant improvements and/or leasing commissions) (collectively, “Lease
Termination Payments”), and (D) any sum received from any Tenant to obtain a
consent to an assignment or sublet or otherwise, or any holdover rents or use
and occupancy fees from any Tenant or former Tenant (to the extent not being
paid for use and occupancy or holdover rent); and

(ii) All sums paid with respect to any other extraordinary event pursuant to
which Borrower receives payments or income (in whatever form) derived from or
generated by the use, ownership or operation of the Property not otherwise
covered by this Agreement or the Cash Management Agreement.

6.6.2 Release of Rollover Funds. Lender shall, or shall direct Servicer to,
disburse the Rollover Funds to Borrower out of the Rollover Account provided
(a) such disbursement is for an Approved Leasing Expense, (b) if the requested
disbursement is for the payment or reimbursement of Approved Leasing Expenses
associated with a Major Lease, Lender shall have reviewed and approved such
Major Lease, and (c) Borrower shall have satisfied each of the Reserve
Disbursement Conditions with respect to each such disbursement. Lender shall not
be required to disburse Rollover Funds more frequently than once each calendar
month, and each disbursement of Rollover Funds must be in an amount not less
than the Minimum Disbursement Amount (or a lesser amount if the total amount of
Rollover Funds is less than the Minimum Disbursement Amount, in which case only
one disbursement of the amount remaining in the account shall be made).

Section 6.7 Ground Rent Funds.

6.7.1 Deposits of Ground Rent Funds. Borrower shall deposit or cause to be
deposited with or on behalf of Lender on each Monthly Payment Date, an amount
equal to the Ground Rent that will be payable under the Ground Lease for the
month immediately following the month in which such Monthly Payment Date occurs,
which amounts shall be transferred by or at the direction of Lender into an
Account established to hold such funds (the “Ground Rent Account”). Amounts
deposited from time to time into the Ground Rent Account pursuant to this
Section 6.7.1 are referred to herein as the “Ground Rent Funds”. Such deposit
may be increased from time to time by Lender in such amount as Lender shall deem
to be necessary in its reasonable discretion to reflect any increases in the
Ground Rent.

6.7.2 Release of Ground Rent Funds. Provided no Event of Default shall exist and
remain uncured, Lender shall, or shall direct Servicer to, apply the Ground Rent
Funds to payments of Ground Rent. In making any payment relating to Ground Rent,
Lender may do so according to any bill or statement given by the Ground Lessor
without inquiry into the accuracy of such bill or statement or into the validity
of any rent, additional rent or other charge thereof. If the amount of the
Ground Rent Funds shall exceed the amounts due for Ground Rent, Lender shall, or
shall direct Servicer to, disburse such excess to Borrower, unless a Sweep Event
has occurred, in which event such excess shall be deposited into the Cash
Management Account to be applied in accordance with Section 6.11.1, or credit
such excess against future payments to be made to the Ground Rent Funds, such
election to be made by Lender in its sole discretion.

 

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Section 6.8 Operating Expenses.

From and after the occurrence of a Sweep Event, Borrower shall deposit or cause
to be deposited with or on behalf of Lender on each Monthly Payment Date an
amount sufficient to pay monthly Approved Operating Expenses at the Property in
accordance with the Approved Annual Budget (together with additional funds, if
any, for monthly Approved Operating Expenses not set forth in the Approved
Annual Budget and monthly Extraordinary Expenses requested by Borrower and
approved by Lender in accordance with the terms hereof), which amounts shall be
transferred by or at the direction of Lender into an Account established to hold
such funds (the “Operating Expense Account”). Amounts deposited from time to
time into the Operating Expense Account pursuant to this Section 6.8 are
referred to herein as the “Operating Expense Funds”. Provided no Event of
Default shall exist and remain uncured, Lender shall, or shall direct Servicer
to, disburse Operating Expense Funds to Borrower out of the Operating Expense
Account promptly following each Monthly Payment Date for the payment of Approved
Operating Expenses at the Property and any Extraordinary Expenses requested by
Borrower and approved by Lender in accordance with the terms hereof in each case
for the applicable monthly period.

Section 6.9 Excess Cash Flow Funds.

From and after the occurrence of a Sweep Event, Borrower shall deposit or cause
to be deposited with or on behalf of Lender all Excess Cash Flow, which amounts
shall be transferred by Cash Management Bank into an Account established to hold
such funds (the “Excess Cash Flow Account”) and held as additional security for
the Loan. Amounts deposited from time to time into the Excess Cash Flow Account
pursuant to this Section 6.9 are referred to herein as the “Excess Cash Flow
Funds”.

Section 6.10 Security Interest in Reserve Funds.

6.10.1 Grant of Security Interest. Borrower hereby pledges, assigns and grants a
security interest to Lender, as security for the payment and performance of the
Obligations, in all of Borrower’s right, title and interest in and to any and
all monies, checks, notes, bonds, money orders, letters of credit, other
instruments and other investment property now or hereafter deposited or held in
the Reserve Funds. The Reserve Funds shall be under the sole dominion and
control of Lender. The Reserve Funds shall not constitute a trust fund and may
be commingled with other monies held by Lender.

6.10.2 Interest on Certain Reserve Funds; Income Taxes. All Reserve Funds may be
invested in Permitted Investments as directed by Lender in accordance with the
terms of the Cash Management Agreement. Borrower acknowledges and agrees that
the availability of and return on certain Permitted Investments depends, in
part, upon the availability of Permitted Investments to the Cash Management
Bank, the size of the balance of the applicable Reserve Funds and/or the
frequency of deposits into and withdrawals from the Reserve Funds and that
certain Permitted Investments may be or become unavailable from time to time
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the Reserve Funds for a variety of reasons, including, without limitation, any
of the foregoing factors. Borrower acknowledges and agrees that the interest or
income received on the Reserve Funds may not be the highest return available on
cash-based investments and further acknowledges and agrees that none of Lender,
any Servicer of the Loan, the Cash Management Bank or any of their respective
agents or representatives shall be obligated to seek the highest return
available on cash-based investments and none of Lender, any Servicer of the
Loan, the Cash Management Bank or any of their respective agents or
representatives shall be liable for any loss sustained on the investment of any
funds constituting the Reserve Funds. Borrower shall deposit with Lender an
amount equal to any actual losses sustained on the investment of any funds
constituting the Reserve Funds within one (1) Business Day of Lender’s notice.
All earnings or interest on each of the Reserve Funds (other than the Tax Funds
and the Insurance Funds) shall be and become part of the respective Reserve Fund
and shall be disbursed as provided in the paragraph(s) of this Agreement
applicable to each such Reserve Fund. All earnings and interest on the Tax Funds
and the Insurance Funds shall be the sole property of and paid to Lender.
Borrower shall report on its federal, state, commonwealth, district and local
income tax returns all interest or income accrued on the Reserve Funds (other
than the Tax Funds and the Insurance Funds).

6.10.3 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.

Section 6.11 Property Cash Flow Allocation.

6.11.1 Order of Priority of Funds in Cash Management Account. All funds
deposited into the Clearing Account during the immediately preceding Interest
Period, after the payment of (a) first, required payments of Ground Rent Funds
into the Ground Rent Account as required under Section 6.7; (b) second, required
payments of Tax Funds into the Tax Account as required under Section 6.3;
(c) third, required payments of Insurance Funds into the Insurance Account as
required under Section 6.4; (d) fourth, funds sufficient to pay the Monthly Debt
Service Payment into the Debt Service Account; (e) fifth, required payments of
Rollover Funds into the Rollover Account as required under Section 6.6;
(f) sixth, funds sufficient to pay any interest accruing at the Default Rate,
late payment charges and all other amounts, other than those described under
other clauses of this Section 6.11.1, then due to Lender and/or any Lender
Indemnified Party under the Loan Documents into the Debt Service Account for the
payment of such amounts; and (g) seventh, when applicable, funds sufficient to
make the required payments of Operating Expense Funds into the Operating Expense
Account as required under Section 6.8 (the “Excess Cash Flow”) shall be swept by
the Clearing Bank on a daily basis into Borrower’s operating account at the
Clearing Bank, unless a Sweep Event has occurred, in which event such funds
shall be swept on a daily basis into an Eligible Account at the Cash Management
Bank controlled by Lender (the “Cash Management Account”) and held by Lender as
additional collateral for the Loan. Funds in the Cash Management Account may be
invested in Permitted Investments, as more particularly set forth in the Cash
Management Agreement. As an alternative to establishing each Account required
pursuant to the terms of this Agreement as a separate Eligible Account, Lender
may also establish subaccounts of the Cash Management Account which shall at all
times

 

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be Eligible Accounts (and may be ledger or book entry accounts and not actual
accounts) whereupon all provisions of this Agreement referring to (i) any
Account shall be deemed to apply instead to the corresponding subaccount and
(ii) to the Accounts generally shall be deemed to apply instead to the Cash
Management Account. The Clearing Account, the Cash Management Account and all
other Accounts will be under the sole control and dominion of Lender, and
Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all
expenses of opening and maintaining all of the above accounts. For the avoidance
of doubt, the obligations of Borrower after the occurrence of a Sweep Event
shall continue notwithstanding the fact that the Sweep Event is subsequently
cured.

6.11.2 Failure to Make Payments. The failure of Borrower to make all of the
payments required under clauses (a) through (g) of Section 6.11.1 in full on
each Monthly Payment Date shall constitute an Event of Default under this
Agreement; provided, however, if adequate funds are available in the Cash
Management Account for such payments, and Borrower is not otherwise in Default
hereunder, the failure by the Cash Management Bank to allocate such funds into
the appropriate Accounts shall not constitute an Event of Default. The
insufficiency of funds on deposit in the Cash Management Account shall not
relieve Borrower from the obligation to make any payments, as and when due
pursuant to the Loan Documents.

6.11.3 Application After Event of Default. Notwithstanding anything to the
contrary contained in Section 6.11.1, upon the occurrence of an Event of
Default, Lender shall be under no obligation to release or disburse any of the
Reserve Funds and may, at its option, withdraw the Reserve Funds and any other
funds of Borrower then in the possession of Lender, Servicer or Cash Management
Bank (including any Gross Revenue) and apply such funds to the items for which
the Reserve Funds were established or to the payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender’s
right to withdraw and apply the Reserve Funds shall be in addition to all other
rights and remedies provided to Lender under the Loan Documents.

Section 6.12 Security Deposits.

6.12.1 Deposits into Tenant Security Account.

(a) Borrower shall deposit or cause to be deposited at Closing the sum of One
Hundred Forty Four Thousand Two Hundred Nine and 13/100 ($144,209.13) Dollars
into the Tenant Security Account,

(b) Borrower shall comply with all Legal Requirements and the requirements of
any applicable Lease with respect to any security given under such Lease.
Subject to the foregoing, Borrower shall deposit or cause to be deposited all
Security Deposits (other than Lease Letters of Credit) under the Leases into the
Tenant Security Account within (2) Business Days after receipt and comply, and
cause the compliance with, all applicable Legal Requirements in connection with
the acceptance, holding, use and releasing of the Security Deposits.

 

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6.12.2 Disbursements from Tenant Security Account. Borrower may direct Lender to
cause the Cash Management Bank to disburse funds from the Tenant Security
Account in an amount equal to the applicable Security Deposit (or applicable
portion thereof) at such time as no Event of Default has occurred and is
continuing provided the proceeds are applied (i) in the ordinary course of
business to sums due under the applicable Lease when the terms of such Lease or
applicable Legal Requirements permit the application thereof or (ii) returned to
the applicable Tenant pursuant to Legal Requirements or the terms of the
applicable Lease which require Borrower to return such Security Deposit (or
portion thereof). After the occurrence and during the continuation of an Event
of Default, Borrower shall have no right to direct Lender to withdraw any
amounts from the Tenant Security Account or apply any Security Deposits, except
as may be approved by Lender. In the event an Event of Default has occurred and
is continuing and Borrower is required pursuant to the terms of the applicable
Lease or applicable Legal Requirements to return any Security Deposit (or
portion thereof) to a Tenant, Borrower shall deliver a notice to Lender
certifying same and stating the reason therefor. In such event, Lender shall, at
Borrower’s sole cost and expense, instruct the Cash Management Bank to deliver
the Security Deposit (or portion thereof) either, at Lender’s option, (1) to
Borrower for delivery to the applicable Tenant or, at Lender’s election,
(2) directly to the applicable Tenant. If an Event of Default exists, Lender
shall have the rights and remedies with respect to the Tenant Security Account
specified in this Agreement or in any other Loan Document.

6.12.3 Delivery of Lease Letter of Credit. Borrower covenants and agrees to
deliver to Lender upon Borrower’s or Manager’s receipt thereof each Lease Letter
of Credit executed in connection with any Lease, with the effect that Lender
shall be the beneficiary thereunder. All Lease Letters of Credit shall provide
that any drawing thereunder shall be by presentation of a clean sight draft,
without any representations or warranties of the beneficiary and be irrevocable,
transferable and otherwise acceptable to Lender in form, content and as to
issuer.

6.12.4 Draws Upon Lease Letters of Credit. Borrower shall have the right to
(i) make drawings under a Lease Letter of Credit at such time as no Event of
Default has occurred and is continuing provided the proceeds are applied in the
ordinary course of business to sums due under the applicable Lease when the
terms of such Lease or applicable Legal Requirements permit the application
thereof or (ii) return such Lease Letter of Credit to the applicable Tenant
pursuant to Legal Requirements or the terms of the applicable Lease which
require Borrower to return such Lease Letter of Credit. After the occurrence and
during the continuation of an Event of Default, Borrower shall have no right to
make a drawing under, or return, a Lease Letter of Credit, except as may be
approved by Lender. In the event an Event of Default has occurred and is
continuing and Borrower is required pursuant to the terms of the applicable
Lease or applicable Legal Requirements to return any Lease Letter of Credit to
the applicable Tenant, Borrower shall deliver a notice to Lender certifying same
and stating the reason therefor and, if Lender shall be holding such Lease
Letter of Credit pursuant to this Section 6.12, Lender shall, at Borrower’s sole
cost and expense, either, at Lender’s option, (A) deliver the Lease Letter of
Credit to Borrower, or (B) deliver the applicable Lease Letter of Credit to
directly to the applicable Tenant.

