EXHIBIT 10.14

LOAN AGREEMENT

Dated as of July 31, 2003

Between

PHILADELPHIA PLAZA-PHASE II, LP,

as Borrower

and

MORGAN STANLEY MORTGAGE CAPITAL INC.,

as Lender

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TABLE OF CONTENTS

 

            Page

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

   1

Section 1.1

     Definitions    1

Section 1.2

     Principles of Construction    18

II. THE LOAN

   19

Section 2.1

     The Loan    19

2.1.1

     Agreement to Lend and Borrow    19

2.1.2

     Single Disbursement to Borrower    19

2.1.3

     The Note    19

2.1.4

     Use of Proceeds    19

2.1.5

     Modification of Components    19

Section 2.2

     Interest Rate    19

2.2.1

     Interest Rate    19

2.2.2

     Intentionally Omitted    19

2.2.3

     Default Rate    19

2.2.4

     Interest Calculation    20

2.2.5

     Usury Savings    20

Section 2.3

     Loan Payments    20

2.3.1

     Payment    20

2.3.2

     Intentionally Omitted    20

2.3.3

     Payment on Maturity Date    20

2.3.4

     Late Payment Charge    20

2.3.5

     Method and Place of Payment    21

2.3.6

     Payments After Event of Default    21

Section 2.4

     Prepayments    21

2.4.1

     Voluntary Prepayments    21

2.4.2

     Mandatory Prepayments    21

2.4.3

     Prepayments After Default    22

Section 2.5

     Defeasance    22

2.5.1

     Conditions to Defeasance    22

2.5.2

     Defeasance Collateral Account    24

2.5.3

     Successor Borrower    24

III. REPRESENTATIONS AND WARRANTIES

   24

Section 3.1

     Borrower Representations    24

3.1.1

     Organization    24

3.1.2

     Proceedings    25

3.1.3

     No Conflicts    25

3.1.4

     Litigation    25

3.1.5

     Agreements    25

 

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TABLE OF CONTENTS

(continued)

 

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3.1.6  

     Consents    25

3.1.7  

     Title    26

3.1.8  

     No Plan Assets    26

3.1.9  

     Compliance    26

3.1.10

     Financial Information    26

3.1.11

     Condemnation    27

3.1.12

     Utilities and Public Access    27

3.1.13

     Separate Lots    27

3.1.14

     Assessments    27

3.1.15

     Enforceability    27

3.1.16

     Assignment of Leases    27

3.1.17

     Insurance    27

3.1.18

     Licenses    27

3.1.19

     Flood Zone    27

3.1.20

     Physical Condition    28

3.1.21

     Boundaries    28

3.1.22

     Leases    28

3.1.23

     Filing and Recording Taxes    28

3.1.24

     Single Purpose    28

3.1.25

     Tax Filings    32

3.1.26

     Solvency    32

3.1.27

     Federal Reserve Regulations    32

3.1.28

     Organizational Chart    33

3.1.29

     Bank Holding Company    33

3.1.30

     No Other Debt    33

3.1.31

     Investment Company Act    33

3.1.32

     Access/Utilities    33

3.1.33

     No Bankruptcy Filing    33

3.1.34

     Full and Accurate Disclosure    33

3.1.35

     Foreign Person    33

3.1.36

     Fraudulent Transfer    33

3.1.37

     No Change in Facts or Circumstances; Disclosure    34

3.1.38

     Management Agreement    34

3.1.39

     Perfection of Accounts    34

3.1.40

     Borrower Entity/Separateness    34

3.1.41

     Owner Entity/Trailing Liabilities    36

3.1.42

     REA    37

Section 3.2

     Survival of Representations    37

Section 3.3

     Mezzanine Loan    37

IV. BORROWER COVENANTS

   37

Section 4.1

     Borrower Affirmative Covenants    37

 

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TABLE OF CONTENTS

(continued)

 

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4.1.1  

     Existence; Compliance with Legal Requirements    37

4.1.2  

     Taxes and Other Charges    37

4.1.3  

     Litigation    38

4.1.4  

     Access to Property    38

4.1.5  

     Further Assurances; Supplemental Mortgage Affidavits    38

4.1.6  

     Financial Reporting    38

4.1.7  

     Title to the Property    40

4.1.8  

     Estoppel Statement    40

4.1.9  

     Leases    41

4.1.10

     Alterations    43

4.1.11

     Intentionally Omitted    43

4.1.12

     Material Agreements    43

4.1.13

     Performance by Borrower    43

4.1.14

     Costs of Enforcement/Remedying Defaults    43

4.1.15

     Business and Operations    44

4.1.16

     Loan Fees    44

Section 4.2

     Borrower Negative Covenants    44

4.2.1  

     Due on Sale and Encumbrance; Transfers of Interests    44

4.2.2  

     Liens    45

4.2.3  

     Dissolution    45

4.2.4  

     Change in Business    45

4.2.5  

     Debt Cancellation    45

4.2.6  

     Affiliate Transactions    45

4.2.7  

     Zoning    45

4.2.8  

     Assets    46

4.2.9  

     No Joint Assessment    46

4.2.10

     Principal Place of Business    46

4.2.11

     ERISA    46

4.2.12

     Material Agreements    46

4.2.13

     REA    46

V. INSURANCE, CASUALTY AND CONDEMNATION

   47

Section 5.1

     Insurance    47

5.1.1

     Insurance Policies    47

5.1.2

     Insurance Company    51

Section 5.2

     Casualty and Condemnation    52

5.2.1

     Casualty    52

5.2.2

     Condemnation    52

5.2.3

     Casualty Proceeds    53

Section 5.3

     Delivery of Net Proceeds    53

 

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TABLE OF CONTENTS

(continued)

 

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5.3.1

     Minor Casualty or Condemnation    53

5.3.2

     Major Casualty or Condemnation    53

Section 5.4

     Net Proceeds    56

VI. RESERVE FUNDS

   56

Section 6.1

     Intentionally Deleted    56

Section 6.2

     Tax and Insurance Funds    56

6.2.1

     Deposits of Tax and Insurance Funds    56

6.2.2

     Release of Tax and Insurance Funds    57

Section 6.3

     Intentionally Deleted    57

Section 6.4

     Capital Expenditure/Leasing Funds    57

6.4.1

     Deposits of Capital Expenditure/Leasing Funds    57

6.4.2

     Release of Capital Expenditure/Leasing Funds    58

Section 6.5

     Debt Service Reserve Funds    60

6.5.1

     Deposits of Debt Service Reserve Funds    60

6.5.2

     Release of Debt Service Reserve Funds    60

Section 6.6

     Lease Termination Rollover Funds    60

6.6.1

     Deposits of Lease Termination Rollover Funds    60

6.6.2

     Release of Lease Termination Rollover Funds    61

Section 6.7

     Operating Expense Funds    62

6.7.1

     Deposits of Operating Expense Reserve Funds    62

6.7.2

     Release of Operating Expense Funds    62

Section 6.8

     Application of Reserve Funds    62

Section 6.9

     Security Interest in Reserve Funds    63

6.9.1

     Grant of Security Interest    63

6.9.2

     Income Taxes    63

6.9.3

     Prohibition Against Further Encumbrance    63

Section 6.10

     Letters of Credit    63

6.10.1

     Delivery of Letters of Credit    63

Section 6.11

     Provisions Regarding Letters of Credit    64

6.11.1

     Security for Debt    64

6.11.2

     Additional Rights of Lender    64

VII. PROPERTY MANAGEMENT

   65

Section 7.1

     The Management Agreement    65

Section 7.2

     Approval of New Manager    65

 

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TABLE OF CONTENTS

(continued)

 

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Section 7.3

     Replacement of Manager    65

VIII. PERMITTED TRANSFERS

   65

Section 8.1

     Permitted Transfer of the Property    65

Section 8.2

     Permitted Transfers of Interest in Borrower    66

IX. SALE AND SECURITIZATION OF MORTGAGE

   66

Section 9.1

     Sale of Mortgage and Securitization    66

Section 9.2

     Securitization Indemnification    68

X. DEFAULTS

   70

Section 10.1

     Event of Default    70

Section 10.2

     Remedies    72

Section 10.3

     Right to Cure Defaults    73

Section 10.4

     Remedies Cumulative    74

XI. MISCELLANEOUS

   74

Section 11.1  

     Successors and Assigns    74

Section 11.2  

     Lender’s Discretion    74

Section 11.3  

     Governing Law    75

Section 11.4  

     Modification, Waiver in Writing    76

Section 11.5  

     Delay Not a Waiver    76

Section 11.6  

     Notices    77

Section 11.7  

     Trial by Jury    77

Section 11.8  

     Headings    78

Section 11.9  

     Severability    78

Section 11.10

     Preferences    78

Section 11.11

     Waiver of Notice    78

Section 11.12

     Remedies of Borrower    78

Section 11.13

     Expenses; Indemnity    79

Section 11.14

     Schedules Incorporated    80

Section 11.15

     Offsets, Counterclaims and Defenses    80

Section 11.16

     No Joint Venture or Partnership; No Third Party Beneficiaries    80

Section 11.17

     Publicity    80

Section 11.18

     Waiver of Marshalling of Assets    81

Section 11.19

     Waiver of Offsets/Defenses/Counterclaims    81

Section 11.20

     Conflict; Construction of Documents; Reliance    81

Section 11.21

     Brokers and Financial Advisors    81

Section 11.22

     Exculpation    82

Section 11.23

     Prior Agreements    84

Section 11.24

     Servicer    84

Section 11.25

     Joint and Several Liability    84

Section 11.26

     Creation of Security Interest    84

Section 11.27

     Assignments and Participations    84

 

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TABLE OF CONTENTS

(continued)

 

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SCHEDULES

            

Schedule I

     -      Rent Roll   

Schedule II

     -      Intentionally Deleted   

Schedule III

     -      Organizational Chart   

Schedule IV

     -      Form of Subordination, Non-Disturbance and Attornment Agreement   

Schedule V

     -      Schedule of Amortized Payments   

Schedule VI

     -      Description of REA   

Schedule VII

     -      Approved Lease Form   

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of July 31, 2003 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between
MORGAN STANLEY MORTGAGE CAPITAL INC., a New York corporation, having an address
at 1221 Avenue of the Americas, 27th Floor, New York, New York 10020 (“Lender”)
and PHILADELPHIA PLAZA-PHASE II, LP, a Pennsylvania limited partnership having
an address at c/o Thomas Properties Group LLC, 515 South Flower, Suite 600, Los
Angeles, California 90071 (“Borrower”).

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

WITNESSETH:

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

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

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

I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided:

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

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

“Agent” shall mean PNC Bank, National Association, and any successor Eligible
Institution thereto.

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

“Alteration Threshold” shall mean $6,600,000.00.

“Annual Budget” shall mean the operating and capital budget for the Property
setting forth Borrower’s good faith estimate of gross revenue, operating
expenses (including the

 

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Philadelphia Gross Receipts Tax, Net Profits Tax and such other customary
business taxes incurred by Borrower in the ordinary course of operating the
Property and the cost of sundry services performed by Borrower for a Tenant, the
cost of which is reimbursable to Borrower by such Tenant), real estate taxes,
and Capital Expenditures for the applicable Fiscal Year.

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

“Approved Lease Form” shall mean the form of Lease approved by Lender and
attached hereto as Schedule VII.

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

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

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

“Borrower” shall mean Philadelphia Plaza-Phase II, LP, a Pennsylvania limited
partnership, together with its permitted successors and permitted assigns.

“Borrower General Partner” shall mean TCS Genpar, LLC, a Delaware limited
liability company.

“Borrower’s Partners” shall have the meaning set forth in Section 11.22(b).

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

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

 

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

“Capital Expenditure/Leasing Funds Amount” shall mean (a) with respect to the
period of time from the Closing Date but prior to July 1, 2009, an amount equal
to $178,739.25 and (b) with respect to the period of time from and after July 1,
2009 through the Maturity Date, an amount equal to $79,439.67.

“Capital Expenditure Funds” shall have the meaning set forth in
Section 6.4.2(b).

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

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

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

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

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

“Closing Date” shall mean the date of this Agreement.

“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.

“Component A1” shall mean that portion of the Loan in the amount of Thirty Three
Million and No/100 Dollars ($33,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

“Component A1 Rate” shall mean a rate per annum equal to Six and Three-Tenths
percent (6.30%).

“Component A2” shall mean that portion of the Loan in the amount of Thirty Three
Million and No/100 Dollars ($33,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

“Component A2 Rate” shall mean a rate per annum equal to Six and Three-Tenths
percent (6.30%).

“Component A3” shall mean that portion of the Loan in the amount of Thirty Three
Million and No/100 Dollars ($33,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

 

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“Component A3 Rate” shall mean a rate per annum equal to Six and Three-Tenths
percent (6.30%).

“Component A4” shall mean that portion of the Loan in the amount of Thirty Three
Million and No/100 Dollars ($33,000,000.00) made by Lender to Borrower pursuant
to this Agreement.

“Component A4 Rate” shall mean a rate per annum equal to Six and Three-Tenths
percent (6.30%).

“Components” shall mean, collectively, Component Al, Component A2, Component A3
and Component A4.

“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.

“Constituent Partner” shall have the meaning set forth in Section 11.22(b).

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

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

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

“Debt Service Reserve Funds” shall have the meaning set forth in Section 6.5.1.

“Debt Service Reserve Target Amount” shall have the meaning set forth in
Section 6.5.1.

“Debt Service Reserve Target Deposit” shall have the meaning set forth in
Section 6.5.1.

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

“Fitch” shall mean Fitch, Inc.

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

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

“Guarantor” shall mean Thomas Development Partners, LP, a California limited
partnership, or the guarantor under any replacement guaranty issued pursuant to
Section 5.16 of the Guaranty.

“Guarantor Operational Covenant” shall mean have the meaning set forth in the
Guaranty.

“Guaranty” shall mean that certain Guaranty of Recourse Obligations of even date
herewith from Guarantor for the benefit of Lender or any replacement guaranty
issued pursuant to Section 5.16 of the Guaranty.

“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 requited 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, (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.

 

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

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

“Insolvency Opinion” shall mean that certain bankruptcy nonconsolidation opinion
letter dated the date hereof delivered by Pircher, Nichols and Meeks in
connection with the Loan.

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

“Interest Period” shall mean (a) for the first interest period hereunder, (i) if
the Closing Date occurs on or before the eighth (8th) day of a calendar month,
the period commencing on the Closing Date and ending on (and including) the
eighth (8th) day of the calendar month in which the Closing Date occurs, and
(ii) if the Closing Date occurs on or after the ninth (9th) day of a calendar
month, the period commencing on the Closing Date and ending on (and including)
the eighth (8th) day of the following calendar month and (b) for each interest
period thereafter commencing August 9, 2003, the period commencing on the ninth
(9th) day of each calendar month and ending on (and including) the eighth
(8th) day of the following calendar month. Each Interest Period as set forth in
clause (b) above shall be a full month and shall not be shortened by reason of
any payment of the Loan prior to the expiration of such Interest Period.

“Interest Rate” shall mean (a) with respect to Component Al, the Component A1
Rate, (b) with respect to Component A2, the Component A2 Rate, (c) with respect
to Component A3, the Component A3 Rate and (d) with respect to Component A4, the
Component A4 Rate.

“Junior A Mezzanine Borrower” shall mean Philadelphia Plaza-Phase II, LP, a
Pennsylvania limited partnership.

“Junior A Mezzanine Lender” shall mean DB Realty Mezzanine Parallel Fund II,
LLC, a Delaware limited liability company.

“Junior A Mezzanine Loan” shall mean the mezzanine loan made by Junior A
Mezzanine Lender to Junior A Mezzanine Borrower in the aggregate principal
amount of Three Million Five Hundred Thousand and No/100 Dollars
($3,500,000.00).

“Junior A Mezzanine Loan Agreement” shall mean that certain Junior A Mezzanine
Loan Agreement dated as of the date hereof between Junior A Mezzanine Lender and
Junior A Mezzanine Borrower and TCS SPE 2, L.P., a Delaware limited partnership,
as a guarantor as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

 

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“Junior A Mezzanine Loan Documents” shall mean, collectively, the Junior A
Mezzanine Note, the Junior A Mezzanine Loan Agreement and any and all other
documents evidencing or securing the Junior A Mezzanine Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Junior A Mezzanine Note” shall mean that certain Junior A Mezzanine Promissory
Note dated the date hereof made by the Junior A Mezzanine Borrower to Junior A
Mezzanine Lender in the stated principal amount of $3,500,000.00, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“Junior B Mezzanine Borrower” shall mean Philadelphia Plaza-Phase II, LP, a
Pennsylvania limited partnership.

“Junior B Mezzanine Lender” shall mean DB Realty Mezzanine Parallel Fund 11,
LLC, a Delaware limited liability company.

“Junior B Mezzanine Loan” shall mean the mezzanine loan made by Junior B
Mezzanine Lender to Junior B Mezzanine Borrower in the aggregate principal
amount of Twenty Four Million Four Hundred Fifty Seven Thousand Three Hundred
Forty and No/100 Dollars ($24,457,340.00).

“Junior B Mezzanine Loan Agreement” shall mean that certain Junior B Mezzanine
Loan Agreement dated as of the date hereof between Junior B Mezzanine Lender and
Junior B Mezzanine Borrower and TCS SPE 3, L.P., a Delaware limited partnership,
as a guarantor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

“Junior B Mezzanine Loan Documents” shall mean, collectively, the Junior B
Mezzanine Note, the Junior B Mezzanine Loan Agreement and any and all other
documents evidencing or securing the Junior B Mezzanine Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Junior B Mezzanine Note” shall mean that certain Junior B Mezzanine Promissory
Note dated the date hereof made by the Junior B Mezzanine Borrower to Junior B
Mezzanine Lender in the stated principal amount of $24,457,340.00, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“Lease” shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property, and every modification, amendment or other agreement relating to such
lease, sublease, subsublease, or other agreement entered into in connection with
such lease, sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto. Subleases granted by parties
other than Borrower, or its predecessor in interest, shall not be included in
this definition unless there is any agreement with Borrower, or its predecessor
in interest, which could make such sublease a direct Lease with the fee owner of
the Property.

 

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

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

“Leasing Funds” shall have the meaning set forth in Section 6.4.2(c).

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or the
Property or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all permits, licenses and authorizations and regulations relating thereto.

“Lender” shall mean Morgan Stanley Mortgage Capital Inc., a New York
corporation, together with its successors and assigns.

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

“Letter of Credit” shall mean an irrevocable, unconditional, transferable, clean
sight draft letter of credit acceptable to Lender and the Rating Agencies
(either an evergreen letter of credit or one which does not expire until at
least thirty (30) Business Days after the Maturity Date) in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution. If at any time the bank issuing any such Letter of Credit shall
cease to be an Eligible Institution, Lender shall have the right immediately to
draw down the same in full and hold the proceeds of such draw in accordance with
the applicable provisions hereof.

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

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

“Loan” shall mean the loan in the original principal amount of One Hundred
Thirty Two Million and No/100 Dollars ($132,000,000.00) 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
Environmental Indemnity, the Guaranty, the Assignment of Management Agreement
and any other document pertaining to the Property as well as all other
documents, certificates and agreements now or hereafter executed and/or
delivered in connection with the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

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“Loss” shall mean any and all liabilities, claims, obligations, debts, actual
damages (excluding diminution in value and other consequential damages), fines,
penalties, charges, fees, actual out-of-pocket costs and expenses actually
incurred by Lender in connection with a matter.

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

“Management Agreement” shall mean that certain Amended and Restated Management
and Leasing Agreement entered into July 1, 1997 by and between Borrower and the
Manager, pursuant to which the Manager is to provide management, leasing and
other services with respect to the Property.

“Manager” shall mean Thomas Development Partners, LP, a California limited
partnership or any other manager approved in accordance with the terms and
conditions of the Loan Documents.

“Material Agreements” means each contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Property, other than the Management Agreement and the
Leases, under which there is an obligation of Borrower to pay more than
$500,000.00 per annum.

“Maturity Date” shall mean May 9, 2013 or such other date on which the final
payment of principal of the Note becomes due and payable as therein or herein
provided, whether at such stated maturity date, by declaration of acceleration,
or otherwise; provided, however, if a Defeasance Event occurs, the Maturity Date
shall mean the Permitted Prepayment Date.

“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,
charge or received on the indebtedness evidenced by the Note and as provided for
herein or the other Loan Documents, under the laws of such state or states whose
laws are held by any court of competent jurisdiction to govern the interest rate
provisions of the Loan.

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

“Monthly Debt Service Payment Amount” shall mean, on any Monthly Payment Date,
the amount of all accrued but unpaid interest, plus the amortization as set
forth on Schedule V.

“Monthly Operating Expense Amount” shall have the meaning set forth in
Section 6.7.1.

“Monthly Operating Expense Funds” shall have the meaning set forth in
Section 6.7.1.

 

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“Monthly Payment Date” shall mean the ninth (9th) day of every calendar month
occurring during the term of the Loan.

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

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

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

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

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

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

“Note” shall mean, collectively, Note Al, Note A2, Note A3 and Note A4, as
either of the same may hereafter be amended, supplemented, restated, increased,
extended, consolidated or severed from time to time.

“Note A1” shall mean that certain Promissory Note Al dated the date hereof
executed by Borrower and payable to the order of Lender which represents
Component Al of the Loan, as the same may hereafter be amended, supplemented,
restated, increased, extended, consolidated or severed from time to time.

“Note A2” shall mean that certain Promissory Note A2 dated the date hereof
executed by Borrower and payable to the order of Lender which represents
Component A2 of the Loan, as the same may hereafter be amended, supplemented,
restated, increased, extended, consolidated or severed from time to time.

“Note A3” shall mean that certain Promissory Note A3 dated the date hereof
executed by Borrower and payable to the order of Lender which represents
Component A3 of the Loan, as the same may hereafter be amended, supplemented,
restated, increased, extended, consolidated or severed from time to time.

“Note A4” shall mean that certain Promissory Note A4 dated the date hereof
executed by Borrower and payable to the order of Lender which represents
Component A4 of the Loan, as the same may hereafter be amended, supplemented,
restated, increased, extended, consolidated or severed from time to time.

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

 

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“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized officer of a constituent general partner of
Borrower or such other authorized representative which in all events shall be
subject to Section 11.22 hereof.

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

“Operating Expense Funds” shall have the meaning set forth in Section 6.7.1.

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

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

“Owner Related Party” or “Owner Related Parties” shall have the meaning set
forth in Section 4.1.30(d).

“Permitted Encumbrances” shall mean, collectively, (i) he Liens and security
interests created by the Loan Documents, (ii) all Liens, encumbrances and other
matters disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes
imposed by any Governmental Authority not yet due or delinquent, (iv) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender’s sole discretion and (v) easements which (a) are necessary for the
operation of the Property that do not and would not have a material and adverse
effect on the Property or (b) Lender has approved or may approve in Lender’s
discretion.

“Permitted Fund Manager” means any entity which is not subject to a bankruptcy
proceeding and is a nationally-recognized manager of investment funds investing
in debt or equity interests relating to commercial real estate which is
investing through a fund which has committed capital of at least $250,000,000.

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

“Permitted Prepayment Date” shall mean March 9, 2013.

“Permitted Transferee” shall mean (A) a corporation, partnership or limited
liability company (i) acceptable to Lender in its sole discretion, (ii) that
qualifies as a single purpose, bankruptcy remote entity under criteria
established by the Rating Agencies and (iii) whose counsel has delivered to
Lender a non-consolidation opinion reasonably acceptable to Lender and
acceptable to the Rating Agencies in their sole discretion, (B) Senior Mezzanine
under or its nominee, (C) Junior A Mezzanine Lender or its nominee or (D) Junior
B Mezzanine Lender or its nominee.

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

 

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

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

“Preferred Equity” shall mean the equity contribution as of the date hereof by
an Affiliate of Borrower into TCS SPE 2, L.P., a Delaware limited partnership of
Two Million and No/100 Dollars ($2,000,000).

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

“Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act), (b) Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001, and
relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, (c) the International
Emergency Economic Power Act, 50 U.S.C. § 1701 et. seq. and (d) all other Legal
Requirements relating to money laundering or terrorism.

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

“Qualified Transferee” shall mean (i) a real estate investment trust, bank,
saving and loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan, (ii) investment company, money
management firm or “qualified institutional buyer” within the meaning of Rule
144A under the Securities Act of 1933, as amended, or an institutional
“accredited investor” within the meaning of Regulation D under the Securities
Act of 1933, as amended, which is regularly engaged in the business of making or
owning mezzanine loans or loans of similar types to the Loan, (iii) a Qualified
Trustee in connection with a securitization of, the creation of collateralized
debt obligations (“CDO”) secured by or financing through an “owner trust” of, a
mezzanine loan, so long as (I) the special servicer or manager of such
securitization, CDO or trust has the Required Special Servicer Rating, (II) the
“controlling class” of such securitization vehicle is held by a Qualified
Transferee and (III) the operative documents of the related securitization
vehicle, CDO or financing must require that (x) the “controlling class” or
“equity interest” in such securitization vehicle or CDO are owned by a Qualified
Transferee or a Permitted Investment Fund (as hereinafter defined) and (y) if
any of the relevant trustee, special servicer, manager or controlling class
fails to meet the requirements of such clause, such entity must be replaced by a
qualifying entity within 30 days, (iv) an investment fund, limited liability
company, limited partnership or general partnership (a “Permitted Investment
Fund”) where a Qualified Transferee or a Permitted Fund Manager acts as the
general partner, managing member or fund manager and at least 50% of the equity
interests

 

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in such Permitted Investment Fund are owned, directly or indirectly, by one or
more of the following: a Qualified Transferee, an institutional “accredited
investor,” within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended, and/or a “qualified institutional buyer” or both within
the meaning of Rule 144A promulgated under the Securities Exchange Act of 1934
(provided each institutional “accredited investor,” or “qualified institutional
buyer” meets the test set forth in clause (vi)(A) below), as amended, (v) any
other lender or entity (including any opportunity funds) regularly engaged in
the business of making mezzanine loans which has been approved as a Qualified
Transferee hereunder by the Rating Agencies, (vi) an institution substantially
similar to any of the foregoing entities described in clauses (i) or (ii) of
this definition, and as to each of the entities described in clauses (i),
(ii) and (vi) provided such entity (A) has total assets (in name or under
management) in excess of $650,000,000 and (except with respect to a pension
advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s
equity of $250,000,000; and (B) is regularly engaged in the business of making
or owning commercial real estate loans or commercial loans secured by a pledge
of interests in a mortgage borrower or (vii) any entity Controlled (as defined
below) by any one or more of the entities described in this definition. For
purposes of this definition only, “Control” means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interest of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise.

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

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

“Rating Surveillance Charge” shall have the meaning set forth in Section 9.3.

“REA” shall mean, collectively, as the same may be amended, restated,
supplemented or otherwise modified from time to time, that certain Reciprocal
Easement Agreement more specifically described on Schedule VI attached hereto
and made a part hereof.

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

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect, including any successor or other
Regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

 

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

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

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

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

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

“Required Special Servicer Rating” means a servicer on its approved list of
special servicers in the case of S&P and, in the case of Moody’s, a special
servicer that is acting as special servicer in a commercial mortgage loan
securitization that was rated by Moody’s within the six month period prior to
the date of determination and Moody’s has not downgraded or withdrawn the
then-current rating on any class of commercial mortgage securities or placed any
class of commercial mortgage securities on watch citing the continuation of such
special servicer as special servicer of such commercial mortgage securities. The
requirement of any agency not a Rating Agency shall be disregarded.

“Reserve Funds” shall mean, collectively, the Capital Expenditure/Leasing Funds,
the Debt Service Reserve Funds, the Operating Expense Funds, the Tax and
Insurance Funds and the Lease Termination Rollover Funds.

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

“Restoration Threshold” shall mean $6,600,000.00.

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

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

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

 

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

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

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

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

“Senior Mezzanine Borrower” shall mean Philadelphia Plaza-Phase II, LP, a
Pennsylvania limited partnership.

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

“Senior Mezzanine Lender” shall mean DB Realty Mezzanine Investment Fund II,
L.L.C., a Delaware limited liability company.

“Senior Mezzanine Loan” shall mean the mezzanine loan made by Senior Mezzanine
Lender to Senior Mezzanine Borrower in the aggregate principal amount of Forty
Nine Million One Hundred Thirty Thousand and No/100 Dollars ($49,130,000.00).

“Senior Mezzanine Loan Agreement” shall mean that certain Senior Mezzanine Loan
Agreement dated as of the date hereof between Senior Mezzanine Lender and Senior
Mezzanine Borrower and TCS SPE 1, L.P., a Delaware limited partnership, as a
guarantor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

“Senior Mezzanine Loan Documents” shall mean, collectively, the Senior Mezzanine
Note, the Senior Mezzanine Loan Agreement and any and all other documents
evidencing or securing the Senior Mezzanine Loan, as amended, restated,
replaced, supplemented or otherwise modified from time to time.

“Senior Mezzanine Note” shall mean that certain Senior Mezzanine Promissory Note
dated the date hereof made by the Senior Mezzanine Borrower to Senior Mezzanine
Lender in the stated principal amount of $49,130,000.00, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

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

“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).

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

 

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

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

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

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

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

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

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

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

“TRIA” shall mean the Terrorism Risk Insurance Act of 2002, as the same may be
amended or otherwise modified.

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

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

“Treasury Rate” shall mean, as of the Maturity Date, the yield, calculated by
Lender by linear interpolation (rounded to the nearest one-thousandth of one
percent ( i.e. , 0.001%) of the yields of non-inflation adjusted noncallable
United States Treasury obligations with terms (one longer and one shorter) most
nearly approximating the period from such date of determination to the Maturity
Date, as determined by Lender on the basis of Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. Governmental
Security/Treasury Constant Maturities, or another nationally recognized source
of financial market information selected by Lender. Lender’s determination of
the Treasury Rate shall be final absent manifest error.

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

“Unbudgeted Expense” shall mean any operating expense or capital expenditure
which is necessary for the maintenance, operation and use of the Property not
set forth in the Approved Annual Budget and for which budget approval has not
been obtained from Lender,

 

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Senior Mezzanine Lender, Junior A Mezzanine Lender and Junior B Mezzanine
Lender; provided, however, that such an operating expense or capital expenditure
shall not be an Unbudgeted Expense unless in the reasonable opinion of Lender,
the incurrence of the same was necessary for the proper maintenance, operation
and use of the Property and was certified as such by Lender to Agent.

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

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

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

“U.S. Obligations” shall mean direct full faith and credit obligations of the
United States of America that are not subject to prepayment, call or early
redemption.

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

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

 

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II. THE LOAN

Section 2.1 The Loan.

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

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

2.1.3 The Note. The Loan shall be evidenced by the Note in the aggregate
principal amount of One Hundred Thirty Two Million and No/100 Dollars
($132,000,000.00) and shall be repaid in accordance with the term of this
Agreement and the Note.

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

2.1.5 Modification of Components. Lender shall have the right, at any time, to
modify the Loan in order to create additional Components, reduce the number of
Components, reallocate the principal balances of the Components or eliminate the
Component structure of the Loan provided that (a) the total principal balance of
the Loan immediately after the effective date of such modification equals the
outstanding principal balance of the Loan immediately prior to such
modification, and (b) the weighted average of the interest rates for all
Components always equals the weighted average of the interest rates for all
Components immediately prior to such modification. Lender shall have the right
to modify the Components in accordance with this Section 2.1.5 upon prior notice
to Borrower (in which event such modification shall then be deemed effective).
Lender shall provide certified copies of any modification of the Components to
Borrower. If requested by Lender, Borrower shall promptly execute an amendment
to this Agreement and the Note to evidence such modification.

Section 2.2 Interest Rate.

2.2.1 Interest Rate. Interest on the outstanding principal balance of each
Component shall accrue from the Closing Date up to but excluding the Maturity
Date at the Interest Rate.

2.2.2 Intentionally Omitted.

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

 

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

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

Section 2.3 Loan Payments.

2.3.1 Payment. Borrower shall make a payment to Lender of interest only on
August 9, 2003 for the period from the Closing Date through and including
August 8, 2003 (unless the Closing Date is the ninth day of a calendar month, in
which case no such separate payment of interest shall be due). Borrower shall
make a payment to Lender of principal and interest in the amount of the Monthly
Debt Service Payment Amount on the Monthly Payment Date occurring in
September 9, 2003 and on each Monthly Payment Date thereafter to and including
the Maturity Date. Each payment shall be applied (a) first to accrued and unpaid
interest on all of the Components and (b) the balance shall be applied to
principal of all the Components, pro rata and pari passu.

2.3.2 Intentionally Omitted.

2.3.3 Payment on Maturity Date. Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest (including without limitation the Accrued Interest) and all other
amounts due hereunder and under the Note, the Mortgage and the other Loan
Documents.