 

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6.12.5 Expiring Lease Letters of Credit. In the event that at any time any Lease
Letter of Credit delivered to Lender by or on behalf of Borrower or Manager
pursuant to this Section 6.12 by its terms (including pursuant to a notice given
pursuant thereto) shall be due to expire within thirty (30) days, on or before
the day which is thirty (30) days prior to such expiration, Borrower shall give
notice thereof to Lender and Lender shall (or if Lender shall not receive such
notice from Borrower, if Lender shall elect), to the extent permitted by the
terms of the Lease Letter of Credit, the applicable Lease and applicable Legal
Requirements, make a drawing on the Lease Letter of Credit in accordance with
the applicable Lease and shall deposit such sums into the Tenant Security
Account.

6.12.6 Indemnity. Borrower shall indemnify and hold the Indemnified Parties
harmless from and against all Loss in connection with any claim by any Tenant or
any Person claiming by or through Borrower or any Tenant in connection with any
drawing by Lender at the request or direction of Borrower on the Lease Letter of
Credit or the application of any proceeds thereof or the transfer of the Lease
Letter of Credit unless arising from the gross negligence or willful misconduct
of Lender or Lenders. This indemnity shall survive the payment and performance
of the Debt.

ARTICLE 7: PROPERTY MANAGEMENT

Section 7.1 The Management Agreement.

Borrower hereby agrees that the fee paid to Manager, inclusive of any fees paid
to CBRE and/or any other third party property manager or submanager engaged to
provide property management services to the Property shall not exceed five
percent (5%) of Gross Revenue in the aggregate (the “Management Fee”),. Borrower
shall (a) cause Manager to manage the Property in accordance with the Management
Agreement, (b) diligently perform and observe all of the terms, covenants and
conditions of the Management Agreement on the part of Borrower to be performed
and observed, (c) promptly notify Lender of any default under the Management
Agreement of which it is aware, (d) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditures plan, report and
estimate received by it under the Management Agreement, and (e) promptly enforce
the performance and observance of all of the covenants required to be performed
and observed by Manager under the Management Agreement. If Borrower shall
default in the performance or observance of any material term, covenant or
condition of the Management Agreement on the part of Borrower to be performed or
observed, then, without limiting Lender’s other rights or remedies under the
Loan Documents, and without waiving or releasing Borrower from any of its
Obligations hereunder or under the Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of the Management Agreement on the part of Borrower to be performed or observed.

Section 7.2 Prohibition Against Termination or Modification.

Borrower shall not (a) surrender, terminate, cancel, modify, renew or extend the
Management Agreement (other than a renewal or extension provided for in the
Management Agreement), (b) enter into any new or other agreement relating to the
management or operation of the Property with Manager or any other Person,
(c) consent to the assignment by Manager of its interest under the Management
Agreement, or (d) waive or release any of its rights and remedies under the
Management Agreement, in each case without the express consent of Lender, which
consent shall not be unreasonably withheld; provided, however, with respect to a
new

 

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manager and/or a management agreement such consent may be conditioned upon
Borrower delivering a Rating Agency Confirmation, if and to the extent
applicable, as to such manager and management agreement. If at any time Lender
consents to the appointment of a new manager and/or the execution of a
management agreement under this Article 7 or under Article 8, such manager and
Borrower shall, as a condition of Lender’s consent, execute a subordination of
management agreement in the form then used by Lender.

Section 7.3 Replacement of Manager.

Lender shall have the right to require Borrower to replace Manager with a Person
chosen by Borrower and approved by Lender upon the occurrence of any one or more
of the following events: (a) from and after the Stated Maturity Date, (b) at any
time following the occurrence of an Event of Default, (c) if at any time the
minimum tenant occupancy at the Property for any two (2) consecutive calendar
quarters months following the eighteen (18) month anniversary of the date hereof
is below ninety percent (90%), (d) if Manager shall be in default under the
Management Agreement beyond any applicable notice and cure period, (e) if
Manager shall become insolvent or a debtor in any Bankruptcy Action, or (f) if
at any time Manager has engaged in gross negligence, fraud or willful
misconduct. Lender’s approval of a new manager under this Section 7.3 may be
conditioned upon Borrower delivering a Rating Agency Confirmation, if and to the
extent applicable, as to such manager and management agreement.

ARTICLE 8: PERMITTED TRANSFERS

Section 8.1 Permitted Transfer of the Property.

Lender shall not withhold its consent to the one-time Transfer of the Property
to a Permitted Transferee and the assumption of the Loan by such Permitted
Transferee provided that (a) Lender shall have received a notice from Borrower
requesting Lender’s consent to such Transfer not less than sixty (60) days prior
to the proposed date of Transfer, (b) no Default or Event of Default shall have
occurred and remain uncured or shall occur solely as a result of such Transfer,
(c) Lender shall have received a Rating Agency Confirmation as to the conveyance
of the Property to the Permitted Transferee and any release and replacement of
Guarantor as contemplated in clause (h) below, (d) Lender shall have received an
agreement, in form and substance reasonably acceptable to Lender, pursuant to
which Permitted Transferee has assumed all of Borrower’s obligations under the
Loan Documents, (e) Borrower shall have paid to Lender an assumption fee equal
to one and 00/100 percent (1%) of the Outstanding Principal Balance, (f) Lender
shall have received such agreements, certificates, legal opinions and other
documentation as may be reasonably requested by Lender, including, without
limitation, a title insurance endorsement confirming the Lien of the Mortgage as
a valid first lien on the Property, (g) the Permitted Transferee and its
property manager shall have sufficient experience in the ownership and
management of properties similar in location, size, class, use, operation and
value as the Property, and Lender shall be provided with reasonable evidence
thereof (and Lender reserves the right to approve the Permitted Transferee
without approving the substitution of the property manager), (h) prior to any
release of any Guarantor, which release may only cover events or conditions
occurring subsequent to the Transfer, (i) one (1) or more substitute guarantors
acceptable to Lender shall (A) have assumed all obligations of Guarantor under
the Guaranty and Environmental Indemnity for events or conditions occurring
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Transfer or (B) have executed a replacement guaranty and a replacement
environmental indemnity in each case in form and substance the same as the
Guaranty and the Environmental Indemnity, respectively, and otherwise reasonably
acceptable to Lender, (ii) if required by Lender or the Rating Agencies,
Borrower delivers to Lender an opinion in form and substance and from counsel
satisfactory to Lender and the Rating Agencies in their sole discretion stating,
among other things, (A) that the Guaranty and the Environmental Indemnity (or
the new guaranty and environmental indemnity, as the case may be) are
enforceable against such substitute guarantor(s) in accordance with their terms,
and (B) that any REMIC Trust formed pursuant to a 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 such release and replacement,
and (iii) Lender and the Rating Agencies shall have received such other
documentation and information as may be reasonably requested by Lender or
requested by the Rating Agencies in connection with such release and
replacement, including, without limitation, a spousal consent in form and
substance acceptable to Lender, as and to the extent applicable, (i) Borrower
shall have delivered to Lender any consent required to be delivered by the
ground lessor in connection with such Transfer and assumption, (j) Lender may,
as a condition to evaluating any requested consent to such Transfer, require
that Borrower post a cash deposit with Lender in an amount equal to Lender’s
anticipated costs and expenses in evaluating any such request for consent, and
(k) the Loan has been securitized pursuant to Section 9.1.

Section 8.2 Permitted Equity Transfers.

Notwithstanding anything contained herein to the contrary, (i) the membership
interests in Borrower, Sole Member and Holdings shall not be transferred or
assigned, in whole or in part, without Lender’s prior written consent, which
consent may be withheld by Lender for any reason or no reason at all,
(ii) Transfers of the capital stock of TNP Strategic Realty Trust, Inc.
(“REIT”), shall be permitted provided such Transfers do not, individually, or
when taken as a whole with any one or more related Transfers of the capital
stock of REIT result in a Loss of Control Event, and (iii) Transfers of up to
49% of the partnership interests of OP shall be permitted provided such
Transfers do not, individually, or when taken as a whole with any one or more
related Transfers of the capital stock of OP result in a Loss of Control Event.

Section 8.3 Replacement Guarantor.

To the extent that any Guarantor is a natural person, the death or incompetency
of such Guarantor shall be an Event of Default hereunder unless such Guarantor
is replaced in accordance with this Section 8.3. Borrower shall be permitted to
substitute a replacement guarantor (a “Substitution”) and no Event of Default
shall be deemed to have occurred hereunder, provided that each of the following
terms and conditions are satisfied: (a) no Default or Event of Default shall
have occurred and remain uncured or would occur as a result of such
Substitution; (b) within thirty (30) days after the occurrence of such death or
incompetency, Borrower delivers to Lender notice of its intent to substitute
such Guarantor and, concurrently therewith, gives Lender all such information
concerning the proposed substitute guarantor as Lender may reasonably require,
including, without limitation, certified financial statements detailing assets
and liabilities; (c) the replacement guarantor is a Satisfactory Replacement
Guarantor; (d) within fifteen (15) days after delivery of the written notice
described in the preceding clause (b), such Satisfactory Replacement Guarantor
assumes the obligations of

 

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Guarantor under the Guaranty and the Environmental Indemnity for events or
conditions occurring prior to, as of and after the Substitution;
(e) concurrently with such assumption (i) such Satisfactory Replacement
Guarantor delivers to Lender a spousal consent in form and substance acceptable
to Lender, as and to the extent applicable, and (ii) each of Borrower, the
remaining Guarantor and such Satisfactory Replacement Guarantor affirms each of
their respective obligations under the Loan Documents; (f) if requested by
Lender, such Satisfactory Replacement Guarantor executes a replacement guaranty
and a replacement environmental indemnity in each case in form and substance the
same as the Guaranty and the Environmental Indemnity, respectively, and
otherwise reasonably acceptable to Lender; (g) Borrower delivers to Lender a
Rating Agency Confirmation with respect to such Substitution; and (h) if
required by Lender or the Rating Agencies, Borrower delivers to Lender an
opinion in form and substance and from counsel satisfactory to Lender and the
Rating Agencies in their sole discretion stating, among other things, (i) that
the Guaranty and the Environmental Indemnity (or the new guaranty and
environmental indemnity, as the case may be) are enforceable against such
Satisfactory Replacement Guarantor in accordance with their terms, and (ii) that
any REMIC Trust formed pursuant to a 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 such Substitution. No such death or
replacement of a Guarantor shall hinder, impair, limit, terminate or effectuate
a novation of the obligations or liabilities of any other Guarantor under any of
the Loan Documents. As used herein, the term “Satisfactory Replacement
Guarantor” shall mean a replacement guarantor that is acceptable to Lender,
which determination shall be based upon, inter alia, (1) such replacement
guarantor having (x) a direct or indirect ownership interest in Borrower, which
is reasonably satisfactory to Lender, and (y) the ability to control Borrower,
(2) such replacement guarantor having a net worth and liquidity reasonably
satisfactory to Lender, (3) Lender’s receipt of searches (including credit,
negative news, OFAC, litigation, judgment, lien and bankruptcy searches)
reasonably required by Lender on such replacement guarantor, the results of
which must be reasonably acceptable to Lender, (4) such replacement guarantor
otherwise satisfying Lender’s then current applicable underwriting criteria and
requirements, and (5) such replacement guarantor being an experienced operator
and/or owner of properties similar in location, size, class, use, operation and
value as the Property, as evidenced by financial statements and other
information reasonably requested by Lender or requested by the Rating Agencies.
The foregoing shall apply whether or not the Loan is securitized. As used in
this Section 8.3, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of such Person, whether through ownership of voting
securities, by contract or otherwise.

Section 8.4 Costs and Expenses.

Borrower shall pay all costs and expenses of Lender in connection with any
Transfer or replacement of any Guarantor, including, without limitation, the
cost of any Rating Agency Confirmation and all reasonable fees and expenses of
Lender’s counsel, and the cost of any required counsel opinions, including,
without limitation, Insolvency Opinions and opinions related to REMIC Trusts or
other securitization or tax issues.

 

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ARTICLE 9: SALE AND SECURITIZATION OF MORTGAGE; LOAN REFINANCE

Section 9.1 Sale of Mortgage and Securitization.

(a) Lender shall have the right (i) to sell, assign, pledge or otherwise
transfer the Loan or any portion thereof or interest therein to any Person,
(ii) to sell participation interests in the Loan to any Person, or (iii) to
securitize the Loan or any portion thereof or interest therein in one or more
private or public single asset or pooled loan securitizations. (The transactions
referred to in clauses (i), (ii) and (iii) are each hereinafter referred to as a
“Secondary Market Transaction” and the transactions 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 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 or applicable Legal
Requirements in connection with any Secondary Market Transactions, including to:

(i)(A) provide updated financial and other information with respect to the
Property, the business operated at the Property, Borrower, Guarantor, any
Affiliate of Borrower or Guarantor and Manager, including, without limitation,
the information set forth on Schedule VI attached hereto, (B) provide updated
budgets and rent rolls (including itemized percentage of floor area occupied and
percentage of aggregate base rent for each Tenant) relating to the Property, and
(C) 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 information referred to in clauses
(A), (B) and (C) shall hereinafter be referred to collectively as “Updated
Information”), together, if customary, with appropriate verification of the
Updated Information through letters of auditors, certificates of third party
service providers or opinions of counsel acceptable to Lender and the Rating
Agencies;

(ii) provide opinions of counsel, which may be relied upon by Lender and the
NRSROs, and their respective counsel, agents and representatives, as to
bankruptcy 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, Borrower, Guarantor and any Affiliate of
Borrower or Guarantor, which counsel and opinions shall be satisfactory to
Lender and the Rating Agencies;

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

(iv) subject to Section 9.3, execute modifications and amendments to the Loan
Documents and Borrower’s organizational documents as Lender or the Rating
Agencies may require, including, without limitation, the addition of one or more
Independent Directors pursuant to the terms and provisions hereof;

(v) provide access to, and conduct tours of, the Property; and

 

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(vi) provide certifications or other evidence of reliance acceptable to Lender
and the Rating Agencies with respect to third party reports and other
information obtained in connection with the origination of the Loan or any
Updated Information.

(c) Borrower agrees that (i) Lender may disclose any information relating to
Borrower, its Affiliates, the Property or the Loan (including information
provided by or on behalf of Borrower or any of its Affiliates to Lender) to any
Person (including, but not limited to, investors or prospective investors in the
Securities, the NRSROs, investment banking firms, accounting firms, law firms
and other third-party advisory and service providers relating to a
Securitization) actually or potentially involved in or related to any Secondary
Market Transaction or any other Person reasonably requesting such information
and (ii) the findings and conclusions of any third-party due diligence report
obtained by Lender or other Indemnified Persons may be made publicly available
if required, and in the manner prescribed, by applicable Legal Requirements.

(d) If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any financial statements, financial, statistical or operating
information or other information as Lender shall reasonably determine is
necessary or appropriate (including items required (or items that would be
required if the Securities issued in connection with a Securitization were
offered publicly) to satisfy any and all disclosure requirements pursuant to the
Securities Act (including, but not limited to, Regulation AB), the Exchange Act,
any other applicable securities laws or any amendment, modification or
replacement to any of the foregoing) or required by any other Legal
Requirements, in each case, in connection with any Disclosure Document or any
Exchange Act Filing or as may otherwise be reasonably requested by Lender.

Section 9.2 Securitization Indemnification.

(a) Borrower understands and agrees that information provided to Lender by
Borrower or its agents, counsel and representatives may be included in
Disclosure Documents in connection with a Securitization 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 NRSROs, investment
banking firms, accounting firms, law firms and other third-party advisory and
service providers relating to a Securitization.

(b) Borrower hereby agrees (i) to indemnify Lender, any Affiliate of Lender that
has filed any registration statement relating to a Securitization or has acted
as the issuer, sponsor, depositor or seller in connection with a Securitization,
any Affiliate of Lender that acts as an underwriter, placement agent or initial
purchaser of Securities issued in connection with a Securitization, any other
issuers, depositors, underwriters, placement agents or initial purchasers of
Securities issued in connection with a Securitization, and each of their
respective officers, directors, partners, employees, representatives, agents and
Affiliates, and each Person that controls any such Person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the “Indemnified Persons”) for any losses, liabilities,
obligations, claims, damages, penalties, actions, judgments, suits, costs and
expenses (collectively, the

 

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“Liabilities”) to which any Indemnified Person may become subject insofar as the
Liabilities arise out of or are based upon (A) any untrue statement or alleged
untrue statement of any material fact contained in the information provided to
Lender by Borrower, any Affiliate of Borrower or any of their respective agents,
counsel or representatives, (B) the omission or alleged omission to state
therein a material fact required to be stated in such information or necessary
in order to make the statements in such information, in light of the
circumstances under which they were made, not misleading and/or (C) a breach of
the representations and warranties made by Borrower in Section 3.1.40 of this
Agreement and (ii) to reimburse each Indemnified Person for any legal or other
expenses reasonably incurred by such Indemnified Person in connection with
investigating or defending the Liabilities; provided, however, that Borrower
will be liable in any such case under clauses (i) or (ii) above only to the
extent that any such Liability arises out of, or is based upon, an untrue
statement, alleged untrue statement, omission or alleged omission made in
reliance upon and in conformity with (x) information furnished by or on behalf
of Borrower (1) in connection with the preparation of the Disclosure Documents
or (2) in connection with the underwriting or closing of the Loan or (y) any of
the reports, statements or other information furnished by or on behalf of
Borrower pursuant to the terms of this Agreement, including, without limitation,
financial statements of Borrower and operating statements and rent rolls with
respect to the Property. This indemnity will be in addition to any liability
which Borrower may otherwise have.

(c) In connection with any Exchange Act Filing or other reports containing
comparable information that are required to be made available to holders of the
Securities under Regulation AB or other applicable Legal Requirements, Borrower
shall (i) indemnify the Indemnified Persons for Liabilities to which any
Indemnified Person may become subject insofar as the Liabilities arise out of or
are based upon an untrue statement, alleged untrue statement, omission or
alleged omission made in reliance upon and in conformity with (x) information
furnished by or on behalf of Borrower (1) in connection with the preparation of
the Disclosure Documents or (2) in connection with the underwriting or closing
of the Loan or (y) any of the reports, statements or other information furnished
by or on behalf of Borrower pursuant to the terms of this Agreement, including,
without limitation, financial statements of Borrower and operating statements
and rent rolls with respect to the Property, and (ii) reimburse each Indemnified
Person for any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending the Liabilities.

(d) Promptly after receipt by an Indemnified Person of notice of a claim or the
commencement of any action, such Indemnified Person will, if a claim in respect
thereof is to be made against Borrower, notify Borrower in writing of the
commencement thereof, but the omission to so notify Borrower will not relieve
Borrower from any liability which it may have to any Indemnified Person under
this Section 9.2 except to the extent that failure to notify materially
prejudices Borrower. In the event that any action is brought against any
Indemnified Person, and it notifies Borrower of the commencement thereof,
Borrower will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the Indemnified Person promptly after
receiving the aforesaid notice from such Indemnified Person, to assume the
defense thereof with counsel satisfactory to such Indemnified Person. After
notice from Borrower to such Indemnified Person of Borrower’s election to assume
the defense of such action, such Indemnified Person shall pay for any legal or
other expenses subsequently incurred by such Indemnified Person in connection
with the defense thereof other than reasonable costs of

 

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investigation; provided, however, if the defendants in any such action include
both Indemnified Person and Borrower and the Indemnified Person shall have
reasonably concluded that there are legal defenses available to it and/or other
Indemnified Persons that are different from or additional to those available to
Borrower, the Indemnified Person or Persons 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 Person or Persons at
the cost of Borrower. Borrower shall not be liable for the expenses of more than
one (1) separate counsel (in addition to local counsel) unless an Indemnified
Person 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 Person.

(e) In order to provide for just and equitable contribution in circumstances in
which any indemnification or reimbursement under this Section 9.2 is for any
reason held to be unenforceable as to an Indemnified Person in respect of any
Liabilities (or action in respect thereof) referred to herein which would
otherwise be indemnifiable under this Section 9.2, Borrower shall contribute to
the amount paid or payable by the Indemnified Person as a result of such
Liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person 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.

(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 Obligations.

Section 9.3 Severance Documentation.

Lender shall have the right, at any time (whether prior to or after any
Secondary Market Transaction in respect of all or any portion of the Loan), to
modify the Loan in order to create one or more new notes (including senior and
junior notes), one or more additional components of the Note or Notes and/or one
or more mezzanine loans (including amending Borrower’s organizational structure
and the organizational documents of Borrower and its direct and indirect
shareholders, partners, members and non-member managers to provide for one or
more mezzanine borrowers), reduce the number of components of the Note or Notes,
revise the interest rate for each component, reallocate the principal balances
of the Notes and/or the components, increase or decrease the monthly debt
service payments for each component or eliminate the component structure and/or
the multiple note structure of the Loan (including the elimination of the
related allocations of principal and interest payments); provided, however, that
in creating such new notes or modified notes or mezzanine notes (a) Borrower
shall not be required to modify the stated maturity of the Note, (b) the
aggregate principal amount of all such new notes or modified notes or mezzanine
notes shall, on the date created, equal the Outstanding Principal

 

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Balance of the Loan immediately prior to the creation of such new notes or
modified notes or mezzanine notes, (c) the weighted average interest rate of all
such new notes or modified notes or mezzanine notes shall, on the date created,
equal the interest rate applicable to the Loan immediately prior to the creation
of such new notes or modified notes or mezzanine notes, and (d) the scheduled
debt service payments on all such new notes or modified notes or mezzanine notes
shall, on the date created, equal the scheduled debt service payments under the
Loan immediately prior to the creation of such new notes or modified notes or
mezzanine notes. At Lender’s election, each note comprising the Loan may be
subject to one or more Secondary Market Transactions. Lender shall have the
right to modify the Note and/or Notes and any components in accordance with this
Section 9.3 and, provided that such modification shall comply with the terms of
this Section 9.3, it shall become immediately effective. If requested by Lender,
Borrower shall promptly execute an amendment to the Loan Documents to evidence
any such modification, including, without limitation, an amendment to the Cash
Management Agreement to reflect the newly created notes, components and/or
mezzanine loans.

Section 9.4 Secondary Market Transaction Costs.

All costs and expenses incurred by Borrower, Guarantor, Manager and their
respective Affiliates and Lender in connection with Sections 9.1 and 9.3
(including, without limitation, the fees and expenses of the Rating Agencies)
shall be paid by Borrower.

Section 9.5 Loan Refinance.

Upon the written request of Lender, which request may be given by Lender to
Borrower at anytime following the date hereof, Lender (or its designee) shall
have the right to refinance the Outstanding Principal Balance upon terms that
are acceptable to Lender in its sole discretion. Such refinance may consist of a
senior loan, a mezzanine loan and/or preferred equity in Borrower, or any
combination thereof; provided, however, that the economic terms of such
refinance are not materially different from those set forth in this Agreement
and the other Loan Documents. All costs and expenses incurred by Borrower,
Guarantor and their respective Affiliates and Lender in connection with
Sections 9.5 shall be paid by Borrower.

ARTICLE 10: DEFAULTS

Section 10.1 Events of Default.

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

(i) if any monthly installment of principal and/or interest due under the Note
or any payment of Reserve Funds due under this Agreement or the payment of the
Obligations due on the Maturity Date is not paid when due;

(ii) if any other portion of the Obligations (other than as set forth in the
foregoing clause (i)) 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;

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

 

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(iv) if the Policies are not (A) delivered to Lender or (B) kept in full force
and effect, each in accordance with the terms and conditions hereof;

(v) subject to the provisions of Sections 8.1 and 8.2, if Borrower breaches or
permits or suffers a breach of the provisions of Section 4.2.1;

(vi) if any representation or warranty made by Borrower or any Guarantor in any
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 such representation or
warranty was made;

(vii)(A) if Borrower, Sole Member or Holdings shall make an assignment for the
benefit of creditors or (B) upon the declaration by Lender in its sole and
absolute discretion that the same constitutes an Event of Default, if any
Guarantor shall make an assignment for the benefit of creditors;

(viii)(A) if a receiver, liquidator or trustee shall be appointed for Borrower,
Holdings or Sole Member or if Borrower, Holdings or Sole Member shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal, state, local or foreign
bankruptcy law, or any similar federal, state, local or foreign law, shall be
filed by or against, consented to, or acquiesced in by, Borrower, Holdings or
Sole Member, or if any proceeding for the dissolution or liquidation of
Borrower, Holdings or Sole Member shall be instituted; provided, however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Holdings or Sole Member, upon the same not being
discharged, stayed or dismissed within thirty (30) days or (B) upon the
declaration by Lender in its sole and absolute discretion that the same
constitutes an Event of Default, if a receiver, liquidator or trustee shall be
appointed for any Guarantor or if any Guarantor shall be adjudicated a bankrupt
or insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal, state, local or foreign bankruptcy law, or any similar
federal, state, local or foreign law, shall be filed by or against, consented
to, or acquiesced in by, any Guarantor, or if any proceeding for the dissolution
or liquidation of any Guarantor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by the applicable Guarantor, upon the same not being discharged,
stayed or dismissed within thirty (30) days;

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

(x) if any of the assumptions contained in any Insolvency Opinion is or shall
become untrue in any material respect;

(xi) if Borrower breaches any representation, warranty or covenant contained in
Sections 3.1.24 or 4.1.15 hereof or in the definition of a Special Purpose
Entity;

(xii) if the Advisory Agreement or any other agreement with TNP Strategic Retail
Advisor, LLC, in its capacity as a manger, sponsor, advisor or other service
provider to Borrower or the REIT is terminated or modified without Lender’s
consent;

 

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(xiii) subject to Borrower’s right to contest as provided in Section 3.6 of the
Mortgage, if the Property becomes subject to any mechanic’s, materialman’s or
other Lien except a Lien for Taxes not then due and payable;

(xiv) except as permitted herein, the alteration, improvement, demolition or
removal of any of the Improvements without the prior consent of Lender;

(xv) if, without Lender’s prior written consent, (A) the Management Agreement is
terminated (and no replacement Management Agreement and Assignment of Management
Agreement has been executed in accordance with the terms and provisions of this
Agreement), (B) the ownership, management or control of an Affiliated Manager is
transferred, (C) there is a material change in the Management Agreement, or
(D) there shall be a material default by Borrower under the Management
Agreement;

(xvi) if Borrower ceases to continuously operate the Property or any material
portion thereof as a shopping center for any reason whatsoever (other than
temporary cessation in connection with any repair or renovation thereof
undertaken with the consent of Lender);

(xvii) if Borrower acts or neglects to act in such a manner as to be considered
a default under the Operating Agreements;

(xviii) If Borrower fails to replace Guarantor with a Satisfactory Replacement
Guarantor upon the death or incompetency of Guarantor in accordance with the
terms and provisions of Section 8.3 hereof;

(xix) if (A) Borrower shall fail in the payment of any rent, additional rent or
other charge mentioned in or made payable by the Ground Lease as and when such
rent or other charge is payable, (B) there shall occur any default by Borrower,
as tenant under the Ground Lease, in the observance or performance of any term,
covenant or condition of the Ground Lease on the part of Borrower, to be
observed or performed, (C) if any one or more of the events referred to in the
Ground Lease shall occur which would cause the Ground Lease to terminate without
notice or action by the landlord under the Ground Lease or which would entitle
the landlord to terminate the Ground Lease and the term thereof by giving notice
to Borrower, as tenant thereunder, (D) if the leasehold estate created by the
Ground Lease shall be surrendered or the Ground Lease shall be terminated or
canceled for any reason or under any circumstances whatsoever, or (E) if any of
the terms, covenants or conditions of the Ground Lease shall in any manner be
modified, changed, supplemented, altered, amended or waived without the consent
of Lender;

(xx) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to
(xix) above, (A) for ten (10) calendar days after the earlier of (1) Borrower’s
knowledge thereof and (2) notice to Borrower from Lender, in the case of any
Default which can be cured by the payment of a sum of money, or (B) for thirty
(30) calendar days after the earlier of (1) Borrower’s knowledge thereof and
(2) 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

 

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within such 30 calendar day period; and provided, further, that Borrower shall
have commenced to cure such Default within such 30 calendar day period and shall
thereafter diligently and expeditiously proceed to cure the same, such 30
calendar day period shall be extended for such additional 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) calendar days;

(xxi) if Borrower or the Sole Member terminates, removes or changes any
independent manager or independent director without Lender’s prior written
consent;

(xxii) if any Loss of Control Event occurs; or

(xxiii) if there shall be a default under any of the other Loan Documents beyond
any applicable notice and/or cure periods contained in such Loan Documents,
whether as to Borrower, any Guarantor, Manager, the Property or any other Person
(other than Lender), or if any other such event shall occur or condition shall
exist, and the effect of such event or condition is to accelerate the maturity
of any portion of the Obligations or to permit Lender to accelerate the maturity
of all or any portion of the Obligations.