2.3.4 Late Payment Charge. If any principal, interest or any other sum due under
the Loan Documents, other than the payment of principal due on the Maturity
Date, is not paid by Borrower on the date on which it is due, Borrower shall pay
to Lender upon demand an amount equal to the lesser of three percent (3%) of
such unpaid sum or the maximum amount permitted by applicable law in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgage and the other Loan
Documents.

 

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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 2:00 P.M., New York City time, on the date when
due and shall be made in lawful money of the United States of America in
immediately available funds at Lender’s office, and any funds received by Lender
after such time shall, for all purposes hereof, be deemed to have been paid on
the next succeeding Business Day.

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

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

2.3.6 Payments After Event of Default. Any amounts received by Lender following
an Event of Default shall be applied by Lender toward the payment of interest
and/or principal of any of the Components and/or any other amounts due under the
Loan Documents in such order, priority and proportions as Lender in its sole
discretion shall deem proper.

Section 2.4 Prepayments.

2.4.1 Voluntary Prepayments. Except as otherwise provided herein, Borrower shall
not have the right to prepay the Loan in whole or in part. On and after the
Permitted Prepayment Date, Borrower may, provided no Event of Default has
occurred and is continuing, at its option and upon ten (10) Business Days prior
notice to Lender (or such shorter period of time as may be permitted by Lender
in its sole discretion), prepay the Debt in whole on any date without payment of
the Yield Maintenance Premium or any other premium or fee. Any prepayment
received by Lender on a date other than a Monthly Payment Date shall include
interest which would have accrued thereon to the next Monthly Payment Date.
Borrower may revoke its notice of prepayment if written notice of such
revocation is provided to Lender at least five (5) Business Days prior to the
proposed prepayment date.

2.4.2 Mandatory Prepayments. On each date on which Borrower or Lender actually
receives a distribution of Net Proceeds, and if Lender is not obligated to make
such Net Proceeds available to Borrower for a Restoration, Borrower shall, at
Lender’s option, prepay the outstanding principal balance of the Note in an
amount equal to one hundred percent (100%) of such Net Proceeds together with
interest that would have accrued on such amounts through the next Monthly
Payment Date. The full amount of any such prepayment shall be applied to the
Components in the order specified in Section 2.3.1 and any amount of such
prepayment in excess of that required to pay the Debt in full and such interest
shall, if any of the Senior Mezzanine Loan, the Junior A Mezzanine Loan or the
Junior B Mezzanine Loan is in existence, be paid in

 

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the following order of priority: (a) first to the Senior Mezzanine Loan,
(b) second to the Junior A Mezzanine Loan and to the Preferred Equity, pari
passu, (c) third to the Junior B Mezzanine Loan and (d) with any remainder being
promptly remitted to Borrower. No Yield Maintenance Premium or other prepayment
premium or fee shall be due in connection with any prepayment made pursuant to
this Section 2.4.2. Any prepayment received by Lender pursuant to this
Section 2.4.2 on a date other than a Monthly Payment Date shall be held by
Lender as collateral security for the Loan in an interest bearing account, with
such interest accruing to the benefit of Borrower, and shall be applied by
Lender on the next Monthly Payment Date.

2.4.3 Prepayments After Default. If after an Event of Default but prior to the
Permitted Prepayment Date, payment of all or any part of the principal of the
Loan is tendered by Borrower, a purchaser at foreclosure or any other Person,
such tender shall be deemed an attempt to circumvent the prohibition against
prepayment set forth in Section 2.4.1 and Borrower, such purchaser at
foreclosure or other Person shall pay the Yield Maintenance Premium, in addition
to the outstanding principal balance, all accrued and unpaid interest and other
amounts payable under the Loan Documents. The full amount of any such prepayment
shall be applied by Lender toward the payment of interest and/or principal of
any of the Components and/or any other amounts due under the Loan Documents in
such order, priority and proportions as Lender in its sole discretion shall deem
proper.

Section 2.5 Defeasance.

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

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

(ii) Borrower shall pay to Lender (A) all payments of principal and interest due
on the Loan to and including the Defeasance Date and (B) all other sums, then
due under the Note, this Agreement, the Mortgage and the other Loan Documents;

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

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

(v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is
standard in commercial lending transactions and subject only to customary
qualifications, assumptions and exceptions opining, among other things, that
(A) Lender has a legal and valid perfected first priority security interest in
the Defeasance Collateral Account and the Defeasance Collateral, (B) if a
Securitization has occurred, the REMIC Trust formed pursuant to such

 

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Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a result
of a Defeasance Event pursuant to this Section 2.5, (C) the Defeasance Event
will not result in a deemed exchange for purposes of the Code and will not
adversely affect the status of the Note as indebtedness for federal income tax
purposes, (D) delivery of the Defeasance Collateral and the grant of a security
interest therein to Lender shall not constitute an avoidable preference under
Section 547 of the Bankruptcy Code or applicable state law and (E) a
non-consolidation opinion with respect to the Successor Borrower,

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

(vii) Borrower shall deliver an Officer’s Certificate certifying that the
requirements set forth in this Section 2.5 have been satisfied;

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

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

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

(b) If Borrower has elected to defease the Note and the requirements of this
Section 2.5 have been satisfied, the Property shall be released from the lien of
the Mortgage and the Defeasance Collateral pledged pursuant to the Security
Agreement shall be the sole source of collateral securing the Note. In
connection with the release of the Lien, Borrower shall submit to Lender, not
less than fifteen (15) days prior to the Defeasance Date (or such shorter time
as is acceptable to Lender in its sole discretion), a release of Lien (and
related Loan Documents) for execution by Lender. Such release shall be in a form
appropriate in the jurisdiction in which the Property is located. In addition,
Borrower shall provide all other documentation Lender reasonably requires to be
delivered by Borrower in connection with such release, together with an
Officer’s Certificate certifying to Borrower’s actual knowledge that such
documentation (i) is in compliance with all Legal Requirements, and (ii) will
effect such release in accordance with the terms of this Agreement. Borrower
shall pay all costs, taxes and expenses association with the release of the lien
of the Mortgage, including Lender’s reasonable attorneys’ fees. Except as set
forth in this Section 2.5 or in connection with a prepayment of the Debt in full
described in and permitted by Section 2.4.1 and Section 2.4.2, no repayment,
prepayment or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of the lien of
the Mortgage on the Property.

 

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

2.5.3 Successor Borrower. In connection with a Defeasance Event under this
Section 2.5, Borrower shall, if required by the Rating Agencies or if Borrower
elects to do so, establish or designate a successor entity (the “Successor
Borrower”) which shall be a single purpose bankruptcy remote entity and which
shall be approved by the Rating Agencies. Any such Successor Borrower may, at
Borrower’s option, be an Affiliate of Borrower unless the Rating Agencies shall
require otherwise. Borrower shall transfer and assign all obligations, rights
and duties under and to the Note, together with the Defeasance Collateral to
such Successor Borrower. Such Successor Borrower shall assume the obligations
under the Note and the Security Agreement and Borrower shall be relieved of its
obligations under such documents. Borrower shall pay a minimum of $1,000 to any
such Successor Borrower as consideration for assuming the obligations under the
Note and the Security Agreement. Borrower shall pay all costs and expenses
incurred by Lender, including Lender’s attorney’s fees and expenses, incurred in
connection therewith.

III. REPRESENTATIONS AND WARRANTIES

Section 3.1 Borrower Representations.

Borrower represents and warrants that as of the Closing Date:

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

 

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(b) Borrower’s exact legal name is correctly set forth in the first paragraph of
this Agreement. Borrower is an organization of the type specified in the first
paragraph of this Agreement. Borrower is incorporated or organized under the
laws of the state specified in the first paragraph of this Agreement. Borrower’s
principal place of business and chief executive office, and the place where
Borrower keeps its books and records, including recorded data of any kind or
nature, regardless of the medium of recording, including software, writings,
plans, specifications and schematics, has been for the preceding four (4) months
(or, if less than four (4) months, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth in the first
paragraph of this Agreement (unless Borrower notifies Lender within five
(5) Business Days after the date of such change). Borrower’s organizational
identification number, if any, assigned by the state of its incorporation or
organization is 1611765. Borrower’s federal tax identification number is
52-1685931. Borrower is not subject to back-up withholding taxes.

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

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

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

3.1.5 Agreements. Borrower is not in default with respect to any order or decree
of any court or any order, regulation or demand of any Governmental Authority,
which default would materially and adversely impair Borrower’s ability to repay
the Loan or Lender’s ability to enforce its rights and remedies under the Loan
Documents.

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

 

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3.1.7 Title. Borrower has good, marketable and insurable fee simple title to the
real property comprising part of the Property and good title to the balance of
the Property owned by it, free and clear of all Liens whatsoever except the
Permitted Encumbrances. The Mortgage, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create (i) a valid, first priority,
perfected lien on 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 any Permitted Encumbrances.
There are no mechanics’, materialman’s or other similar liens or claims which
have been filed for work, labor or materials affecting the Property which are or
may be liens prior to, or equal or coordinate with, the lien of the Mortgage.
None of the Permitted Encumbrances, individually or in the aggregate, materially
impair the use or operations of the Property or impair Borrower’s ability to pay
its obligations in a timely manner.

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

3.1.9 Compliance. Except as otherwise disclosed in writing prior to the Closing
Date by Borrower to Lender, Borrower and the Property and the use thereof comply
in all material respects with all applicable Legal Requirements, including,
without limitation, building and zoning ordinances and codes and Prescribed
Laws. Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the violation of which would
materially adversely affect Borrower’s ability to repay the Loan or Lender’s
ability to enforce its rights and remedies under the Loan Documents. Borrower
has not committed any act which may give any Governmental Authority the right to
cause Borrower to forfeit the Property or any part thereof or any monies paid in
performance of Borrower’s obligations under any of the Loan Documents.

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

 

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

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

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

3.1.14 Assessments. Except as disclosed in the Title Policy, there are no
pending, or to Borrower’s actual knowledge, proposed special or other
assessments for public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may result in such
special or other assessments.

3.1.15 Enforceability. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

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

3.1.17 Insurance. Borrower has obtained and has delivered to Lender original or
certified copies of all of the Policies or so-called “Acord” certificates
evidencing coverage thereof, with all premiums prepaid thereunder, reflecting
the insurance coverages, amounts and other requirements set forth in this
Agreement. No claims have been made under any of the Policies, and no Person,
including Borrower, has done, by act or omission, anything which would impair
the coverage of any of the Policies.

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

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.

 

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3.1.20 Physical Condition. To Borrower’s actual knowledge and except as
otherwise identified in the Property Condition Report, the Property, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; there exists no structural
or other material defects or damages in the Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.

3.1.21 Boundaries. Except as may be shown on the Survey, 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 materially and adversely affect the value or
marketability of the Property except those which are insured against by title
insurance.

3.1.22 Leases. Borrower represents and warrants to Lender with respect to the
Leases that: (a) the rent roll attached hereto as Schedule I is true, complete
and correct and the Property is not subject to any Leases other than the Leases
described in Schedule I , (b) the Leases identified on Schedule I are in full
force and effect and to Borrower’s actual knowledge, there are no defaults
thereunder by either party, (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 (including 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) except as otherwise disclosed in writing prior to the Closing Date
by Borrower to Lender, any payments, free rent, partial rent, rebate of rent or
other payments, credits, allowances or abatements required to be given by
Borrower to any Tenant has already been received by such Tenant and (g) all
security deposits are being held in accordance with Legal Requirements.

3.1.23 Filing and Recording Taxes. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, have been paid or are being paid
simultaneously herewith.

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

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

 

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(b) Borrower will not engage in any business other than the acquisition,
development, ownership, operating, leasing, management, maintenance, holding,
selling and otherwise dealing with the Property and entering into the Loan, and
activities incidental thereto and Borrower will conduct and operate its business
as presently conducted and operated.

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

(d) Borrower has not incurred and will not incur any Indebtedness other than
(i) the Debt, Taxes and Other Charges, (ii) unsecured trade payables and
operational debt not evidenced by a note and in an aggregate amount not
exceeding $500,000.00 at any one time (not including trade payables Borrower is
contesting in good faith up to an aggregate amount of $250,000.00 and
(iii) Indebtedness incurred in the financing of equipment and other personal
property used on the Property with annual payments not exceeding $150,000.00 in
the aggregate; provided that any Indebtedness incurred pursuant to subclauses
(ii) and (iii) shall be (x) not more than sixty (60) days past due and
(y) incurred in the ordinary course of business. No Indebtedness other than the
Debt may be secured (subordinate or pari passu) by the Property.

(e) Borrower has not made and will not make any loans or advances to any third
party (including any Affiliate or constituent party) but provided that this
shall not prohibit tenant allowances pursuant to Leases permitted under this
Agreement, and shall not acquire obligations or securities of its Affiliates or
any other Person (other than cash or investment grade securities).

(f) Borrower is and will remain solvent and Borrower will pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due to the extent of available funds.

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

(h) Borrower will maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates and any constituent party.
Borrower’s assets will not be listed as assets on the financial statement of any
other Person, provided, however, that Borrower’s assets may be included in a
consolidated financial statement of its Affiliates provided that (i) appropriate
notation shall be made on such consolidated financial statements to indicate the
separateness of Borrower and such Affiliates and to indicate that Borrower’s
assets and credit

 

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are not available to satisfy the debts and other obligations of such Affiliates
or any other Person and (ii) such assets shall be listed on Borrower’s own
separate balance sheet. Borrower will file its own tax returns (to the extent
Borrower is required to file any such tax returns) and will not file a
consolidated federal income tax return with any other Person. Borrower shall
maintain all Pennsylvania limited partnership formalities.

(i) Borrower will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including any
Affiliate of Borrower or any constituent party of Borrower), shall correct any
known misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other, shall maintain and utilize separate stationery,
invoices and checks bearing its own name and shall allocate fairly and
reasonably any overhead for shared office space, provided, however, to the
extent invoices for such services are not allocated and separately billed to
each entity, there is a system in place that provides that the amount thereof
that is to he allocated among the relevant parties will be reasonably related to
the services provided to each such party. The invoices, checks and stationery
utilized by Borrower 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 clearly designated as being Borrower’s agent.

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

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

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

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

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

(o) (i) If Borrower is a limited partnership or a limited liability company
(other than a single member limited liability company), each general partner or
managing member (each, an “SPC Party”) shall be a limited liability company or
corporation whose sole asset is its interest in Borrower and each such SPC Party
will at all times comply (except as to Borrower General Partner with respect to
Section 3.1.24(a), (b), (d) and (n) above), and will cause Borrower to comply,
with each of the representations, warranties, and covenants contained in this
Section 3.1.24 as if such representation, warranty or covenant was made directly
by such SPC Party (except as to Borrower General Partner with respect to
Section 3.1.24(a), (b), (d) and

 

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(n) above). Upon the withdrawal or the disassociation of an SPC Party from
Borrower, Borrower shall immediately appoint a new SPC Party whose articles of
organization or incorporation, as applicable, are substantially similar to those
of such SPC Party and deliver a new non-consolidation opinion to the Rating
Agency or Rating Agencies, as applicable, with respect to the new SPC Party and
its equity owners.

(ii) If Borrower or SPC Party is a single member limited liability company, such
Borrower or SPC Party shall have at least two (2) springing members, one of
which, upon the dissolution of such sole member or the withdrawal or the
disassociation of the sole member from such Borrower or SPC Party, shall
immediately become the sole member of such Borrower or SPE Party, and the other
of which shall become the sole member of such Borrower or SPC Party if the first
such springing member no longer is available to serve as such sole member.

(p) Borrower shall at all times cause there to be at least two duly appointed
members of the board of directors or independent managers, as applicable, who
are provided by a nationally-recognized company that provides professional
independent directors (Lender hereby approves of the use of Entity Services as
the provider for independent directors) (each, an “Independent Director”) of
each SPC Party who shall not have been at the time of such individual’s
appointment or at any time while serving as a director of such SPC Party and
Borrower, and may not have been at any time during the preceding five years
(i) a stockholder, director (other than as an Independent Director of SPC
Party), officer, employee, partner, member, attorney or counsel of such SPC
Party, Borrower or any Affiliate of any of them, (ii) a creditor, customer,
supplier or other Person who derives any of its purchases or revenues from its
activities with such SPC Party, Borrower or any Affiliate of any of them (other
than his or her service as an Independent Director of SPC Party), (iii) a Person
or other entity controlling or under common control with any such stockholder,
partner, member, creditor, customer, supplier or other Person, or (iv) a member
of the immediate family of any such stockholder, director, officer, employee,
partner, member, creditor, customer, supplier or other Person. As used in this
definition, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management, policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise.

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

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

 

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(s) Borrower will not permit any Affiliate or constituent party independent
access to its bank accounts except for the Manager, as agent, pursuant to the
terms of the Management Agreement.

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

(u) Borrower shall compensate each of its consultants and agents from its funds
for services provided to it and pay from its own assets all obligations of any
kind incurred.

(v) Borrower shall not pledge its assets for the benefit of any other Person.

(w) Borrower shall not form, acquire, or hold any subsidiary (whether corporate,
partnership, limited liability company or other) or own any equity interest in
any other entity.

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

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

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

 

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

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

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

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

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

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

3.1.34 Full and Accurate Disclosure. To Borrower’s actual knowledge, no
information contained in this Agreement, the other Loan Documents, or any
written statement furnished by or on behalf of Borrower pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.

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

3.1.36 Fraudulent Transfer. Borrower (a) has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor
and (b) has received reasonably equivalent value in exchange for its obligations
under the Loan Documents. The assets of Borrower do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debts and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts reasonably expected to be payable on or in
respect of its obligations).

 

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

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

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

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

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

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

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

3.1.40 Borrower Entity/Separateness. Borrower hereby represents with respect to
Borrower, from the date of formation of Borrower on March 28, 1990 to the date
of this Agreement as follows:

(a) Borrower’s business has been limited solely to (i) acquiring, owning,
developing, holding, leasing, financing, operating and managing the Property,
(ii) entering into financings and refinancings of the Property and
(iii) transacting any and all lawful business that was incident, necessary and
appropriate to accomplish the foregoing.

 

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(b) Borrower has not engaged in any business other than as set forth in
(a) above.

(c) Borrower has not owned any asset or property other than (i) the Property,
and (ii) incidental personal and intangible property reasonably necessary for
and used or to be used in connection with the ownership or operation of the
Property.

(d) Borrower has not entered into any contract or agreement with any Affiliate
of Borrower, any constituent party of Borrower, any owner of Borrower, any
guarantors of the obligations of Borrower or any Affiliate of any such
constituent party, owner or guarantor (individually, a “Borrower Related Party”
and collectively, the “Borrower Related Parties”), except upon terms and
conditions that are commercially reasonable.

(e) Borrower has not made any loans or advances to any Person and has not
acquired obligations or securities of any Borrower Related Party (other than
cash or investment-grade securities).

(f) Borrower has paid its debts and liabilities (including, as applicable, share
personnel and overhead expenses) from its assets as the same have become due
except for the debts permitted under Section 3.1.24(d) of this Agreement.

(g) Borrower has done or caused to be done all things necessary to observe
organizational formalities and preserve its existence.

(h) Borrower has maintained all of its books, records, financial statements and
bank accounts in accordance with the provisions of this Agreement, and
Borrower’s assets have not been listed as assets on the financial statement of
any other Person. Borrower has filed its own tax returns and has not filed a
consolidated federal income tax return with any other Person. Borrower has
maintained all Pennsylvania partnership formalities.

(i) Borrower has been, and at all times has held itself out to the public as, a
legal entity separate and distinct from any other Person (including any
Affiliate or other Borrower Related Party), has corrected any known
misunderstanding regarding its status as a separate entity, has conducted its
business in its own name, has not identified itself or any of its Affiliates as
a division or part of the other, has maintained and utilized separate invoices
and checks.

(j) Borrower has not commingled its assets with those of any other Person and
has held all of its assets in its own name.

(k) Borrower has not guaranteed or become obligated for the debts of any other
Person and has not held itself out as being responsible for or have its credit
available to satisfy the debts or obligations of any other Person.

(l) Borrower has allocated fairly and reasonably any overhead expenses that have
been shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate or Borrower Related Party, provided,
however, to the extent invoices for such services are not allocated and
separately billed to each entity, there is a system

 

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in place that provides that the amount thereof that is to be allocated among the
relevant parties will be reasonably related to the services provided to each
such party. The invoices, checks and stationery utilized by Borrower 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 clearly designated as
being Borrower’s agent.

(m) Borrower has not pledged its assets for the benefit of any other Person
other than with respect to loans secured by the Property and no such pledge
remains outstanding except in connection with the Loan.

(n) Borrower has maintained a sufficient number of employees in light of its
contemplated business operations and has paid the salaries of its own employees
from its own funds.

(o) Borrower has not made loans to any other person or has bought or held
evidence of indebtedness issued by any other person or entity that are still
outstanding except for tenant allowances permitted under Section 3.1.24(e) of
this Agreement.

(p) Intentionally Deleted.

(q) Borrower has not incurred any indebtedness that is still outstanding other
than (i) indebtedness that is permitted under the Loan Documents and
(ii) indebtedness satisfied as of the date hereof

(r) Borrower has received a Phase One environmental audit for the Property and
no such environmental audit has indicated any area of environmental concern
which has not been corrected in full.

(s) Except for guarantees permitted under the Loan Documents, no Affiliate of
Borrower has guaranteed indebtedness of Borrower that is still outstanding other
than those described in the Insolvency Opinion.

3.1.41 Owner Entity/Trailing Liabilities. Except for that certain lawsuit
between Borrower and Deutsche Bank Trust Company Americas which is concurrently
herewith being jointly dismissed with prejudice, (a) Borrower is not now party
to any lawsuit, arbitration or adversarial legal proceeding except (i) lawsuits,
arbitrations or legal proceedings which have been dismissed with prejudice (and
for which the time period for any and all appeals has expired), (ii) lawsuits,
arbitrations or legal proceedings which have been paid or satisfied in full,
(iii) lawsuits, arbitrations or legal proceedings for which Borrower’s liability
is fully covered by Borrower’s insurance, or (iv) bankruptcy proceedings in
which Borrower is or was a creditor or proceedings in which Borrower is or was a
plaintiff ( provided no counterclaims or crossclaims have been asserted against
Borrower).

(b) No judgments or liens of any nature are filed against or imposed upon
Borrower or any of its property or assets, except for tax liens with respect to
taxes that are not yet due and payable and liens disclosed in the Title Policy.

(c) Intentionally deleted.

 

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(d) Borrower is not involved in any dispute with any taxing authority other than
normal appeals relating to (i) valuation for ad valorem tax purposes and
(ii) calculations of sales tax on utility consumption.

(e) Borrower has no material contingent or actual obligations not related to the
Property.

(f) Borrower is and, since its formation has been duly formed, validly existing,
and in good standing under the laws of the State of Pennsylvania.

(g) Borrower is not delinquent in the payment of any Taxes.

3.1.42 REA. The REA is in full force and effect and neither Borrower nor to
Borrower’s knowledge, any other party to the REA, 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
thereunder. Except as set forth on Schedule VI, the REA has not been modified,
amended or supplemented.

Section 3.2 Survival of Representations. The representations and warranties set
forth in Section 3.1 shall survive, and any covenants contained in Section 3.1
shall continue, for so long as any amount remains payable to Lender under this
Agreement or any of the other Loan Documents.

Section 3.3 Mezzanine Loan. Notwithstanding the foregoing provisions of this
Article 3, Borrower shall not be deemed to have violated any of the foregoing
representations by signing the Senior Mezzanine Note, the Junior A Mezzanine
Note, the Junior B Mezzanine Note, the Senior Mezzanine Loan Agreement, the
Junior A Mezzanine Loan Agreement and the Junior B Mezzanine Loan Agreement in
connection with the Senior Mezzanine Loan, the Junior A Mezzanine Loan and the
Junior B Mezzanine Loan.

IV. BORROWER COVENANTS

Section 4.1 Borrower Affirmative Covenants.

Borrower hereby covenants and agrees with Lender that:

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

4.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Property or any part
thereof as the same become due and payable, provided , however , Borrower’s
obligation to directly pay Taxes shall be suspended for so long as Borrower
complies with the terms and provisions of Section 6.2 hereof. Borrower shall
furnish to Lender receipts for the payment of the Taxes and the Other Charges
prior to the date the same shall become delinquent; provided , however , that

 

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Borrower is not required to furnish such receipts for payment of Taxes in the
event that such Taxes have been paid by Lender pursuant to Section 6.2 hereof.
Borrower shall not permit or suffer and shall promptly discharge any lien or
charge against the Property; however, 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 (i) no Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in accordance
with all applicable statutes, laws and ordinances; (iii) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the Property; and (vi) Borrower shall deposit with Lender
cash, or other security as may be approved by Lender, in an amount equal to one
hundred twenty-five percent (125%) of the contested amount, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon. Lender may pay over any such cash or other security held by
Lender to the claimant entitled thereto at any time when, in the good faith
judgment of Lender, the entitlement of such claimant is established.

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

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

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

(a) execute and deliver to Lender such 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 of Borrower under the Loan Documents, as
Lender may reasonably require; and

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

4.1.6 Financial Reporting.

(a) Borrower shall keep and maintain or will cause to be kept and maintained
proper and accurate books and records, in accordance with GAAP, reflecting the
financial affairs of Borrower. Lender shall have the right from time to time
during normal business hours upon reasonable written notice (but no more than
twice per year when there is no occurrence and continuance of an Event of
Default) 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.

 

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(b) Borrower shall furnish Lender annually, within one hundred twenty (120) days
following the end of each Fiscal Year, a complete copy of Borrower’s annual
financial statements audited by a “Big Four” accounting firm or other
independent certified public accountant reasonably acceptable to Lender prepared
in accordance with GAAP covering the Property, including statements of income
and expense and cash flow for Borrower and the Property and a balance sheet for
Borrower. Borrower’s annual financial statements shall be accompanied by an
Officer’s Certificate stating that such annual financial statement presents
fairly the financial condition and the results of operations of Borrower and the
Property. Together with Borrower’s annual financial statements, Borrower shall
furnish to Lender an Officer’s Certificate certifying as of the date thereof
whether to Borrower’s actual knowledge each such financial statement is true,
correct and complete in all respects. In addition, Borrower shall provide Lender
with the annual financial statements of Senior Mezzanine Borrower, Junior A
Mezzanine Borrower, Junior B Mezzanine Borrower and Guarantor, each accompanied
by an Officer’s Certificate certifying that each such financial statement is
true, correct and complete in all respects.

(c) Borrower will furnish Lender on or before the forty-fifth (45th) day after
the end of each fiscal quarter (based on Borrower’s Fiscal Year), the following
items, accompanied by an Officer’s Certificate, certifying that such items are
true, correct, accurate and complete and fairly present the financial condition
and results of the operations of Borrower and the Property in accordance with
GAAP as applicable:

(i) a comparative balance sheet for Borrower illustrating the current
quarter-end position and the position at the beginning of Borrower’s fiscal
year;

(ii) an income statement illustrating the most current month of operations and
the fiscal year-to-date operations for Borrower;

(iii) a cash flow statement indicating the fiscal year-to-date cash flow of
Borrower;

(iv) a comparison of the budgeted income and expenses and the actual income and
expenses for such month and year to date for the Property, together with a
detailed explanation of any variances of more than the greater of five percent
(5%) or $10,000.00 between budgeted and actual year-to-date amounts;

(v) a comparison of the actual income and expenses for the current year to date
and the actual income and expenses for the comparable period of the previous
year for the Property;

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

(vii) an aged accounts receivable report for payments due from Tenants at the
Property.

 

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(d) Borrower will furnish Lender on or before the twenty-fifth (25th) day after
the end of each calendar month, the following items, accompanied by an Officer’s
Certificate, certifying that such items are true, correct, accurate, and
complete and fairly present the financial condition and results of the
operations of Borrower and the Property in a manner consistent with GAAP, as
applicable:

(i) monthly and year-to-date statements of income and expense and cash flow
prepared for such month with respect to the Property;

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

(iii) any notice received from a Tenant threatening non-payment of Rent or other
default, alleging or acknowledging a default by landlord.

(e) Borrower shall submit the Annual Budget to Lender not later than thirty
(30) days prior to the commencement of each Fiscal Year. Lender shall have the
right to approve each Annual Budget covering any period of time after the
Closing Date, which approval shall not be unreasonably withheld, conditioned or
delayed. Annual Budgets approved by Lender shall hereinafter be referred to as
an “Approved Annual Budget.” In the event that Borrower incurs an Unbudgeted
Expense, then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Unbudgeted Expense for Lender’s approval.

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

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

4.1.8 Estoppel Statement.

(a) After request by Lender, Borrower shall within five (5) Business Days
furnish Lender with a statement, duly acknowledged and certified, stating
(i) the unpaid principal amount of the Note, (ii) the Interest Rate of the Note,
(iii) the date installments of interest and/or principal were last paid, (iv) to
Borrower’s actual knowledge, any offsets or defenses to the payment of the Debt,
if any, (v) that this Agreement and the other Loan Documents have not been
modified or if modified, giving particulars of such modification and (vi) if to
Borrower’s actual knowledge, there are any Events of Default under the Loan.

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

 

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(c) Borrower shall use commercially reasonable efforts to deliver to Lender,
upon thirty (30) days’ request, an estoppel certificate from each Tenant under
any Lease; provided that such certificate may be in the form required under such
Lease; provided further that Borrower shall not be required to deliver such
certificates more frequently than one (1) time in any calendar year or two
(2) times in any calendar year in which a Securitization occurs.

(d) Borrower shall deliver to Lender, upon request, estoppel certificates from
each party to the REA; provided, however, that such certificates may be in the
form required under the REA; provided further that Borrower shall not be
required to deliver such certificates more than three (3) times during the term
of the Loan and not more frequently than once per calendar year (or twice during
any calendar year in which a Securitization occurs).

4.1.9 Leases.

(a) All Leases and all renewals of Leases executed after the date hereof shall
(i) provide for rental rates comparable to existing local market rates for
similar properties taking into account the other terms of the Lease, (ii) be on
commercially reasonable terms, (iii) provide that such Lease is subordinate to
the Mortgage and that the lessee will attorn to Lender and any purchaser at a
foreclosure sale and (iv) not contain any terms which would materially adversely
affect Lender’s rights under the Loan Documents. All Major Leases and all
renewals, amendments and modifications thereof executed after the date hereof
shall be subject to Lender’s prior approval, which approval shall not be
unreasonably withheld, conditioned or delayed; provided, however, that Borrower
may, without Lender’s consent (x) enter into renewals, modifications,
amendments, expansions and terminations of existing Leases that are not Major
Leases and (y) enter into new Leases that are not Major Leases. Lender shall
execute and deliver a Subordination Non-Disturbance and Attornment Agreement in
the form annexed as Schedule IV to Tenants under future Leases approved or
deemed approved by Lender promptly upon request with such commercially
reasonable changes as may be requested by Tenants, from time to time, and which
are reasonably acceptable to Lender. All Leases that are not Major Leases which
provide for tenant improvements, tenant allowances and leasing commissions, in
the aggregate in excess of $50.00 per rentable square foot, are subject to
Lender’s prior approval, such approval not to be unreasonably withheld,
conditioned or delayed. Moreover, it shall be reasonable for Lender to withhold
its approval of any Lease which provides for an excess of $50.00 per rentable
square foot for tenant improvements, tenant allowances and leasing commissions
in the aggregate unless Borrower provides Lender evidence that it has the
financial ability (e.g., adequate funds on deposit with Senior Mezzanine Lender
which are available for the payment of same) to fund such excess before Lender
disburses same out of the various Reserve Funds.

(b) Borrower (i) shall observe and perform the obligations imposed upon the
lessor under the Leases in a commercially reasonable manner; (ii) shall use
commercially reasonable efforts to enforce the terms, covenants and conditions
contained in the Leases upon the part of the lessee thereunder to be observed or
performed in a commercially reasonable manner, provided , however , Borrower
shall not terminate or accept a surrender of a Major Lease without Lender’s
prior approval which approval shall not be unreasonably withheld, delayed or
conditioned provided further, however, that it shall not be unreasonable for
Lender to withhold its approval if the Senior Mezzanine Lender or the Junior A
Mezzanine Lender or the Junior B

 

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Mezzanine Lender (or any holder of any loan which refinanced such mezzanine
loans) do not approve such termination or surrender, (iii) shall not collect any
of the Rents more than one (1) month in advance (other than security deposits
and lease termination payments permitted under Leases permitted hereunder);
(iv) shall not execute any assignment of lessor’s interest in the Leases or the
Rents (except as contemplated by the Loan Documents); and (v) shall hold all
security deposits under all Leases in accordance with Legal Requirements. Upon
request, Borrower shall furnish Lender with executed copies of all Leases.