(b) Upon the occurrence of an Event of Default (other than an Event of Default
described in clauses (vii), (viii) or (ix) above) and at any time thereafter
Lender may, in addition to any other rights or remedies available to it pursuant
to the 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 declaring the Obligations 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 all rights or remedies available at law or in equity; and
upon any Event of Default described in clauses (vii), (viii) or (ix) above, the
Debt and all other Obligations of Borrower under the 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 in any Loan Document to the contrary notwithstanding.

(c) Notwithstanding anything contained herein to the contrary, upon the
occurrence of an Event of Default described in Section 10.1(a)(xxii) above,
Lender shall have all rights and remedies available to Lender pursuant to this
Agreement and the other Loan Documents or at law or in equity, but shall forbear
from foreclosing on the Collateral and from collecting interest at the Default
Rate for a period of sixty (60) days (the “Forbearance Period”); provided,
however, that (i) in the event that another Event of Default occurs or is
continuing during the Forbearance Period, Lender shall no longer be required to
forbear from foreclosing on the Collateral or collecting interest at the Default
Rate, and (ii) this subsection (c) shall only apply with respect to subsection
(vi) of the definition of Loss of Control Event if such sale or assignment of
all, or substantially all of the outstanding shares of the REIT or OP in one or
more related transactions is (A) initiated, set forth or controlled by a third
party who is not Sponsor or an Affiliate of Borrower or Sponsor, and
(B) pursuant to an arm’s length transaction with such third party.

 

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Section 10.2 Remedies.

(a) Upon the occurrence of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Lender against
Borrower under the 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 Obligations 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 in the Loan
Documents. Without limiting the generality of the foregoing, if an Event of
Default is continuing (i) Lender shall not be subject to any “one action” or
“election of remedies” law or rule, and (ii) all Liens and other rights,
remedies or privileges provided to 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 Obligations or the Obligations have 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 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, 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 the 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. Borrower shall be obligated to pay all
costs and expenses incurred in connection with the preparation, execution,
recording and filing of the Severed Loan Documents. 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 Lender’s Right to Perform.

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

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 the 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.

ARTICLE 11: MISCELLANEOUS

Section 11.1 Successors and Assigns; Assignments and Participations.

Except as expressly permitted under Section 8.1, Borrower may not assign,
transfer or delegate its rights or obligations under the Loan Documents without
Lender’s prior written consent, and any attempted assignment, transfer or
delegation without such consent shall be null and void. Lender may assign,
pledge, participate, transfer or delegate, as applicable, to one (1) or more
Persons, all or a portion of its rights and obligations under the Loan
Documents. The assigning Lender shall have no further obligations under the Loan
Documents from and after the date of any such assignment or transfer. In
connection with any such assignment, pledge, participation, transfer or
delegation, Lender may disclose to the assignee, pledgee, participant,
transferee or delegee or proposed assignee, pledgee, participant, transferee or
delegee, as the case

 

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may be, any information relating to Borrower or any of its Affiliates or to any
aspect of the Loan that has been furnished to Lender by or on behalf of Borrower
or any of its Affiliates. 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 any matter, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove such
matter or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole and absolute discretion of Lender and shall be final and conclusive.
Prior to a Securitization, whenever pursuant to this Agreement the Rating
Agencies are given any right to approve or disapprove any matter, or any
arrangement or term is to be satisfactory to the Rating Agencies, the decision
of Lender to approve or disapprove such matter, or to decide whether
arrangements or terms are satisfactory or not satisfactory, shall be substituted
therefor, which such decision shall be based upon Lender’s determination of
Rating Agency criteria (unless Lender has an independent approval right in
respect of the matter at issue pursuant to the terms of this Agreement, in which
case the discretion afforded to Lender in connection with such independent
approval right shall apply instead).

Section 11.3 Governing Law.

(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND DELIVERED TO
LENDER 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 OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION
AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT TO THE LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE,
COMMONWEALTH OR DISTRICT, AS APPLICABLE, IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
COMMONWEALTH OR DISTRICT, AS APPLICABLE, 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

 

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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.

(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, OR IN ANY FEDERAL OR
STATE COURT OF THE STATE OF HAWAII, 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
EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT:

Richard L. Yellen

Richard L. Yellen & Associates LLP

111 Broadway

New York, New York 10006

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, 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. 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. NOTHING CONTAINED HEREIN SHALL
AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY
OTHER JURISDICTIONS.

Section 11.4 Modification, Waiver in Writing.

No modification, amendment, extension, discharge, termination or waiver of any
provision of any Loan Document, nor consent to any departure by Borrower
therefrom, shall in

 

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any event be effective unless the same shall be in a writing signed by the party
or parties against whom enforcement is sought, and then such waiver or consent
shall be effective only in the specific instance, and for the specific 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 under any Loan Document, shall operate as or
constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right, power,
remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the due date of any amount payable under any Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment
when due of all other amounts due under the Loan Documents, or to declare 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.

(a) 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 and shall be sent: (i) by certified mail, postage
prepaid, return receipt requested, or (ii) delivered by hand, or (iii) by
reputable overnight courier, or (iv) by facsimile provided such notice is also
transmitted by one of the methods specified in (i), (ii) or (iii) above, in each
case 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,
if sent by registered or certified mail, (B) on the date of delivery by hand, if
delivered during business hours on a Business Day (otherwise on the next
Business Day), (C) on the next Business Day if sent by an overnight commercial
courier, or (D) on the Business Day when sent if sent by facsimile and received
by the recipient prior to 5:00 PM Eastern Time on the Business Day when sent, in
each case addressed to the parties as follows:

 

If to Lender:   

DOF IV REIT Holdings, LLC

230 Park Avenue, 12th Floor

New York, New York 10169

Attention: Ms. Abbey Kosakowski

Facsimile No.: (212) 883-2888

 

- and-

 

Attention: Mr. Steven Schwartz

Facsimile No.: (212) 883-2955

 

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with a copy to   

Torchlight Loan Services, LLC

230 Park Avenue, 12th Floor

New York, New York 10169

Attention: Mr. Steve Altman

Facsimile No.: (646) 253-9759

and with a copy to:   

Cole, Schotz, Meisel, Forman & Leonard, P.A.

Court Plaza North

25 Main Street

Hackensack, New Jersey 07601

Attention: Richard W. Abramson, Esq.

Facsimile No.: (201) 678-6218

If to Borrower:   

TNP SRT Lahaina Gateway, LLC

1900 Main Street, Suite 700

Irvine, California 92614

Attention: Tony Thompson

Facsimile No.: (949) 252-0212

with a copy to:   

Kaplan Voekler Cunningham & Frank PLC

7 East Second Street

Richmond, Virginia 23224

Attention: D. Zachary Grabill, Esq.

Facsimile No.: (804) 525-1798

(b) Any party may change the address to which any such Notice is to be
delivered, by furnishing ten (10) days’ written notice of such change to the
other parties in accordance with the provisions of this Section 11.6. Notices
shall be deemed to have been given on the date as set forth above, even if there
is an inability to actually deliver any such Notice because of a changed address
of which no Notice was given, or there is a rejection or refusal to accept any
Notice offered for delivery. Notice for any party may be given by its respective
counsel. Additionally, Notice from Lender may also be given by Servicer and
Lender hereby acknowledges and agrees that Borrower shall be entitled to rely on
any Notice given by Servicer as if it had been sent by Lender.

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 any Legal Requirements, 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,
federal, state, local or foreign 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 the 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 the 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 the 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) Borrower shall pay or, if Borrower fails to pay, reimburse Lender upon
receipt of notice from Lender, for all reasonable costs and expenses (including
reasonable attorneys’ fees and disbursements) incurred by Lender in connection
with (i) Borrower’s ongoing performance of and compliance with Borrower’s
agreements and covenants contained in the 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;
(ii) Lender’s ongoing performance of and compliance with all agreements and
covenants contained in the Loan Documents on its part to be performed or
complied with after the Closing Date; (iii) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to the Loan Documents and any other documents or matters
requested by Borrower or any Guarantor; (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
the 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, in each case against, under or affecting Borrower, the 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
or any Guarantor under the 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 Bankruptcy
Action; 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, as determined
by a final non-appealable judgment of a court of competent jurisdiction. Any
costs due and payable to Lender may be paid, at Lender’s election in its sole
discretion, from any amounts in the Cash Management Account.

(b) Borrower shall indemnify, defend and hold harmless the Lender Indemnified
Parties 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 any Lender Indemnified Party in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Lender Indemnified Party shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against any
Lender Indemnified Party in any manner relating to or arising out of (i) any
default or breach by Borrower of its Obligations under, or any material
misrepresentation by Borrower contained in, the Loan Documents, (ii) the use or
intended use of the proceeds of the Loan, (iii) any materials or information
provided by or on behalf of Borrower, or contained in any documentation approved
by Borrower; (iv) ownership of the Mortgage, the Property or any interest
therein, or receipt of any Rents; (v) any accident, injury to or death of
persons or loss of or damage to property occurring in, on or about the Property
or on the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (vi) any use, nonuse or condition in, on or about the
Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (vii) performance of any labor or services or the
furnishing of any materials or other property in respect of the Property;
(viii) any failure of the Property to comply with any Legal Requirement;
(ix) any claim by brokers, finders or similar persons claiming to be entitled

 

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to a commission in connection with any Lease or other transaction involving the
Property or any part thereof, or any liability asserted against such Lender
Indemnified Party with respect thereto; (x) the claims of any lessee of any
portion of the Property or any Person acting through or under any lessee or
otherwise arising under or as a consequence of any Lease; and (xi) any
indemnification to the Rating Agencies in connection with issuing, monitoring or
maintaining the Securities insofar as such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses or
disbursements arise out of any untrue statement of any material fact in any
materials or information provided by or on behalf of Borrower or arise out of
the omission to state a material fact in such materials or information required
to be stated therein or necessary in order to make the statements in such
materials or information, in light of the circumstances under which they were
made, not misleading (collectively, the “Indemnified Liabilities”); provided,
however, that Borrower shall not have any obligation to the Lender Indemnified
Parties hereunder to the extent that such Indemnified Liabilities arise from the
gross negligence, illegal acts, fraud or willful misconduct of the Lender
Indemnified Parties, as determined by a final non-appealable judgment of a court
of competent jurisdiction. 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 Indemnified Parties. The provisions of Section 11.13(a) and this
Section 11.13(b) shall survive any payment or prepayment of the Loan and any
foreclosure or satisfaction of the Mortgage.

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

Section 11.14 Schedules Incorporated.

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

Section 11.15 Offsets, Counterclaims and Defenses.

Any assignee of Lender’s interest in and to the Loan Documents shall take the
same free and clear of all offsets, counterclaims and 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.

 

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

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

(b) The Loan Documents are solely for the benefit of Lender and nothing
contained in the 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 (and disburse Reserve Funds) 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 (or make any disbursement of Reserve Funds) in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

Section 11.17 Publicity.

All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents or to Lender or any
of its Affiliates shall be subject to the prior approval of Lender.

Section 11.18 Waiver of Marshalling of Assets.

To the fullest extent permitted by law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower’s members or partners, as applicable, 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
Obligations without any prior or different resort for collection or of the right
of Lender to the payment of the Obligations 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.

 

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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.

Section 11.21 Brokers and Financial Advisors.

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

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 Gross Revenues, 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 Gross Revenues 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,

 

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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 of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases; (f) constitute a prohibition against
Lender to 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 incurred) arising out of
or in connection with the following:

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

(ii) material physical waste or, after the occurrence and during the continuance
of an Event of Default, the removal or disposal of any portion of the Property;

(iii) the misapplication, misappropriation or conversion by Borrower, Sole
Member, Holdings, any Guarantor or any Affiliate 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 Gross Revenues (including, without
limitation, Lease Termination Payments and any security deposits, advance
deposits or any other deposits collected with respect to the Property (including
the failure to deliver any such deposits to Lender upon a foreclosure of the
Property or an action in lieu thereof, except to the extent any such deposits
were applied in accordance with the terms and conditions of the applicable Lease
prior to the occurrence of the Event of Default giving rise to such foreclosure
or action in lieu thereof));

(iv) the failure to pay charges for labor or materials or other charges that can
create Liens on any portion of the Property to the extent such Liens are not
bonded over or discharged in accordance with the Loan Documents;

(v) the failure to (A) pay Taxes or (B) obtain and maintain the fully paid for
Policies in accordance with Section 5.1 hereof;

(vi) the failure by Borrower, Sole Member, Holdings, any Guarantor or any
Affiliate of any of the foregoing to reasonably cooperate with Lender’s
execution of a Secondary Market Transaction pursuant to the terms and provisions
of Section 9.1 hereof;

(vii) the failure by Borrower to satisfy in full its indemnification obligations
pursuant to and in accordance with the term and provisions of Section 9.2
hereof;

 

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(viii) the commission or purported commission of a criminal act by Borrower,
Sole Member, Holdings, any Guarantor or any of their respective Affiliates;

(ix) Borrower fails to (A) permit on-site inspections of the Property,
(B) provide financial information, or (C) timely appoint a new property manager
at the request of Lender, each as required by, and in accordance with, the terms
and provisions of, the Loan Documents;

(x) the amendment, modification, termination, cancellation or acceptance of a
surrender of any Affiliate Agreement or Material Agreement, or the waiver of any
of the terms or provisions of any Affiliate Agreement or Material Agreement, in
each case without Lender’s prior written consent unless in accordance with the
terms of Section 4.1.19 hereof;

(xi) fraud or intentional misrepresentation by or on behalf of Borrower, Sole
Member, Holdings, any Guarantor, or any Affiliate of any of them in connection
with the Loan or the Property;

(xii) gross negligence or willful misconduct of Borrower, Sole Member, Holdings,
Guarantor or any Affiliate of any of them in connection with the Loan or the
Property;

(xiii) any fraud, misrepresentation, misleading or incorrect certification or
breach of any representation, warranty or certification contained in this
Guaranty or any other Loan Document by Borrower, Sole Member, Holdings,
Guarantor or any Affiliate or in any document executed in connection with the
Loan, pursuant to any of the Loan Documents or otherwise to induce Lender to
make the Loan, or any advance thereof, or to release monies from any account
held by Lender (including any reserve or escrow) or to take other action with
respect to the Collateral or the Property;

(xiv) Borrower’s, Sole Member’s, Holding’s or any Guarantor’s failure to act in
accordance with Lender’s instructions with respect to the enforcement of the
Loan Documents;

(xv) Borrower’s, Sole Member’s, Holding’s or any Guarantor’s violation of any
jury or counterclaim waiver provisions set forth in the Loan Documents;

(xvi) any assertion by Borrower, Sole Member, Holdings, Guarantor or any
Affiliate that the relationship between Lender and Borrower is anything other
than that of a debtor/creditor arising under the Loan Documents;

(xvii) a breach of any of the covenants set forth in Section 4.1.19 hereof; or

(xviii) Borrower enters into any Lease without the consent of Lender or, after
having entered into same with Lender’s consent any amendment, modification,
termination, cancellation or acceptance of a surrender of any Lease, or the
waiver of any of the terms or provisions of any Lease, in each case without
Lender’s prior written consent unless in accordance with Section 4.1.10 hereof.

 

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Notwithstanding anything to the contrary in this Agreement or any of the other
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 Obligations or to
require that all collateral shall continue to secure all of the Obligations
owing to Lender in accordance with the Loan Documents and (B) the Obligations
shall be fully recourse to Borrower in the event that any of the following
occur:

(i) Borrower fails to comply with any representation, warranty or covenant set
forth in Sections 3.1.24 or 4.1.15 hereof or Sole Member or Holdings fails to
maintain its status as a Special Purpose Entity;

(ii) Borrower fails to obtain Lender’s prior consent to any Indebtedness or any
voluntary Lien encumbering the Property or any portion thereof or interest
therein, except to the extent expressly permitted by the Loan Documents;

(iii) Borrower, Sole Member, Holdings, any Guarantor or any Affiliate fails to
obtain Lender’s prior consent to any Transfer, except to the extent expressly
permitted by the Loan Documents;

(iv) Borrower, Sole Member, Holdings, Gateway Holdings, any Guarantor, Advisor,
OP, OP Holdings or Sponsor files a voluntary petition under the Bankruptcy Code
or any other federal, state, local or foreign bankruptcy or insolvency law;

(v) an Affiliate, officer, director or representative which controls, directly
or indirectly, Borrower, Sole Member, Holdings, Gateway Holdings, REIT, Advisor,
OP, OP Holdings or Sponsor files, or joins in the filing of, an involuntary
petition against Borrower, Sole Member, Holdings, Gateway Holdings, any
Guarantor, Advisor, OP, OP Holdings or Sponsor under the Bankruptcy Code or any
other federal, state, local or foreign bankruptcy or insolvency law, or solicits
or causes to be solicited petitioning creditors for any involuntary petition
against Borrower, Sole Member, Holdings, Gateway Holdings, any Guarantor,
Advisor, OP, OP Holdings or Sponsor from any Person;

(vi) Borrower, Sole Member, Holdings, Gateway Holdings, any Guarantor, Advisor,
OP, OP Holdings or Sponsor 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, state, local or
foreign bankruptcy or insolvency law, or solicits or causes to be solicited
petitioning creditors for any involuntary petition from any Person;

(vii) any Affiliate, officer, director or representative which controls
Borrower, Sole Member, Holdings, Gateway Holdings, REIT, Advisor, OP, OP
Holdings or Sponsor consents to, or acquiesces in, or joins in, an application
for the appointment of a custodian, receiver, trustee or examiner for Borrower,
Sole Member, Holdings, Gateway Holdings, any Guarantor, Advisor, OP, OP Holdings
or Sponsor or any portion of the Property;

(viii) Borrower, Sole Member, Holdings, Gateway Holdings, any Guarantor,
Advisor, OP, OP Holdings or Sponsor 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;

 

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(ix) the Ground Lease is amended, modified, canceled, terminated or surrendered,
or any of the terms or provisions of the Ground Lease are waived, in each case
without Lender’s prior written consent unless in accordance with the Loan
Agreement;

(x) Borrower, Sole Member or Holdings fails to have two (2) independent managers
or removes or terminates any independent manager without Lender’s prior written
consent;

(xi) Borrower fails to comply with the terms of that certain Post-Closing
Agreement of even date herewith by Borrower in favor of Lender;

(xii) Borrower’s failure to fund the Equity Requirement in accordance with the
terms of the Loan Agreement; or

(xiii) Borrower, Sole Member, Holdings any Guarantor (or any Person comprising
Borrower or any Guarantor), or any Affiliate of any of the foregoing, in
connection with any enforcement action or exercise or assertion of any right or
remedy by or on behalf of Lender under or in connection with the Note, the
Mortgage, this Guaranty or any other Loan Document, seeks a defense, judicial
intervention or injunctive or other equitable relief of any kind or asserts in a
pleading filed in connection with a judicial proceeding any defense against
Lender or any right in connection with any security for the Loan, which is
frivolous, brought in bad faith, without merit (in the case of a defense) or
unwarranted (in the case of a request for judicial intervention or injunctive or
other equitable relief).

As used in this Section 11.22, the term “control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise.

Section 11.23 Prior Agreements.

The 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,
including the Application Letter dated October 10, 2012 (as amended) between
Anthony W. Thompson of Thompson National Properties, LLC and Lender, are
superseded by the terms of the Loan Documents.

Section 11.24 Servicer.

(a) At the option of Lender, the Loan may be serviced by a master servicer,
primary servicer, special servicer and/or trustee (any such master servicer,
primary servicer, special servicer and trustee, together with its agents,
designees or nominees, collectively, “Servicer”) selected by Lender and Lender
may delegate all or any portion of its responsibilities under the Loan Documents
to the Servicer pursuant to a pooling and servicing agreement, servicing
agreement, special servicing agreement and/or other agreement providing for the
servicing of one (1) or more mortgage loans (collectively, the “Servicing
Agreement”) between

 

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Lender and Servicer. Borrower shall be responsible for any reasonable set-up
fees and any other initial costs relating to or arising under the Servicing
Agreement. In addition, Borrower shall pay (i) any fees and expenses of Servicer
(including, without limitation, attorneys’ fees and disbursements), which fees
and expenses may be due and payable on a periodic or continuing basis in
accordance with the Servicing Agreement, in connection with any release of the
Property, any prepayment, defeasance, assumption, amendment or modification of
the Loan, any documents or other matters requested by Borrower or any Guarantor,
special servicing or workout of the Loan or enforcement of the Loan Documents,
including, without limitation, any liquidation fees that may be due to Servicer
under the Servicing Agreement in connection with the exercise of any or all
remedies permitted under this Agreement and (ii) the costs of all property
inspections and/or appraisals of the Property (or any updates to any existing
inspection or appraisal) required under the Servicing Agreement or that a
Servicer may otherwise require under the Servicing Agreement (other than the
cost of regular annual inspections required to be borne by Servicer under the
Servicing Agreement). Without limiting the generality of the foregoing, Servicer
shall be entitled to reimbursement of costs and expenses as and to the same
extent (but without duplication) as Lender is entitled thereto pursuant to the
terms of the Loan Documents.

(b) Upon notice thereof from Lender, Servicer shall have the right to exercise
all rights of Lender and enforce all obligations of Borrower and Guarantor under
the Loan Documents.

(c) Provided Borrower shall have received notice from Lender of Servicer’s
address, Borrower shall deliver, and cause to be delivered, to Servicer
duplicate originals of all notices and other documents and instruments which
Borrower and/or Guarantor deliver to Lender pursuant to the Loan Documents. No
delivery of any such notices or other documents shall be of any force or effect
unless delivered to Lender and Servicer as provided in this Section 11.24(c).

Section 11.25 Joint and Several Liability.

If more than one Person has executed any of the Loan Documents as “Borrower,”
the representations, covenants, warranties and obligations of all such Persons
under such Loan Documents shall be joint and several.

Section 11.26 Creation of Security Interest.

Notwithstanding any other provision set forth in the Loan Documents, Lender may
at any time create a security interest in all or any portion of its rights under
any of the Loan Documents (including, without limitation, payments 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 or to secure a borrowing by
Lender or its Affiliates from any Person that purchases or funds financial
assets.

 

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Section 11.27 Counterparts.

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

Section 11.28 Set-Off.

In addition to any rights and remedies of Lender provided by this Agreement and
by law, Lender shall have the right, without prior notice to Borrower, any such
notice being expressly waived by Borrower to the extent permitted by Legal
Requirements, upon any amount becoming due and payable by Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise), to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in accordance with Legal
Requirements, 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 Certain Additional Rights of Lender (VCOC).

Notwithstanding anything to the contrary contained in the Loan Documents, Lender
shall have:

(a) the right to routinely consult with and advise Borrower’s management
regarding the significant business activities and business and financial
developments of Borrower, including, but not limited to, with respect to
(i) annual operating and capital budgets, (ii) insurance, (iii) material leases
and lease forms, (iv) property management and leasing agents and amendments,
modifications or termination of any agreements with such agents, and (v) changes
in business; provided, however, that such consultations shall not include
discussions of environmental compliance programs or disposal of hazardous
substances. Consultation meetings should occur on a regular basis (no less
frequently than quarterly) with Lender having the right to call special meetings
at any reasonable times upon reasonable notice;

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

(c) the right, in accordance with the terms of this Agreement, including,
without limitation, Section 4.1.7 hereof, to receive monthly, quarterly and
year-end financial reports, including balance sheets, statements of income,
shareholder’s equity and cash flow, a management report and schedules of
outstanding indebtedness.

The rights described above in this Section 11.29 may be exercised by any entity
which owns and controls, directly or indirectly, substantially all of the
interests in Lender. As used in this Section 11.29, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.

[NO FURTHER TEXT ON THIS PAGE]

 

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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: DOF IV REIT HOLDINGS, LLC,

a Delaware limited liability company

By:  

/s/ Abbey Kosakowski

Name:   Abbey Kosakowski Title:   Authorized Signatory

 

BORROWER: TNP SRT LAHAINA GATEWAY, LLC, a Delaware limited liability company

By:

  TNP SRT Lahaina Gateway Mezz, LLC,   a Delaware limited liability company,  
its sole member  

By:

  TNP SRT Lahaina Gateway Mezz Holdings, LLC,   a Delaware limited liability
company,   its sole member  

By:

  TNP SRT Lahaina Gateway Holdings, LLC,   a Delaware limited liability company,
  its sole member  

By:

  TNP Strategic Retail Operating Partnership, LP,   a Delaware limited
partnership,   its sole member  

By:

  TNP Strategic Retail Trust, Inc.,   a Maryland corporation,   its general
partner  

By:

 

/s/ Dee Balch

Name:

  Dee Balch

Title:

  CFO

 

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SCHEDULE I

DEFINITIONS

“Account” shall mean an Eligible Account at the Cash Management Bank controlled
by Lender.

“Act” shall mean the Delaware Limited Liability Company Act, as may be amended
and restated from time to time.

“Adjusted Operating Expenses” shall mean, as of any date of determination by
Lender, the greater of (i) actual Operating Expenses incurred during the
preceding twelve (12) month period and (ii) the Operating Expenses provided for
in the then-effective Approved Annual Budget for the succeeding twelve
(12) month period, annualized and determined on a line by line basis in each
case; provided, however, in the event that the Annual Budget has not been
approved by Lender under Section 4.1.7(e) and/or Borrower has failed to deliver
the financial statements required pursuant to this Agreement, Lender shall
determine the amount of Adjusted Operating Expenses in its sole and absolute
discretion.

“Advisor” shall mean TNP Strategic Retail Advisor, LLC.

“Advisory Agreement” shall mean that certain Amended and Restated Advisory
Agreement dated as of August 7, 2010 by and among the REIT, OP and Advisor, as
thereafter amended.

“Affiliate” shall mean, as to any Person, any other Person that (i) owns
directly or indirectly ten percent (10%) or more of all equity interests in such
Person, (ii) is in control of, is controlled by or is under common ownership or
control with such Person, (iii) is a director or executive officer of such
Person or of an Affiliate of such Person, and/or (iv) is the spouse, issue or
parent of such Person. As used in this definition, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of such Person, whether
through ownership of voting securities, by contract or otherwise and the term
“controlled” shall have a correlative meaning. For avoidance of doubt, among
others, each of TNP Strategic Retail Trust, Inc., TNP Strategic Retail Operating
Partnership, L.P., TNP SRT Lahaina Gateway Holdings, LLC, Holdings and Sole
Member shall be deemed an Affiliate of Borrower.

“Affiliate Agreement” shall mean any contract and agreement with Thompson
National Properties, LLC or any Affiliate thereof, or an Affiliate of Borrower,
Sole Member, Holdings or Guarantor relating to the ownership, management,
development, use, operation, leasing, maintenance, repair or improvement of the
Property, including without limitation, the Advisory Agreement.

“Affiliated Manager” shall mean any Manager that is an Affiliate of Borrower,
Sole Member or any Guarantor.

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

 

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“Alteration Threshold” shall mean one percent (1%) of the Outstanding Principal
Balance.