(c) Notwithstanding anything to the contrary contained in this Section 4.1.9:

(i) whenever Lender’s approval or consent is required pursuant to the provisions
of this Section 4.1.9, Borrower shall have the right to submit a term sheet for
any Major Lease or any renewal, modification or amendment thereof to Lender for
Lender’s approval, such approval not to be unreasonably withheld, delayed or
conditioned. Any such term sheet submitted to Lender shall set forth all
material terms of the proposed Major Lease (or renewal, modification or
amendment thereof) including, without limitation, identity of tenant, square
footage, term, rent, rent credits, abatements, work allowances and tenant
improvements to be constructed by Borrower and include a request containing a
legend in bold letters stating that upon Lender’s failure to respond within ten
(10) Business Days the lease transaction described in the term sheet shall be
deemed consented to and approved. Lender shall 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, Lender shall be deemed to have approved or consented to
such term sheet;

(ii) whenever Lender’s approval or consent is required pursuant to the
provisions of this Section 4.1.9 for any matter that Lender has not previously
approved a term sheet pursuant to Section 4.1.9(c)(i) above, Lender shall
respond within ten (10) Business Days after Lender’s receipt of Borrower’s
written request for such approval or consent which contains a legend in bold
letters stating that Lender’s failure to respond within ten (10) Business Days
shall be deemed consent or approved. If Lender fails to respond to such request
within ten (10) Business Days, Lender shall be deemed to have approved or
consented to the matter for which lender’s consent or approval was sought;

(iii) whenever Lender’s approval or consent is required pursuant to the
provisions of this Section 4.1.9 for any matter that Lender has previously
approved a term sheet pursuant to Section 4.1.9(c)(i) above, Lender shall
respond within ten (10) Business Days after Lender’s receipt of Borrower’s
written request for such approval or consent containing a legend in bold letters
stating that Lender’s failure to respond within ten (10) Business Days shall be
deemed consent or approval. If Lender fails to respond to such request within
ten (10) Business Days, Lender shall be deemed to have approved or consented to
the matter for which Lender’s consent or approval was sought. The ten
(10) Business Day periods contained in this subsection (iii) shall be reduced to
three (3) Business Days if the matter involves a new Major Lease or an amended
and restated Major Lease, a term sheet is approved, a blacklined copy of the new
document against the Approved Lease Form is delivered to Lender and an Officer’s
Certificate is delivered to Lender, in each case indicating that the new
document’s only differences with the Approved Lease Form are as reflected in the
approved term sheet and those which do not materially adversely affect the
Property, Borrower or Lender;

 

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(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 or any other provisions which do not materially
adversely affect the Property, Borrower or Lender; and

(v) Borrower shall have the right, without the consent or approval of Lender in
any instance, to terminate or accept a surrender of any Lease that is not a
Major Lease.

4.1.10 Alterations. Lender’s prior approval shall be required in connection with
any alterations to any Improvements (except tenant improvements under any Lease
approved by Lender or under any Lease for which approval was not required by
Lender under this Agreement) (a) that is likely to have a material and adverse
effect on Borrower’s financial condition, the value of the Property or the
ongoing revenues and expenses of the Property or (b) the cost of which
(including any related alteration, improvement or replacement) is reasonably
anticipated to exceed the Alteration Threshold. If the total unpaid amounts
incurred and to be incurred with respect to such alterations to the Improvements
shall at any time exceed the Alteration Threshold, Borrower shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for Borrower’s obligations under the Loan Documents any of the
following: (i) cash, (ii) Letters of Credit (iii) U.S. Obligations, (iv) other
securities acceptable to Lender, provided that Lender shall have received a
Rating Agency Confirmation as to the form and issuer of same, or (v) a
completion bond, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same. Such security shall be in an
amount equal to the excess of the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.

4.1.11 Intentionally Omitted.

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

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

4.1.14 Costs of Enforcement/Remedying Defaults. In the event (a) that the
Mortgage is foreclosed in whole or in part or the Note or any other Loan
Document is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any

 

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Lien or Mortgage prior to or subsequent to the Mortgage in which proceeding
Lender is made a party, (c) of the bankruptcy, insolvency, rehabilitation or
other similar proceeding in respect of Borrower or Guarantor or an assignment by
Borrower or Guarantor for the benefit of its creditors, or (d) Lender shall
remedy or attempt to remedy any Event of Default hereunder, Borrower shall be
chargeable with and agrees to pay all out of pocket costs incurred by Lender as
a result thereof, including costs of collection and defense (including
reasonable attorneys’, experts’, consultants’ and witnesses’ fees and
disbursements) in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable on ten (10) days’ notice from Lender, together with interest thereon
from the date incurred by Lender at the Default Rate, and together with all
required service or use taxes.

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

4.1.16 Loan Fees.

Borrower shall pay all fees and costs required of Borrower pursuant to the terms
of that certain commitment letter between Thomas Development Partners, L.P., DB
Realty Mezzanine Investment Fund II, LLC and Morgan Stanley Mortgage Capital
Inc. dated June 3, 2003.

Section 4.2 Borrower Negative Covenants.

Borrower covenants and agrees with Lender that:

4.2.1 Due on Sale and Encumbrance; Transfers of Interests. Except with respect
to the Senior Mezzanine Loan, the Junior A Mezzanine Loan and the Junior B
Mezzanine Loan, without the prior written consent of Lender, Borrower or any
other Person having a direct or indirect ownership or beneficial interest in
Borrower shall not sell, convey, mortgage, grant, bargain, encumber, pledge,
assign or transfer any interest, direct or indirect, in the Borrower, the
Property or any part thereof, whether voluntarily or involuntarily, in violation
of the covenants and conditions set forth in the Mortgage and this Agreement.
Borrower shall not be deemed to have violated this Section 4.2.1 in connection
with Borrower’s execution and delivery of the Senior Mezzanine Note, the Junior
A Mezzanine Note, the Junior B Note, the Senior Mezzanine Loan Agreement, the
Junior A Mezzanine Loan Agreement, the Junior B Loan Agreement, the mezzanine
cash management agreements executed in connection with the foregoing and the
pledge agreements delivered on the Closing Date in connection with the foregoing
(which pledge agreements are not executed by Borrower). Notwithstanding the
foregoing, Lender’s consent shall not be required for the refinancing of the
Senior Mezzanine Loan, the Junior A Mezzanine Loan and the Junior B Mezzanine
Loan provided (i) the amount of the new financing shall not exceed the amount
necessary to satisfy in full the Senior Mezzanine Loan, the Junior A Mezzanine
Loan and the Junior B Mezzanine Loan, including normal and customary costs and
reasonable fees of the new lender, (ii) the new lender is a Qualified
Transferee; (iii) the loan

 

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documents for the refinanced mezzanine loans do not impose a materially greater
burden on Borrower, Senior Mezzanine Borrower, Junior A Mezzanine Borrower or
the Junior B Mezzanine Borrower, and (iv) an intercreditor agreement
satisfactory to Lender is executed and delivered between Lender and the new
mezzanine lender(s); provided, however, that in the event that the proposed
refinancing exceeds the amount in clause (i) above or the proposed lender is not
a Qualified Transferee, Borrower may nonetheless proceed with such refinancing
if Borrower obtains Lender’s consent (not to be unreasonably withheld,
conditioned or delayed) and, if a Securitization has occurred, Borrower has
obtained a Rating Agency Confirmation with respect thereto.

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

4.2.3 Dissolution. Borrower shall not (i) engage in any dissolution, liquidation
or consolidation or merger with or into any other business entity, (ii) engage
in any business activity not related to the ownership and operation of the
Property, (iii) transfer, lease or sell, in one transaction or any combination
of transactions, all or substantially all of the property or assets of Borrower
except to the extent expressly permitted by the Loan Documents, or (iv) cause,
permit or suffer any SPC Party to (A) dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which such SPC Party would be
dissolved, wound up or liquidated in whole or in part, or (B) amend, modify,
waive or terminate the certificate of formation or operating agreement of such
SPC Party to delete, amend or otherwise modify the single purpose entity
covenants set forth in Section 3.1.24 or those provisions which pursuant to such
formation or operating agreements cannot be modified without Lender’s consent,
in each case without obtaining the prior consent of Lender.

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

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

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

4.2.7 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, not to be unreasonably
withheld.

 

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

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

4.2.10 Principal Place of Business. Borrower shall not change its principal
place of business from the address set forth on the first page of this Agreement
without promptly thereafter notifying Lender in writing.

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

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

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

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

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

4.2.12 Material Agreements. Borrower shall not, without Lender’s prior written
consent, which shall not be unreasonably withheld, delayed or conditioned:
(a) increase or consent to the increase of the amount of any charges under any
Material Agreement to which it is a party, except as provided therein or on an
arms’-length basis and commercially reasonable terms; or (b) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement to which it is a party in any material
respect, except on an arms’-length basis and commercially reasonable terms.

4.2.13 REA. Borrower agrees that without the prior consent of Lender, Borrower
will not execute modifications to the REA if such modification will have a
material adverse effect on the use, operation or value (including the
underwritable cash flow) of the Property, taken as a whole, or the ability of
Borrower to pay its obligations in respect of the Loan.

 

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V. INSURANCE, CASUALTY AND CONDEMNATION

Section 5.1 Insurance.

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

(i) comprehensive all risk insurance on the Improvements and the personal
property at the Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction Endorsements,
in each case (A) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation, but the amount shall in
no event be less than the outstanding principal balance of the Loan;
(B) containing an agreed amount endorsement with respect to the Improvements and
personal property at the Property waiving all co-insurance provisions;
(C) providing for no deductible in excess of Twenty-Five Thousand and No/100
Dollars ($25,000) for all such insurance coverage; and (D) containing an
“Ordinance or Law Coverage” or “Enforcement” endorsement if any of the
Improvements or the use of the Property shall at any time constitute legal
non-conforming structures or uses. In addition, Borrower shall obtain: (y) if
any portion of the Improvements is currently or at any time in the future
located in a federally designated “special flood hazard area”, flood hazard
insurance in an amount equal to the lesser of (1) the outstanding principal
balance of the Note or (2) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be amended
or such greater amount as Lender shall 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 against claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, such insurance (A) to be on the so-called “occurrence” form with a per
occurrence limit of One Million and No/100 Dollars ($1,000,000) and a general
aggregate, excluding umbrella coverage, of not less than Two Million and No/100
Dollars ($2,000,000) and (B) 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 9 of the Mortgage to the extent the same is available;

 

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

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

(v) to the extent the risks to be covered thereby are not already covered by the
Policies maintained by Borrower, workers’ compensation, subject to the statutory
limits of the state in which the Property is located, and employer’s liability
insurance with a limit of at least One Million and No/100 Dollars ($1,000,000)
per accident and per disease per employee, and One Million and No/100 Dollars
($1,000,000) for disease aggregate in respect of any work or operations on or
about the Property, or in connection with the Property or its operation (if
applicable);

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

(vii) umbrella liability insurance in addition to primary coverage in an amount
not less than Twenty-Five Million and No/100 Dollars ($25,000,000) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above and (viii) below;

 

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(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, of One Million and No/100 Dollars ($1,000,000) (if
applicable);

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

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

(xi) (A) during any period of the term of the Loan that TRIA is in effect, if
“acts of terrorism” or other similar acts or events are hereafter excluded from
Borrower’s comprehensive all risk insurance policy (including business income),
Borrower shall obtain an endorsement to such policy, or a separate policy
insuring against all “certified acts of terrorism” as defined by TRIA and “fire
following,” each in an amount equal to (i) one hundred percent (100%) of the
“Full Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation or (ii) the total
outstanding principal balance of the; Loan and the Senior Mezzanine Loan;
provided, however, the total annual premium payable by Borrower for such
terrorism coverage shall not exceed Three Hundred Seventy Five Thousand and
No/100 Dollars ($375,000.00) for such coverage. The endorsement or policy shall
be in form and substance reasonably satisfactory to Lender and shall meet Rating
Agency criteria for securitized loans; or

(B) during any period of the term of the Loan that TRIA is not in effect, if
“acts of terrorism” or other similar acts or events or “fire following” are
hereafter excluded from Borrower’s comprehensive all risk insurance policy
(including business income), Borrower shall obtain an endorsement to such
policy, or a separate policy from an insurance provider which maintains at least
an investment grade rating from Moody’s (that is, “ Baa3 ”) and/or S&P and/or
Fitch (that is, “ BBB- ”), insuring against all such excluded acts or events, to
the extent such policy or endorsement is available, in an amount which is at
least One Hundred Thirty Five Million and No/100 Dollars ($135,000,000.00) if
such coverage is dedicated to the Property only (if coverage is provided on a
blanket basis, the coverage under the blanket policy shall be at least Two
Hundred Twenty Five Million and No/100 Dollars ($225,000,000.00); provided ,
however , the total annual premium payable by Borrower for such terrorism
coverage shall not exceed Three Hundred Seventy Five Thousand and No/100 Dollars
($375,000.00) for such coverage. The endorsement or policy shall be in form and
substance reasonably satisfactory to Lender and shall meet Rating Agency
criteria for securitized loans. Notwithstanding the foregoing, Lender may, in
its sole discretion, consent to Borrower’s obtaining the coverage required by
this Section 5.1.1(a)(xi)(B) from carriers that do not have an investment grade
rating as described above (which consent may be conditioned upon receipt

 

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of a Rating Agency Confirmation) if Lender, in its sole judgment, determines
that it would be beneficial to both the Borrower and the Property to obtain
insurance from such carriers based on a comparison of the various rates, types
and amounts of coverage available, as well as the quality of the carriers
offering to provide such coverage (it being agreed that once such consent is
granted by Lender, the coverage obtained by Borrower and permitted by Lender
shall be deemed to satisfy the requirements of this Section 5.1.1(a)(xi)(B)
until the expiration of such coverage based on the expiration date of such
coverage consented to by Lender); and

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

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

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

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

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

(i) no act (excepting intentional acts (for liability Policies only)) 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;

 

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(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
(except ten (10) days’ written notice with respect to non-payment) 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 reasonably
necessary to protect its interest in the Property, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon ten (10) days written demand and until paid
shall be secured by the Mortgage and shall bear interest at the Default Rate
from the date incurred.

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

5.1.2 Insurance Company. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the state in which
the Property is located and having a claims paying ability rating of “AA-” or
better by S&P or Fitch or an insurance financial strength rating of “Aa3” by
Moody’s. Notwithstanding the foregoing, Borrower shall be permitted to maintain
the Policies with insurance companies which do not meet the foregoing
requirements (an “Otherwise Rated Insurer”), provided Borrower obtains a
“cut-through” endorsement (that is, an endorsement which permits recovery
against the provider of such endorsement), or similar credit enhancing vehicle
which accomplishes the same financial wherewithal objective, with respect to any
Otherwise Rated Insurer from an insurance company which meets the claims paying
ability ratings required above with the cut-through endorsement (or other such
vehicle) in effect at all times, in an amount not less than the Full Replacement
Cost of the Property. Moreover, if Borrower desires to maintain insurance
required hereunder from an insurance company which does not meet the claims
paying ability ratings set forth herein but the parent of such insurance
company, which owns at least fifty-one percent (51%) of such insurance company,
maintains such ratings, Borrower may use such insurance companies if approved by
the Rating Agencies (such approval may be conditioned on items required by the
Rating Agencies including a requirement that the parent guarantee the
obligations of such insurance company).

 

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Section 5.2 Casualty and Condemnation.

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

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, delayed or
conditioned) 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.

 

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

Section 5.3 Delivery of Net Proceeds.

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

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

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

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

(iii) Leases requiring payment of annual rent equal to seventy-five percent
(75%) of the gross rental 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;

 

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

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

(vi) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (A) the date three (3) months prior to the
Maturity Date, (B) the earliest date required for such completion under the
terms of any Major Lease, (C) such time as may be required under applicable
Legal Requirements in order to repair and restore the Property to the condition
it was in immediately prior to such Casualty or to as nearly as possible the
condition it was in immediately prior to such Condemnation, as applicable or
(D) the expiration of the insurance coverage referred to in
Section 5.1.1(a)(iii);

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

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

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

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

 

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(c) All plans and specifications required in connection with the Restoration
shall be subject to prior reasonable 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 reasonable
practicable after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the Property shall be at least
equal in value and general utility to the Property prior to the damage or
destruction; it being understood, however, that Borrower shall not be obligated
to restore the Property to the precise condition of the Property prior to such
Casualty provided the Property is restored, to the extent practicable, to be of
at least equal value and of substantially the same character as prior to the
Casualty. Borrower shall restore all Improvements such that when they are fully
restored and/or repaired, such Improvements and their contemplated use fully
comply with all applicable material Legal Requirements. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration, the cost
of which is greater than $20,000.00, as well as the contracts under which they
have been engaged, shall be subject to the reasonable approval of Lender and the
Casualty Consultant. All out of pocket costs and expenses incurred by Lender in
connection with recovering, holding and advancing the Net Proceeds for the
Restoration including, without limitation, reasonable attorneys’ fees and
disbursements and the Casualty Consultant’s fees and disbursements, shall be
paid by Borrower.

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

 

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(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 good faith opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 5.3.2 shall constitute additional security for the Debt.

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

(h) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 5.3.2(g) may be retained and applied by Lender toward the payment of the
Components, 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.

Section 5.4 Net Proceeds. Notwithstanding anything to the contrary contained
herein, if Lender is obligated under this Agreement to disburse the Net Proceeds
to Borrower, and if Lender fails to do so, then any obligation of Borrower to
restore or repair the Property under the Loan Documents shall not apply.

VI. RESERVE FUNDS

Section 6.1 Intentionally Deleted.

Section 6.2 Tax and Insurance Funds.

6.2.1 Deposits of Tax and Insurance Funds. On the Closing Date, Borrower shall
deposit with Agent the amount of One Million Six Hundred Twelve Thousand Seven
Hundred Twenty Seven and 04/100 Dollars ($1,612,727.04) and, pursuant to the
Cash Management Agreement, there shall be deposited on each Monthly Payment Date
an amount equal to one-twelfth of (i) 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

 

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ten (10) days prior to their respective due dates and (ii) 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 five (5) Business
Days prior to the expiration of the Policies. Amounts deposited pursuant to this
Section 6.2.1 are referred to herein as the “Tax and Insurance Funds.” If at any
time Lender reasonably determines that the Tax and Insurance Funds will not be
sufficient to pay the Taxes and/or Insurance Premiums, Lender shall notify
Borrower of such determination and the monthly deposits for Taxes and/or
Insurance Premiums, as applicable, 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 and at least five (5) Business Days
prior to the expiration of the Policies; provided that if Borrower receives
notice of any deficiency after the date that is ten (10) days prior to the date
that Taxes are due, Borrower will deposit such amount within one (1) Business
Day after its receipt of such notice.

6.2.2 Release of Tax and Insurance Funds. Lender shall apply the Tax and
Insurance Funds to payments of Taxes and Insurance Premiums. In making any
payment relating to Taxes and Insurance Premiums, Lender shall 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 and
Insurance Funds shall exceed the amounts due for Taxes and Insurance Premiums,
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Tax and Insurance Funds.
Any Tax and Insurance Funds remaining after the Debt has been paid in full shall
be returned to Borrower. Notwithstanding anything to the contrary contained
herein and provided no Event of Default then exists, Lender shall request Agent
to issue a check for Taxes (made payable to the appropriate public office in the
amount of the Taxes then due but not more than has been reserved hereunder for
Taxes) and deliver such check to Borrower so that Borrower may directly pay the
Taxes to the appropriate public office on or prior to February 28th of each
year. Notwithstanding anything to the contrary contained herein and provided no
Event of Default then exists, and upon Lender’s receipt of evidence that the
Policies for the insurance required under this Agreement has been bound, Lender
shall request Agent to issue a check for Insurance Premiums (made payable to the
insurance company or Borrower’s insurance broker in the amount of the Insurance
Premiums but not more than has been reserved hereunder for Insurance Premiums)
and deliver such check to Borrower promptly after Borrower’s request therefore
so that Borrower may directly pay the Insurance Premiums to the insurance
company.

Section 6.3 Intentionally Deleted.

Section 6.4 Capital Expenditure/Leasing Funds.

6.4.1 Deposits of Capital Expenditure/Leasing Funds. On the Closing Date,
Borrower shall deposit with Agent the amount of One Million Three Hundred Eighty
Eight Thousand One Hundred Thirty Two and 55/100 Dollars ($1,388,132.55), and
pursuant to the Cash Management Agreement, there shall be deposited on each
Monthly Payment Date an amount equal to the Capital Expenditure/Leasing Funds
Amount for annual Capital Expenditures approved by Lender, which approval shall
not be unreasonably withheld or delayed, and for tenant improvements and leasing
commissions that may be incurred following the date hereof Amounts deposited
pursuant to this Section 6.4.1 are referred to herein as the “Capital
Expenditure/Leasing Funds.”

 

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6.4.2 Release of Capital Expenditure/Leasing Funds. (a) Lender shall direct
Agent to disburse Capital Expenditure/Leasing Funds only for Capital
Expenditures, tenant improvements and leasing commissions.

(b) With respect to Capital Expenditure/Leasing Funds to be utilized for Capital
Expenditures (“Capital Expenditure Funds”), Lender shall direct Agent to
disburse to Borrower the Capital Expenditure Funds upon satisfaction by Borrower
of each of the following conditions: (i) Borrower shall submit a request for
payment to Lender at least five (5) Business Days prior to the date on which
Borrower requests such payment be made and specifies the Capital Expenditures to
be paid, (ii) on the date such request is received by Lender and on the date
such payment is to be made, no Event of Default shall exist and remain uncured,
(iii) Lender shall have received an Officers Certificate from Borrower
(A) stating that the items to be funded by the requested disbursement are
Capital Expenditures, (B) stating, that all Capital Expenditures at the Property
to be funded by the requested disbursement have been completed in a good and
workmanlike manner and in accordance in all material respects with all
applicable Legal Requirements, such certificate to be accompanied by a copy of
any license, permit or other approval required by any Governmental Authority in
connection with the Capital Expenditures, if applicable, (C) identifying each
Person that supplied materials or labor in connection with the Capital
Expenditures to be funded by the requested disbursement, and (D) stating that
each such Person has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment reasonably satisfactory to Lender, (iv) at Lender’s option,
and only if (1) requested in writing and (2) the cost of any individual Capital
Expenditure exceeds $500,000.00 and the disbursement exceeds $100,000.00, a
title search for the Property indicating that the Property is free from all
Liens, claims and other encumbrances not previously approved by Lender, and
(v) at Lender’s option, if the cost of any individual Capital Expenditure
exceeds $500,000.00 and the disbursement exceeds $100,000.00, Lender shall have
received a report satisfactory to Lender in its reasonable discretion from an
architect or engineer reasonably approved by Lender in respect of such architect
or engineer’s inspection of the required repairs, and (vi) Lender shall have
received such other evidence as Lender shall reasonably request that the Capital
Expenditures at the Property to be funded by the requested disbursement have
been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Capital Expenditure Funds
more frequently than once each calendar month, unless such requested
disbursement is in an amount greater than the Minimum Disbursement Amount (or a
lesser amount if the total amount of Capital Expenditure Funds is less than the
Minimum Disbursement Amount, in which case only one disbursement of the amount
remaining in the account shall be made).

(c) With respect to Capital Expenditure/Leasing Funds to be utilized for tenant
improvements and leasing commissions (“Leasing Funds”), Lender shall direct
Agent to disburse to Borrower the Leasing Funds upon satisfaction by Borrower of
each of the following conditions: (i) Borrower shall submit a request for
payment to Lender at least five (5) Business Days prior to the date on which
Borrower requests such payment be made and specifies the tenant improvement
costs and leasing commissions to be paid, (ii) on the date such request is
received by Lender and on the date such payment is to be made, no Event of
Default shall exist

 

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and remain uncured, (iii) as to a Major Lease, Lender shall have reviewed and
approved the Major Lease (or such Major Lease shall have been deemed approved
hereunder) in respect of which Borrower is obligated to pay or reimburse certain
tenant improvement costs and leasing commissions, (iv) with respect to
disbursements for tenant improvements, Lender shall have received an Officer’s
Certificate from Borrower (A) stating that all tenant improvements at the
Property to be funded by the requested disbursement have been completed in good
and workmanlike manner and in accordance in all material respects with all
applicable federal, state and local laws, rules and regulations, such
certificate to be accompanied by a copy of any license, permit or other approval
by any Governmental Authority required in connection with the tenant
improvements, if applicable, (B) identifying each Person that supplied materials
or labor in connection with the tenant improvements to be funded by the
requested disbursement, and (C) stating that each such Person has been paid in
full or will be paid in fill upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment reasonably satisfactory
to Lender, (v) with respect to disbursements for tenant improvements, at
Lender’s option and only (1) if requested in writing and (2) if the cost of the
tenant improvements exceeds $2,000,000.00 and the disbursement exceeds One
Hundred Thousand and No/100 Dollars ($100,000.00), a title search for the
Property indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender and (vi) with respect to
disbursements for tenant improvements Lender shall have received such other
evidence as Lender shall reasonably request that the tenant improvements at the
Property to be funded by the requested disbursement have been with respect to
disbursements for tenant improvements, completed and are paid for or will be
paid upon such disbursement to Borrower. Lender shall not be required to
disburse Leasing Funds more frequently than once each calendar month, unless
such requested disbursement is in an amount greater than the Minimum
Disbursement Amount (or a lesser amount if the total amount of Leasing Funds is
less than the Minimum Disbursement Amount, in which case only one disbursement
of the amount remaining in the account shall be made).

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

(e) Upon two (2) Business Days’ notice, Borrower shall permit Lender and
Lender’s agents and representatives (including, without limitation, Lender’s
engineer, architect, or inspector) to enter onto the Property during normal
business hours (subject to the rights of Tenants under their Leases) to inspect
the progress of any Capital Expenditures Work and all materials being used in
connection therewith and to examine all plans and shop drawings relating to such
Capital Expenditures Work. Borrower shall use commercially reasonable efforts to
cause all contractors and subcontractors to cooperate with Lender or Lender’s
representatives or such other Persons described above in connection with
inspections described in this Section 6.4.2(d).

(f) If (i) the Capital Expenditure Work exceeds $500,000.00 or (ii) the Tenant
Improvement Cost exceeds $2,000,000.00 and the disbursement will exceed
$100,000.00. Lender may require an inspection of the Property at Borrower’s
expense prior to making a disbursement of Capital Expenditure Funds in order to
verify completion of the Capital

 

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Expenditures Work for which reimbursement is sought. Lender may require that
such inspection be conducted by an appropriate independent qualified
professional selected by Lender and may require a certificate of completion by
an independent qualified professional architect acceptable to Lender prior to
the disbursement of Capital Expenditure Funds. Borrower shall pay the expense of
the inspection as required hereunder, whether such inspection is conducted by
Lender or by an independent qualified professional architect.

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

(h) Lender shall use good faith efforts to cause the disbursement of the
applicable amounts of the Capital Expenditure Funds and the Leasing Funds within
five (5) Business Days after receipt of Borrower’s request and all required
documentation (but Lender shall have no liability for failure to do so).

Section 6.5 Debt Service Reserve Funds.

6.5.1 Deposits of Debt Service Reserve Funds. On the Closing Date, Borrower
shall deposit with Agent the amount of Five Hundred Thousand and No/100 Dollars
($500,000.00) and, pursuant to the Cash Management Agreement, there shall be
deposited on each Monthly Payment Date the Debt Service Reserve Target Deposit
whenever the amount on deposit in the Debt Service Reserve Account is less than
Five Hundred Thousand and No/100 Dollars ($500,000.00) (the “Debt Service
Reserve Target Amount”). The “Debt Service Reserve Target Deposit” shall be an
amount equal to the lesser of (i) the difference between the amount on deposit
in the Debt Service Reserve on such Monthly Payment Date (before any deposit on
such Monthly Payment Date pursuant to Section 3.3(h) of the Cash Management
Agreement) and the Debt Service Reserve Target Amount and (ii) the amount
available to be deposited into the Debt Service Reserve Account on such Monthly
Payment Date after the disbursements pursuant to Sections 3.3(a) - (g) of the
Cash Management Agreement. Amounts deposited pursuant to this Section 6.5.1 are
referred to herein as the “Debt Service Reserve Funds.”

6.5.2 Release of Debt Service Reserve Funds. Debt Service Reserve Funds shall be
released as set forth in the Cash Management Agreement.

Section 6.6 Lease Termination Rollover Funds.

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

 

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6.6.2 Release of Lease Termination Rollover Funds. (a) Lender shall direct Agent
to disburse to Borrower the Lease Termination Rollover Funds upon satisfaction
by Borrower of each of the following conditions: (i) Borrower shall submit a
request for payment to Lender at least five (5) Business Days prior to the date
on which Borrower requests such payment be made and (A) specifies the tenant
improvement costs and leasing commissions to be paid for the Termination Space
or (B) specifies the amount by which the rent expected to be obtained by
Borrower for the Termination Space during the next succeeding calendar month
pursuant to the Lease or Leases for such Termination Space (a “Replacement
Lease”) is less than the amount of monthly rent received from the previous
Tenant in the Termination Space pursuant to its Lease prior to such termination
(the “Rent Deficiency”), (ii) on the date such request is received by Lender and
on the date such payment is to be made, no Event of Default shall exist and
remain uncured, (iii) if disbursements are to be used for tenant improvements,
Lender shall have reviewed and, if the Replacement Lease shall constitute a
Major Lease or if such Lease shall provide for tenant improvements in excess of
$50.00 per rentable square foot, approved the Replacement Lease in respect of
which Borrower is obligated to pay or reimburse certain tenant improvement costs
and leasing commissions, (iv) with respect to any Lease Termination Rollover
Funds to be released by Lender for tenant improvements or leasing commissions
pursuant to a Replacement Lease, Lender shall have received an Officer’s
Certificate (A) stating that a 11 tenant improvements at the Property to be
funded by the requested disbursement have been completed in good and workmanlike
manner and in accordance in all material respects with all applicable federal,
state and local laws, rules and regulations, such certificate to be accompanied
by a copy of any license, permit or other approval by any Governmental Authority
required in connection with the tenant improvements, if applicable,
(B) identifying each Person that supplied materials or labor in connection with
the tenant improvements to he funded by the requested disbursement, and
(C) stating that each such Person has been paid in full or will be paid in full
upon such disbursement, such certificate to be accompanied by lien waivers or
other evidence of payment reasonably satisfactory to Lender, (v) with respect to
any Lease Termination Rollover Funds to be released by Lender for tenant
improvements or leasing commissions pursuant to a Replacement Lease, at Lender’s
option and only (1) if requested in writing and (2) if the cost of the tenant
improvements exceeds $2,000,000.00 and the disbursement exceeds One Hundred
Thousand and No/100 Dollars ($100,000.00), a title search for the Property
indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender and (vi) with respect to any
Lease Termination Rollover Funds to be released by Lender for tenant
improvements or leasing commissions pursuant to a Replacement Lease, Lender
shall have received such other evidence as Lender shall reasonably request that
the tenant improvements at the Property to be funded by the requested
disbursement have been completed and are paid for or will be paid upon such
disbursement to Borrower. Lender shall not be required to disburse Lease
Termination Rollover Funds more frequently than once each calendar month, unless
such requested disbursement is in an amount greater than the Minimum
Disbursement Amount (or a lesser amount if the total amount of Lease Termination
Rollover Funds is less than the Minimum Disbursement Amount, in which case only
one disbursement of the amount remaining in the account shall be made). All Rent
Deficiency disbursements made by Lender shall be deposited into the Deposit
Account as if such sums were received by Borrower as Rent during the
calendar-month after such request is made by Borrower.

 

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

(c) Lender shall use good faith efforts to cause the disbursement of the
applicable amounts of the Lease Termination Rollover Funds within five
(5) Business Days after receipt of Borrower’s request and all required
documentation (but Lender shall have no liability for failure to do so).

Section 6.7 Operating Expense Funds.

6.7.1 Deposits of Operating Expense Reserve Funds. There shall be deposited on
each Monthly Payment Date an amount equal to one-twelfth (1/12) of the amount of
operating expenses and capital expenditures necessary for operation of the
Property as set forth in the Approved Annual Budget (the “Monthly Operating
Expense Amount”) for the calendar month following the Monthly Payment Date on
which such deposit was made. Amounts deposited pursuant to this Section 6.7.1
are referred to herein as the “Operating Expense Funds.”

6.7.2 Release of Operating Expense Funds. Lender shall disburse the Monthly
Operating Expense Amount and the amount of the Unbudgeted Expense to Borrower in
accordance with the provisions of the Cash Management Agreement, provided that,
on the date such payment is to be made, no Event of Default shall exist and
remain uncured. Notwithstanding anything to the contrary in the foregoing,
during the continuance of an Event of Default Lender shall have the option (but
not the obligation) in lieu of disbursing Operating Expense Funds to Borrower,
to pay such Operating Expense Funds directly to the related obligees or to pay
such Operating Expense Funds to Borrower and the related obligees jointly or to
apply the Operating Expense Funds to the Debt in any order Lender desires. If
Lender fails to fund any Operating Expense Funds requested by Borrower, no waste
shall be deemed created thereby.

Section 6.8 Application of Reserve Funds.

Notwithstanding anything contained herein to the contrary, upon the occurrence
and during the continuance of an Event of Default, Lender, at its option, may
withdraw the Reserve Funds and apply the Reserve Funds to the items for which
the Reserve Funds were established or to payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender’s
right to withdraw and apply the Reserve Funds shall be in addition to all other
rights and remedies provided to Lender under the Loan Documents.

 

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Section 6.9 Security Interest in Reserve Funds.

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

6.9.2 Income Taxes. Borrower shall report on its federal, state and local income
tax returns all interest or income accrued on the Reserve Funds.

6.9.3 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 6.10 Letters of Credit.

6.10.1 Delivery of Letters of Credit. (a) In lieu of making the payments to any
of the Reserve Funds (other than the Operating Expense Funds), Borrower may
deliver to Lender a Letter of Credit in accordance with the provisions of this
Section 6.10. Additionally, Borrower may deliver to Lender a Letter of Credit in
accordance with the provisions of this Section 6.10 in lieu of deposits
previously made to the Reserve Funds. The aggregate amount of any Letter of
Credit and cash on deposit with respect to the Capital Expenditure/Leasing Funds
and the Lease Termination Rollover Funds shall at all times be at least equal to
the aggregate amount which Borrower is required to have on deposit in such
Reserve Fund pursuant to this Agreement. The aggregate amount of any Letter of
Credit and cash on deposit with respect to the Tax and Insurance Funds shall at
all times be at least equal to the aggregate which Borrower would be required to
deposit in such Reserve Fund over the next twelve (12) month period. The
aggregate amount of any Letter of Credit and cash on deposit with respect to
Debt Service Reserve Funds shall at all times be at least equal to the aggregate
amount which Borrower is required to have on deposit in such Reserve Fund
pursuant to this Agreement. In the event that a Letter of Credit is delivered in
lieu of any portion of the Tax and Insurance Funds, Borrower shall be
responsible for the payment of Taxes or Insurance Premiums, as applicable, and
Lender shall not be responsible therefore. Provided no Event of Default has
occurred and is continuing, and the amount of the Letter of Credit is greater
than that required by Section 6.10.1, then Borrower may be permitted to amend
the applicable Letter of Credit to reduce the amount of the Letter of Credit to
the amount required hereunder or replace with cash. In the event Borrower is
entitled to a disbursement from any of the Reserve Funds which are represented
by a Letter of Credit and Borrower desires a reduction of any such Letter of
Credit instead, Borrower may amend the applicable Letter of Credit to reduce the
amount of the Letter of Credit in the amount of the disbursement and Lender will
cooperate in obtaining such amendment.

 

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(b) Borrower shall give Lender no less than twenty (20) days notice of
Borrower’s election to deliver a Letter of Credit and Borrower shall pay to
Lender all of Lender’s reasonable actual out-of-pocket costs and expenses in
connection therewith. Borrower shall not be entitled to draw from any such
Letter of Credit. Upon twenty (20) days notice to Lender, Borrower may replace a
Letter of Credit with a cash deposit to the applicable Reserve Fund if a Letter
of Credit has been outstanding for more than six (6) months. Prior to the return
of a Letter of Credit, Borrower shall deposit an amount equal to the amount that
would have accumulated in the applicable Reserve Fund and not been disbursed in
accordance with this Agreement if such Letter of Credit had not been delivered.

(c) Borrower shall provide Lender with notice of any increases in the annual
payments for Taxes and Insurance Premiums twenty (20) days prior to the
effective date of any such increase and any applicable Letter of Credit shall be
increased by such increased amount at least ten (10) days prior to the effective
date of such increase.

Section 6.11 Provisions Regarding Letters of Credit.

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

6.11.2 Additional Rights of Lender. In addition to any other right Lender may
have to draw upon a Letter of Credit pursuant to the terms and conditions of
this Agreement, Lender shall have the additional rights to draw in full any
Letter of Credit: (a) with respect to any evergreen Letter of Credit, if Lender
has received a notice from the issuing bank that the Letter of Credit will not
be renewed and a substitute Letter of Credit is not provided at least fifteen
(15) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (b) with respect to any Letter of Credit with a stated
expiration date, if Lender has not received a notice from the issuing bank that
it has renewed the Letter of Credit at least fifteen (15) 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 fifteen (15) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (c) upon receipt of notice
from the issuing bank that the Letter of Credit will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided at
least fifteen (15) days prior to such termination); or (d) if Lender has
received notice that the bank issuing the Letter of Credit shall cease to be an
Eligible Institution and a substitute Letter of Credit is not provided within
fifteen (15) days of such cessation. Notwithstanding anything to the contrary
contained in the above, Lender is not obligated to draw any Letter of Credit
upon the happening of an event specified in (a), (b), (c) or (d) above and shall
not be liable for, any losses sustained by Borrower due to the insolvency of the
bank issuing the Letter of Credit if Lender has not drawn the Letter of Credit.

 

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VII. PROPERTY MANAGEMENT

Section 7.1 The Management Agreement.

Borrower shall cause Manager to manage the Property in accordance with the
Management Agreement. Borrower shall (i) diligently perform and observe all of
the material terms, covenants and conditions of the Management Agreement on the
part of Borrower to be performed and observed and (ii) promptly notify Lender of
any notice to Borrower of any default by Borrower in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of Borrower to be performed and observed. If Borrower
shall default in the performance or observance of any material term, covenant or
condition of the Management Agreement on the part of Borrower to be performed or
observed, then, without limiting Lender’s other rights or remedies under this
Agreement or the other Loan Documents, and without waiving or releasing Borrower
from any of its obligations hereunder or under the Management Agreement, Lender
shall have the right, but shall be under no obligation, to. pay any sums and to
perform any act as may be appropriate to cause all the material terms, covenants
and conditions of the Management Agreement on the part of Borrower to be
performed or observed.

Section 7.2 Approval of New Manager. Borrower shall be permitted to terminate
the Management Agreement provided that Lender shall approve the replacement
Manager, such approval not to unreasonably withheld, conditioned or delayed, and
Borrower and such replacement Manager shall, as a condition to Lender’s
approval, execute a subordination of management agreement in the form then used
by Lender and reasonably acceptable to the new Manager.

Section 7.3 Replacement of Manager. Lender shall have the right to require
Borrower to replace the Manager with a Person which is not an Affiliate of, but
is chosen by, Borrower and approved by Lender upon the occurrence of any one or
more of the following events: (i) at any time following the occurrence of an
Event of Default and acceleration of the Loan, (ii) at any time following the
occurrence of an “Event of Default” under the Senior Mezzanine Loan and
acceleration of the Senior Mezzanine Loan, (iii) if Manager shall be in default
under the Management Agreement beyond any applicable notice and cure period or
(iv) if at any time the Manager has engaged in fraud or willful misconduct. If
any replacement Manager under Section 7.2 or this Section 7.3 is an Affiliate of
Borrower, Borrower shall deliver to Lender at the time of such replacement a
non-consolidation opinion acceptable to Rating Agencies and reasonably
acceptable to Lender.

VIII. PERMITTED TRANSFERS

Section 8.1 Permitted Transfer of the Property. Lender shall not withhold, delay
or condition its consent to the one-time conveyance of the Property to a
Permitted Transferee provided that (a) no Event of Default then exists,
(b) Lender has received a Rating Agency Confirmation as to the conveyance of the
Property to the Permitted Transferee,

 

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(c) Lender has received an agreement, acceptable to it in its sole discretion,
pursuant to which Permitted Transferee assumes all of Borrower’s obligations
under the Loan Documents upon which Borrower shall be released from all
obligations arising thereafter, (d) Lender receives a transfer fee equal to
$100,000.00 only in the event of a transfer to a Person not an Affiliate of
Borrower, plus reimbursement for all out of pocket costs and expenses of Lender
in connection with the transactions contemplated by this Section 8.1 and
(e) Lender shall have received such documents, certificates and legal opinions
as it may reasonably request.

Section 8.2 Permitted Transfers of Interest in Borrower. The restrictions on
Transfers of ownership interests in Borrower set forth in Article 6 of the
Mortgage shall not apply to and Lender’s consent shall not be required with
respect to the transfer of direct and indirect interests in the owners of the
Junior B Mezzanine Borrower (i) to the Guarantor (so long as it is controlled by
James A. Thomas), James A. Thomas or Thomas Properties Group LLC (so long as it
is controlled by James A. Thomas), or to any entity or entities controlled by or
under common control with any of the foregoing, or to any combination of the
foregoing; (ii) to immediate family members of James A. Thomas, entities
controlled by immediate family members of James A. Thomas, or trusts established
for the immediate family members of the equity holders in the Junior B Mezzanine
Borrower for estate planning purposes, (iii) to employees of Thomas Properties
Group LLC as part of a compensation package (provided such transfer, taken
together with all previous transfers to employees, does not result in a change
of control of Borrower) or (iv) pursuant to a will or other testamentary
disposition, provided that in each case (v) notice is provided to the Lender of
such a transfer, (w) the transferee of such interests acknowledges in writing
that such interests remain subject to the provisions of the Senior Mezzanine
Lender’s pledge and security agreement, the Junior A Mezzanine Lender’s pledge
and security agreement and the Junior B Mezzanine Lender’s pledge and security
agreement, (x) the transferee delivers a non-consolidation opinion, if required
by the Rating Agencies, (y) unless resulting from death or incapacitation, James
A. Thomas at all times maintains direct or indirect control of Borrower, Senior
Mezzanine Borrower, Junior A Mezzanine Borrower and Junior B Mezzanine Borrower
and (z) Lender receives reimbursement for all out of pocket costs and expenses
of Lender in connection with the transactions contemplated by this Section 8.2.
In addition to the foregoing, the restrictions on Transfers of ownership
interests set forth in Article 6 of the Mortgage shall not apply to and Lender’s
consent shall not be required with respect to the pledging of the interests
pursuant to the pledge agreements which are part of the Senior Mezzanine Loan
Documents, the Junior A Mezzanine Loan Documents and the Junior B Mezzanine Loan
Documents.

IX. SALE AND SECURITIZATION OF MORTGAGE

Section 9.1 Sale of Mortgage and Securitization.

(a) Lender shall have the right (i) to sell or otherwise transfer the Loan or
any portion thereof as a whole loan, (ii) to sell participation interests in the
Loan or (iii) to securitize the Loan or any portion thereof in a single asset
securitization or a pooled loan securitization. (The transaction referred to in
clauses (i), (ii) and (iii) shall hereinafter be referred to collectively as
“Secondary Market Transactions” 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”).

 

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(b) If requested by Lender, at no out-of-pocket cost or additional liability to
Borrower, 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 in connection with any Secondary Market
Transactions, including, without limitation, to:

(i) (A) provide updated financial and other information with respect to the
Property, the business operated at the Property, Borrower and the Manager and
(B) provide updated budgets relating to the Property to the extent otherwise
required by the Loan Documents;

(ii) if required by the Rating Agencies, provide revised opinions of counsel,
which may be relied upon by Lender, the Rating Agencies and their respective
counsel, agents and representatives, as to non-consolidation, due execution and
enforceability with respect to the Property, Borrower, Guarantor and the Loan
Documents;

(iii) provide updated, as of the closing date of the Secondary Market
Transaction, representations and warranties made in the Loan Documents as are
customarily provided in securitization transactions and as may be reasonably
requested by the holder of the Note or the Rating Agencies and consistent with
the facts covered by such representations and warranties made in the Loan
Documents to the extent they are true as of the time of the closing of the
Securitization; and

(iv) execute amendments to the Loan Documents reasonably requested by Lender,
provided, however, that Borrower shall not be required to modify or amend any
Loan Document if such modification or amendment would (A) change the interest
rate, the stated maturity or the amortization of principal as set forth herein
or in the Note, (B) modify or amend any economic or any other material term of
the Loan, (C) otherwise materially increase the obligations or decrease the
rights of Borrower pursuant to the Loan Documents or (D) impose any additional
personal liability on any Constituent Partner (as hereinafter defined) of
Borrower, Guarantor or their respective Affiliates.

All financial statements provided by Borrower pursuant to this Section 9.1(c)
shall be prepared in accordance with GAAP, and shall meet other applicable Legal
Requirements. All financial statements relating to a Fiscal Year shall be
audited by the independent accountants in accordance with generally accepted
auditing standards and all other applicable Legal Requirements, shall be
accompanied by the manually executed report of the independent accountants
thereon, which report shall meet the requirements and all other applicable Legal
Requirements, and shall be further accompanied by a manually executed written
consent of the independent accountants, in form and substance acceptable to
Lender, to the inclusion of such financial statements in any Disclosure Document
and any Exchange Act Filing and to the use of the name of such independent
accountants and the reference to such independent accountants as “experts” in
any Disclosure Document and Exchange Act Filing, all of which shall be provided
at the same time as the related financial statements are required to be
provided. All other financial statements shall be certified by the chief
financial officer of Borrower, which certification shall state that such
financial statements meet the requirements set forth in the first sentence of
this paragraph.

 

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Section 9.2 Securitization Indemnification.

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

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

 

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lawsuit based upon an alleged untrue statement or an alleged omission and such
allegations are proved to be untrue pursuant to a final court order which is
unappealable, Borrower shall not be responsible for the legal fees incurred by
Lender, the Morgan Stanley Group and the Underwriter Group. This indemnity
agreement will be in addition to any liability which Borrower may otherwise
have.

(c) In connection with Exchange Act Filings, Borrower shall (i) indemnify
Lender, the Morgan Stanley Group and the Underwriter Group for Liabilities to
which Lender, the Morgan Stanley Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon the omission
or alleged omission to state in the Disclosure Document a material fact in
Borrower’s actual knowledge required to be stated in the Disclosure Document in
order to make the statements in the Disclosure Document, in light of the
circumstances under which they were made, not misleading and (ii) reimburse
Lender, the Morgan Stanley Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, the Morgan Stanley Group or the
Underwriter Group in connection with defending or investigating the Liabilities.
Notwithstanding anything to the contrary contained herein, if there is a lawsuit
based upon an alleged untrue statement or an alleged omission and such
allegations are proved to be untrue pursuant to a final court order which is
unappealable, Borrower shall not be responsible for the legal fees incurred by
Lender, the Morgan Stanley Group and the Underwriter Group.

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

 

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(e) In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 9.2(b) or (c) is for any
reason held to be unenforceable as to an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 9.2(b) or (c), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such 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) Morgan Stanley’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.

(f) Subject to the provisions of Section 11.22 hereof, the liabilities and
obligations of both Borrower and Lender under this Section 9.2 shall survive the
termination of this Agreement and the satisfaction and discharge of the Debt.

X. DEFAULTS

Section 10.1 Event of Default.

(a) Each of the following events, after the applicable notice and expiration of
the applicable cure period set forth in this subsection (a), if any, shall
constitute an event of default hereunder (an “Event of Default”):

(i) if (A) any monthly installment of principal and/or interest due under the
Note or the payment due on the Maturity Date is not paid when due, provided that
it shall not be an Event of Default if (1) a monthly installment of principal
and/or interest is not paid when due if sufficient funds are in the Debt Service
Account to make such payment on the Monthly Payment Date in question and
Borrower has not attempted to block the payment of such sums or (2) a monthly
installment of principal and/or interest is not paid when due up to two
(2) times during any twelve (12) month period as long as such payment is
received by Lender within one (l) Business Day following notice to Borrower that
the same is due and payable, or (B) any other portion of the Debt is not paid
when due and such non-payment continues for five (5) days following notice to
Borrower that the same is due and payable;

(ii) if any of the Taxes are not paid when due (except to the extent sums
sufficient to pay such Taxes have been deposited with Lender in accordance with
the terms of this Agreement in an amount sufficient to pay the same and Borrower
has not attempted to impede Agent’s attempts to pay same) or any of the Other
Charges are not paid within ten (10) Business Days of the date when the same are
due;

(iii) if the Policies are not kept in full force and effect (except to the
extent sums sufficient to pay the Insurance Premiums have been deposited with
Lender in accordance with the terms of this Agreement in an amount sufficient to
pay the same and Borrower has not attempted to impede Agent’s attempts to pay
same);

 

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(iv) if Borrower breaches or permits or suffers a breach of Article 6 of the
Mortgage and such breach is not cured within ten (10) Business Days of notice
thereof;

(v) if any representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made and such default is not cured within ten (10) Business Days of notice
thereof;

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

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

(viii) Intentionally Deleted;

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

(x) if Borrower breaches any representation, warranty or covenant contained in
Sections 3.1.24, 3.1.40 or 3.1.41 hereof;

(xi) if Borrower fails to comply with the covenants as to Prescribed Laws set
forth in Section 4.1.1 and continues to fail to comply after ten (10) Business
Days of notice thereof;

(xii) if Borrower breaches any of the negative covenants contained in
Section 4.2.12 hereof or acts or neglects to act in such a manner as to be
considered a default under the Operating Agreements and continues such breach or
act after ten (10) Business Days of notice thereof;

(xiii) if Guarantor breaches in any material respect any covenant, warranty or
representation contained in the Guaranty and continues such breach after ten
(10) Business Days of notice thereof or breaches the Guarantor Operational
Covenant;

(xiv) 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
(xiii) above, for ten (10) days after notice to Borrower from Lender, in the
case of any Default which can be cured by

 

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the payment of a sum of money, or for thirty (30) days after notice from Lender
in the case of any other Default; provided, however, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such 30-day
period and provided further that Borrower shall have commenced to cure such
Default within such 30-day period and thereafter diligently and expeditiously
proceeds to cure the same, such 30-day period shall be extended for such time as
is reasonably necessary for Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed ninety (90) days plus time
permitted for Excusable Delays; or

(xv) if there shall be default under any of the other Loan Documents beyond any
applicable cure periods contained in such Loan Documents or if no time period is
specified for the thirty (30) day period following written notice of such
default, whether as to Borrower or the Property, or if any other such event
shall occur or condition shall exist, if the effect of such event or condition
is to accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt.

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

Section 10.2 Remedies.

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

 

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

(c) Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder, provided that Borrower’s
liability or obligations shall not be materially increased by such severance.
Borrower shall execute and deliver to Lender from time to time, promptly after
the request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such power
unless Borrower has not responded to such request within five (5) Business Days
after notice has been given to Borrower by Lender of Lender’s intent to exercise
its rights under such power. Borrower shall not be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents. The Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents (modified to reflect the current status of such representations and
warranties) and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.

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

Section 10.3 Right to Cure Defaults. During the existence of an Event of Default
or on ten (10) Business Days’ notice (except in the case of an emergency),
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder or
being deemed to have cured any Event of

 

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Default hereunder, make, do or perform any obligation of Borrower hereunder in
such manner and to such extent as Lender may deem necessary. During the
existence of an Event of Default or on ten (10) Business Days’ notice (except in
the case of an emergency), Lender is authorized to enter upon the Property for
such purposes, or appear in, defend, or bring any action or proceeding to
protect its interest in the Property for such purposes, and the out of pocket
cost and expense thereof (including reasonable attorneys’ fees to the extent
permitted by law), with interest as provided in this Section 10.3, shall
constitute a portion of the Debt and shall be due and payable to Lender upon
demand. All such out of pocket costs and expenses incurred by Lender in
remedying such Event of Default or such failed payment or act or in appearing
in, defending, or bringing any action or proceeding shall bear interest at the
Default Rate, for the period after such cost or expense was incurred into the
date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by the liens, claims and
security interests provided to Lender under the Loan Documents and shall be
immediately due and payable upon demand by Lender therefore.

Section 10.4 Remedies Cumulative. The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender’s rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.

XI. MISCELLANEOUS

Section 11.1 Successors and Assigns. All covenants, promises and agreements in
this Agreement, by or on behalf of Borrower, shall inure to the benefit of the
legal representatives, successors and assigns of Lender.

Section 11.2 Lender’s Discretion. Whenever pursuant to this Agreement Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive. Prior to a
Securitization, whenever pursuant to this Agreement the Rating Agencies are
given any right to approve or disapprove, or any arrangement or term is to be
satisfactory to the Rating Agencies, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory, based upon Lender’s determination of Rating Agency criteria, shall
be substituted therefore.

 

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Section 11.3 Governing Law.

(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE LOAN 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, THE NOTE AND THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER 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 HERETO AND PURSUANT TO THE
OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND SECURITY INTERESTS IN
PROPERTY WHOSE PERFECTION, PRIORITY AND ENFORCEMENT IS COVERED BY ARTICLE 9 OF
THE UCC (INCLUDING, WITHOUT LIMITATION, THE ACCOUNTS) WHICH SHALL BE GOVERNED BY
THE LAW OF THE JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9-301
THROUGH 9-307 OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY
LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE
OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
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
EXCEPT AS SPECIFICALLY SET FORTH ABOVE.

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

 

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HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT:

Mr. Randall Scott

c/o Thomas Properties Group, LLC

One Commerce Square

2004 Market Street, Suite 2300

Philadelphia, Pennsylvania 19103

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, AND
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND
ADDRESS FOR SERVICE OF PROCESS).

Section 11.4 Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to, or
demand on Borrower, shall entitle Borrower to any other or future notice or
demand in the same, similar or other circumstances.

Section 11.5 Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement or any other Loan Document,
Lender shall not be deemed to have waived any right either to require prompt
payment when due of all other amounts due under this Agreement or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount. Lender shall have the right to waive or reduce any time
periods that Lender is entitled to under the Loan Documents in its sole and
absolute discretion.

 

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

 

If to Lender:

     

Morgan Stanley Mortgage Capital Inc.

1221 Avenue of the Americas, 27th Floor

New York, New York 10020

Attention: James Flaum and Kevin Swartz

Facsimile No.: (212) 762-9494

with a copy to:

     

Cadwalader, Wickersham & Taft LLP

100 Maiden Lane

New York, New York 10038

Attention: John M. Zizzo, Esq.

Facsimile No.: (212) 504-6666

If to Borrower:

     

Philadelphia Plaza-Phase II, LP

c/o Thomas Properties Group, LLC

515 South Flower, Suite 600

Los Angeles, California 90071

Attention: Mr. James Thomas

Facsimile No.: (213) 633-4760

with a copy to:

     

Thomas Properties Group, LLC

One Commerce Square

2005 Market Street, Suite 2300

Philadelphia, Pennsylvania 19103

Attention: Mr. Randall Scott

Facsimile No. (215) 851-6021

with a copy to:

     

Pircher, Nichols & Meeks

1925 Century Park East, Suite 1700

Los Angeles, California 90067

Attention: Real Estate Notices (LJP/SCS)

Facsimile No. (310) 201-8922

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

 

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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.

Section 11.8 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

Section 11.9 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

Section 11.10 Preferences. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder. To the extent Borrower makes a payment
or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

Section 11.11 Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly provide for the
giving of notice by Lender to Borrower and except with respect to matters for
which Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to Borrower.

Section 11.12 Remedies of Borrower. In the event that a claim or adjudication is
made that Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case where, by law or under this Agreement or the other Loan
Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, neither Lender nor its agents shall be liable for any
monetary damages, and Borrower’s sole remedy shall be limited to commencing an
action seeking injunctive relief or declaratory judgment unless Lender’s actions
are arbitrary and capricious. Any action or proceeding to determine whether
Lender has acted reasonably shall be determined by an action seeking declaratory
judgment unless Lender’s actions are arbitrary and capricious.

 

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Section 11.13 Expenses; Indemnity.

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

(b) Borrower shall indemnify, defend and hold harmless Lender and its officers,
directors, agents, employees (and the successors and assigns of the foregoing)
(the “Lender Indemnitees”) from and against any and all liabilities,
obligations, out-of-pocket losses, compensatory damages (but not consequential
damages), penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for the Lender Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not the Lender Indemnitees shall be
designated a party thereto), that may be imposed on, incurred by, or asserted
against the Lender Indemnitees in any manner relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that Borrower
shall not have any obligation to the Lender Indemnitees hereunder to the extent
that such Indemnified Liabilities arise from the gross

 

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negligence, illegal acts, fraud or willful misconduct of the Lender Indemnitees.
To the extent that the undertaking to indemnify, defend and hold harmless set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Lender Indemnitees.

Section 11.14 Schedules Incorporated. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

Section 11.15 Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement and the other Loan Documents shall take the
same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

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

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

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

Section 11.17 Publicity. Except for Lender Disclosure Documents in connection
with a Securitization, all news releases, publicity or advertising by Borrower,
Lender or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Borrower, Lender, Morgan Stanley Mortgage Capital Inc., or any of
their Affiliates shall be subject to the prior approval of Lender and Borrower,
which shall not be unreasonably withheld. Notwithstanding the foregoing,
disclosure required by any federal or state securities laws, rules or
regulations or other applicable Legal Requirements, as determined by any such
party’s counsel, shall be not be subject to the prior written approval of the
other.

 

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Section 11.18 Waiver of Marshalling of Assets. To the fullest extent permitted
by law, Borrower, for itself and its successors and assigns, waives all rights
to a marshalling of the assets of Borrower, Borrower’s Partners and others with
interests in Borrower, and of the Property, and shall not assert any right under
any laws pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Property for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Property in
preference to every other claimant whatsoever.

Section 11.19 Waiver of Offsets/Defenses/Counterclaims. Borrower hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Lender or its agents or otherwise to
offset any obligations to make the payments required by the Loan Documents. No
failure by Lender to perform any of its obligations hereunder shall be a valid
defense to, or result in any offset against, any payments which Borrower is
obligated to make under any of the Loan Documents.

Section 11.20 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in
the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or Affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

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 third party (i.e. other than Borrower or its Affiliates)
claims, liabilities, out of pocket costs and expenses of any kind (including
Lender’s attorneys’ fees and expenses) in any way relating to or arising from a
claim by any Person that such Person acted on behalf of Borrower or Lender in
connection with the transactions contemplated herein. The provisions of this
Section 11.21 shall survive the expiration and termination of this Agreement and
the payment of the Debt.

 

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Section 11.22 Exculpation.

(a) 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 (including a money judgment under
the Note and the other Loan Documents) to enable Lender to enforce and realize
upon its interest under the Note, this Agreement, the Mortgage and the other
Loan Documents, or in the Property, the Rents, or any other collateral given to
Lender pursuant to the Loan Documents; provided, however, that, except as
specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Property, in the Rents and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Mortgage and the other Loan
Documents, shall not sue for, seek or demand any deficiency or other personal
judgment against Borrower in any such action or proceeding under or by reason of
or under or in connection with the Note, this Agreement, the Mortgage or the
other Loan Documents. The provisions of this Section shall not, however,
(a) constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (b) impair the right of Lender to name
Borrower as a party defendant in any action or suit for foreclosure and sale
under the Mortgage; (c) affect the validity or enforceability of any guaranty
made in connection with the Loan or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of the Assignment of Leases; (f) constitute
a prohibition against Lender to seek a deficiency or other personal judgment
against Borrower solely in order to fully realize on any security given by
Borrower in connection with the Loan or to commence any other appropriate action
or proceeding in order for Lender to exercise its remedies against such
security; 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 incurred by Lender (including attorneys’ fees and costs
reasonably incurred) arising out of or in connection with the following:

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

(ii) the willful misconduct of Borrower,

(iii) the existence of environmental matters in violation of applicable Legal
Requirements;

(iv) the intentional misapplication or conversion by Borrower or its authorized
agents of (A) any insurance proceeds paid by reason of any loss, damage or
destruction to the Property, to the extent so misappropriated or misapplied,
(B) any Awards or other amounts received in connection with the Condemnation of
an or a portion of the Property, to the extent so misappropriated or misapplied,
or (C) any Rents, to the extent so misappropriated or misapplied;

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

 

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(vi) Borrower breaches any representation contained in Sections 3.1.40 or 3.1.41
hereof

Notwithstanding anything to the contrary in this Agreement, the Note or any of
the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) Borrower files a voluntary
petition under the Bankruptcy code or any other Federal or state bankruptcy or
insolvency law; (ii) an Affiliate, which controls, directly or indirectly,
Borrower files, or arranges for or joins in the filing of, an involuntary
petition against Borrower under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law (other than if such filing is consented to in
writing by Lender); (iii) Borrower colludes in or arranges for any involuntary
petition filed against it by any other Person (other than by Lender) under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law
(other than if such filing is consented to in writing by Lender); or
(iv) Guarantor breaches the Guarantor Operational Covenant.

(b) Notwithstanding anything to the contrary contained in this Agreement, the
Note or any of the Loan Documents (except for Guarantor under the Guaranty and
Manager under the Assignment of Management Agreement and the Cash Management
Agreement) neither any present or future Constituent Partner in Borrower nor any
present or future shareholder, officer, director, employee, trustee,
beneficiary, advisor, partner, member, principal, participant or agent of or in
Borrower or of or in any person or entity that is or becomes a Constituent
Partner in Borrower (collectively, the “Borrower’s Partners”) shall have any
personal liability, directly or indirectly, under or in connection with this
Agreement, the Note or any of the Loan Documents (except for Guarantor under the
Guaranty and Manager under the Assignment of Management Agreement and the Cash
Management Agreement), or any amendment or amendments to any of the foregoing
made at any time or times hereafter and Lender, on behalf of itself and its
successors and assigns, hereby waives any and all such personal liability. The
term “Constituent Partner,” as used herein, shall mean, any direct partner in
Borrower and any person or entity that, directly or indirectly, through one or
more other partnerships, limited liability companies or corporation or other
entities is a partner in Borrower. For purposes of this Section 11.22(b),
neither the negative capital account of any Constituent Partner in Borrower or
in any other Constituent Partner in Borrower, nor any obligation of any
Constituent Partner in Borrower to restore a negative capital account or to
contribute or loan capital to Borrower or to any other Constituent Partner in
Borrower shall at any time be deemed to be the property or an asset of Borrower
(or any other Constituent Partner) and neither Lender nor any of its successors
or assigns shall have any right to collect, enforce or proceed against with
respect to any such negative capital account or obligation to restore,
contribute or loan.

 

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Section 11.23 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, including, without limitation,
the Commitment Letter dated June 3, 2003 (as amended) between Borrower DB Realty
Mezzanine Investment Fund II, LLC and Lender, are superseded by the terms of
this Agreement and the other Loan Documents.

Section 11.24 Servicer.

(a) At the option of Lender, the Loan may be serviced by a servicer (the
“Servicer”) selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender and Servicer. Lender shall be responsible for any reasonable set-up fees
or any other initial costs relating to or arising under the Servicing Agreement;
and Borrower shall not be responsible for payment of the monthly servicing fee
due to the Servicer under the Servicing Agreement. Servicer shall, however, be
entitled to reimbursement of costs and expenses as and to the same extent (but
without duplication) as Lender is entitled thereto under the applicable
provisions of this Agreement and the other Loan Documents.

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

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

Section 11.25 Joint and Several Liability. If more than one Person has executed
this Agreement as “Borrower,” the representations, covenants, warranties and
obligations of all such Persons hereunder shall be joint and several.

Section 11.26 Creation of Security Interest. Notwithstanding any other provision
set forth in this Agreement, the Note, the Mortgage or any of the other Loan
Documents, Lender may at any time create a security interest in all or any
portion of its rights under this Agreement, the Note, the Mortgage and any other
Loan Document (including, without limitation, the advances owing to it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.

Section 11.27 Assignments and Participations.

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

 

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

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

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

(e) Notwithstanding anything to the contrary contained in this Agreement, Lender
shall not include Guarantor financial information in any Disclosure Document.

[NO FURTHER TEXT ON THIS PAGE]

 

- 85 -

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

 

LENDER: MORGAN STANLEY MORTGAGE CAPITAL INC., a New York corporation By:  

 

Name:   Title:  

 

- 86 -

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BORROWER:

PHILADELPHIA PLAZA-PHASE II, LP,

a Pennsylvania limited partnership

By:   

TCS Genpar, LLC

a Delaware limited liability company,

Its General Partner

   By:   

TCS SPE 1, L.P.,

a Delaware limited partnership,

Its Sole Member

      By:   

TCS Mezzanine GP, LLC,

a Delaware limited liability company,

Its General Partner

         By:   

Maguire Thomas Partners-Commerce Square II, Ltd.,

a California limited partnership,

Its Managing Member

            By:   

Thomas Development Partners-Phase II, Inc.,

a California corporation,

Its General Partner

               By:   

 

                  Name:   

 

                  Title:   

 

  

 

- 87 -

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SCHEDULE I

RENT ROLL

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Page 1 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge   
Base    Percent   Break

ATT/TCG

   30    1    0    1/9/03   1/1/03    MTM    1/1/03    $ 1200    N/A    N/A     

Commerce Restaurant Corporation

   100    1    1,621    4/3/01   5/20/01    5/31/07    12/1/01    $ 24.22   
Op. Ex.    Net    6.0%     Annual

    “Twenty21”

                    1/1/02    $ 16.87    Taxes    Net    Effective     Sales >
                    4/1/02    $ 24.22                                6/1/04    $
24.80          12/1/01   $ 3,750,000                     6/1/05    $ 25.44      
   1/1/02   $ 3,465,463             3/18/02:                     1/1/03   $
3,750,000             Option to                     6/1/04   $ 3,840,000      
      Exercise                     6/1/05   $ 3,940,000             and Amnd  
                   

Cort Furniture Rental Corp.