“Annual Budget” shall mean the operating and capital budget for the Property
setting forth, on a month-by-month basis, in reasonable detail, each line item
of Borrower’s good faith estimate of anticipated Gross Revenue, Operating
Expenses and Capital Expenditures for the applicable Fiscal Year.

“Approved Annual Budget” shall have the meaning set forth in
Section 4.1.7(b)(iv).

“Approved Capital Expenditures” shall mean Capital Expenditures incurred by
Borrower and either (i) included in the Approved Annual Budget or (ii) approved
by Lender, which approval shall not be unreasonably withheld or delayed.

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

“Approved Operating Expenses” shall mean Operating Expenses incurred by Borrower
which (i) are included in the Approved Annual Budget for the current calendar
month, (ii) are for real estate taxes, insurance premiums, electric, gas, oil,
water, sewer or other utility service to the Property, (iii) are for property
management fees payable to Manager under the Management Agreement, such amounts
not to exceed four percent (4%) of the monthly Gross Revenue, or (iv) have
otherwise been approved by Lender.

“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 those certain Assignment of
Management Agreement and Subordination of Management Fees, dated as of the date
hereof, among Borrower, Manager and Lender, 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, state,
local or foreign bankruptcy or insolvency law; (ii) the filing of an involuntary
petition against such Person under

 

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the Bankruptcy Code or any other federal, state, local or foreign 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, state, local or foreign 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.

“Borrower” shall have the meaning set forth in the Recitals to this Agreement.

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

“Capital Expenditure Account” shall have the meaning set forth in Section 6.5.1.

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

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

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

“Cash Management Account” shall have the meaning set forth in Section 6.1.

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

“Cash Management Bank” shall mean an Eligible Institution acceptable to Lender
in its sole discretion.

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

 

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“Casualty and Condemnation Account” shall have the meaning set forth in the Cash
Management Agreement.

“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 have the meaning set forth in Section 6.1.

“Clearing Account Agreement” shall mean that certain Deposit Account Control
Agreement, dated as of the date hereof, by and among Borrower, Lender, Manager
and Clearing Bank, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

“Clearing Bank” shall have the meaning set forth in Section 6.1.

“Closing Date” shall mean the date of the funding of the Loan or November 7,
2012.

“Closing Payment” shall mean a loan closing payment due by Borrower to Lender on
the Closing Date in the amount of Three Hundred Thousand and 00/100
($300,000.00) Dollars.

“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” (including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean, except as otherwise set forth herein,
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), notwithstanding the
fact that another Person may retain approval or veto rights over certain
significant actions affecting the property or assets of a Person.
Notwithstanding the foregoing, with respect to the REIT, a Person shall be
deemed to Control Borrower if it, or its appointees, hold three (3) or more of
the seats on the board of directors of the REIT.

“CPI” shall mean the Consumer Price Index, as published by the United States
Department of Labor, Bureau of Labor Statistics for the region in which the
Property is located or any substitute index hereafter adopted by the United
States Department of Labor.

“Debt” shall mean the Outstanding Principal Balance together with all interest
accrued and unpaid thereon and all other sums (including the Yield Maintenance
Premium, if applicable) due to Lender in respect of the Loan under the Loan
Documents.

 

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“Debt Service” shall mean, with respect to any particular period of time, the
aggregate amount of scheduled principal and interest payments due and payable
under the Note.

“Debt Service Account” shall have the meaning set forth in the Cash Management
Agreement.

“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 constitute 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 Legal Rate or (ii) five percent (5%) above the
Interest Rate.

“Disclosure Document” shall mean, collectively, any written materials used or
provided to any prospective investors and/or NRSROs in connection with any
public offering or private placement in connection with a Securitization,
including, but not limited to, any preliminary or final offering circular,
prospectus, prospectus supplement, free writing prospectus, private placement
memorandum or other offering documents, marketing materials or information.

“Easements” shall have the meaning set forth in Section 3.1.12.

“Eligible Account” shall have the meaning set forth in the Cash Management
Agreement.

“Eligible Institution” shall have the meaning set forth in the Cash Management
Agreement.

“Embargoed Person” shall have the meaning set forth in Section 4.2.16.

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

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

“Equity Requirement” shall mean the contribution (and not loan) by Guarantor to
Borrower of an amount equal to Five Million Eight Hundred Eighty Thousand
Dollars ($5,880,000.00).

“ERISA” shall have the meaning set forth in Section 4.2.13.

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

“Excess Cash Flow” shall have the meaning set forth in Section 6.11.1.

“Excess Cash Flow Account” shall have the meaning set forth in Section 6.9.

“Excess Cash Flow Funds” shall have the meaning set forth in Section 6.9.

 

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

“Exchange Act Filing” shall mean a filing pursuant to the Exchange Act in
connection with or relating to a Securitization.

“Extraordinary Expense” shall have the meaning set forth in Section 4.1.7(c).

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

“Fitch” shall mean Fitch IBCA, Inc.

“Forbearance Period” shall have the meaning set forth in Section 10.1(c).

“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.

“Gateway Holdings” shall mean TNP SRT Lahaina Gateway Holdings, LLC.

“Government Lists” shall have the meaning set forth in Section 4.2.16(b).

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

“Gross Revenue” shall mean all revenue, including, without limitation, Rents,
derived from the ownership and operation of the Property from whatever source.

“Ground Lease” shall mean that certain Ground Lease, dated February 2, 2005,
between Lahaina Gateway Commercial, LLC, a Washington limited liability company,
as landlord, and Borrower, as tenant (as successor by assignment from Central
Pacific Bank, a Hawaii corporation, as successor to Bilarjo, LLC, a Hawaii
limited liability company, as successor by assignment from Kohoma Development,
Inc., a Washington corporation), as amended by a certain Amendment to Ground
Lease, dated August 15, 2012.

“Ground Rent” shall mean any rent, additional rent or other charge payable by
the tenant under the Ground Lease.

“Ground Rent Account” shall have the meaning set forth in Section 6.7.1.

“Ground Rent Funds” shall have the meaning set forth in Section 6.7.1.

“Guarantor” shall mean, individually and collectively, as the context may
require, Anthony W. Thompson and TNP Strategic Retail Trust, Inc., a Maryland
corporation.

 

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“Guaranty” shall mean that certain Guaranty of Recourse Obligations, dated as of
the date hereof, from Guarantor for the benefit of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Hedge Losses” shall mean all actual losses incurred by Lender or its affiliates
in connection with the hedge positions taken by Lender or its affiliates with
respect to the Interest Rate. Borrower acknowledges that such hedging
transactions may include the sale of U.S. Obligations or other securities and/or
the execution of certain derivative transactions, which hedging transactions
would have to be “unwound” if all or any portion of the Loan is paid down.

“Holdings” shall mean TNP SRT Lahaina Gateway Mezz Holdings, LLC, a Delaware
limited liability company.

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

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

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

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

“Independent Director” or “Independent Manager” shall mean an individual who has
prior experience as an independent director, independent manager or independent
member with at least three years of employment experience as an independent
director, independent manager or independent member and who is provided by CT
Corporation, Corporation Service Company, National Registered Agents, Inc.,
Wilmington Trust Company, Stewart Management Company, Lord Securities
Corporation or, if none of those companies is then providing professional
Independent Directors or Independent Managers, another nationally-recognized
company reasonably approved by Lender, in each case that is not an Affiliate of
Borrower and that provides professional Independent Directors or Independent
Managers and other corporate services in the ordinary course of its business,
and which individual is duly appointed as a member of the board of directors or
board of managers of such corporation or limited liability company and is not,
and has never been, and will not while serving as Independent Director or
Independent Manager be, any of the following:

 

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(a) a member, partner, equityholder, manager, director, officer or employee of
Borrower, any equityholder that is required hereby to be a Single Purpose
Entity, or any of their respective equityholders or Affiliates (other than as an
Independent Director or Independent Manager of an Affiliate of Borrower that is
a Single Purpose Entity that is not in the direct chain of ownership of Borrower
and that is required by a creditor to be a single purpose bankruptcy remote
entity, provided that such Independent Director or Independent Manager is
employed by a company that routinely provides professional Independent Directors
or Independent Managers);

(b) a creditor, supplier or service provider (including provider of professional
services) to Borrower, any equityholder that is a Single Purpose Entity, or any
of their respective equityholders or Affiliates (other than a
nationally-recognized company that routinely provides professional Independent
Directors or Independent Managers and other corporate services in the ordinary
course of its business);

(c) a family member of any such member, partner, equityholder, manager,
director, officer, employee, creditor, supplier or service provider; or

a Person that controls (whether directly, indirectly or otherwise) any of (a),
(b) or (c) above.

A natural person who otherwise satisfies the foregoing definition other than
subparagraph (a) by reason of being the Independent Director or Independent
Manager of a Single Purpose Entity affiliated with Borrower shall not be
disqualified from serving as an Independent Director or Independent Manager of
the Borrower, provided that the fees that such individual earns from serving as
Independent Director or Independent Manager of affiliates of the Borrower in any
given year constitute in the aggregate less than five percent (5%) of such
individual’s annual income for that year.

“Initial Equity Requirement” shall mean the contribution (and not loan) by
Guarantor to Borrower of an amount equal to Two Million Eight Hundred Eighty
Thousand and 00/100 ($2,880,000) Dollars.

“Insurance Account” shall have the meaning set forth in Section 6.4.1.

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

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

“Insurance Proceeds” shall mean all payments from any insurance company payable
as a result of the Policies required by Article 5 hereof or any other insurance
policy covering the Property and/or Borrower.

“Interest Period” shall have the meaning set forth in Section 2.3.1.

“Interest Rate” shall mean a rate of: (a) 9.483% per annum from the date hereof
through the first full calendar month of the Term; (b) 9.419% per annum for the
second calendar month of the Term; (c) 9.353% per annum for the third calendar
month of the Term; (d) 9.286% per annum for the fourth through twelfth calendar
month of the Term; and (e) 11.429% per annum for the remainder of the Term.

 

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“Key Principal” shall mean Anthony W. Thompson.

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

“Lease Letter of Credit” means a letter of credit issued for the benefit of
Borrower as security for the payment and performance of a Tenant’s obligation
under its Lease.

“Lease Termination Payments” shall have the meaning set forth in
Section 6.6.1(b)(i).

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees, demands and injunctions of Governmental Authorities affecting the Loan,
any Secondary Market Transaction with respect to the Loan, Borrower, Guarantor
or the Property or any part thereof or the ownership, construction, alteration,
use, management or operation of the Property or any part thereof, whether now or
hereafter enacted and in force, including, without limitation, the Securities
Act, the Exchange Act, Regulation AB, the Dodd-Frank Wall Street Reform and
Consumer Protection Act, zoning and land use laws and the Americans with
Disabilities Act of 1990, the rules and regulations promulgated pursuant to any
of the foregoing, and all permits, licenses and authorizations relating thereto,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting Borrower, any Guarantor or the Property or any part thereof,
including, without limitation, any which may (i) require repairs, modifications
or alterations in or to the Property or any part thereof or (ii) in any way
limit the use and enjoyment thereof.

“Lender” shall have the meaning set forth in the Recitals to this Agreement.

“Lender Indemnified Parties” shall mean Lender and any designee of Lender, any
Affiliate of Lender that has filed any registration statement relating to a
Securitization or has acted as the issuer, sponsor, depositor or seller in
connection with such Securitization, any Affiliate of Lender that acts as an
underwriter, placement agent or initial purchaser of Securities issued in a
Securitization, any other co-underwriters, co-placement agents or co-initial
purchasers of Securities issues in a Securitization, each Person who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) any such Person, any Person who is or will have been involved in
the origination of the Loan, any Person who is or will have been involved in the
servicing of the Loan, any Person in whose name the Lien created by the Loan
Documents are or will be recorded or filed, any Person who may hold or acquire
or will have held a full or partial interest in the Loan (including, but not
limited to, investors or

 

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prospective investors in the Securities, as well as custodians, trustees and
other fiduciaries who hold or have held a full or partial interest in the Loan
for the benefit of third parties), any Person who holds or acquires or will have
held a participation or other full or partial interest in the Loan, whether
during the term of the Loan or as a part of or following a foreclosure thereof,
any successors by merger, consolidation or acquisition of all or a substantial
portion of Lender’s assets and business, as well as the respective directors,
officers, shareholders, partners, members, employees, agents, servants,
representatives, contractors, subcontractors, Affiliates, participants,
successors and assigns of any and all of the foregoing.

“Letter of Credit” shall mean an irrevocable, unconditional, transferable
(without the payment of a transfer fee), clean, evergreen (or not expiring until
at least thirty (30) Business Days after the Stated Maturity Date) sight draft
letter of credit acceptable to Lender and the Rating Agencies in favor of Lender
and entitling Lender to draw thereon in New York, New York based solely on a
statement purportedly executed by an officer of Lender stating that it has the
right to draw thereon issued by a domestic Eligible Institution or the U.S.
agency or branch of a foreign Eligible Institution and with respect to which
Borrower has no reimbursement obligation. The evergreen clause of each Letter of
Credit shall provide that the expiration date of such Letter of Credit shall
automatically extend (i.e., without requiring a consent, approval, amendment or
other modification) for additional periods from the current or each future
expiration date unless the issuing bank provides Lender and Servicer with
written notice that such Letter of Credit will not be renewed at least sixty
(60) days, and not more than ninety (90) days, prior to the date on which the
outstanding Letter of Credit is scheduled to expire. Lender shall have the right
immediately to draw down any Letter of Credit in full and hold the proceeds of
such draw in the same manner as funds deposited in the Reserve Funds (i) if at
any time the bank issuing any such Letter of Credit shall cease to be an
Eligible Institution, (ii) with respect to an evergreen Letter of Credit, if
Lender has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided at least
thirty (30) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire, (iii) with respect to any Letter of Credit with a stated
expiration date, if Lender has not received a notice from the issuing bank that
it has renewed the Letter of Credit at least thirty (30) days prior to the date
on which such Letter of Credit is scheduled to expire and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire, (iv) upon receipt of notice
from the issuing bank that the Letter of Credit will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided prior
to such termination), or (v) during the continuance of an Event of Default.
Notwithstanding anything to the contrary contained in the above, Lender is not
obligated to draw any Letter of Credit upon the happening of any of the
foregoing events and shall not be liable for any losses sustained by Borrower
due to the insolvency of the bank issuing the Letter of Credit if Lender has not
drawn the Letter of Credit.

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

“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, easement, restrictive covenant, preference, assignment,
security interest, or any other encumbrance, charge or transfer of, or any
agreement to enter into or create any of the foregoing, on or affecting all or
any portion of the Property or any interest therein, or any direct

 

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or indirect interest in Borrower or Sole Member, including any conditional sale
or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic’s, materialmen’s and other similar liens and
encumbrances.

“Loan” shall mean the loan in the original principal amount of Twenty Nine
Million and 00/100 Dollars ($29,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing
Account Agreement, the Environmental Indemnity, the Assignment of Management
Agreement, the Guaranty and any other documents, agreements and instruments now
or hereafter evidencing, securing or delivered to Lender in connection with the
Loan.

“Loss of Control Event” shall mean (i) any change in the composition or number
of independent directors of the REIT without Lender’s consent, (ii) any change
in the number of members of the board of directors of the REIT (the “Board”) or
the voting power of any of the members of the Board without Lender’s consent,
(iii) any change, in the composition of the Board or otherwise, which results in
Key Principal no longer appointing, or having the authority to appoint, at least
two (2) members to the Board (“Key Principal’s Board Seats”), (iv) any change to
the individuals holding the Key Principal’s Board Seats without Lender’s prior
approval, (v) any change in the composition or purpose of each of the audit,
compensation and special committees of the REIT without Lender’s consent,
(vi) the establishment or formation of any other committee of the REIT without
Lender’s consent, (vi) the sale or assignment of all, or substantially all of
the outstanding shares of the REIT or partnership interests of OP in one or more
related transactions, or (vii) with respect to OP, a change of Control.

“Major Lease” shall mean the Ground Lease and any other Lease or proposed lease
(a) that accounts for ten (10%) percent or more of the Gross Revenue of the
Property, (b) that accounts for more than 2,500 square feet of rental space at
the Property, (c) that contains an option or preferential right to purchase all
or any portion of the Property, (d) that is with an Affiliate of Borrower or
Guarantor, as tenant, or (e) that is executed by Borrower during the continuance
of an Event of Default. Notwithstanding clause (e) in the event that a Lease
executed during the continuance of an Event of Default would not otherwise
qualify as a Major Lease pursuant to any of clauses (a), (b), (c) or (d), upon
termination or cessation of such Event of Default, such Lease described in
clause (e) shall cease to be a “Major Lease”.

“Management Agreement” shall mean the management agreement entered into by and
between Borrower and Manager, pursuant to which Manager is to provide management
and other services with respect to the Property.

“Manager” shall mean TNP Property Manager, LLC, a Delaware limited liability
company, or any other manager approved by Lender and the Rating Agencies in
accordance with the terms and conditions of the Loan Documents, including,
without limitation, Article 8.

 

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“Material Action” means, with respect to any Person, to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against such Person or file
a petition seeking, or consent to, reorganization or relief with respect to such
Person under any applicable federal, state, local or foreign law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or a
substantial part of its property, or make any assignment for the benefit of
creditors of such Person, or admit in writing such Person’s inability to pay its
debts generally as they become due, or declare or effectuate a moratorium on the
payment of any obligation, or take action in furtherance of any such action.

“Material Adverse Effect” shall mean any material adverse effect upon (i) the
business operations, economic performance, assets, condition (financial or
otherwise), equity, contingent liabilities, prospects, material agreements or
results of operations of Borrower, Sole Member, any Guarantor or the Property,
(ii) the ability of Borrower or any Guarantor to perform their respective
obligations under any of the Loan Documents, (iii) the enforceability or
validity of any of the Loan Documents, the perfection or priority of any Lien
created under any of the Loan Documents or the rights, interests or remedies of
Lender under any of the Loan Documents, or (iv) the value, use operation of, or
cash flows from, the Property.

“Material Agreements” shall mean (a) the Ground Lease and all other documents
executed or delivered by Borrower or an Affiliate in connection therewith,
(b) all brokerage and management agreements and construction documents
associated with the Property, (c) all agreements between Borrower or any
Affiliate and Central Pacific Bank or its Affiliate, including without
limitation, the Purchase and Sale Agreement, and (d) each other contract and
agreement relating to the ownership, management, development, use, operation,
leasing (but not Leases), maintenance, repair or improvement of the Property, as
to which either (i) there is an obligation of Borrower to pay more than $50,000
per annum, or (ii) the term thereof extends beyond one year (unless cancelable
on thirty (30) days or less notice without requiring the payment of termination
fees or payments of any kind).

“Material Alteration” shall have the meaning set forth in Section 4.1.11.

“Maturity Date” shall mean the date on which the final payment of principal of
the Note becomes due and payable as herein and therein provided, whether at the
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 Governmental
Authority 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
($25,000.00).

“Monthly Debt Service Payment” shall have the meaning set forth in
Section 2.3.1.

“Monthly Payment Date” shall mean the first (1st) day of every calendar month
occurring during the Term commencing with January 1, 2013.

 

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

“Mortgage” shall mean that certain first priority Leasehold Mortgage, Assignment
of Leases and Rents. Security Agreement and Financing Statement as Fixture
Filing, dated as of 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 Operating Income” shall mean, the amount by which Gross Revenue exceeds
Operating Expenses, provided, however, that for purposes of determining Gross
Revenue, (a) the effects of straight-lining of rents shall be eliminated, and
(b) Gross Revenue shall exclude (1) extraordinary items of revenue (for example,
lease termination payments), and (2) rents paid by tenants then subject to a
pending proceeding under the bankruptcy Code (unless the applicable tenant has
reaffirmed its applicable lease).

“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 reasonable attorneys’ fees and costs), if any, in
collecting such Insurance Proceeds or (ii) the net amount of the Award payable
as a result of any Condemnation of the Property, after deduction of reasonable
costs and expenses (including reasonable attorneys’ fees and costs), if any, in
collecting such Award.

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

“Note” shall have the meaning set forth in Section 2.1.2.

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

“NRSRO” shall mean any credit rating agency that has elected to be treated as a
nationally-recognized statistical rating agency for purposes of the Exchange Act
irrespective of whether or not such credit rating agency has been engaged by
Lender or another Indemnified Person to rate any of the Securities issued in
connection with a Securitization of the Loan or any portion thereof.

“Obligations” shall mean, collectively, Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations.

“OFAC” shall have the meaning set forth in Section 4.2.16(b).

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

“OP” shall mean TNP Strategic Retail Operating Partnership, LP.

“OP Holdings” shall mean TNP Strategic Retail Op Holdings, LLC.

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

 

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“Operating Expense Account” shall have the meaning set forth in Section 6.8

“Operating Expense Funds” shall have the meaning set forth in Section 6.8.

“Operating Expenses” shall mean all costs and expenses relating to the
operation, maintenance and/or management of the Property, including utilities,
repairs and maintenance, insurance, property taxes and assessments, advertising
expenses, payroll and related taxes, equipment lease payments and management
fees payable under the Management Agreement, but excluding actual Capital
Expenditures, depreciation, amortization, Debt Service and deposits required to
be made to the Reserve Funds.

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

“Other Obligations” shall mean (i) the performance of all obligations of
Borrower contained herein; (ii) the performance of each obligation of Borrower
contained in the Note or any other Loan Document; and (iii) the performance of
each obligation of Borrower contained in any renewal, extension, amendment,
modification, consolidation, change of, or substitution or replacement for, all
or any part of this Agreement, the Note or any other Loan Document.

“Outstanding Principal Balance” shall mean, as of any date, the outstanding
principal balance of the Loan.

“Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
ACT) of 2001, as the same may be amended from time to time, and corresponding
provisions of future laws.

“Patriot Act Offense” shall have the meaning set forth in Section 4.2.16(b).

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, (ii) all encumbrances and other matters
disclosed in the Title Insurance Policy and otherwise acceptable to Lender,
(iii) Liens, if any, for Taxes imposed by any Governmental Authority not yet due
or delinquent, (iv) any workers’, mechanics’ or similar Liens on the Property
provided any such Lien is discharged or bonded in accordance with Section 3.6 of
the Mortgage, and (v) such other title and survey exceptions as Lender has
approved or may approve in writing.

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

“Permitted Transferee” shall mean a corporation, partnership (including a
limited or limited liability limited partnership) or limited liability company
that satisfies the following conditions: (i) such transferee and Transferee’s
Principals shall be acceptable to Lender, which determination shall be based
upon, inter alia, (a) such transferee and Transferee’s Principals having an
aggregate net worth and liquidity reasonably satisfactory to Lender,
(b) Lender’s

 

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receipt of searches (including credit, negative news, OFAC, litigation,
judgment, lien and bankruptcy searches) reasonably required by Lender on such
transferee and Transferee’s Principals, the results of which must be reasonably
acceptable to Lender, and (c) such transferee and Transferee’s Principals
otherwise satisfying Lender’s then current applicable underwriting criteria and
requirements, (ii) such transferee shall qualify as a single purpose, bankruptcy
remote entity under criteria established by the Rating Agencies, and (iii) such
transferee, together with Transferee’s Principals, shall be an experienced
operator and/or owner of properties similar in location, size, class, use,
operation and value as the Property, as evidenced by financial statements and
other information reasonably requested by Lender or requested by the Rating
Agencies.

“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, real estate investment trust,
unincorporated association, any other entity, any Governmental Authority and any
fiduciary acting in such capacity on behalf of any of the foregoing.

“Pledge” shall have the meaning set forth in Section 12.1.

“Pledge Agreement” shall mean, collectively, that certain (i) Pledge and
Security Agreement, dated the date hereof, executed and delivered by Sole
Borrower as security for the Obligations, and (ii) Pledge and Security
Agreement, dated the date hereof, executed and delivered by Holdings as security
for the Obligations, each encumbering, among other things, the applicable
Pledged Collateral, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

“Pledged Collateral” shall collectively mean (i) the one hundred percent
(100%) ownership interest of Sole Member in borrower, and (ii) the one hundred
percent (100%) ownership interest of Holdings in Sole Member.

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

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

“Pro Forma Gross Revenue” shall mean, as of any date of determination by Lender,
all sustainable Gross Revenue for the succeeding twelve (12) month period as
determined by Lender, including, but not limited to, Rents, service fees or
charges, license fees, parking fees, utility charges, escalations, rent
concessions or credits and other pass-through or reimbursements paid by Tenants
under Leases, but excluding: (i) Rents from Tenants that have not accepted or
are not in possession of the premises demised under their respective Leases,
(ii) Rents from Tenants that (a) are not in occupancy or are not open for
business and conducting normal business operations at substantially all of their
respective demised premises, (b) have not commenced paying then current monthly
Rent (less any rent abatement) under their respective Leases, or (c) are in a
free rent period under their respective Leases, (iii) Rents subject to a right
of offset or credit, (iv) Rents from Tenants that have delivered notice to
Borrower that they will be vacating the demised premises or terminating their
respective Leases, (v) Rents from Tenants under Leases that are expiring within
six (6) months from the date of determination by Lender,

 

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(vi) Rents from month-to-month Tenants, (vii) Rents from Tenants that are
included in any Bankruptcy Action or Tenants whose lease guarantors or parent
companies are included in any Bankruptcy Action, (viii) Rents from Tenants under
Leases that, if entered into after the date of this Agreement, are not pursuant
to written Leases satisfying the requirements of this Agreement, (ix) Lease
Termination Payments and other payments or income received by Borrower in
connection with any other extraordinary event, including payments or income
contemplated by Section 6.6.1(b), (x) sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any Governmental Authority,
(xi) refunds and uncollectible accounts, (vi) sales of furniture, fixtures and
equipment, (xii) Insurance Proceeds (other than business or rental interruption
or other loss of income insurance applicable to the period under consideration
(including Insurance Proceeds that Lender elects to treat as business or rental
interruption Insurance Proceeds pursuant to Section 5.2.3)), (xiii) Awards,
(xiv) security deposits, utility and other similar deposits, (xv) any
disbursements to Borrower from the Reserve Funds, and (xvi) interest on credit
accounts.

“Pro Forma Net Cash Flow” shall mean, as of any date of determination by Lender,
(i) Pro Forma Gross Revenue, less (ii)(a) Adjusted Operating Expenses and
(b) Capital Expenditures for the succeeding twelve (12) month period as
determined by Lender.

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

“Purchase and Sale Agreement” shall mean that certain Sale Agreement, dated as
of June     , 2012, with respect to the Property between Central Pacific Bank,
as seller, and TNP Acquisitions, LLC, as purchaser, as thereafter reinstated,
amended and assigned to Borrower.

“Rating Agencies” shall mean, prior to the final Securitization of the Loan,
each of S&P, Moody’s, Fitch, DBRS, Inc. and Morningstar Credit Ratings, LLC 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;
provided, however, if (i) a Securitization has not occurred or (ii) a
Securitization has occurred but any Rating Agency, within the period of time
provided in the Securitization’s pooling and servicing agreement (or similar
agreement), has not responded to the request for a Rating Agency Confirmation or
has responded in a manner that indicates that such Rating Agency is neither
reviewing such request nor waiving the requirement for a Rating Agency
Confirmation, then, Lender’s written approval shall be required in lieu of a
Rating Agency Confirmation from such Rating Agency, which such approval shall be
based on Lender’s good faith determination of whether such Rating Agency would
issue a Rating Agency Confirmation (unless Lender has an independent approval
right in respect of the matter at issue pursuant to the terms of this Agreement,
in which case the discretion afforded to Lender in connection with such
independent approval right shall apply instead).

 

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“Regulation AB” shall mean Regulation AB under the Securities Act and the
Exchange Act, as such regulation may be amended from time to time.

“Regulation S-K” means Regulation S-K of the Securities Act, as such regulation
may be amended from time to time.

“Regulation S-X” means Regulation S-X of the Securities Act, as such regulation
may be amended from time to time.

“Related Loan” shall mean (i) a loan made to an Affiliate of Borrower or
Guarantor or secured by a Related Property that is included in a Securitization
with the Loan or any portion thereof or interest therein or (ii) any loan that
is cross-collateralized or cross-defaulted with the Loan.