   110    1    4,477    1/5/93   10/1/93    9/30/03    10/1/93    $ 8.25   
Op. Ex.    Net     

    “Coif Furniture Rental”

                    10/1/94    $ 15.50    Taxes    Net                         
10/1/95    $ 16.50                                10/1/96    $ 17.50           
                    10/1/97    $ 18.50                                10/1/98   
$ 19.00                                10/1/01    $ 20.00                       
1st Amnd.   10/01/03    9/30/06    10/1/03    $ 23.00    Op. Ex.    Net        
         10/18/02               Taxes    Net     

Marathon Grill

   120    1    7,938    10/25/00   4/1/01    3/31/11    4/1/01    $ 8.31    Op.
Ex.    Net    6.0%     Annual                     4/1/02    $ 9.15    Taxes   
Net    Effective     Sales >             1st Amnd:         4/1/03    $ 9.98   
                    5/1/01         4/1/04    $ 11.22          4/1/01   $
1,100,000                     4/1/06    $ 14.55          4/1/02   $ 1,210,000   
                 4/1/07    $ 15.80          4/1/03   $ 1,320,000              
      4/1/09    $ 17.04          4/1/04   $ 1,485,000                     4/1/10
   $ 17.88          4/1/06   $ 1,925,000                                 411/07
  $ 2,090,000                                 4/1109   $ 2,255,000              
                  4/1/10   $ 2,365,000

Salad Works, Inc.

   130    1    3,606    3/31/97   10/1/97    9/30/07    10/1/97    $ 20.00   
Op. Ex.    Net    6.0%     LY 1-5:

    “Salad Works”

                    4/1/00    $ 22.00    Taxes    Net      $ 1.75mm            
1st Amnd:         4/1/02    $ 24.00                        9/30/97        
4/1/04    $ 26.00              LY 6-10:                     4/1/05    $ 27.00   
        $ 1.85mm

Kinko’s of Ohio, Inc.

   140    1    4,650    12/2/96   5/12/97    5/11/07    5/1/97    $ 33.79    Op.
Ex.    Tot     

    “Kinko’s”

                    5/1/98    $ 34.79    Taxes    Base                         
5/1/99    $ 35.79       $6.85                          5/1/00    $ 38.79      
                         5/1/01    $ 37.79                                5/1/02
   $ 41.29           

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Page 2 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent    Recoveries    Percentage Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge   
Base    Percent    Break

Citizens Bank

   170    1    2,896    7/12/02   12/16/02    12/31/12    12/16/02    $ 28.00   
Op. Ex.    Net                           1/1/06    $ 29.00    Taxes    Net      
                    1/1/08    $ 31.00                                 1/1/11   
$ 32.00            

Shoe Shine Service

   180    1    180    N/A                       

NYCL - (Delaware Mgt.)

   060    P-1    10,198    3/28/90   5/15/92    6/23/07    5/15/92    $ 19.00   
Op. Ex.    Net      

NYCL - (Delaware Mgt.)

   200    2    41,936            5/15/93    $ 20.00    Taxes    Net      

NYCL - (Delaware Mgt.)

   300    3    31,817    1st Amnd:         6/24/97    $ 25.25            

NYCL - (Delaware Mgt.)

   400    4    33,572    10/1/92         6/24/02    $ 30.00            

NYCL - Vacant

   500    5    33,572                          

NYCL - (Citizens Bank)

   800    8    33.572    2nd Amnd:                       

NYCL - (Biological Abstr.)

   700    7    33,572    6/20/99                       

NYCL - Alliance

   800    8    16,186                          

NYCL - (Biological Abstr.)

   810    6    7,551    3rd Amnd:                       

NYCL - CSX

   830    8    5,640    9/30/99                       

NYCL - (McCormick Teyl.)

   900    9    29,392                          

NYCL - (McCormick Tayl.)

   1000    10    29,376                          

NYCL - (ADR Options)

   1100    11    10.969    4th Amnd:                       

NYCL - (Reliance Stand.)

   1110    11    18,761    12/10/99                       

NYCL - (Reliance Stand.)

   1200    12    29,730                          

NYCL - (Reliance Stand.)

   1400    14    29,724    5th Amnd:                       

NYCL - (Reliance Stand.)

   1600    15    29,724    1/5/00                       

NYCL - Conrail

   1800    16    29,724                          

NYCL - (PWC)

   1700    17    29,773    6th Amnd:                       

NYCL - (PWC)

   1800    18    23,440    5/17/01                       

NYCL - (PWC)

   1900    19    23,037                          

NYCL - (PWC)

   2000    20    23,037    Ltr Agmnts:                       

NYCL - (PWC)

   2100    21    22,825    3/28/90                       

NYCL - (PWC)

   2200    22    23,037    6/3/93                       

NYCL - (PWC)

   2300    23    23.037    9/9/94                       

NYCL - (PWC)

   2400    24    23,037                          

NYCL - (PWC)

   2500    25    23,037                          

NYCL - Vacant

   2600    26    23,037                          

NYCL - (GreenbergTrourig)

   2700    27    22,825                          

NYCL - (PP Ph 2/E&Y)

   2800    28    22,981                          

NYCL - (Norfolk South.)

   2900    29    14,677                          

NYCL - Vacant

   4110    41    224                                                            
            752,999                          

Delaware Management

   000    P-1    See    12/10/99   N/A                         200    2    NYCL
                             300    3                                 400    4
                            

Citizens Bank

   600    6    See    11/8/01   N/A                               NYCL        
                 

 

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Page 3 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge  
Base    Percent    Break

Biological Abstracts

   700    7    See    4/30/99   6/24/09    11/30/09    6/24/09    $9.55   
Op. Ex.   Net          810    8    NYCL                  Taxes   Net            
      1st Amend:                                   2/28/01                      

Alliance

   800    a    See    2/18/01   6/24/08    12/31/09    0/24/08    $25.90    Op.
Ex.   Net                NYCL                  Taxes   Net      

McCormick Taylor

   1000    10    See    7/8/99   8/24/09    1/31/10    6/24/09    $20.50   
Op. Ex*   $5.89          900    9    NYCL                  Taxes*   $3.09      
            1st Amend:                                   7/6/99                
                  2nd Amend:                                   5/17/00        
             

ADR Options, Inc.

   1100    11    See    8/15/01   N/A                              NYCL        
                

Reliance Standard Life

   1110    11    See    1/05/00   06/24108    06/23/09    06/24/08    $24.00   
Op. Ex*   $5.89      

Reliance Standard Life

   1200    12    NYCL                  Taxes*   $3.09      

Reliance Standard Life

   1400    14       Amended &                      

Reliance Standard Life

   1500    15       Restated                                   Sublease:        
                          5/1/00                      

PriceWaterhouseCoopers

   1700    17    See    8/20/99   8/24/09    4/24/15    8/24/09    $25.00    Op.
Ex   $5.94          1800    18    NYCL            4/24/10    $27.00    Taxes  
$3.15          1900    19                                2000    20           
                    2100    21                                2200    22        
                       2300    23                                2400    24   
                            2500    25                            

Greenberg Traurlg

   2700    27    See    7/11/00   N/A                              NYCL        
                

Norfolk Southern

   2900    29    See    10/1/99   N/A                              NYCL        
                             1st Amnd:                                  
10/26/99                      

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Page 4 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge   
Base    Percent    Break

Vacant

   3020    30    4.745                          

Grant Thornton, LLP

   3010    30    9,856    7/29/94   12/5/94    12/4/04    9/2/96    $ 25.00   
Op. Ex.    Net                           9/2/97    $ 6.75    Taxes    Net      
                    9/2/98    $ 7.75                                 9/2/99    $
8.75                                 9/2/00    $ 9.75                          
      9/2/01    $ 10.75                                 9/2/02    $ 11,75      
                          9/2/03    $ 12.75                                
9/2/04    $ 13.75            

Grant Thornton, LLP

   3100    31    14,633    1st Amend:         12/5/94    $ 25.71               
      24,489    3/14/88         12/5/95    $ 4.70                             
   12/5/98    $ 5.00                                 12/5/99    $ 6.00         
                       12/5/00    $ 7.00                                 12/5/01
   $ 8.00                                 12/5/02    $ 9.00                     
           12/6/03    $ 10.00            

Shrager, McDaid, Loftus,

   3210    32    8,989    6/15/92   12/18/93    12/31/03    1/1/93    $ 8.75   
Op. Ex.    Net      

    Flum, & Spivey

                    12/1/94    $ 9.50    Taxes    Net                          
12/1/95    $ 10.25                3209    32    *972    Ltr Agmnt:        
12/1/96    $ 11.00    N/A                                                       
9,961    8/14/92         12/1/97    $ 14.50                                
12/1/98    $ 15.00                                 12/1/99    $ 16.00         
                       12/1/00    $ 17.00                                
12/1/01    $ 20.00                                 12/1/02    $ 21.00         
                       12/1/03    $ 22.00            

Barrack, Rodos & Baclne

   3220    32    4,672    2/1/93   5/10/93    9/30/11    5/10/93    $ 14.57   
Op. Ex.    Net      

Barrack, Rodos & Becine

   3300    33    14,633            5/10/96    $ 15,25    Taxes    Net         
                                           19,305            9/22/01    $ 15.50
                                10/1/02    $ 16.00                        

 

1st Amend:

        10/1/03    $ 17.00                         12/26/00         10/1/04    $
18.00                                 10/1/05    $ 18.75                        
        10/1/06    $ 19.00                                 10/1/07    $ 18.50   
                             10/1/08    $ 20.25                                
10/1/09    $ 21.00                                 10/1/10    $ 21.75         
  

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Page 5 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square   Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet   Date   Start    End    steps        Rent       
Charge    Base    Percent    Break

Eizan, Fineburg & McCarthy

   3410    34    7,183   9/14/93   11/1/93    7/31/05    11/1/93    $ 9.75   
Op. Ex.    Net                          11/1/94    $ 13.00    Taxes    Net      
         Effective   1st Amend:         9/1/96    $ 13.50                     
9/1/99:   5/14198         9/1/99    $ 10.47                               
6/1/00    $ 11.75                      9,506   2nd Amend:         8/1/00    $
12.00                        7/31/99         8/1/01    $ 12.25                  
             8/1/02    $ 12.75                                8/1/03    $ 13.00
                               8/1/04    $ 13.25            

P. G Corbin & Co., Inc.

   3420    34    5,127   3/7/94   6/1/94    7/31/04    6/1/94    $ 11.26    Op.
Ex.    Net                          8/1/01    $ 12.70    Taxes    Net         
        1st amend:         8/1/02    $ 13.70                        11/30/98  
      8/1/03    $ 14.70                        2nd Amend:                       
           2/28/01                       

Ernst & Young, LLP

   2800    28    22,961   Sublease   1/1/00    8/22/08    1/1/00    $ 12,02   
Op. Ex    Net                  7/1/00

 

        1/1/04

 

   $

 

13.05

 

   Taxes

 

        

Ernst & Young, LLP

   3500    35    14,633   12/19/91   9/21/92    9/30/07    9/21/92    $ 0      
     

Ernst & Young, LLP

   3600    36    14,633           9/21/93    $ 7.00    Op. Ex.    Net      

Ernst & Young, LLP

   3700    37    14,633   1st Amend.   7/1/00    9/29/07    9/21/94    $ 10.50
   Taxes    Net      

Ernst & Young, LLP

   3800    38    14,633   9/30/99         9/21/95    $ 15.50            

Ernst & Young, LLP

   3900    39    14,833           9/21/96    $ 16.00            

Ernst & Young, LLP

   4000    40    14,833           9/21/97    $ 20.00            

Ernst & Young, LLP**

   4100    41    13,998           9/21/99    $ 21.00                           
                              124,757           9/21/00    $ 22.00            

Less: NYCL Sublease

         (22,961)           9/21/01    $ 23.00                                 
              

    Original Direct Lease

         101,796           9/21/02    $ 24.00                               
9/21/04    $ 26.00                                9/21/05    $ 27.00            
                   9/21/08    $ 28.00            

 

Total Leased Space

   948,531    98.3 % 

Total Vacant Space

   4,745    1.7 % 

Total Space

   953,276    100 % 

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SCHEDULE II

INTENTIONALLY DELETED

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SCHEDULE III

ORGANIZATIONAL CHART

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LOGO [g16024g59a93.jpg]

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LOGO [g16024g41i61.jpg]

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LOGO [g16024g42a66.jpg]

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SCHEDULE IV

 

 

(Lender) - and -

 

(Tenant)

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

Dated: Location: Section: Block: Lot: County:

PREPARED BY AND UPON

RECORDATION RETURN TO:

Messrs. Cadwalader, Wickersham & Taft LLP 100 Maiden Lane

New York, New York 10038

Attention:

File No.: Title No.:

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”)
is made as of the      day of             , 20     by and between MORGAN STANLEY
MORTGAGE CAPITAL INC., having an address at 1221 Avenue of the Americas, 27th
Floor, New York, New York 10020 (“Lender”) and                                 ,
having an address at                                          (“Tenant”).

RECITALS:

A. Lender has made a loan in the approximate amount of $132,000,000.00 to
Landlord (defined below), which Loan is given pursuant to the terms and
conditions of that certain Loan Agreement dated             , 2003, between
Lender and Landlord (the “Loan Agreement”). The Loan is evidenced by a certain
Promissory Note dated             , 2003, given by Landlord to Lender (the
“Note”) and secured by a certain [Mortgage][Deed of Trust] and Security
Agreement dated             , 2003, given by Landlord to Lender (the
“Mortgage”), which encumbers the fee estate of Landlord in certain premises
described in Exhibit A attached hereto (the “Property”);

B. Tenant occupies a portion of the Property under and pursuant to the
provisions of a certain lease dated             ,      between Philadelphia
Plaza-Phase 11, Ltd., a Pennsylvania limited partnership, as landlord
(“Landlord”) and Tenant, as tenant (the “Lease”); and

C. Tenant has agreed to subordinate the Lease to the Mortgage and to the lien
thereof and Lender has agreed to grant non-disturbance to Tenant under the Lease
on the terms and conditions hereinafter set forth.

AGREEMENT:

For good and valuable consideration, Tenant and Lender agree as follows:

1. Subordination. Tenant agrees that the Lease and all of the terms, covenants
and provisions thereof and all rights, remedies and options of Tenant thereunder
are and shall at all times continue to be subject and subordinate in all
respects to the Mortgage and to the lien thereof and all terms, covenants and
conditions set forth. in the Mortgage and the Loan Agreement including without
limitation all renewals, increases, modifications, spreaders, consolidations,
replacements and extensions thereof and to all sums secured thereby with the
same force and effect as if the Mortgage and Loan Agreement had been executed,
delivered and (in the case of the Mortgage) recorded prior to the execution and
delivery of the Lease.

2. Non-Disturbance. Lender agrees that if any action or proceeding is commenced
by Lender for the foreclosure of the Mortgage or the sale of the Property,
Tenant shall not be named as a party therein unless such joinder shall be
required by law, provided, however, such joinder shall not result in the
termination of the Lease or disturb the Tenant’s possession or use of the
premises demised thereunder, and the sale of the Property in any such action or
proceeding shall be made subject to all rights of Tenant under the Lease except
as set

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

forth in Section 3 below, provided that at the time of the commencement of any
such action or proceeding or at the time of any such sale or exercise of any
such other rights (a) the term of the Lease shall have commenced pursuant to the
provisions thereof, (b) the Lease shall be in full force and effect and
(d) Tenant shall not be in default under any of the terms, covenants or
conditions of the Lease or of this Agreement on Tenant’s part to be observed or
performed beyond the expiration of any applicable notice or grace periods (a, b
and c, the “Conditions”).

3. Attornment. Lender and Tenant agree that upon the conveyance of the Property
by reason of the foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or otherwise, the Lease shall not be
terminated or affected thereby (at the option of the transferee of the Property
(the “Transferee”) if the Conditions set forth in Section 2 above have not been
met at the time of such transfer) but shall continue in full force and effect as
a direct lease between the Transferee and Tenant upon all of the terms,
covenants and conditions set forth in the Lease and in that event, Tenant agrees
to attorn to the Transferee and the Transferee shall accept such attornment, and
the Transferee shall not be (a) obligated to complete any construction work
required to be done by Landlord pursuant to the provisions of the Lease or to
reimburse Tenant for any construction work done by Tenant, (b) liable (i) for
Landlord’s failure to perform any of its obligations under the Lease which have
accrued prior to the date on which the Transferee shall become the owner of the
Property, or (ii) for any act or omission of Landlord, whether prior to or after
such foreclosure or sale, (c) required to make any repairs to the Property or to
the premises demised under the Lease required as a result of fire, or other
casualty or by reason of condemnation unless the Transferee shall be obligated
under the Lease to make such repairs and shall have received sufficient casualty
insurance proceeds or condemnation awards to finance the completion of such
repairs, (d) required to make any capital improvements to the Property or to the
premises demised under the Lease which Landlord may have agreed to make, but had
not completed, or to perform or provide any services not related to possession
or quiet enjoyment of the premises demised under the Lease, (e) subject to any
offsets, defenses, abatements or counterclaims which shall have accrued to
Tenant against Landlord prior to the date upon which the Transferee shall become
the owner of the Property, (f) liable for the return of rental security
deposits, if any, paid by Tenant to Landlord in accordance with the Lease unless
such sums are actually received by the Transferee, (g) bound by any payment of
rents, additional rents or other sums which Tenant may have paid more than one
(1) month in advance to any prior Landlord unless (i) such sums are actually
received by the Transferee or (ii) such prepayment shall have been expressly
approved of by the Transferee, (h) bound to make any payment to Tenant which was
required under the Lease, or otherwise, to be made prior to the time the
Transferee succeeded to Landlord’s interest, (i) bound by any agreement
amending, modifying or terminating the Lease made without the Lender’s prior
written consent prior to the time the Transferee succeeded to Landlord’s
interest or (j) bound by any assignment of the Lease or sublease of the
Property, or any portion thereof, made prior to the time the Transferee
succeeded to Landlord’s interest other than if pursuant to the provisions of the
Lease.

4. Notice to Tenant. After notice is given to Tenant by Lender that the Landlord
is in default under the Note and the Mortgage and that the rentals under the
Lease should be paid to Lender pursuant to the terms of the assignment of leases
and rents executed and delivered by Landlord to Lender in connection therewith,
Tenant shall thereafter pay to Lender or as directed by the Lender, all rentals
and all other monies due or to become due to

 

2

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

Landlord under the Lease and Landlord hereby expressly authorizes Tenant to make
such payments to Lender and hereby releases and discharges Tenant from any
liability to Landlord on account of any such payments made in accordance with
the Lender’s instructions.

5. Lender’s Consent. Tenant shall not, without obtaining the prior written
consent of Lender, (a) enter into any agreement amending, modifying or
terminating the Lease, (b) prepay any of the rents, additional rents or other
sums due under the Lease for more than one (1) month in advance of the due dates
thereof, (c) voluntarily surrender the premises demised under the Lease or
terminate the Lease without cause or shorten the term thereof, or (d) assign the
Lease or sublet the premises demised under the Lease or any part thereof other
than pursuant to the provisions of the Lease; and any such amendment,
modification, termination, prepayment, voluntary surrender, assignment or
subletting, without Lender’s prior consent, shall not be binding upon Lender.

6. Lender to Receive Notices. Tenant shall provide Lender with copies of all
written notices sent to Landlord pursuant to the Lease simultaneously with the
transmission of such notices to the Landlord. Tenant shall notify Lender of any
default by Landlord under the Lease which would entitle Tenant to cancel the
Lease or to an abatement of the rents, additional rents or other sums payable
thereunder, and agrees that, notwithstanding any provisions of the Lease to the
contrary, no notice of cancellation thereof or of such an abatement shall be
effective unless Lender shall have received notice of default giving rise to
such cancellation or abatement and shall have failed within sixty (60) days
after receipt of such notice to cure such default, or if such default cannot be
cured within sixty (60) days, shall have failed within sixty (60) days after
receipt of such notice to commence and thereafter diligently pursue any action
necessary to cure such default.

7. Notices. All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (hereinafter
defined) after having been deposited for overnight delivery with any reputable
overnight courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the U.S.
Postal Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If to Tenant:  

 

    

 

    

 

     Attention:  

 

     Facsimile No.  

 

   If to Lender:  

Morgan Stanley Mortgage Capital Inc.

1221 Avenue of the Americas, 27th Floor

New York, New York 10020

Attention: James Flaum and Kevin Swartz

Facsimile No. (212) 762-9494

 

3

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

With a copy to:   Cadwalader, Wickersham & Taft LLP   100 Maiden Lane  

New York, New York 10038

Attention: John M. Zizzo, Esq.

Facsimile No. (212) 504-6666

or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section, the term “Business Day” shall
mean a day on which commercial banks are not authorized or required by law to
close in New York, New York.

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

8. Joint and Several Liability. If Tenant consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Agreement shall be, binding upon and inure to the benefit of
Lender and Tenant and their respective successors and assigns.

9. Definitions. The term “Lender” as used herein shall include the successors
and assigns of Lender and any person, party or entity which shall become the
owner of the Property by reason of a foreclosure of the Mortgage or the
acceptance of a deed or assignment in lieu of foreclosure or otherwise. The term
“Landlord” as used herein shall mean and include the present landlord under the
Lease and such landlord’s predecessors and successors in interest under the
Lease, but shall not mean or include Lender. The term “Property” as used herein
shall mean the Property, the improvements now or hereafter located thereon and
the estates therein encumbered by the Mortgage.

10. No Oral Modifications. This Agreement may not be modified in any manner or
terminated except by an instrument in writing executed by the parties hereto.

11. Governing Law. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State where the Property is located and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State where the Property is located.

12. Inapplicable Provisions. If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.

13. Duplicate Originals; Counterparts. This Agreement may be executed in any
number of duplicate originals and each duplicate original shall be deemed to be
an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

 

4

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

14. Number and Gender. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.

15. Transfer of Loan. Lender may sell, transfer and deliver the Note and assign
the Mortgage, this Agreement and the other documents executed in connection
therewith to one or more investors in the secondary mortgage market
(“Investors”). In connection with such sale, Lender may retain or assign
responsibility for servicing the loan, including the Note, the Mortgage, this
Agreement and the other documents executed in connection therewith, or may
delegate some or all of such responsibility and/or obligations to a servicer
including, but not limited to, any subservicer or master servicer, on behalf of
the Investors. All references to Lender herein shall refer to and include any
such servicer to the extent applicable.

16. Further Acts. Tenant will, at the cost of Tenant, and without expense to
Lender, do, execute, acknowledge and deliver all and every such further acts and
assurances as Lender shall, from time to time, require, for the better assuring
and confirming unto Lender the property and rights hereby intended now or
hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of this Agreement or for filing, registering or
recording this Agreement, or for complying with all applicable laws.

17. Limitations on Lender’s Liability. Tenant acknowledges that Lender is
obligated only to Landlord to make the Loan upon the terms and subject to the
conditions set forth in the Loan Agreement. In no event shall Lender or any
purchaser of the Property at foreclosure sale or any grantee of the Property
named in a deed-in-lieu of foreclosure, nor any heir, legal representative,
successor, or assignee of Lender or any such purchaser or grantee (collectively
the Lender, such purchaser, grantee, heir, legal representative, successor or
assignee, the “Subsequent Landlord”) have any personal liability for the
obligations of Landlord under the Lease and should the Subsequent Landlord
succeed to the interests of the Landlord under the Lease, Tenant shall look only
to the estate and property of any such Subsequent Landlord in the Property for
the satisfaction of Tenant’s remedies for the collection of a judgment (or other
judicial process) requiring the payment of money in the event of any default by
any Subsequent Landlord as landlord under the Lease, and no other property or
assets of any Subsequent Landlord shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant’s remedies under or with
respect to the Lease; provided, however, that the Tenant may exercise any other
right or remedy provided thereby or by law in the event of any failure by
Subsequent Landlord to perform any such material obligation.

 

5

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

IN WITNESS WHEREOF, Lender and Tenant have duly executed this Agreement as of
the date first above written.

 

LENDER:

MORGAN STANLEY MORTGAGE CAPITAL INC.,

a New York corporation

By:

 

 

Name:

 

Title:

 

TENANT:

 

a                                 

By:

 

 

Name:

 

Title:

 

 

The undersigned accepts and agrees to the provisions of Section 4 hereof:
LANDLORD:

PHILADELPHIA PLAZA-PHASE II, LP,

a Pennsylvania limited partnership

By:

  TCS Genpar, LLC, a Delaware limited liability

company, Its General Partner

  By:   TCS SPE 1, L.P., a Delaware limited

partnership, Its Sole Member

    By:   TCS Mezzanine GP, LLC, a Delaware limited

liability company, Its General Partner

      By:   Maguire Thomas Partners-Commerce Square II, Ltd.,

a California limited partnership, Its Managing Member

        By:  

Thomas Development Partners-Phase II, Inc., a

California corporation, Its General Partner

          By:                                          
                                       Name:  
                                                                              
Title:                                                                       

 

6

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

ACKNOWLEDGMENTS

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

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

EXHIBIT A

LEGAL DESCRIPTION

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

SCHEDULE V

SCHEDULE OF AMORTIZED PAYMENTS

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

Two Commerce

Amortization Schedule based on June 2003 Split

 

MS Loan Amount

   132,000,000

Balloon Balance

   106,445,603

 

Date

   Beginning Balance    Principal Payment    End Balance

August 2003

   132,000,000    —      132,000,000

September 2003

   132,000,000    307,600.00    131,692,400

October 2003

   131,692,400    307,600.00    131,384,800

November 2003

   131,384,800    307,600.00    131,077,200

December 2003

   131,077,200    307,600.00    130,769,600

January 2004

   130,769,600    448,808.97    130,320,791

February 2004

   130,320,791    448,808.97    129,871,982

March 2004

   129,871,982    448,808.97    129,423,173

April 2004

   129,423,173    448,808.97    128,974,364

May 2004

   128,974,364    448,808.97    128,525,555

June 2004

   128,525,555    448,808.97    128,076,746

July 2004

   128,076,746    448,808.97    127,627,937

August 2004

   127,627,937    448,808.97    127,179,128

September 2004

   127,179,128    448,808.97    126,730,319

October 2004

   126,730,319    448,808.97    126,281,510

November 2004

   126,281,510    448,808.97    125,832,701

December 2004

   125,832,701    448,808.97    125,383,892

January 2005

   125,383,892    442,424.00    124,941,468

February 2005

   124,941,468    442,424.00    124,499,044

March 2005

   124,499,044    442,424.00    124,056,620

April 2005

   124,056,620    442,424.00    123,614,196

May 2005

   123,614,196    442,424.00    123,171,772

June 2005

   123,171,772    442,424.00    122,729,348

July 2005

   122,729,348    442,424.00    122,286,924

August 2005

   122,286,924    442,424.00    121,844,500

September 2005

   121,844,500    442,424.00    121,402,076

October 2005

   121,402,076    442,424.00    120,959,652

November 2005

   120,959,652    442,424.00    120,517,228

December 2005

   120,517,228    442,424.00    120,074,804

January 2006

   120,074,804    459,258.80    119,615,546

February 2006

   119,615,546    459,258.80    119,156,287

March 2006

   119,156,287    459,258.80    118,697,028

April 2006

   118,697,028    459,258.80    118,237,769

May 2006

   118,237,769    459,258.80    117,778,510

June 2006

   117,778,510    459,258.80    117,319,252

July 2006

   117,319,252    459,258.80    116,859,993

August 2006

   116,859,993    459,258.80    116,400,734

September 2006

   116,400,734    459,258.80    115,941,475

October 2006

   115,941,475    459,258.80    115,482,216

November 2006

   115,482,216    459,258.80    115,022,958

December 2006

   115,022,958    459,258.80    114,563,699

January 2007

   114,563,699    378,733.33    114,184,965

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

Two Commerce

Amortization Schedule based on June 2003 Split

 

MS Loan Amount

   132,000,000

Balloon Balance

   106,445,603

 

Date

   Beginning Balance    Principal Payment    End Balance

February 2007

   114,184,965    378,733.33    113,806,232

March 2007

   113,806,232    378,733.33    113,427,499

April 2007

   113,427,499    378,733.33    113,048,765

May 2007

   113,048,765    378,733.33    112,670,032

June 2007

   112,670,032    378,733.33    112,291,299

July 2007

   112,291,299    378,733.33    111,912,565

August 2007

   111,912,565    378,733.33    111,533,832

September 2007

   111,533,832    378,733.33    111,155,099

October 2007

   111,155,099    378,733.33    110,776,365

November 2007

   110,776,365    378,733.33    110,397,632

December 2007

   110,397,632    378,733.33    110,018,899

January 2008

   110,018,899    119,999.70    109,898,899

February 2008

   109,898,899    119,999.70    109,778,899

March 2008

   109,778,899    119,999.70    109,658,900

April 2008

   109,658,900    119,999.70    109,538,900

May 2008

   109,538,900    119,999.70    109,418,900

June 2008

   109,418,900    119,999.70    109,298,901

July 2008

   109,298,901    119,999.70    109,178,901

August 2008

   109,178,901    119,999.70    109,058,901

September 2008

   109,058,901    119,999.70    108,938,901

October 2008

   108,938,901    119,999.70    108,818,902

November 2008

   108,818,902    119,999.70    108,698,902

December 2008

   108,698,902    119,999.70    108,578,902

January 2009

   108,578,902    39,582.70    108,539,320

February 2009

   108,539,320    39,582.70    108,499,737

March 2009

   108,499,737    39,582.70    108,460,154

April 2009

   108,460,154    39,582.70    108,420,572

May 2009

   108,420,572    39,582.70    108,380,989

June 2009

   108,380,989    39,582.70    108,341,406

July 2009

   108,341,406    39,582.70    108,301,823

August 2009

   108,301,823    39,582.70    108,262,241

September 2009

   108,262,241    39,582.70    108,222,658

October 2009

   108,222,658    39,582.70    108,183,075

November 2009

   108,183,075    39,582.70    108,143,493

December 2009

   108,143,493    39,582.70    108,103,910

January 2010

   108,103,910    39,582.70    108,064,327

February 2010

   108,064,327    39,582.70    108,024,745

March 2010

   108,024,745    39,582.70    107,985,162

April 2010

   107,985,162    39,582.70    107,945,579

May 2010

   107,945,579    41,666.00    107,903,913

June 2010

   107,903,913    41,666.00    107,862,247

July 2010

   107,862,247    41,666.00    107,820,581

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

Two Commerce

Amortization Schedule based on June 2003 Split

 

MS Loan Amount

   132,000,000

Balloon Balance

   106,445,603

 

Date

   Beginning Balance    Principal Payment    End Balance

August 2010

   107,820,581    41,666.00    107,778,915

September 2010

   107,778,915    41,666.00    107,737,249

October 2010

   107,737,249    41,666.00    107,695,583

November 2010

   107,695,583    41,666.00    107,653,917

December 2010

   107,653,917    41,666.00    107,612,251

January 2011

   107,612,251    41,666.00    107,570,585

February 2011

   107,570,585    41,666.00    107,528,919

March 2011

   107,528,919    41,666.00    107,487,253

April 2011

   107,487,253    41,666.00    107,445,587

May 2011

   107,445,587    41,666.00    107,403,921

June 2011

   107,403,921    41,666.00    107,362,255

July 2011

   107,362,255    41,666.00    107,320,589

August 2011

   107,320,589    41,666.00    107,278,923

September 2011

   107,278,923    41,666.00    107,237,257

October 2011

   107,237,257    41,666.00    107,195,591

November 2011

   107,195,591    41,666.00    107,153,925

December 2011

   107,153,925    41,666.00    107,112,259

January 2012

   107,112,259    41,666.00    107,070,593

February 2012

   107,070,593    41,666.00    107,028,927

March 2012

   107,028,927    41,666.00    106,987,261

April 2012

   106,987,261    41,666.00    106,945,595

May 2012

   106,945,595    41,666.00    106,903,929

June 2012

   106,903,929    41,666.00    106,862,263

July 2012

   106,862,263    41,666.00    106,820,597

August 2012

   106,820,597    41,666.00    106,778,931

September 2012

   106,778,931    41,666.00    106,737,265

October 2012

   106,737,265    41,666.00    106,695,599

November 2012

   106,695,599    41,666.00    106,653,933

December 2012

   106,653,933    41,666.00    106,612,267

January 2013

   106,612,267    41,666.00    106,570,601

February 2013

   106,570,601    41,666.00    106,528,935

March 2013

   106,528,935    41,666.00    106,487,269

April 2013

   106,487,269    41,666.00    106,445,603

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

Two Commerce Square

Amortization Schedule

 

Date

   Beginning Balance    Principal Payment    End Balance

August 2003

   132,000,000    —      132,000,000

September 2003

   132,000,000    307,600.00    131,692,400

October 2003

   131,692,400    307,600.00    131,384,800

November 2003

   131,384,800    307,600.00    131,077,200

December 2003

   131,077,200    307,600.00    130,769,600

January 2004

   130,769,600    448,80897    130,320,791

February 2004

   130,320,791    448,808.97    129,871,982

March 2004

   129,871,982    448,808.97    129,423,173

April 2004

   129,423,173    448,808.97    128,974,364

May 2004

   128,974,364    448,808.97    128,525,555

June 2004

   128,525,555    448,80897    128,076,746

July 2004

   128,076,746    448,808.97    127,627,937

August 2004

   127,627,937    448,808.97    127,179,128

September 2004

   127,179,128    448,808.97    126,730,319

October 2004

   126,730,319    448,808.97    126,281,510

November 2004

   126,281,510    448,808.97    125,832,701

December 2004

   125,832,701    448,80897    125,383,892

January 2005

   125,383,892    442,424.00    124,941,468

February 2005

   124,941,468    442,424.00    124,499,044

March 2005

   124,499,044    442,424.00    124,056,620

April 2005

   124,056,620    442,424.00    123,614,196

May 2005

   123,614,196    442,424.00    123,171,772

June 2005

   123,171,772    442,424.00    122,729,348

July 2005

   122,729,348    442,424.00    122,286,924

August 2005

   122,286,924    442,424.00    121,844,500

September 2005

   121,844,500    442,424.00    121,402,076

October 2005

   121,402,076    442,424.00    120,959,652

November 2005

   120,959,652    442,424.00    120,517,228

December 2005

   120,517,228    442,424.00    120,074,804

January 2006

   120,074,804    459,258.80    119,615,546

February 2006

   119,615,546    459,258.80    119,156,287

March 2006

   119,156,287    459,258.80    118,697,028

April 2006

   118,697,028    459,258.80    118,237,769

May 2006

   118,237,769    459,258.80    117,778,510

June 2006

   117,778,510    459,258.80    117,319,252

July 2006

   117,319,252    459,258.80    116,859,993

August 2006

   116,859,993    459,258.80    116,400,734

September 2006

   116,400,734    459,258.80    115,941,475

October 2006

   115,941,475    459,258.80    115,482,216

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

November 2006

   115,482,216    459,258.80    115,022,958

December 2006

   115,022,958    459,258.80    114,563,699

January 2007

   114,563,699    378,733.33    114,184,965

February 2007

   114,184,965    378,733.33    113,806,232

March 2007

   113,806,232    378,733.33    113,427,499

April 2007

   113,427,499    378,733.33    113,048,765

May 2007

   113,048,765    378,733.33    112,670,032

June 2007

   112,670,032    378,733.33    112,291,299

July 2007

   112,291,299    378,733.33    111,912,565

August 2007

   111,912,565    378,733.33    111,533,832

September 2007

   111,533,832    378,733.33    111,155,099

October 2007

   111,155,099    378,733.33    110,776,365

November 2007

   110,776,365    378,733.33    110,397,632

December 2007

   110,397,632    378,733.33    110,018,899

January 2008

   110,018,899    119,999.70    109,898,899

February 2008

   109,898,899    119,999.70    109,778,899

March 2008

   109,778,899    119,999.70    109,658,900

April 2008

   109,658,900    119,999.70    109,538,900

May 2008

   109,538,900    119,999.70    109,418,900

June 2008

   109,418,900    119,999.70    109,298,901

July 2008

   109,298,901    119,999.70    109,178,901

August 2008

   109,178,901    119,999.70    109,058,901

September 2008

   109,058,901    119,999.70    108,938,901

October 2008

   108,938,901    119,999.70    108,818,902

November 2008

   108,818,902    119,999.70    108,698,902

December 2008

   108,698,902    119,999.70    108,578,902

January 2009

   108,578,902    39,58230    108,539,320

February 2009

   108,539,320    39,582.70    108,499,737

March 2009

   108,499,737    39,582.70    108,460,154

April 2009

   108,460,154    39,582.70    108,420,572

May 2009

   108,420,572    39,582.70    108,380,989

June 2009

   108,380,989    39,582.70    108,341,406

July 2009

   108,341,406    39,582.70    108,301,823

August 2009

   108,301,823    39,582.70    108,262,241

September 2009

   108,262,241    39,582.70    108,222,658

October 2009

   108,222,658    39,582.70    108,183,075

November 2009

   108,183,075    39,582.70    108,143,493

December 2009

   108,143,493    39,582.70    108,103,910

January 2010

   108,103,910    39,582.70    108,064,327

February 2010

   108,064,327    39,582.70    108,024,745

March 2010

   108,024,745    39,582.70    107,985,162

April 2010

   107,985,162    39,582.70    107,945,579

May 2010

   107,945,579    41,666.00    107,903,913

June 2010

   107,903,913    41,666.00    107,862,247

July 2010

   107,862,247    41,666.00    107,820,581

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

August 2010

   107,820,581    41,666.00    107,778,915

September 2010

   107,778,915    41,666.00    107,737,249

October 2010

   107,737,249    41,666.00    107,695,583

November 2010

   107,695,583    41,666.00    107,653,917

December 2010

   107,653,917    41,666.00    107,612,251

January 2011

   107,612,251    41,666.00    107,570,585

February 2011

   107,570,585    41,666.00    107,528,919

March 2011

   107,528,919    41,666.00    107,487,253

April 2011

   107,487,253    41,666.00    107,445,587

May 2011

   107,445,587    41,666.00    107,403,921

June 2011

   107,403,921    41,666.00    107,362,255

July 2011

   107,362,255    41,666.00    107,320,589

August 2011

   107,320,589    41,666.00    107,278,923

September 2011

   107,278,923    41,666.00    107,237,257

October 2011

   107,237,257    41,666.00    107,195,591

November 2011

   107,195,591    41,666.00    107,153,925

December 2011

   107,153,925    41,666.00    107,112,259

January 2012

   107,112,259    41,666.00    107,070,593

February 2012

   107,070,593    41,666.00    107,028,927

March 2012

   107,028,927    41,666.00    106,987,261

April 2012

   106,987,261    41,666.00    106,945,595

May 2012

   106,945,595    41,666.00    106,903,929

June 2012

   106,903,929    41,666.00    106,862,263

July 2012

   106,862,263    41,666.00    106,820,597

August 2012

   106,820,597    41,666.00    106,778,931

September 2012

   106,778,931    41,666.00    106,737,265

October 2012

   106,737,265    41,666.00    106,695,599

November 2012

   106,695,599    41,666.00    106,653,933

December 2012

   106,653,933    41,666.00    106,612,267

January 2013

   106,612,267    41,666.00    106,570,601

February 2013

   106,570,601    41,666.00    106,528,935

March 2013

   106,528,935    41,666.00    106,487,269

April 2013

   106,487,269    41,666.00    106,445,603

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SCHEDULE VI

DESCRIPTION OF REA

Reciprocal Easement and Operating Agreement and Covenants Agreement, dated
September 15, 1990, by and between Maguire – Thomas Partners – Philadelphia
Plaza Associates and Maguire Thomas Partners – Philadelphia Plaza – Phase II.

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SCHEDULE VII

APPROVED LEASE FORM

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TWO COMMERCE SQUARE

OFFICE LEASE

by and between

PHILADELPHIA PLAZA-PHASE II, LP

a Pennsylvania limited partnership

and

Dated

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TABLE OF CONTENTS

 

1    Definitions    1 2    Lease of Premises    1 3    Use of Premises    1 4   
Term    1 5    Rent    2    5.1    Items Comprising Rent    2    5.2    Time for
Payment    2    5.3    Estimates and Annual Reconciliation of Property Expenses
   3    5.4    Tenant’s Right to Audit Property Expenses    3 6    Security
Deposit    4 7    Abatement for Failure of Building Systems    5 8    Tenant
Improvements; Allowances    5    8.1    Tenant Improvements    5    8.2   
Allowances    5    8.3    Acceptance    7 9    Utilities and Services    7   
9.1    Landlord Obligations    7    9.2    Extraordinary Services    8    9.3   
Telephone    9    9.4    Interruption in Utility Services    9 10    Alterations
   9    10.1    Restriction on Alterations    9    10.2    Removal and Surrender
of Fixtures and Alterations    10    10.3    Tenant’s Fixtures    11 11   
Maintenance and Repairs    11    11.1    Tenant’s Obligations    11    11.2   
Landlord’s Obligations    11    11.3    Waiver of Liability    11 12   
Insurance; Waiver of Subrogation    11    12.1    Liability Insurance    11   
12.2    Property Insurance    12    12.3    Business Interruption Insurance   
12    12.4    Policy Requirements    12    12.5    Landlord’s Insurance    13   
12.6    Waiver of Subrogation    14 13    Damage or Destruction    14    13.1   
Damage and Restoration    14    13.2    Termination    14 14    Eminent Domain
   15    14.1    Taking    15    14.2    Temporary Taking    15 15    Assignment
and Subletting    16    15.1    Limitation    16    15.2    Notice of Intent to
Assign or Sublet    17    15.3    Right of Recapture; Landlord’s Consent    17
   15.4    No Release of Tenant’s Obligations    18

 

i

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   15.5    Transfer is Assignment    19    15.6    Costs    19 16    Landlord’s
Reserved Rights    19    16.1    Right of Entry    19    16.2    Building and
Common Areas    19    16.3    Name    20    16.4    One Commerce Square    20 17
   Indemnification and Waiver    20    17.1    Indemnity by Tenant    20    17.2
   Waiver    20 18    Definition of Landlord    21 19    Subordination    21   
19.1    Subordination    21    19.2    Attornment    21    19.3    Notice from
Tenant    21 20    Substitution of Premises    22 21    Surrender of Premises
and Removal of Property    22    21.1    No Merger    22    21.2    Surrender of
Premises    22    21.3    Disposal of Property    22 22    Holding Over    23 23
   Defaults and Remedies    23    23.1    Defaults by Tenant    23    23.2   
Landlord’s Remedies    24    23.3    Waivers by Tenant    25    23.4    Right of
Landlord to Injunction; Remedies Cumulative    25    23.5    Right of Distress
and Lien    25    23.6    Waiver of Jury Trial    26    23.7    Definition of
Tenant    26 24    Covenant Against Liens    26 25    Interest on Tenant’s
Obligations; Late Charges    26    25.1    Interest    26    25.2    Late Charge
   26 26    Quiet Enjoyment    27 27    Parking Facilities    27 28    Brokers
   27 29    Rules and Regulations    28 30    Directory Board and Signage    28
   30.1    Directory Board    28    30.2    Sins    28 31    Termination Option
   28 32    Expansion Options    29    32.1    First Expansion Option    29   
32.2    Second Expansion Option    30    32.3    Personal Option    31 33   
Rights of First Offer    31

 

ii

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   33.1    First Offer Space    31    33.2    Personal Option    32 34    Option
to Renew    32 35    General Provisions    33    35.1    No Waiver    33    35.2
   Landlord’s Right to Perform    33    35.3    Terms; Headings    34    35.4   
Entire Agreement    34    35.5    Successors and Assigns    34    35.6   
Notices    34    35.7    Severability    34    35.8    Time of Essence    35   
35.9    Governing Law    35    35.10        Attorneys’ Fees    35    35.11   
    Light and Air    35    35.12        Bankruptcy Prior to Commencement    35
   35.13        Force Majeure    35    35.14        Applicable Laws    35   
35.15        Estoppel Certificates    35    35.16        Examination of Lease   
36    35.17        Landlord Liability    36    35.18        Execution by Tenant
   36    35.19        Landlord’s Waiver    36 36    CONFESSION OF JUDGMENT    36
   36.1    CONFESSION OF JUDGMENT FOR RENT    36    36.2    CONFESSION OF
JUDGMENT FOR POSSESSION    37    36.3    PROCEEDINGS    37    36.4   
ACKNOWLEDGMENT OF CONFESSION OF JUDGMENT    38

EXHIBIT A - FLOOR PLAN

EXHIBIT B - GLOSSARY OF DEFINED TERMS

EXHIBIT C - MEMORANDUM OF LEASE COMMENCEMENT

EXHIBIT D - TENANT IMPROVEMENT LETTER

EXHIBIT E - RULES AND REGULATIONS

EXHIBIT F - HVAC SPECIFICATIONS

EXHIBIT G - JANITORIAL SPECIFICATIONS

[OPTIONAL]: EXHIBIT H - NON-DISTURBANCE AGREEMENT

 

iii

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LEASE SUMMARY

This lease summary is for convenience of reference only. It is not a part of the
lease and it should not be used in the interpretation of any of the provisions
of the lease.

 

Date:                         Landlord:    PHILADELPHIA PLAZA-PHASE II, LP
Tenant:                                 Premises:                 rentable
square feet (“rsf”) located on the                      floor Two    Commerce
Square, 2001 Market Street, Philadelphia, Pennsylvania 19103 Term:   
                    , commencing                         (see Section 4, page 1)

Rent (net of Operating

Expenses and Real Estate

Taxes):

 

Period

   Annual Net Rent    Monthly Net Rent

Lease Year

   $      $  

Lease Year

   $      $  

Lease Year

   $      $  

    (see Section 5, page 2)

 

Estimated Current Year Operating Expenses and Real Estate Taxes:   
$            /rsf Estimated Current Year Philadelphia Business
Use and Occupancy tax:    $            /rsf Parking Passes:                
Improvement Allowance:    $             Moving Allowance:    $            
Security Deposit:    $            

 

S-1

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Options:

Early termination (Section            )

Expansion (Section            )

Renewal (Section            )

Right of First Offer (Section            )

 

S-2

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TWO COMMERCE SQUARE OFFICE LEASE

THIS LEASE is made and entered into as of the      day of          200    , by
and between PHILADELPHIA PLAZA-PHASE II, LP, a Pennsylvania limited partnership
(“Landlord”) and                                         , a
                                         (“Tenant”).

1 Definitions. All capitalized terms used in this Lease and not specifically
defined in the text shall have the meanings ascribed to them in the glossary
attached hereto as Exhibit B and hereby made a part hereof.

2 Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, those certain premises (the “Premises”) shown on the drawings
attached hereto as Exhibit A, located on the                      floor of the
Building. The Premises contain                     Rentable Square Feet.
Landlord also hereby grants to Tenant a non-exclusive license to use the common
areas and public areas within the Property.

3 Use of Premises. The Premises shall be used only for office uses in keeping
with the character of a first-class, high-rise, institutional headquarters-grade
office building and for no other purpose. Without limitation of the foregoing,
Tenant shall not use the Premises, or permit others to use the Premises, for
(a) a medical practice, retail sales operation, retail showroom, classroom
(other than for Tenant’s employees), testing center or for non-incidental
storage; (b) any use which would violate any Applicable Laws, including, without
limitation, those with respect to hazardous or toxic materials, or the
provisions of any governmental permit or document related to the Property;
(c) any use which would adversely affect or render more expensive any fire or
other insurance maintained by Landlord for the Building or any of its contents;
or (d) any use which would impair or interfere with the Building Systems or the
Service Facilities.

4 Term. The term of this Lease (the “Term”) shall be
                                , commencing                                 
and ending, without the necessity of any notice from either party, on the last
day of the              [calendar month thereafter] [Lease Year].
Notwithstanding the foregoing, if Tenant takes occupancy for any purpose prior
to                             , the Term shall commence on the date of such
occupancy and shall end on the last day of the              [calendar month
thereafter] [Lease Year]. At the request of either party, Landlord and Tenant
will execute a memorandum in the form of Exhibit C attached hereto, setting
forth the dates on which the Term begins and ends.

OPTIONAL CLAUSE:

The term of this Lease (the “Term”) shall be                     , commencing on
the date the Tenant Improvements are Substantially Complete and ending, without
the necessity of any notice from either party, on the last day of the
             calendar month after such date. At the request of either party,
Landlord and Tenant will execute a memorandum in the form of Exhibit C attached
hereto, setting forth the dates on which the Term begins and ends. The date on
which the term begins is hereinafter referred to as the “Commencement Date.”

 

1

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5 Rent.

5.1 Items Comprising Rent. In consideration for this Lease, effective as of the
Commencement Date, Tenant agrees to pay Landlord the following (hereinafter
collectively referred to as “Rent”):

(a) Monthly net Rent in accordance with the following table:

 

Period   Annual Net Rent/Sq. Ft.   Annual Net Rent   Monthly Net Rent

    

           

    

                         

(b) Tenant’s Pro Rata Share of (i) Operating Expenses, and (ii) Real Property
Taxes, as estimated by Landlord in accordance with Section 5.3 below.

(c) The cost of electricity consumed by Tenant in the Premises. The Premises
will be separately metered and Landlord will bill Tenant based upon such metered
usage at the Building’s high tension rate without any mark-up.

(d) Any costs or expenses for goods, services or utilities in excess of those
which Landlord is required to supply pursuant to this Lease, including, without
limitation, replacement lamps and ballasts within the Premises, and use of the
freight elevator, which are (i) directly attributable to Tenant’s use or
occupancy of the Premises, and (ii) not otherwise included in Operating
Expenses.

(e) Any sums which Tenant becomes obligated to pay as a result of Tenant’s
failure to comply with any of the terms and provisions of this Lease.

(f) Tenant’s Pro Rata Share of the City of Philadelphia Business Use and
Occupancy Tax applicable to the Property, which Tenant shall pay to Landlord
along with each monthly installment of Rent, and which Landlord shall forward to
the Department of Revenue of the City of Philadelphia.

(g) Taxes, if any, now or hereafter imposed upon or attributable to Tenant’s
personal property located in or about the Premises, or any leasehold
improvements (including Tenant Improvements and Alterations) installed in the
Premises.

5.2 Time for Payment. Rent due under subparagraphs (a), (b) and (f) above shall
be payable in advance on the first day of each calendar month without prior
notice or demand, except that Rent for the first month of the Term shall be due
and payable upon Tenant’s execution of this Lease. As a convenience only,
Landlord will endeavor to invoice Tenant monthly for such Rent. All other sums
due from Tenant, including electric bills pursuant to subparagraph (c) above,
shall be payable upon presentation unless this Lease specifically

 

2

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

provides otherwise. All Rent shall be payable in United States dollars at the
office of Landlord or such other place as Landlord may designate, without
deduction or offset of any kind. Rent for any partial calendar month during the
Term shall be prorated on a per diem basis based on a 360 day year.

5.3 Estimates and Annual Reconciliation of Property Expenses. Prior to the
commencement of each calendar year, or as soon thereafter as possible, Landlord
shall furnish to Tenant a statement containing Landlord’s reasonable estimate of
Operating Expenses and Real Property Taxes (collectively, “Property Expenses”)
for such year and a calculation of Tenant’s Pro Rata Share thereof. Thereafter,
Tenant shall pay to Landlord one-twelfth of the amount of its Pro Rata Share on
each monthly Rent payment date (commencing on January 1) until further
adjustment pursuant to this paragraph. If Landlord’s statement is furnished
after the start of the year, then on the next monthly Rent payment date after it
receives Landlord’s statement, Tenant shall also pay the amounts allocable to
the prior months in that year. Following each year, Landlord shall furnish to
Tenant a statement prepared by a firm of certified public accountants selected
by Landlord showing the actual Property Expenses during the previous year, and
Landlord shall compute any charge or credit to Tenant necessary to adjust Rent
previously paid by Tenant to reflect the actual Property Expenses. If such
statement and computation reveal an underpayment, Tenant shall within 30 days
pay to Landlord an amount equal to such underpayment (whether or not this Lease
has expired or been terminated), and if such statement and computation show an
overpayment, Landlord shall credit the next monthly rental payment of Tenant
with an amount equal to such overpayment, or, if the Term has expired, refund
the overpayment to Tenant.

OPTIONAL CLAUSE:

5.4 Tenant’s Right to Audit Property Expenses. Tenant shall have the right to
audit Landlord’s books and records with respect to Property Expenses provided
(a) such audit shall be made by a national or regional firm of certified public
accountants, in accordance with generally accepted accounting principles, in
Landlord’s offices at the Building, but at Tenant’s sole cost and expense;
(b) such accounting firm must be engaged on an hourly basis for its services
rather than on a contingency fee basis; (c) Tenant shall give Landlord at least
30 days’ notice prior to arrival of the auditors; (d) the audit will cover only
the most recently expired calendar year, and Landlord will not be obligated to
provide information with respect to previous years; (e) the audit shall not
unreasonably interfere with the normal operations of Landlord’s manager for the
Property; and (f) Tenant and its accountants shall keep all information
disclosed by the audit as confidential and shall disclose such information to no
other party except as may be required by subpoena or other legal process.

If such audit reveals that for such calendar year the Rent paid by Tenant on
account of Property Expenses exceeded the sum which Tenant should have paid,
Landlord shall credit such excess payments against Tenant’s next monthly payment
due in accordance with the terms of this Lease, or, if this Lease has expired,
Landlord shall promptly refund such excess payment to Tenant. Additionally, if
such audit reveals that for such calendar year the Rent paid by Tenant on
account of Property Expenses exceeded by more than 5% the sum which Tenant
should have paid, Landlord shall promptly pay Tenant for the cost of such audit
upon presentation of such accounting agency’s invoice therefor; provided,
however, that regardless of

 

3

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

the total sum of such invoice, Landlord shall not be obligated to pay more than
$1,500.00 on account thereof; further provided, however, that if such audit
reveals that for such calendar year the Rent paid by Tenant on account of
Property Expenses was within 5% of the sum which Tenant should have paid,
Tenant, as additional Rent, shall promptly pay Landlord for the reasonable
actual costs incurred by Landlord in connection with such audit upon
presentation of an invoice therefor, but in no event shall Tenant be obligated
to pay more than $1,500 on account thereof.

6 Security Deposit.

(a) Tenant shall pay Landlord upon execution and delivery hereof by Tenant the
amount of $         (the “Security Deposit”) as security for the full and
faithful performance of each of the terms hereof by Tenant. Landlord shall [not]
be required to keep the Security Deposit separate from its general funds and
Tenant shall [not] be entitled to interest thereon. If an Event of Default
occurs, Landlord may, but shall not be required to, use, apply or retain all or
any part of the Security Deposit for the payment of any Rent or any other sum in
default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of such Event of Default or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
such Event of Default, including, without limitation, costs and attorneys’ fees
incurred by Landlord to recover possession of the Premises. If any portion of
the Security Deposit is so used or applied, Tenant shall, upon demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount and Tenant’s failure to do so shall constitute an
Event of Default.

(b) Tenant acknowledges that Landlord has the right to transfer or mortgage its
interest in the Building and in this Lease, and Tenant agrees that in the event
of any such transfer or mortgage, Landlord shall have the right to transfer or
assign the Security Deposit to the transferee or mortgagee. Upon such transfer
or assignment of the Security Deposit, Landlord shall be deemed released by
Tenant from all liability or obligation for the return of the Security Deposit
and Tenant shall look solely to such transferee or mortgagee for the return of
the Security Deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or, at Landlord’s option, to the
last assignee of Tenant’s interest hereunder) within 30 days following the
expiration of the Term and surrender of possession of the Premises to Landlord.
Tenant hereby waives all provisions of law, now or hereafter in force, which
provide that Landlord may claim from a security deposit only those sums
reasonably necessary to remedy defaults in the payment of Rent, to repair damage
caused by Tenant or to clean the Premises; rather, Landlord may, in addition,
claim those sums reasonably necessary to compensate Landlord for any other loss
or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant
or any officer, employee, agent or invitee of Tenant.

ALTERNATIVE PARAGRAPH: (Letter of Credit)

(c) In lieu of cash, Tenant may elect to deliver an irrevocable letter of
credit, in form and substance satisfactory to Landlord, in the amount of
$         issued by a Philadelphia-based bank satisfactory to Landlord in the
exercise of reasonable business judgment, as the Security Deposit. Such letter
of credit shall be renewed or replaced with a

 

4

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

substantially identical letter of credit annually, at least ten (10) business
days prior to expiration of the then current letter of credit. Instead of a
replacement or renewal of the letter of credit, Tenant may deposit cash with
Landlord, in which event subparagraphs (a) and (b) above will apply. Failure to
deliver a renewal or replacement letter of credit, or cash in lieu thereof, in a
timely manner, shall be an Event of Default. After the              year of the
Term, the amount of the renewal or replacement letter of credit shall be reduced
to $        .

7 Abatement for Failure of Building Systems. If the Premises or any portion
thereof are rendered untenantable and are not used by Tenant for a period of
five consecutive business days or 12 business days in any 12-month period (the
“Eligibility Period”) as a result of failure in the water, sewerage, air
conditioning, heating, ventilating or electrical systems of the Property,
Tenant’s Rent shall be reduced and abated after the expiration of the
Eligibility Period for such time as the Premises (or portion thereof, as the
case may be) remain untenantable and are not used by Tenant, in the same
proportion as the Rentable Area rendered untenantable bears to the total
Rentable Area of the Premises; provided, however, there shall be no abatement of
Rent: (a) if Landlord provides to Tenant other space in the Building which is
reasonably suited for the temporary operation of Tenant’s business; (b) if the
failure is caused in whole or in part by the negligent or willful acts or
omissions of Tenant, its agents, employees, contractors, licensees or invitees;
or (c) to the extent that the Rent abatement is not actually covered by rental
loss insurance, so long as such coverage is available on commercially reasonable
terms. Notwithstanding the foregoing, during any Rent abatement period under
this Lease, Tenant shall pay Landlord as Rent Landlord’s normal charges for all
services and utilities provided to and used by Tenant during the period of the
Rent abatement.

8 Tenant Improvements; Allowances.

8.1 Tenant Improvements. Tenant shall be entitled to make Tenant Improvements to
the Premises prior to the Commencement Date, in accordance with, and subject to,
the terms and conditions of the Tenant Improvement Letter attached hereto as
Exhibit D.

8.2 Allowances. Subject to Exhibit D, Landlord shall make available to Tenant up
to $         (the “Tenant Fund”) (calculated as $         for each of
                     Rentable Square Feet) to be used solely for the following
purposes:

(a) relocation and moving expenses;

(b) space planning, architectural and engineering expenses related to the Tenant
Improvements; and

(c) purchase, installation and construction of Tenant Improvements which
constitute permanent improvements to the Premises (including, without
limitation, voice and data cabling, and carpeting) but not furniture,
furnishings or equipment or other personal property.

Subject to Exhibit D, Tenant may divide the Tenant Fund among the foregoing
expenses in such amounts as Tenant elects.

 

5

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

Amounts payable to Tenant for relocation and moving expenses pursuant to
subparagraph (a) above shall be paid by Landlord to Tenant within 30 days after
presentation by Tenant to Landlord of receipted bills for such expenses. Amounts
payable pursuant to subparagraphs (b) and (c) above shall be governed by the
provisions of Exhibit D, including, without limitation, paragraph 3 thereof.

If the Tenant Fund is insufficient to defray the entire cost of the items
referred to in subparagraphs (a), (b) and (c) above, the balance shall be paid
entirely by Tenant. Landlord has no obligation to advance more than $        
for such items under any circumstances.

OPTIONAL CLAUSE:

If and to the extent Tenant does not use the entire Tenant Fund for expenses
incurred in connection with its initial occupancy of the Premises, Landlord will
make the unused balance available to Tenant for (a) additional Tenant
Improvements, made after the Commencement Date, but otherwise in accordance with
Exhibit D; or (b) payment of Rent, up to a maximum of $        ; or (c) any
combination of the foregoing, provided, however, Landlord shall not be required
to make any funds available unless it has received Tenant’s request therefor by
                            .

Landlord will retain any portion of the Tenant Fund which is not disbursed or
committed by                             , and shall have no further obligation
to disburse such retained funds to Tenant.

OPTIONAL CLAUSE:

In addition to the foregoing, Landlord will make available to Tenant the sum of
$         at the end of the          month of the Term, provided Tenant is not
then in default hereunder, such sum to be used exclusively for painting,
carpeting, and similar refurbishment of the Premises. Such funds will be
advanced in accordance with and subject to the applicable terms and provisions
of Exhibit D.

OPTIONAL CLAUSE (TURNKEY ALTERNATIVE TO 8.1 AND 8.2):

Landlord shall construct, at its sole cost and expense, the physical
improvements in the Premises, including, without limitation, partitions, wiring,
floor coverings, wall coverings, outlets, ceilings, lighting and millwork (the
“Tenant Improvements”) as specifically shown in Tenant’s Plans (as defined in
Exhibit D).

Landlord shall not materially deviate from Tenant’s Plans without the prior
written consent of Tenant; provided, however, that Landlord may (i) make “field
changes” to the extent required by any Applicable Law, so long as such changes
do not materially affect the Tenant Improvements and Tenant is promptly notified
of such changes, and (ii) substitute materials of equal or better quality upon
written notice to Tenant of Landlord’s intention to do so, specifying in such
notice the nature of such substitution and that the substitute materials are of
equal or better quality than those specified in Tenant’s Plans.

 

6

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“Substantial Completion” (or “Substantially Complete”) shall mean the condition
of the Premises when Landlord has (i) completed construction of the Tenant
Improvements in substantial compliance with Tenant’s Plans (exclusive of any
equipment, furniture or fixtures to be installed by Tenant and exclusive of any
items on the Punchlist, as hereinafter defined), as certified by Landlord’s
architect, and (ii) delivered to Tenant a statement of occupancy (or the
equivalent) for the Premises from the Department of Licenses and Inspections of
the City of Philadelphia. On the date of Substantial Completion, Landlord and
Tenant shall jointly inspect the Premises and shall prepare a list of any
incomplete or deficient portions of the Tenant Improvements (the “Punchlist”).
Landlord shall, at its sole cost and expense, promptly and diligently proceed to
cause completion of the Punchlist items.

If the date of Substantial Completion is delayed by any failure of Tenant to
comply with its obligations under Exhibit “D”, then the Commencement Date shall
be the date the Premises would have been Substantially Complete but for Tenant’s
delay. This paragraph shall not be construed to limit any other damages for
which Tenant may be liable in the event of its failure to comply with its
obligations under Exhibit “D”.

8.3 Acceptance. In consideration for Landlord’s agreement to make funds
available for Tenant Improvements as set forth above, Tenant agrees to accept
the Premises in their present physical condition, without any obligation by
Landlord to paint, redecorate, or perform any other work in, on or about the
Premises at any time, except as otherwise specifically set forth in this Lease.
Except as specifically set forth herein, Landlord makes no warranty or
representation of any kind, expressed or implied, with respect to the Premises
or the Building or any other portion of the Property.

9 Utilities and Services.

9.1 Landlord Obligations. Landlord shall furnish the following services and
utilities to the Premises, the cost of which shall be included in Operating
Expenses except as specifically provided otherwise herein, during Normal Working
Hours, subject to reasonable rules and regulations from time to time.

(a) HVAC. Landlord shall furnish heating, ventilation and air conditioning
(“HVAC”) in accordance with the specifications attached hereto as Exhibit F and
made a part hereof. Tenant shall not, without Landlord’s prior written consent,
use any equipment or lighting or occupy the Premises with personnel so that heat
generated by such use or occupancy affects the ambient temperature otherwise
maintained in the Premises by the HVAC system under normal operation. In the
event such use or occupancy affects the ambient temperature, Landlord shall have
the right to install any machinery or equipment which Landlord reasonably deems
necessary to restore temperature balance, including without limitation,
modifications to the standard air conditioning equipment, and the cost thereof
including the cost of installation and any additional cost of operation and
maintenance incurred thereby, shall be paid by Tenant to Landlord upon demand by
Landlord. Landlord makes no representation with respect to the adequacy or
fitness of the HVAC equipment in the Building to maintain temperatures which may
be required for, or because of, any equipment of Tenant, and Landlord shall have
no liability for loss or damage in connection therewith.

 

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(b) Electricity. Landlord shall furnish to the Premises electric current for
HVAC and an average of five watts of electric current (connected load) per
square foot of Rentable Area for power and lighting. Without the prior written
consent of Landlord, which Landlord may refuse in its sole discretion, Tenant
shall not install or operate any machinery, appliances or equipment in the
Premises which will in any way increase the amount of electricity usually
furnished or supplied for use of the Premises as general office space; nor
connect any apparatus, device, machinery, appliances or equipment (except
through existing electrical outlets in the Premises), for the purpose of using
electric current.