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

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

“Rents” shall mean all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a Bankruptcy
Action) or in lieu of rent or rent equivalents, royalties (including all oil and
gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower, Manager or any of their agents or
employees from any and all sources arising from or attributable to the Property
and the Improvements, including all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of the Property or rendering
of services by Borrower, Manager or any of their agents or employees and
proceeds, if any, from business interruption or other loss of income insurance,
but only to the extent Lender elects to treat such Insurance Proceeds as
business or rental interruption Insurance Proceeds.

“Required Repairs Account” shall have the meaning set forth in Section 6.2.1.

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

“Required Repairs” shall have the meaning set forth in Section 6.2.1.

“Reserve Disbursement Conditions” shall mean (i) Borrower shall have submitted a
request for payment to Lender at least ten (10) days prior to the date on which
Borrower has requested such payment be made, which request specifies the
Required Repairs, Capital

 

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Expenditures or Approved Leasing Expenses, as applicable, 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 (iii) Lender
shall have received (a) an Officer’s Certificate from Borrower (1) (A) in the
case of a requested disbursement of Capital Expenditure Funds, stating that the
items to be funded by the requested disbursement are Approved Capital
Expenditures, and a description thereof, or (B) in the case of a requested
disbursement of Rollover Funds, stating that the items to be funded by the
requested disbursement are Approved Leasing Expenses, and a description thereof,
(2) stating that all Required Repairs, Approved Capital Expenditures or Approved
Leasing Expenses consisting of tenant improvements at the Property, as
applicable, to be funded by the requested disbursement have been completed in a
good and workmanlike manner and in accordance with all applicable Legal
Requirements, (3) identifying each Person that supplied materials or labor in
connection with the Required Repairs, Approved Capital Expenditures or Approved
Leasing Expenses consisting of tenant improvements, as applicable, to be funded
by the requested disbursement or, in the case of a requested disbursement of
Rollover Funds for leasing commissions, the broker entitled to such leasing
commissions to be funded by the requested disbursement, (4) stating that each
such Person has been paid in full or will be paid in full upon such
disbursement, (5) stating that the Required Repairs, Capital Expenditures or
Approved Leasing Expenses, as applicable, to be funded have not been the subject
of a previous disbursement of Required Repair Funds, Capital Expenditure Funds
or Rollover Funds, as applicable, (6) stating that all previous disbursements of
Required Repair Funds, Capital Expenditure Funds or Rollover Funds, as
applicable, have been used to pay the previously identified Required Repairs,
Capital Expenditures or Approved Leasing Expenses, as applicable, and
(7) stating that all outstanding trade payables (other than those to be paid
from the requested disbursement) have been paid in full, (b) a copy of any
license, permit or other approval by any Governmental Authority required in
connection with the Required Repairs, Capital Expenditures or Approved Leasing
Expenses consisting of tenant improvements, as applicable, and not previously
delivered to Lender, (c) lien waivers or other evidence of payment satisfactory
to Lender, (d) at Lender’s option, a title search for the Property indicating
that the Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, (e) at Lender’s option, if the cost of the
Required Repairs, Capital Expenditures or Approved Leasing Expenses consisting
of tenant improvements, as applicable, exceeds $25,000.00, 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, Capital Expenditures or Approved Leasing Expenses consisting of tenant
improvements, as applicable, and (f) such other evidence as Lender shall
reasonably request to demonstrate that the Required Repairs, Approved Capital
Expenditures or Approved Leasing Expenses, as applicable, to be funded by the
requested disbursement have been completed (in the case of Required Repairs,
Approved Capital Expenditures or Approved Leasing Expenses consisting of tenant
improvements) and are paid for or will be paid upon such disbursement to
Borrower.

“Reserve Funds” shall mean, collectively, all funds deposited by Borrower with
Lender or Cash Management Bank pursuant to Article 6 of this Agreement,
including, but not limited to, the Capital Expenditure Funds, the Insurance
Funds, the Tax Funds, the Required Repair Funds, the Operating Expense Funds,
the Ground Rent Funds, the Rollover Funds, the Excess Cash Flow Funds, any other
escrow or reserve fund established by the Loan Documents and such other amounts
deposited by or on behalf of Borrower with Lender as security for the Loan
pursuant to the Loan Documents.

 

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

“Restoration Threshold” shall mean one percent (1%) of the Outstanding Principal
Balance.

“Restricted Party” shall mean, collectively, (i) Borrower, Sole Member, any
Guarantor, and any Affiliated Manager and (ii) any shareholder, partner, member,
non-member manager or any other direct or indirect legal or beneficial owner of
Borrower, Sole Member, any Guarantor, any Affiliated Manager or any non-member
manager.

“Rollover Account” shall have the meaning set forth in Section 6.6.1.

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

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

“Sale Agreement” shall mean that certain Sale Agreement, dated as of June 14,
2012, between Central Pacific Bank, as seller, and TNP Acquisitions, LLC, as
buyer, as amended by a certain Amendment and Restatement of Sale Agreement,
dated as of October 9, 2012, with respect to the Property.

“Satisfactory Replacement Guarantor” shall have the meaning set forth in
Section 8.3.

“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).

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

“Security Deposit” means any Cash deposit or deposits delivered or required to
be delivered by a Tenant to Borrower (or to Manager, as agent for Borrower ) as
security for the performance of Tenant’s obligations under its Lease.

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

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

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

 

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“Significant Tenant” shall mean any Tenant under a Lease which, either
individually, or when taken together with any other Lease with such Tenant or
its Affiliates: (i) covers more than 2,500 square feet at the Property; or
(ii) constitutes more than 10% of the total annual Rents.

“Sole Member” shall mean TNP SRT Lahaina Gateway Mezz, LLC, a Delaware limited
liability company, the sole member of Borrower.

“Special Purpose Entity” shall mean a corporation, limited partnership or
limited liability company which at all times on and after the date hereof,
unless otherwise approved in writing by Lender:

(a) is organized (i) with respect to Borrower, solely for the purpose of
acquiring, developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Property, financing, refinancing the
Property, and transacting any and all lawful business that is incident,
necessary and appropriate to accomplish the foregoing, and (ii) with respect to
Sole Member and Holdings, solely for the purpose of acquiring, owning, holding
and managing the applicable Pledged Collateral;

(b) is not engaged and will not engage in any business unrelated to the
acquisition, development, ownership and/or leasing, management or operation of
the Property;

(c) does not have and will not have any assets other than those related to
(i) the Property, with respect to Borrower, and (ii) the applicable Pledged
Collateral, with respect to Sole Member and Holdings;

(d) has not engaged, sought or consented to and will not engage in, seek or
consent to any dissolution, winding up, liquidation, consolidation, merger, sale
of all or substantially all of its assets, transfer of partnership or membership
interests (if such entity is a general partner in a limited partnership or a
member in a limited liability company), or any amendment of its articles of
incorporation, by-laws, limited partnership certificate, limited partnership
agreement, articles of organization, certificate of formation or operating
agreement (as applicable) with respect to the matters set forth in this
definition;

(e) if such entity is (i) a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement, as
applicable, (ii) a limited partnership, has a certificate of limited partnership
and limited partnership agreement, or (iii) a corporation, has a certificate of
incorporation or articles of incorporation, that in each case provide that such
entity (A) will not dissolve, merge, liquidate or consolidate; (B) will not sell
all or substantially all of its assets or the assets of any other entity in
which it has a direct or indirect legal or beneficial ownership interest;
(C) will not engage in any other business activity, other than as permitted
pursuant to the Loan Documents, or amend its organizational documents with
respect to the matters set forth in this definition without the consent of
Lender; and (D) shall not take any action of the type described in clauses (a),
(c), (d) or (g) of the definition of “Material Action” with respect to itself or
to any other entity in which it has a direct or indirect legal or beneficial
ownership interest or is the direct or indirect general partner or manager
without the affirmative vote of all of the directors of the entity including the
Independent Directors or Independent Managers and in each case has a board of
directors or board of managers with not less than two (2) Independent Directors
or Independent Managers, as applicable;

 

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(f) if such entity is a limited partnership, has as its only general partner a
Single Purpose Entity;

(g) is and intends to remain solvent and pay its debts and liability (including,
as applicable, shared personnel and overhead expenses) from its assets as the
same shall become due, and is maintaining and intends to maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations;
provided, however, that the foregoing shall not require any Person to make
additional capital contributions or loans to such entity;

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

(i) has maintained and will maintain its accounts, books and records separate
from any other Person and, to the extent required under applicable law, will
file its own tax returns, except to the extent that it is required or allowed to
file consolidated tax returns by law;

(j) has not commingled and will not commingle its funds or assets with those of
any other Person;

(k) has held and will hold its assets in its own name;

(l) has maintained and will maintain financial statements that properly and
accurately show its separate assets and liabilities and do not show the assets
or liabilities of any other Person, and has not permitted and will not permit
its assets to be listed as assets on the financial statement of any other entity
except as required by or in accordance with GAAP; provided, however, such
entity’s assets and liabilities may be included in a consolidated financial
statement with its Affiliates provided that any such consolidated financial
statement shall contain a note indicating that its separate assets and
liabilities are neither available to pay the debts of the consolidated entity
nor constitute obligations of the consolidated entity;

(m) has paid and will pay its own liabilities and expenses, including, but not
limited to, the salaries of its own employees (if any), only out of its own
funds and assets, and has maintained and will maintain a sufficient number of
employees in light of its contemplated business operations; provided, however,
that the foregoing shall not require any Person to make any additional capital
contributions or loans to such entity;

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

(o) has not and will not assume or guarantee or become obligated for the debts
of any other Person or hold out its credit as being available to satisfy the
obligations of any other Person except as permitted pursuant to this Agreement;

 

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(p) other than with respect to the Pledged Collateral, has not and will not
acquire obligations or securities of its members or shareholders or any other
affiliate;

(q) has allocated and will allocate fairly and reasonably any overhead expenses
that are shared with an affiliate, including, but not limited to, paying for
shared office space and services performed by any officer or employee of an
affiliate;

(r) uses and will use separate invoices and checks bearing its name or the
address of the Property. The invoices, and checks utilized by the Single Purpose
Entity or utilized to collect its funds or pay its expenses shall bear its own
name and shall not bear the name of any other entity unless such entity is
acting as the Single Purpose Entity’s agent;

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

(t) has conducted business, held itself out and identified itself and will
conduct business, hold itself out and identify itself as a separate and distinct
entity under its own name or in a name franchised or licensed to it by a Person
other than an affiliate of Borrower and not as a division or part of any other
Person; except for services rendered under a business management services
agreement with an Affiliate so long as the manager, or equivalent thereof, under
such business management services agreement holds itself out as an agent of
Borrower;

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

(v) has not and will not have any obligation to indemnify its partners,
officers, directors or members, as the case may be, unless such obligation is
fully subordinated to the Debt and will not constitute a claim against it in the
event that, after payment of the Debt, cash flow is insufficient to pay such
obligation;

(w) if such entity is a corporation, it is required to consider the interests of
its creditors in connection with all corporate actions;

(x) except pursuant to the Loan Documents, does not and will not have any of its
obligations guaranteed by any Affiliate,

(y) has at least two (2) Independent Directors or Independent Managers; and

(z) without the affirmative vote of all its directors or managers (including its
Independent Directors or Independent Managers) or if the entity is a limited
partnership or limited liability company with more than one member, the
affirmative vote of all of the directors or manager (including the Independent
Directors or Independent Managers) of the general partner or managing member of
such entity), will not take any action of the type described in the definition
of “Material Action” with respect to itself or to any other entity in which it
has a direct or indirect legal or beneficial ownership interest other than as
expressly permitted in the Loan Documents.

 

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“Sponsor” shall mean Thompson National Properties, LLC.

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

“Stated Maturity Date” shall mean November     , 2017.

“Substitution” shall have the meaning set forth in Section 8.3.

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

“Sweep Event” shall mean (i) the occurrence of an Event of Default, (ii) the
occurrence of an event of default under the Management Agreement, (iii) the date
on which any Significant Tenant vacates, surrenders or ceases to conduct its
normal business operations at substantially all of its demised premises or
otherwise “goes dark” or notifies Borrower that it intends to vacate, surrender
or cease to conduct its normal business operations at substantially all of its
demised premises or otherwise “go dark”, or (iv) the date on which any
Significant Tenant (or any such Significant Tenant’s parent company, if
applicable) (a) shall become insolvent or a debtor in any Bankruptcy Action or
(b) shall have its senior unsecured debt rating be downgraded below “BBB-” by
S&P or the equivalent of such rating by any other Rating Agency.

“Tax Account” shall have the meaning set forth in Section 6.3.1.

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

“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.

“Tenant Security Account” shall mean an account into which shall be deposited
all Security Deposits.

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

“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in
the form acceptable to Lender issued with respect to the Property and insuring
the Lien of the Mortgage.

“Transfer” shall have the meaning set forth in Section 4.2.1.

 

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“Transferee’s Principals” shall mean, with respect to any proposed transferee,
such transferee’s shareholders, partners, members or non-member managers that,
directly or indirectly, (i) own ten percent (10%) or more of the legal,
beneficial or economic interests in such Transferee or (ii) are in control of
such Transferee. As used in this definition, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of such Person, whether
through ownership of voting securities, by contract or otherwise and the term
“controlled” shall have a correlative meaning.

“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.

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

“U.S. Obligations” shall mean securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, not subject to prepayment, call or early redemption
or (ii) other non-callable “government securities” as defined in Treasury
Regulations Section 1.860G-2(a)(8)(ii), as amended, which (a) will not result in
a reduction, downgrade or withdrawal of the ratings for the Securities or any
class thereof issued in connection with a Securitization, (b) are then
outstanding, and (c) are then being generally accepted by the Rating Agencies
without any reduction, downgrade or withdrawal of the ratings for the Securities
or any class thereof issued in connection with a Securitization.

“U.S. Person” shall mean any Person that is (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any state, commonwealth or
district thereof, or (iii) any estate or trust that is subject to United States
federal income taxation, regardless of the source of its income.

 

S-I-24