(c) Elevators. Landlord shall furnish passenger elevator service to the Premises
during Normal Working Hours and freight elevator service to the Premises during
Normal Working Hours, excluding Saturdays. Such service shall be provided in
common with service to other parts of the Building. During all other hours,
Landlord shall furnish passenger elevator cab service in the elevator bank
serving the Premises on an as needed basis, and, by prior arrangement with the
Manager (and at Tenant’s sole cost), freight elevator service.

(d) Water. Landlord shall make available water for normal lavatory and drinking
purposes to be drawn from the public lavatory in the core of the floor on which
the Premises are located.

(e) Janitorial. Landlord shall provide janitorial service in accordance with the
specifications attached hereto as Exhibit G and made a part hereof. Landlord
shall not be required to provide more than Building standard janitorial services
for portions of the Premises used for storage, mailroom, kitchen or other
non-office purposes, nor shall Landlord be required to provide janitorial
services to areas obstructed or locked by Tenant, or used as a lavatory, other
than the lavatory rooms shown on the floor plan of the Premises attached hereto
as Exhibit A.

(f) Access. Landlord shall furnish Tenant’s employees access to the Premises and
the Garage on a seven-day per week, 24-hour per day basis, subject to compliance
with such reasonable security measures and reasonable rules and regulations as
shall from time-to-time be in effect for the Building and/or the Property, and
Landlord’s maintenance activities.

9.2 Extraordinary Services. Landlord may impose a reasonable direct charge and
establish reasonable rules and regulations for any of the following: (a) the use
of any HVAC or electric current by Tenant at any time other than during Normal
Working Hours; (b) additional or unusual janitorial services requested by Tenant
or required because of any non-building standard improvements in the Premises,
the carelessness of Tenant, the nature of Tenant’s business (including the
operation of Tenant’s business other than during Normal Working Hours); (c) the
removal of any refuse and rubbish from the Premises except for discarded
material placed in wastepaper baskets and left for emptying as an incident to
Landlord’s normal cleaning of the Premises; and (d) any other services
including, without limitation, freight elevator service, provided to Tenant at
any time other than during Normal Working Hours (excluding Saturdays). The
foregoing direct charges shall be payable by Tenant as Rent on the next Rent
payment date after submission of an invoice therefor by Landlord.

 

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9.3 Telephone. Tenant shall make its own arrangements for telephone and/or other
communication services, and Landlord shall have no liability or obligation in
connection therewith other than to provide reasonable access to the Building
telephone closets.

9.4 Interruption in Utility Services. Landlord shall not be liable for damages
or otherwise for failure, stoppage or interruption of any services or utilities
or unavailability of access to the Property, nor shall the same be construed
either as an eviction of Tenant, or result in an abatement of Rent (except as
provided in Article 7), when such failure is caused by acts of God, accidents,
breakage, repairs, strikes, lockouts, other labor disputes, other force majeure
events, or by the making of repairs, alterations or improvements to the Premises
or the Building, or the limitation, curtailment, rationing or restriction on
supply of fuel, steam, water, electricity, labor or other supplies or any other
condition beyond Landlord’s reasonable control, including, without limitation,
any governmental energy conservation program or legal requirement. If any
governmental entity imposes mandatory or voluntary controls or guidelines on
Landlord or the Property or any part thereof, relating to the services provided
by Landlord, or the reduction of emissions, Landlord may make such alterations
to the Building or any other part of the Property related thereto and take such
other steps as are necessary to comply with such controls and guidelines, the
cost of such compliance and alterations shall be included in Operating Expenses,
and Landlord shall not be liable therefor, for damages or otherwise, nor shall
the same be construed either as an eviction of Tenant, or result in an abatement
of Rent.

10 Alterations.

10.1 Restriction on Alterations. Except for any Tenant Improvements specifically
permitted by this Lease, Tenant shall make no alteration, repair, addition or
improvement in, to or about the Premises (collectively, “Alterations”), without
the prior written consent of Landlord and Landlord may impose as a condition to
such consent such requirements as Landlord, in its reasonable discretion, may
deem necessary or desirable, including, without limitation, some or all of the
following: (a) the right to approve the plans and specifications for any work;
(b) the right to require supplemental insurance satisfactory to Landlord and
naming Landlord and Manager as an additional insured; (c) the right to require
waivers of liens prior to commencement of work and/or unconditional lien
releases for work completed; (d) requirements as to the manner in which or the
time or times at which work may be performed; and (e) the right to approve the
contractor or contractors to perform Alterations.

All Alterations (including cosmetic improvements) shall be compatible with a
first class office building complex and completed in accordance with Landlord’s
requirements and all applicable rules, regulations and requirements of
governmental authorities and insurance carriers. The outside appearance,
character or use of the Building shall not be affected by any Alteration, and no
Alteration shall materially weaken or impair the structural strength of the
Building or create the potential for unusual expenses to be incurred upon the
removal of the Alterations and the restoration of the Premises upon the
termination of this Lease. No part of the Building outside of the Premises shall
be materially, adversely affected by any Alteration; the proper functioning of
the Building Systems and Service Facilities shall not be materially, adversely
affected by any Alteration and there shall be no Alteration which materially,
adversely interferes with Landlord’s free access to the Building Systems or
materially, adversely interferes with the moving of Landlord’s equipment to or
from the enclosures containing the Building

 

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Systems. Tenant shall not be permitted to install and make part of the Premises
any materials, fixtures or articles which are subject to liens, conditional
sales contracts or chattel mortgages other than trade fixtures, furniture and
equipment. Tenant shall reimburse Landlord for (a) its reasonable expenses in
reviewing plans and inspecting all Alterations to assure compliance with
Landlord’s requirements; and (b) any out-of-pocket costs for engineering review
reasonably incurred by Landlord. Landlord will not expressly or implicitly
covenant or warrant that any plans or specifications submitted by Tenant are
safe or that the same comply with Applicable Laws. Further, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any loss, cost or
expense, including reasonable attorneys’ fees and costs, incurred by Landlord as
a result of any defects in design, materials or workmanship resulting from
Alterations, except to the extent such defects are caused by the negligence of
Landlord, its agents, servants or employees. If requested by Landlord, Tenant
shall provide Landlord with copies of all contracts, receipts, paid vouchers,
and any other documentation (including, without limitation, “as-built” drawings,
air/water balancing reports, permits and inspection certificates) in connection
with the construction of such Alterations. Tenant shall promptly pay all costs
incurred in connection with all Alterations. Any increase in any tax, assessment
or charge levied or assessed as a result of any Alterations shall be payable by
Tenant.

OPTIONAL CLAUSE:

Notwithstanding anything in this Section 10.1 to the contrary, Tenant shall have
the right to make cosmetic improvements to the interior of the Premises (such as
painting, carpeting and wallpapering) without Landlord’s prior consent, provided
that: (i) the cosmetic improvements do not impair the structural integrity,
operation or value of the Building; (ii) such improvements do not cost in excess
of [$10,000.00]; and (iii) Tenant shall, prior to the commencement of the work,
deliver to Landlord waivers of liens and proofs of contractor insurance, in form
reasonably acceptable to Landlord, from all contractors performing such work and
plans indicating the nature of the proposed improvements.

10.2 Removal and Surrender of Fixtures and Alterations. All Alterations and all
Tenant Improvements installed in the Premises pursuant to Exhibit D, which are
attached to, or built into, the Premises, shall at the end of the Term become
the property of Landlord and shall be surrendered with the Premises; provided,
however, Landlord may, by written notice to Tenant at least 30 days prior to the
end of the Term, require Tenant to remove any Alterations or Tenant Improvements
designated by Landlord to be removed at the time of Landlord’s approval thereof
(other than the initial Tenant Improvements constructed in the Premises pursuant
to Exhibit D) and any other improvements not generally found in a first-class
office building, and to repair any damage to the Premises, the Building and any
other part of the Property caused by such removal, all at Tenant’s sole expense
and to the reasonable satisfaction of Landlord. With respect to Tenant
Improvements installed in the Premises pursuant to Exhibit D, Landlord and
Tenant shall each own undivided interests in such Tenant Improvements to the
extent, in the case of Landlord, of the Tenant Improvement Allowance paid to or
on behalf of Tenant, and, in the case of Tenant, the portion of the cost of such
Tenant Improvements paid for by Tenant For purposes of the insurance
requirements of this Lease, Tenant shall be deemed to have an insurable interest
in all of the Tenant Improvements and Alterations in the Premises, as between
Landlord and Tenant, but the same shall be surrendered with the Premises on
termination of this Lease, as set forth above.

 

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10.3 Tenant’s Fixtures. Tenant shall have the right to install trade fixtures,
machinery and equipment (excluding Alterations, which are governed by Sections
10.1 and 10.2 hereof) required by Tenant or used by it in its business
(collectively, “Tenant’s Property”), provided that same do not exceed applicable
safe floor loads or otherwise impair the structural strength of the Building and
further provided that Tenant’s Property shall be limited to items normally used
for the permitted usage of the Premises. Except to the extent (if any) paid for
by Landlord, in cash or by way of any credit or allowance provided hereunder,
Tenant’s Property shall be and remain Tenant’s personal property and shall be
removed by Tenant prior to the end of the Term. Tenant shall repair and restore
any damage to the Premises and Building caused by such installation or removal.

11 Maintenance and Repairs.

11.1 Tenant’s Obligations. Tenant shall, at Tenant’s sole expense, keep the
Premises and every part thereof clean and in good condition and repair, except
for Landlord’s obligations specifically set forth in this Lease.

11.2 Landlord’s Obligations. Subject to Article 13 (“Damage or Destruction”),
Landlord shall repair and maintain with reasonable diligence after notice
thereof from Tenant, defects in, and damage to, the Building Systems installed
by Landlord and serving or located on the Premises. If such maintenance and
repair is required by the act, neglect, misuse, fault or omission of any duty of
Tenant, its agents, employees, contractors, licensees or invitees, Tenant shall
pay the cost of such maintenance and repairs.

11.3 Waiver of Liability. Landlord shall not be liable for any injury to persons
or property arising from any repairs, maintenance, alteration or improvement in
or to any portion of the Property or the Building, including the Premises, or
any personal property located therein, unless Landlord is negligent in
performing such repairs, maintenance, alterations or improvements, and such
negligence is the sole proximate cause of the loss or damage. Further, neither
Landlord nor its agents or employees shall be liable for any damage to persons
or property caused by other tenants or other persons in or about the Property,
or for any consequential damages arising out of any loss of use of the Premises
or any equipment or facilities therein by Tenant or any person claiming through
or under Tenant. Tenant waives and releases its right (if any) to make repairs
at Landlord’s expense under Applicable Law.

12 Insurance; Waiver of Subrogation. Tenant shall at all times during the Term
(and prior to the Term with respect to any activity of Tenant at the Property)
and at its own cost and expense procure and continue in force insurance as
follows:

12.1 Liability Insurance. Workers’ compensation insurance, employer’s liability
insurance and commercial general liability insurance and, if necessary,
commercial umbrella or excess liability insurance adequate to protect Tenant and
Landlord against liability for injury to or death of any person or damage to
property in connection with the use, operation or condition of the Premises. The
limits of liability under the workers’ compensation policy shall be at least
equal to the statutory requirements therefor, and the limits of liability under
the employer’s liability policy shall be at least $1,000,000.00. The commercial
general liability policy shall be in an amount of not less than $2,000,000.00
per occurrence and in the aggregate. Not more

 

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frequently than once each two years, if, in the opinion of Landlord’s mortgagee
or of the independent insurance broker retained by Landlord, the amount of
employer’s liability or commercial general liability coverage at that time is
not adequate, Tenant shall increase the insurance coverage as reasonably
required by Landlord, provided, however, such increases shall not exceed
commercially reasonable insurance coverages carried by tenants leasing similar
first-class Center City Philadelphia high-rise office space.

12.2 Property Insurance. Insurance covering all leasehold improvements
(including, but not limited to, all Tenant Improvements and Alterations) trade
fixtures, merchandise and other personal property from time to time in, on or
upon the Premises, in an amount not less than 100% of their full replacement
cost from time to time during the Term, providing protection against any peril
included within the classification “All Risk Coverage,” together with insurance
against sprinkler water damage (including earthquake caused sprinkler damage),
vandalism and malicious mischief. The proceeds of such insurance shall be used
for the repair or replacement of the property so insured. Upon termination of
this Lease due to any casualty, the proceeds of such insurance shall be paid to
Landlord and Tenant, as their interests appear in the insured property. The full
replacement value of the items to be insured under this paragraph shall be
determined by Tenant and acknowledged by the company issuing the insurance
policy by the issuance of an agreed amount endorsement at the time the policy is
initially obtained, and shall be increased from time to time if and to the
extent necessary to maintain full replacement value coverage.

12.3 Business Interruption Insurance. Loss of income or business interruption
insurance in such amounts as will reimburse Tenant for direct and indirect loss
of earnings attributable to all perils commonly insured against by prudent
tenants or attributable to prevention of access to the Premises or to the
Building as a result of such perils.

12.4 Policy Requirements.

(a) All insurance required to be carried by Tenant hereunder shall be issued by
responsible insurance companies, qualified to do business in the Commonwealth of
Pennsylvania and reasonably acceptable to Landlord. Insurance companies rated A
VII or better by Best’s Insurance Reports shall be deemed acceptable.

(b) Each policy shall be written on an “occurrence” basis and shall have a
deductible or deductibles, if any, which do not exceed the deductible amount(s)
generally maintained by similarly situated tenants in first-class, high-rise
office buildings in the central business district of downtown Philadelphia. Each
policy shall name Landlord, Manager, and Landlord’s lender and their respective
members, managers, partners, officers, directors, agents and employees as
additional insureds, as their interests may appear, and the commercial general
liability policy shall also name the Manager as an additional insured.
Certificates evidencing the existence and amounts of such insurance shall be
delivered to Landlord by Tenant at least 30 days prior to Tenant’s occupancy of
any portion of the Premises, and in any event, prior to any activity of Tenant
in the Building. No such policy shall be cancelable except after 30 days’
written notice to Landlord. Tenant shall provide Landlord with originals of the
endorsement(s) to Tenant’s commercial general liability insurance policy and all
risks property insurance policies which include the following exact wording:

It is agreed that [TBD], and their respective members, managers, partners,
officers, directors, affiliates, agents and employees are additional insureds.
The coverage under this policy is primary insurance with respect to liability
arising out of the ownership, maintenance or use of the premises leased to
                                                  [Tenant’s name].

 

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Tenant shall, at least 30 days prior to the expiration of any such policy,
furnish Landlord with renewals or “binders” thereof. Should Tenant at any time
neglect or refuse to provide the insurance required by this Lease, or should
such insurance be canceled, Landlord shall have the right, but not the duty, to
procure the same and Tenant shall pay the cost thereof as Rent promptly upon
Landlord’s demand. Tenant will deliver copies of its policies and endorsements
to Landlord within 20 days after Landlord’s written request therefor.

(c) The policies of insurance required to be carried by Tenant shall be primary
and non-contributing with, and not in excess of any other insurance available to
Landlord. The cost of defending any claims made against any of the policies
required to be carried by Tenant shall not be included in any of the limits of
liability for such policies. Tenant shall immediately report to Landlord, and
promptly thereafter confirm in writing, the occurrence of any injury, loss or
damage incurred by Tenant, or Tenant’s receipt of notice or knowledge of any
claim by a third party or any occurrence that might give rise to such claims. It
shall be the responsibility of Tenant not to violate nor knowingly permit to be
violated any condition of the policies required by this Lease.

(d) If any of the liability insurance policies required to be maintained by
Tenant pursuant to this Article contains aggregate limits which apply to
operations of Tenant other than those operations which are the subject-of this
Lease, and such limits are diminished by more than $200,000.00 after any one or
more incidents, occurrences, claims, settlements, or judgments against such
insurance, Tenant shall take immediate steps to restore aggregate limits or
shall maintain other insurance protection for such aggregate limits. Any policy
of property insurance required hereunder may be in “blanket coverage” form,
provided any such “blanket coverage” policy (i) specifically provides that the
amount of insurance coverage required hereunder shall in no way be prejudiced by
other losses covered by the policy or (ii) is in an amount not less than the sum
of 100% of the actual replacement costs of all of the properties covered under
such “blanket coverage” insurance policy. Neither the issuance of any such
property insurance policy nor the minimum limits specified in this Article shall
be deemed to limit or restrict in any way Tenant’s liability arising under or
out of this Lease.

12.5 Landlord’s Insurance. Landlord shall, at all times during the Term hereof,
maintain in force insurance of the type commonly referred to as an “all risk of
physical loss” policy, including earthquake insurance, in an amount equal to the
full replacement cost of the Building (with a deductible not exceeding $100,000
for any loss), and commercial general liability insurance in an amount not less
than $2 million insuring the Building and the Property against all risks and
hazards as are customarily insured against, in Landlord’s reasonable judgment,
by others similarly situated and operating like properties. Landlord shall also
maintain in force rental loss insurance in an amount not less than 12 month’s
Rent for the Building. Without limitation of the foregoing, Landlord shall
maintain in force such insurance as may be required by the holder of the
Mortgage. The premiums and deductible amounts on the insurance policies referred
to in this paragraph will be part of Operating Expenses.

 

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12.6 Waiver of Subrogation. Landlord and Tenant each hereby releases the other,
and waives its right of recovery against the other, for any direct or
consequential loss or damage arising out of or incident to the perils covered by
the insurance policy or policies carried by the waiving party to the extent such
losses or damages are actually covered by such insurance policies, whether or
not such damage or loss may be attributable to the negligence of either party or
their agents, invitees, contractors, or employees. Each insurance policy carried
by either Landlord or Tenant in accordance with this Lease shall include a
waiver of the insurer’s rights of subrogation to the extent necessary. Such
waiver shall not limit any indemnity or other waiver made under this Lease.

13 Damage or Destruction.

13.1 Damage and Restoration. If the Premises or any Building Systems or common
areas of the Building serving or providing access to the Premises shall be
damaged by fire or other casualty, Landlord shall promptly and diligently
restore the Premises and such Building Systems and common areas at Landlord’s
expense, and not as a part of Operating Expenses. Such restoration shall be to
substantially the condition that existed prior to the casualty, except for
modifications required by zoning and building codes and other laws, or by the
holder of a Mortgage on the Building, and any other modifications to the common
areas deemed desirable by Landlord (provided access to the Premises and any
common restrooms serving the Premises is not materially impaired). Landlord
shall not be required to repair or replace any of Tenant’s furniture,
furnishing, fixtures or equipment, or any Alterations or Tenant Improvements not
originally installed or constructed by Landlord at its expense. Landlord shall
not be liable for any inconvenience or annoyance to Tenant or its visitors, or
injury to Tenant’s business resulting in any way from such damage or the repair
thereof, except that Landlord shall allow Tenant a proportionate abatement of
Rent during the time and to the extent the Premises are unfit for occupancy by
Tenant as a result thereof; provided, if the Premises or any other portion of
the Building is damaged by fire or other casualty caused in whole or in part by
Tenant or any of Tenant’s agents, contractors, employees, or visitors, Rent
shall not be so abated.

13.2 Termination. Notwithstanding the foregoing, Landlord may elect not to
perform restoration work, and instead terminate this Lease by notifying Tenant
in writing of such termination within 60 [90] days after the date the damage
occurred (such notice to include a termination date giving Tenant at least 60
days to vacate the Premises), but Landlord may so elect only if the Building
shall be damaged by fire or other casualty (whether or not the Premises are
affected) such that: (a) restoration cannot reasonably be completed within 120
[180] days after being commenced without the payment of overtime or other
premiums; (b) the holder of any Mortgage on the Building shall require that the
insurance proceeds or any portion thereof be used to retire the mortgage debt;
or (c) the damage is not fully covered by Landlord’s insurance policies. Tenant
hereby waives any rights it may have under any Applicable Law to terminate the
Lease by reason of damage to the Premises or the Building or to any abatement of
Rent except as specifically set forth above.

 

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OPTIONAL “RIGHT TO TERMINATE” CLAUSE:

If the damage is so extensive that the Premises cannot reasonably be expected to
be ready for re-occupancy by Tenant within 180 days after the occurrence, or if
the Premises are not in fact ready for re-occupancy by Tenant within 180 days
after occurrence of the damage, Tenant may terminate this Lease by notice to
Landlord.

14 Eminent Domain.

14.1 Taking. In case the whole of the Premises, or such part thereof as shall
substantially interfere with Tenant’s use and occupancy thereof, shall be taken
by any lawful power or authority by exercise of the right of eminent domain, or
sold to prevent such taking, within 60 days after receipt of notice of such
taking, either Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to said authority. If such portion
of the Building or Property is so taken or sold so as to require, in the opinion
of Landlord, a substantial alteration or reconstruction of the remaining
portions thereof, or which renders the Building or Property economically
inviable for its use as presently intended, or requires cancellation of
substantially all tenant leases in the Building, this Lease may be terminated by
Landlord, as of the date of the vesting of title under such taking or sale, by
written notice to Tenant within 60 days following notice to Landlord of the date
on which said vesting will occur. Except as provided herein, Tenant shall not
because of such taking assert any claim against Landlord or the taking authority
for any compensation because of such taking, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate or
interest of Tenant. If the amount of property or the type of estate taken shall
not substantially interfere with Tenant’s use of the Premises, Landlord shall be
entitled to the entire amount of the award without deduction for any estate or
interest of Tenant. In such event, Landlord shall promptly proceed to restore
the Premises and the Building to substantially their condition prior to such
partial taking, and the Rent shall be abated in proportion to the time during
which, and to the part of the Premises of which, Tenant shall be so deprived on
account of such taking and restoration. Notwithstanding the foregoing, during
any Rent abatement under this Lease, Tenant shall continue to be obligated to
pay Landlord for all services and utilities provided to and used by Tenant
during the period of the Rent abatement. Nothing contained in this Article shall
be deemed to give Landlord any interest in, or prevent Tenant from seeking any
award against the taking authority for, the taking of personal property and
fixtures belonging to Tenant or for relocation or business interruption expenses
recoverable from the taking authority.

Notwithstanding that the entire Premises are not condemned or taken for any
public or quasi-public use or purpose, Tenant shall have the right to terminate
this Lease in the event that (i) a portion of the Premises is taken such that
the remaining portion of the Premises cannot be used for its intended purposes,
as reasonably determined by Tenant; (ii) access to the Building is taken;
(iii) vehicular access to the Garage is taken; or (iv) the existing parking
spaces leased to Tenant are taken (unless Landlord replaces the lost parking
spaces with new parking spaces within reasonable proximity to the Building).

14.2 Temporary Taking. If all or any portion of the Premises are condemned or
otherwise taken for public or quasi-public use, this Lease shall remain in full
force and effect and Tenant shall continue to perform all of the terms,
conditions and covenants of this Lease, including without limitation, the
payment of Rent and all other amounts required hereunder. Tenant shall be
entitled to receive the entire award made in connection with any temporary

 

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condemnation or other taking attributable to any period within the Term.
Landlord shall be entitled to the entire award for any such temporary
condemnation or other taking which relates to a period after the expiration of
the Term or which is allocable to the cost of restoration of the Premises. If
any such temporary condemnation or other taking terminates prior to the
expiration of the Term, Tenant shall restore the Premises as nearly as possible
to the condition prior to the condemnation or other taking, at Tenant’s sole
cost and expense; provided Tenant shall receive the portion of the award
attributable to such restoration.

15 Assignment and Subletting.

15.1 Limitation.

(a) Tenant shall not directly or indirectly, voluntarily or involuntarily (i)
assign, mortgage or otherwise encumber (collectively, “Assignment”) all or any
portion of its leasehold estate or (ii) permit the Premises to be occupied by
anyone other than Tenant or Tenant’s employees or sublet the Premises or any
portion thereof (collectively, a “Sublease”) without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. Any attempted Assignment or Sublease (collectively, a “Transfer”)
without such consent shall be null and void and of no effect. Notwithstanding
any law or custom to the contrary, Landlord’s refusal to consent to any Transfer
shall be deemed reasonable if:

(1) The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building or the Property;

(2) The Transferee intends to use the Transfer Space for purposes which are not
permitted under this Lease;

(3) The Transferee has been involved in bona fide negotiations with Landlord for
space in the Building within the preceding [12] months;

(4) [If less than 95% of the Building is occupied on the date of the Transfer
Notice, the effective rental rate for the Transfer is less than 90% of the
effective rental rate Landlord is asking for comparable space at the time of
such Transfer;]

(5) The Transfer Space is not suitable for normal renting purposes in conformity
with all applicable building and safety codes;

(6) The Transferee is a governmental body (or subdivision or agency thereof);

(7) The Transferee is an occupant of the Building; or

(8) The Transferee is, in the judgment of Landlord, insolvent or does not have
the financial capacity to perform the obligations to be assumed for the term of
the Transfer.

 

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OPTIONAL CLAUSE:

Notwithstanding the foregoing, Tenant shall have the right, after notice thereof
to Landlord, to assign this Lease, or to sublet all or any portion of the
Premises, without the approval of Landlord to (i) any entity resulting from a
merger or consolidation with Tenant; (ii) any entity succeeding to the business
and assets of Tenant; or (iii) any entity which is a subsidiary or affiliate of
Tenant. For purposes of this Lease, an affiliate shall mean an entity controlled
by Tenant, or which controls Tenant, or which is under common control with
Tenant. No Transfer shall relieve Tenant of its obligations hereunder.

15.2 Notice of Intent to Assign or Sublet. If Tenant desires at any time to
Transfer the Premises or any portion thereof, it shall first give Landlord a
notice (the “Transfer Notice”) specifying (a) the size and location of the space
Tenant proposes to Transfer (the “Transfer Space”); (b) the terms of the
proposed Transfer; (c) the date on which Tenant proposes that the Transfer be
effective, which shall be at least 30 days after the Transfer Notice; (d) the
name of the proposed assignee, subtenant, transferee or occupant (“Transferee”);
(e) the nature of the proposed Transferee’s business to be carried on in the
Transfer Space; and (f) such financial statements concerning the proposed
Transferee as may be reasonably necessary for Landlord to make an informed
judgment as to the financial condition and prospects of the Transferee.

15.3 Right of Recapture; Landlord’s Consent.

(a) At any time within 30 days after Landlord’s receipt of all of the
information required in the Transfer Notice, Landlord may by written notice to
Tenant elect to recapture the Transfer Space and terminate this Lease with
respect thereto. If the Transfer Space is less than the entire Premises, this
Lease shall remain in full force and effect with respect to the remainder of the
Premises, except that Rent (including Tenant’s Pro Rata Share of Property
Expenses) shall be adjusted to reflect the diminution in the number of square
feet of Rentable Area within the Premises.

(b) If the Transfer is not completed within 120 days of Landlord’s consent
thereto, Tenant shall once again comply with all of the provisions of this
Article, including, without limitation, the obligation to give Landlord the
Transfer Notice and Landlord shall again have the right of recapturing the
Transfer Space and terminating the Lease with respect thereto.

(c) Any Sublease shall provide that it is subject and subordinate to this Lease
and to the Mortgages; that Landlord may enforce the provisions of the Sublease,
including collection of Rent; that the cost of any modification to the Premises,
Building and/or Property arising from or as a result of the Sublease shall be
the sole responsibility of Tenant; that in the event of termination of this
Lease for any reason, including, without limitation, a voluntary surrender by
Tenant, or in the event of any reentry or repossession of the Premises by
Landlord, Landlord may, at its option, either (i) terminate the Sublease or
(ii) take over all of the right, title and interest of Tenant, as sublessor,
under such Sublease, in which case the Transferee shall attorn to Landlord, but
that nevertheless Landlord shall not (1) be liable for any previous act or
omission of Tenant under such Sublease, (2) be subject to any defense or offset
previously accrued in favor of the Transferee against Tenant, or (3) be bound by
any previous modification of any Sublease made without Landlord’s written
consent, or by any previous prepayment by the Transferee of more than one
month’s Rent.

 

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(d) Each Transferee by assignment shall assume all obligations of Tenant under
this Lease and shall be and remain liable jointly and severally with Tenant for
the payment of the Rent, and for the performance of all of the terms, covenants,
conditions and agreements herein contained on Tenant’s part to be performed for
the term of this Lease; provided, however, that the Transferee shall be liable
to Landlord for Rent only in the amount set forth in the Transfer. No Assignment
shall be binding on Landlord unless the Transferee or Tenant shall deliver to
Landlord a counterpart of the Assignment and an instrument in recordable form
which contains a covenant of assumption by the Transferee satisfactory in
substance and form to Landlord consistent with the requirements of this Section.
Failure or refusal of the Transferee to execute such instrument of assumption
shall not release or discharge the Transferee from its liability as set forth
above.

(e) If there are any Profits from any Transfer, Tenant shall pay 50% of such
Profits to Landlord as additional Rent. Landlord’s share of Profits shall be
paid to Landlord within 30 days after receipt thereof by Tenant. The payments of
Profits to Landlord shall be made on a monthly basis as additional Rent with
respect to each Transfer separately, subject to an annual reconciliation on each
anniversary date of the Transfer. If the payments to Landlord under this
paragraph during the 12 months preceding each annual reconciliation exceed the
amount of Profits determined on an annual basis, then Landlord shall refund to
Tenant the amount of such overpayment or credit the overpayment against Tenant’s
future obligations under this paragraph, at Tenant’s option. If Tenant has
underpaid its obligations hereunder during the preceding 12 months, Tenant shall
immediately pay to Landlord the amount owing after the annual reconciliation.

For purposes of this Article, “Profits” are defined as all cash or cash
equivalent amounts and sums which Tenant (including any affiliate or successor
of Tenant or other entity related to Tenant) receives on an annual basis from
any Transferee, directly or indirectly, attributable to the Premises or any
portion thereof, less the sum of (1) the amortized amount for each such annual
period of (i) any additional tenant improvement costs paid to Tenant’s
Transferee by Tenant; (ii) reasonable leasing commissions paid by Tenant in
connection with the Transfer; (iii) other economic concessions (planning
allowance, lease takeover payments, moving expenses, etc.) paid by Tenant to or
on behalf of the Transferee in connection with the Transfer; (iv) reasonable
costs incurred by Tenant in advertising the Transfer Space; and (v) Tenant’s
reasonable attorneys’ fees paid by Tenant in connection with the Transfer (such
amounts to be amortized over the term of the Transfer), and (2) the Rent paid
during each such annual period by Tenant attributable to the Transfer Space (pro
rata based on Rentable Area). Any lump sum payment received by Tenant from a
Transferee shall be treated like any other amount so received by Tenant for the
applicable annual period and shall be utilized in computing Profits in
accordance with the foregoing. All Profits and the components thereof shall be
subject to audit by Landlord or its representatives at reasonable times. Tenant
shall deliver to Landlord, upon request, any information reasonably required by
Landlord to calculate and/or substantiate the amount of Profits hereunder.

15.4 No Release of Tenant’s Obligations. No Transfer shall relieve Tenant of its
obligation to pay the Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any Transfer. Consent

 

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to one Transfer shall not be deemed to constitute consent to any subsequent
Transfer. Tenant waives any right it may have at law or in equity to terminate
this Lease as a result of Landlord’s refusal to consent to a Transfer, event if
such refusal is ultimately determined by a court of competent jurisdiction to be
unreasonable, nor will it obligate Landlord to consent to any further Transfer.

15.5 Transfer is Assignment. The transfer, assignment or hypothecation of any
stock, partnership interest or other equity interest in Tenant, in excess of
25%, in the aggregate, shall be deemed an Assignment hereunder.

15.6 Costs. Tenant agrees to reimburse Landlord for Landlord’s reasonable costs
and attorneys’ fees incurred in connection with the processing and documentation
of any requested Transfer whether or not Landlord consents to the Transfer or
the same is finally consummated.

16 Landlord’s Reserved Rights.

16.1 Right of Entry. Landlord and its agents and representatives shall have the
right, at all reasonable times, but in such manner as to cause as little
disturbance to Tenant as reasonably practicable, to enter the Premises for the
following purposes: (a) inspecting the physical condition of the Premises;
(b) performing all obligations of Landlord under this Lease or Applicable Law;
(c) showing the Premises to prospective purchasers, mortgagees and tenants;
(d) maintaining, replacing, extending or otherwise modifying the Building
Systems; and (e) access to telephone closets, electrical panels, and similar
installations which may serve areas of the Building other than (or in addition
to) the Premises. Except for (i) emergencies and (ii) entry to furnish
janitorial or other services to be provided by Landlord hereunder, Landlord will
give Tenant reasonable notice (which may be oral) prior to any entry, and Tenant
shall have the right to have one of its employees accompany Landlord or its
agent or representative, as the case may be. No such entry shall be construed
under any circumstances as a forcible or unlawful entry into the Premises, or an
eviction of Tenant. Tenant hereby waives any claim against Landlord or its
agents or representatives for damages for any injury or inconvenience to or
interference with, Tenant’s business or quiet enjoyment of the Premises, with
the exception of any physical damage to the Premises or Tenant’s trade fixtures
resulting from such entry.

16.2 Building and Common Areas. Without limitation of the preceding paragraph,
and provided Landlord does not unreasonably interfere with Tenant’s use,
Landlord may: (a) install, repair, replace or relocate pipes, ducts, conduits,
wires and appurtenant meters and equipment for service to other parts of the
Building above the ceiling surfaces, below the floor surfaces, within the walls
and in the central core areas of the Premises or the rest of the Building;
(b) repair, renovate, alter, expand or improve the Property; (c) make changes to
the common areas, including, without limitation, changes in the location, size,
shape and number of street entrances, driveways, ramps, entrances, exits,
parking spaces, parking areas, loading and unloading areas, halls, passages,
stairways and other means of ingress and egress, direction of traffic,
landscaped areas and walkways; (d) close temporarily any of the common areas for
maintenance purposes as long as reasonable access to the Premises remains
available; (e) designate other land outside the boundaries of the Building to be
a part of the common areas; (f) use the common areas while engaged in making
additional improvements, repairs or alterations to the Building, or any portion
thereof; and (g) do and perform such other acts and make such other changes in,
to or with respect to the common areas and Building and other portions of the
Property as Landlord may deem appropriate.

 

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16.3 Name. Landlord may adopt any name for the Building and/or the Property and
Landlord reserves the right to change the name and/or the address of the
Building and/or the Property or any part thereof at any time.

16.4 One Commerce Square. Landlord shall have the right, but not the obligation,
to enter into other agreements with the owner of the adjacent building known as
One Commerce Square (“Commerce 1”) to provide for (1) reciprocal rights of
access, use and enjoyment of the Property and Commerce 1, (2) for the common
management, operation, maintenance, improvement and repair of all or any portion
of the common area serving both the Property and Commerce 1, such as the
fountain and the courtyard, and/or (3) for the allocation (on a 50/50 basis) of
all or any portion of the Operating Expenses with respect to such management,
operation, and maintenance.

17 Indemnification and Waiver.

17.1 Indemnity by Tenant. Tenant shall indemnify, protect, defend and hold
harmless, Landlord, its officers, directors, partners, agents, attorneys and
employees, and any affiliate of Landlord, including, without limitation, any
corporations or any other entities controlling, controlled by or under common
control with Landlord (collectively, “Landlord Indemnified Parties”), from and
against any and all claims, suits, demands, liability, damages and expenses,
including attorneys’ fees and costs (collectively, “Indemnified Claims”),
arising from or in connection with Tenant’s use or alteration of the Premises or
the conduct of its business or from any activity performed or permitted by
Tenant in or about the Premises, the Building or any part of the Property during
the Term or prior to the Commencement Date if Tenant has been provided access to
the Premises, the Building or any part of the Property for any purpose, or
arising from any breach or default in the performance of any obligation on
Tenant’s part to be performed under the terms of this Lease, or arising from
Tenant’s use of the Building Services in excess of their capacity or arising
from any other act, neglect, fault or omission of Tenant or any of its officers,
agents, directors, contractors, employees, subtenants, assignees, licensees or
invitees. If any action or proceeding is brought against any of the Landlord
Indemnified Parties in connection with any Indemnified Claims, Tenant, upon
notice from Landlord, shall defend the same at Tenant’s expense with counsel
approved by Landlord, which approval shall not be unreasonably withheld.
Tenant’s indemnity obligation as aforesaid shall not be limited or affected by
the provisions of any Worker’s Compensation Acts, disability benefits acts or
other employee benefits acts or similar acts or statutes. Tenant’s obligations
under this Section 17.1 shall survive the expiration or earlier termination of
this Lease.

17.2 Waiver. As a material part of the consideration to Landlord for entering
into this Lease, Tenant hereby assumes all risk of and releases, discharges and
holds harmless Landlord from and against any and all liability to Tenant for
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever except that which is caused by the negligence or willful
misconduct of Landlord. In no event shall Landlord be liable to Tenant for any
injury to any person in or about the Premises or damage to the Premises or for
any loss, damage or injury to any property of Tenant therein or by any
malfunction of any utility or other

 

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equipment, installation or system, or by the rupture, leakage or overflow of any
plumbing or other pipes, including without limitation, water, steam and
refrigeration lines, sprinklers, tanks, drains, drinking fountains or similar
cause in, about or upon the Premises, the Building or any other portion of the
Property unless such loss, damage or injury is caused by the negligence or
willful misconduct of Landlord.

18 Definition of Landlord. The term “Landlord” as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall be limited
to mean and include only the owner or owners, at the time in question, of the
fee title of the Premises or the lessees under ground leases of the land or
master leases of the Building, if any. In the event of any transfer, assignment
or other conveyance of any such title, Landlord herein named (and in case of any
subsequent transfer or conveyance, the then grantor) shall be automatically
freed and relieved from and after the date of such transfer, assignment or
conveyance of all liability for the performance of any covenant or obligation on
the part of Landlord contained in this Lease thereafter to be performed. Without
further agreement, the transferee of such title shall be deemed to have assumed
and agreed to observe and perform any and all obligations of Landlord hereunder,
during its ownership of the Premises. Landlord may transfer its interest in the
Premises without the consent of Tenant and such transfer or subsequent transfer
shall not be deemed a violation on Landlord’s part of any term or condition of
this Lease.

19 Subordination.

19.1 Subordination. This Lease is subject and subordinate to the Mortgage. This
clause shall be self-operative; however, Tenant shall execute promptly any
certificate or document that Landlord may request to effectuate, evidence or
confirm such subordination, and failure to do so shall be an Event of Default
under this Lease.

19.2 Attornment. Notwithstanding the foregoing, if Landlord’s interest in the
Building is sold or conveyed upon the exercise of any remedy provided for in any
Mortgage, or otherwise by operation of law: (a) Tenant will attorn to and
recognize the new owner as Tenant’s landlord under this Lease, and Tenant will
confirm such attornment in writing within 10 days after receipt of a written
request to do so; and (b) the new owner shall not be (i) liable for any act or
omission of Landlord under this Lease occurring prior to such sale or
conveyance; (ii) subject to any offset, abatement or reduction of Rent because
of any default of Landlord under this Lease occurring prior to such sale or
conveyance; (iii) liable for the return of any security deposit paid by Tenant
except to the extent that the security deposit has actually been paid to such
person or entity; or (iv) bound by any Rent payment which Tenant might have paid
to Landlord more than 30 days in advance.

19.3 Notice from Tenant. Tenant shall give written notice to the holder of any
Mortgage whose name and address have been previously furnished to Tenant of any
act or omission by Landlord which Tenant asserts as giving Tenant the right to
terminate this Lease or to claim a partial or total eviction or reduction in
Rent or any other right or remedy under this Lease or provided by law. Tenant
further agrees that if Landlord shall have failed to cure any default within the
time period provided for in this Lease, then the holder of any Mortgage shall
have an additional 30 days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
if within such 30 days such

 

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holder has commenced and is diligently pursuing the remedies necessary to cure
such default (including, but not limited to, commencement of foreclosure
proceedings, if necessary to effect such cure), in which event this Lease shall
not be terminated while such remedies are being so diligently pursued.

OPTIONAL CLAUSE:

20 Substitution of Premises. Landlord shall have the right, at its option and
from time to time, upon not less than 30 days’ prior written notice to Tenant,
to relocate Tenant and to substitute for the Premises other space in the
Building containing at least as much Rentable Area as the original Premises. The
Rent for such substitute Premises shall be no higher than that of the original
Premises, and shall be improved by Landlord, at Landlord’s expense, with
decorations and improvements at least equal in quality to those in the original
Premises. Landlord shall pay the costs of moving and telephone relocation
reasonably incurred by Tenant in connection with such substitution of Premises,
subject to adequate substantiation of such costs.

21 Surrender of Premises and Removal of Property.

21.1 No Merger. The voluntary or other surrender of this Lease by Tenant, a
mutual cancellation or a termination hereof, shall not constitute a merger, and
shall, at the option of Landlord, terminate all or any existing subleases or
shall operate as an assignment to Landlord of any or all subleases affecting the
Premises.

21.2 Surrender of Premises. Upon the expiration of the Term, or upon any earlier
termination hereof, Tenant shall quit and surrender possession of the Premises
to Landlord in as good order and condition as the Premises are now or hereafter
may be improved by Landlord or Tenant, reasonable wear and tear, damage by
casualty and repairs which are Landlord’s obligation excepted, and shall,
without expense to Landlord, remove or cause to be removed from the Premises,
all debris and rubbish, all furniture, equipment, business and trade fixtures,
free-standing cabinet work, movable partitioning and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and all similar articles of any other persons claiming under Tenant
unless Landlord exercises its option to have any subleases or subtenancies
assigned to Landlord, and Tenant shall repair all damage to the Premises and the
Property resulting from such removal.

21.3 Disposal of Property. In the event of the expiration of this Lease or other
re-entry of the Premises by Landlord as provided in this Lease, any property of
Tenant not removed by Tenant upon the expiration of the Term of this Lease, or
within 48 hours after a termination by reason of Tenant’s default, shall be
considered abandoned and Landlord may remove any or all of such property and
dispose of the same in any manner or store the same in a public warehouse or
elsewhere for the account of, and at the expense and risk of, Tenant. If Tenant
shall fail to pay the costs of storing any such property after it has been
stored for a period of 30 days or more, Landlord may sell any or all of such
property at public or private sale, in such manner and at such places as
Landlord, in its sole discretion, may deem proper, without notice to or demand
upon Tenant. In the event of such sale, Landlord shall apply the proceeds
thereof, first, to the cost and expense of sale, including reasonable attorneys’
fees; second, to the repayment of the cost of removal and storage; third, to the
repayment of any other sums which may then or thereafter be due to Landlord from
Tenant under any of the terms of this Lease; and fourth, the balance, if any, to
Tenant.

 

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22 Holding Over. In the event Tenant holds over after the expiration of the
Term, with the express or implied consent of Landlord, such tenancy shall be
from month-to-month only, and not a renewal or an extension for any further
term, and such month-to-month tenancy shall be subject to each and every term,
covenant and agreement contained herein; provided, however, that Tenant shall
pay as monthly net rent during any holding over period, an amount equal to 150%
of the monthly net rent payable immediately prior to expiration of the Term.
Nothing in this Article shall be construed as a consent by Landlord to any
holding over by Tenant and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises upon the expiration of the Term
or upon the earlier termination hereof and to assert any remedy in law or equity
to evict Tenant and/or collect damages in connection with such holding over.

23 Defaults and Remedies.

23.1 Defaults by Tenant. The occurrence of any of the following shall constitute
a material default and breach of this Lease by Tenant (each, an “Event of
Default”):

(a) If Tenant fails to pay the Rent or make any other payment required to be
made by Tenant under this Lease and the Exhibits hereto as and when due and such
failure continues for 5 business days after notice thereof by Landlord to
Tenant;

(b) If Tenant (1) abandons the Premises or (2) enters into any assignment or
sublease transaction in violation of the terms of this Lease;

(c) If Tenant fails to observe or perform the provisions of Articles 3 (“Use of
Premises”) and/or 10 (“Alterations”) and such failure continues for 24 hours
after notice thereof from Landlord to Tenant;

(d) If Tenant fails to provide estoppel certificates, or other certificates as
herein provided, and such failure continues for 3 business days after notice to
Tenant following expiration of the 10-day period provided herein for the
delivery of such certificates;

(e) If Tenant fails to observe or perform any other provision of this Lease
including the Exhibits hereto, to be observed or performed by Tenant, and such
failure continues for 30 days after notice thereof by Landlord to Tenant;
provided, however, that if the nature of such failure is such that it cannot
reasonably be cured within such 30-day period, Tenant shall not be deemed to be
in default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion;

(f) If any action is taken by or against Tenant pursuant to any statute
pertaining to bankruptcy or insolvency or the reorganization of Tenant (unless,
in the case of a petition filed against Tenant, the same is dismissed within 90
days); if Tenant makes any general assignment for the benefit of creditors; if a
trustee or receiver is appointed to take possession of all or any portion of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease,
where possession is not restored to Tenant within 30 days; or if all or any
portion of Tenant’s assets located at the Premises or of Tenant’s interest in
this Lease is attached, executed upon, or otherwise judicially seized and such
seizure is not discharged within 30 days;

 

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(g) If Tenant fails to vacate and surrender the Premises as required by this
Lease upon the expiration of the Term or sooner termination of this Lease;

(h) If Tenant submits to Landlord any materially false information on any
document required to be given by Tenant to Landlord; and/or

(i) If any surety or guarantor of this Lease fails to comply with all the
provisions of the suretyship or guaranty agreement.

23.2 Landlord’s Remedies. If there shall occur an Event of Default, Landlord
shall have and may exercise all remedies available to Landlord at law or in
equity or under any statute or ordinance. Without limitation of the foregoing,
Landlord may at its option:

(a) Acceleration of Rent: declare due and payable and sue for and recover, all
unpaid Rent for the unexpired period of the Term as if by the terms of this
Lease the same were payable in advance, or sue for Rent monthly as it accrues;
and/or

(b) Termination: terminate this Lease by giving written notice thereof and, upon
the giving of such notice, this Lease and the estate hereby granted shall expire
and terminate with the same force and effect as though the date of such notice
were the date fixed for the expiration of the Term, and all rights of Tenant
hereunder shall expire and terminate, but Tenant shall remain liable as
hereinafter provided; and/or

(c) Recovery of possession; reletting: whether or not this Lease has been
terminated as herein provided, re-enter and repossess the Premises or any part
thereof by summary proceedings, ejectment or otherwise, and Landlord shall have
the right to remove all persons and property therefrom. Landlord shall be under
no liability for or by reason of any such entry, repossession or removal; and no
such re-entry or taking of possession of the Premises by Landlord shall be
construed as an election on Landlord’s part to terminate this Lease or to accept
a surrender thereof unless a written notice of such intention be given to Tenant
or unless the termination of this Lease be decreed by a court of competent
jurisdiction. Notwithstanding any law or custom to the contrary, Landlord shall
have no legal obligation to mitigate its damages; however, at any time or from
time to time after the repossession of the Premises or any part thereof whether
or not the Term shall have been terminated, Landlord may at its option relet all
or any part of the Premises for the account of Tenant for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free Rent) and for such uses as Landlord, in its sole discretion,
may determine, and Landlord may collect and receive any Rents payable by reason
of such reletting; and apply the same on account of Rent due and to become due
hereunder. Landlord shall not be required to accept any tenant offered by Tenant
or observe any instruction given by Tenant about such reletting, or do any act
or exercise any care or diligence with respect to such reletting. For the
purpose of such reletting, Landlord may decorate or make repairs, changes,
alterations or additions in or to the Premises or any part thereof to the extent
deemed by Landlord desirable or convenient, and the cost of such

 

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decoration, repairs, changes, alterations or additions shall be charged to and
be payable by Tenant as Rent hereunder, as well as any reasonable brokerage and
legal fees expended by Landlord. Landlord reserves the right to terminate this
Lease at any time after taking possession of the Premises as aforesaid. Neither
termination nor repossession and reletting shall relieve Tenant of its
obligations hereunder, all of which shall survive such termination, repossession
or reletting. Tenant agrees that Landlord may file suit to recover any sums
falling due under the terms of this Article from time to time and that no suit
or recovery of any portion due Landlord hereunder shall be any defense to any
subsequent action brought for any amount not theretofore reduced to judgment in
favor of Landlord; and/or

(d) Liquidated damages: terminate this Lease and recover from Tenant upon demand
therefor, unless Tenant has paid the whole of accelerated Rent pursuant to
subparagraph (a) above, as liquidated and agreed upon final damages for Tenant’s
default, an amount equal to the difference, if any, between (a) Rent and other
sums which would be payable under this Lease for the remainder of the Term,
discounted to present worth at the rate of (5%] per annum, and (b) the then fair
market rental value of the Premises as reasonably determined by Landlord for the
same period, discounted to present worth at a like rate.

(e) Calculation of Rent: In calculating future Rent for purposes of
subparagraphs (a), (c) and (d) above, Landlord’s reasonable and good faith
estimate of future Property Expenses shall be conclusive and binding on the
parties. In addition, Landlord may include as an item of Rent its reasonable
attorney’s fees and costs in enforcing its rights hereunder.

23.3 Waivers by Tenant. In the event of a termination of this Lease as a result
of an Event of Default, Tenant hereby waives all right to recover or regain
possession of the Premises, to save forfeiture by payment of Rent due or by
other performance of the conditions, terms or provisions hereof, and without
limitation of or by the foregoing, Tenant waives all right to reinstate or
redeem this Lease notwithstanding any provisions of any statute, law or decision
now or hereafter in force or effect, and Tenant waives all right to any second
or further trial in summary proceedings, ejectment or in any other action
provided by any statute or decision now or hereafter in force or effect. Tenant
hereby waives all notices required by the Landlord and Tenant Act of 1951, as
amended, and as the same may hereafter be amended, and/or any other provision of
Pennsylvania law.

23.4 Right of Landlord to Injunction; Remedies Cumulative. Upon any actual or
threatened Event of Default, Landlord shall have the right of injunction to
restrain the same. The rights and remedies given to Landlord in this Lease are
distinct, separate and cumulative remedies, and no one of them, whether or not
exercised by Landlord, shall be deemed to be in exclusion of any of the others.

23.5 Right of Distress and Lien. If an Event of Default shall occur, Landlord
shall, to the extent permitted by law, have a right of distress for Rent and a
lien on all of Tenant’s inventory, trade fixtures, machinery, equipment and
personal property of whatsoever kind or nature in the Premises as security for
Rent and all other charges payable hereunder, and also the right to proceed,
without judicial decree, writ of execution or assistance of sheriffs, to conduct
a private sale, by auction or sealed bid, of such personal property, at which
sale Landlord may bid

 

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without restriction. Tenant hereby waives the benefit of all laws, whether now
in force or hereafter enacted, exempting any personal property on the Premises
from sale or levy, whether execution thereon is had by order of any court,
assistance of sheriffs or through private sale as herein authorized. Tenant
further waives the right to issue a Writ of Replevin under the laws of
Pennsylvania Rules of Civil Procedure or under any other law of the Commonwealth
of Pennsylvania pertaining to the recovery of any articles of any nature
whatsoever seized under a distress for Rent, or levy upon an execution for Rent,
liquidated damages or otherwise.

23.6 Waiver of Jury Trial. Landlord and Tenant hereby waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use
or occupancy of the Premises, and/or any claim of injury or damage, or for the
enforcement of any remedy under any statute, ordinance or otherwise.

23.7 Definition of Tenant. The term “Tenant” shall be deemed to include all
persons or entities named as Tenant under this Lease, or each and every one of
them. If any of the obligations of Tenant hereunder is guaranteed by another
person or entity, the term “Tenant” shall be deemed to include all of such
guarantors and any one or more of such guarantors. If this Lease has been
assigned, the term “Tenant” shall be deemed to include both the assignee and the
assignor.

24 Covenant Against Liens. Tenant has no authority or power to cause or permit
any lien or encumbrance of any kind whatsoever, whether created by act of
Tenant, operation of law or otherwise, to attach to or be placed upon the
Property or the Premises, or on Tenant’s leasehold hereunder. Tenant further
agrees not to suffer or permit any lien of mechanics or materialmen or others to
be placed against the Property, the Building or the Premises, or any portion
thereof, with respect to work or services performed for or materials furnished
to Tenant or the Premises (including, without limitation, in connection with the
Tenant Improvements and any Alterations). Tenant agrees to cause any such lien
to be immediately released and removed of record, at Tenant’s expense. Tenant
affirms that the Tenant Improvements are solely for the use and benefit of
Tenant, and not in any way for the immediate benefit of Landlord.

25 Interest on Tenant’s Obligations; Late Charges.

25.1 Interest. Any amount due from Tenant to Landlord which is not paid when due

shall bear interest at 10% per annum, from the date such payment is due until
paid, but the payment of such interest shall not excuse or cure any default by
Tenant under this Lease.

25.2 Late Charge. In the event Tenant is more than 5 days late in paying any
amount of Rent due under this Lease, Tenant shall pay Landlord a late charge
equal to 3% of each delinquent amount of Rent and any subsequent delinquent
amount of Rent. OPTIONAL CLAUSE: [Landlord agrees not to assess such late charge
until 5 days have elapsed after Landlord has given Tenant notice of such
delinquency; provided, however, that Landlord shall have the right to assess
such late charge without notice to Tenant in the event Landlord has given Tenant
notice of past delinquencies at least twice during the prior 12 months.] The
parties agree that the amount of such late charge represents a reasonable
estimate of the cost and expense that would be incurred by Landlord in
processing each delinquent payment of Rent by Tenant and

 

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that such late charge shall be paid to Landlord as liquidated damages for each
delinquent payment, but the payment of such late charge shall not excuse or cure
any default by Tenant under this Lease. The parties further agree that the
payment of late charges and the payment of interest provided for in the
preceding paragraph are distinct and separate from one another in that the
payment of interest is to compensate Landlord for the use of Landlord’s money by
Tenant, while the payment of a late charge is to compensate Landlord for the
additional administrative expense incurred by Landlord in handling and
processing delinquent payments, but excluding attorneys’ fees and costs incurred
with respect to such delinquent payments.

26 Quiet Enjoyment. Tenant, upon the paying of all Rent hereunder and performing
each of the covenants, agreements and conditions of this Lease required to be
performed by Tenant, shall lawfully and quietly hold, occupy and enjoy the
Premises during the Term without hindrance or molestation of anyone lawfully
claiming by, through or under Landlord, subject, however, to the terms and
conditions of this Lease. This covenant of quiet enjoyment is in lieu of any
implied covenant of quiet enjoyment under Pennsylvania law.

OPTIONAL CLAUSE NO. 1:

27 Parking Facilities. Landlord shall provide (and Tenant shall lease for the
entire Term)              unreserved parking spaces in the Garage, at such
monthly rates as Landlord or its Garage operator may establish from time to
time. Such parking spaces will be used solely by Tenant’s own personnel and the
right to use such spaces may not be transferred except pursuant to an assignment
of this Lease or a subletting of all or any portion of the Premises as the same
may be permitted by the terms of this Lease. Such parking shall be subject to
such reasonable rules and regulations as the operator of the Garage may
establish from time to time.

OPTIONAL CLAUSE NO. 2:

27 Parking Facilities. Landlord shall provide up to              unreserved
parking spaces in the Garage, at such monthly rates as Landlord or its Garage
operator may establish from time to time; provided, however, that Tenant shall
have no obligation to take all or any of such spaces and Tenant may at any time,
surrender all or some of such spaces, and thereafter, neither Landlord nor
Tenant shall have any obligations with respect to the surrendered spaces under
this Article. However, if Tenant thereafter requests to once again take such
spaces and at the time of such request such spaces are available, Landlord shall
provide such spaces to Tenant on the aforesaid terms. Such parking spaces will
be used solely by Tenant’s own personnel and the right to use such spaces may
not be transferred except pursuant to an assignment of this Lease or a
subletting of all or any portion of the Premises as the same may be permitted by
the terms of this Lease. Such parking shall be subject to such reasonable rules
and regulations as the operator of the Garage may establish from time to time.

28 Brokers. Landlord and Tenant each warrant to the other that it has not had
any contact or dealings with any real estate broker or other intermediary other
than                      (collectively, “Broker”) which would give rise to the
payment of any fee or brokerage commission in connection with this Lease.
Landlord and Tenant shall each indemnify the other from and against any loss,
liability or damage (including reasonable counsel fees and costs) with respect
to any fee or brokerage commission (except to Broker) arising out of any act or
omission of the indemnifying party. Landlord agrees to pay brokerage commissions
due in connection with this Lease to Broker in accordance with a separate
commission agreement executed by Landlord and Broker.

 

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29 Rules and Regulations. The “Rules and Regulations” attached hereto as Exhibit
E are hereby incorporated herein and made a part of this Lease. Tenant agrees to
abide by and comply with each and every one of said Rules and Regulations and
any amendments, modifications and/or additions thereto as may hereafter be
adopted by Landlord for the safety, care, security, good order and cleanliness
of the Premises, the Building, the Garage or any other portion of the Property.
Provided Tenant’s rights under this Lease are not materially and adversely
affected, Landlord shall have the right to amend, modify or add to the Rules and
Regulations in its sole discretion. Landlord agrees that the Rules and
Regulations shall not be enforced so as to discriminate against Tenant or
unreasonably interfere with Tenant’s use of the Premises and that the Rules and
Regulations shall be enforced uniformly against all tenants in the Building;
provided, however, that Landlord shall not be liable to Tenant for Landlord’s
failure to enforce the Rules and Regulations against any other tenants. Tenant
shall not be obligated to comply with any future Rules and Regulations or
amendments thereto until Tenant has received a written copy of such Rules and
Regulations.

30 Directory Board and Signage.

30.1 Directory Board. During the Term, Tenant shall have the right to designate
one (1) name (a department or individual) per thousand square feet of Rentable
Area in the Premises occupied by Tenant for placement on the directory board in
the lobby of the Building. Landlord shall have the option to maintain, in place
of the directory board in the lobby of the Building, a computerized directory
with display screen which has the capacity to accommodate Tenant’s designation
of names as set forth above.

30.2 Signs. Tenant shall be permitted to install, at its own expense,
appropriate signs containing Tenant’s name at the entrance to the Premises, and,
if and so long as Tenant leases all of the Rentable Area on individual floors of
the Premises, on the walls of the elevator lobbies on each floor of the Premises
leased solely by Tenant. Any such signs will be designed and constructed in a
manner compatible with Building standard signs and graphics criteria and shall
be subject to Landlord’s prior written approval which approval shall not be
unreasonably withheld or delayed. Upon expiration of the Term, Tenant shall
promptly remove all its signs and repair and restore the surfaces on which such
signs were attached to their prior condition, at Tenant’s expense.

OPTIONAL CLAUSE:

31 Termination Option. Notwithstanding anything else herein contained, Tenant
shall have the right to terminate this Lease effective as of
                     (the “Early Termination Date”), subject to the following
terms and conditions:

(a) Tenant shall give Landlord written notice of its election to terminate the
Lease not less than 12 months prior to the Early Termination Date;

 

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(b) Tenant shall pay Landlord, in consideration for such early termination, a
fee equal to the sum of the following: (i) monthly Rent paid by Tenant pursuant
to Articles 5(a) and 5(b) for the preceding              months, plus (ii) the
unamortized balance of (x) the funds actually disbursed by Landlord pursuant to
[Tenant Improvement/Moving Allowance] and (y) brokerage commissions paid by
Landlord to                      (which, for these purposes, shall be
amortizable over the original Term). Payment of 50% of the termination fee shall
accompany the notice of early termination, and the remaining 50% shall be paid
at least 30 days prior to the Early Termination Date.

(c) No Event of Default shall have occurred and be in existence on the date of
Tenant’s notice of its election to exercise this early termination option or
during the period from and including the date of such notice through and
including the Early Termination Date.

(d) Tenant’s notice of early termination shall automatically nullify Landlord’s
obligation to make funds available for painting and other renovations at the end
of the              month of the Term pursuant to Article             , and all
other options (if any) Tenant may have to renew, extend, or otherwise modify
this Lease.

OPTIONAL CLAUSE:

32 Expansion Options.

32.1 First Expansion Option. Tenant shall have the option to lease approximately
             contiguous square feet of Rentable Area on the              floor
of the Building as shown on the plan attached hereto as Exhibit A (the “First
Expansion Space”), by notice given on or before                     , subject to
the following terms and conditions:

(a) Promptly after receipt of Tenant’s notice, Landlord shall notify Tenant of
the date (which shall be between                      and                     )
on which it will deliver the First Expansion Space to Tenant.

(b) The First Expansion Space shall become part of the Premises on the aforesaid
delivery date and Tenant agrees to commence paying Rent for the First Expansion
Space          days after such delivery date. The annual Rent for the First
Expansion Space shall be calculated by multiplying the Rent per square foot of
Rentable Area in effect for the original Premises on the delivery date by the
Rentable Area of the First Expansion Space.

(c) Except as otherwise specifically provided in this Article, all of the terms
and conditions of this Lease shall apply to the First Expansion Space from and
after the aforesaid delivery date;

(d) The First Expansion Space shall be leased to Tenant in its then existing
condition and state of improvement and Landlord shall have no obligation to make
any improvements, repairs or alterations thereto. However, Landlord shall
provide Tenant with a tenant improvement allowance for the First Expansion Space
equal to $             per square foot of Rentable Area in the First Expansion
Space. Such tenant improvement allowance and the tenant improvements to be
performed in the First Expansion Space shall be subject to all of the terms and
conditions set forth in Exhibit D attached hereto regarding the Tenant
Improvements and the Tenant Improvement Allowance.

 

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(e) Notwithstanding anything to the contrary contained herein, Tenant shall have
the right to lease the First Expansion Space only if no Event of Default has
occurred and is continuing on the date of Tenant’s notice of its intention to
lease the First Expansion Space or on the date of delivery of the First
Expansion Space to Tenant.

(f) Within 10 days after Tenant exercises the First Expansion Option, Landlord
and Tenant shall execute an amendment to this Lease documenting the expansion of
the Premises pursuant to this Section.

(g) Landlord shall have no liability to Tenant for any damages resulting from
any delay in delivering possession of the First Expansion Space to Tenant if
said delay is caused by the holding over of a previous tenant of the First
Expansion Space; provided, that, Landlord shall take all action reasonably
necessary, including required legal proceedings, to secure possession of the
First Expansion Space.

OPTIONAL CLAUSE:

32.2 Second Expansion Option. Regardless of whether Tenant leases the First
Expansion Space as set forth above, then Tenant shall have the right to lease
the remainder of the              of the Building (the “Second Expansion Space”)
by notice given on or before                     , subject to the following
terms and conditions:

(a) Promptly after receipt of Tenant’s notice, Landlord shall notify Tenant of
the date (which shall be between                      and                     )
on which it will deliver the Second Expansion Space to Tenant.

(b) The Second Expansion Space shall become part of the Premises and Tenant
agrees to commence paying Rent for the Second Expansion Space          days
after the date of delivery thereof to Tenant. The annual Rent for the Second
Expansion Space shall be calculated by multiplying the Rent per square foot of
Rentable Area in effect for the original Premises on the delivery date by the
Rentable Area of the Second Expansion Space.

(c) Except as otherwise specifically provided in this Article, all of the terms
and conditions of this Lease shall apply to the Second Expansion Space from and
after the aforesaid delivery date;

(d) The Second Expansion Space shall be leased to Tenant in its then existing
condition and state of improvement and Landlord shall have no obligation to make
any improvements, repairs or alterations thereto. However, Landlord shall
provide Tenant with a tenant improvement allowance for the Second Expansion
Space equal to $             per square foot of Rentable Area in the Second
Expansion Space. Such tenant improvement allowance and the tenant improvements
to be performed in the Second Expansion Space shall be subject to all of the
terms and conditions set forth in Exhibit D attached hereto regarding the Tenant
Improvements and the Tenant Improvement Allowance.

 

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(e) Notwithstanding anything to the contrary contained herein, Tenant shall have
the right to lease the Second Expansion Space only if no Event of Default has
occurred and is continuing on the date of Tenant’s notice of its intention to
lease the Second Expansion Space or on the date of delivery of the Second
Expansion Space to Tenant.

(f) Within 10 days after Tenant exercises the Second Expansion Option, Landlord
and Tenant shall execute an amendment to this Lease documenting the expansion of
the Premises pursuant to this Section.

(g) Landlord shall have no liability to Tenant for any damages resulting from
any delay in delivering possession of the Second Expansion Space to Tenant if
said delay is caused by the holding over of a previous tenant of the Second
Expansion Space; provided, that, Landlord shall take all action reasonably
necessary, including required legal proceedings, to secure possession of the
Second Expansion Space.

(h) Notwithstanding anything else herein contained, including Exhibit A, if, and
only if, Tenant exercises its Second Expansion Option without having executed
its First Expansion Option, then Landlord may deliver, as the Second Expansion
Space, either the area designated on Exhibit A as the First Expansion Space
(i.e., the southerly side of the          floor) or the Second Expansion Space
(i.e., the northerly side of the          floor) and Tenant will accept
whichever space Landlord elects to deliver as the Second Expansion Space.

32.3 Personal Option. The options to expand set forth in this Article are
personal to Tenant and may not be assigned, transferred or conveyed to any
party, except to a sublessee of the entire Premises or an assignee of Tenant’s
entire interest under this Lease (which does not under any circumstances include
a party who has become an assignee as the result of Tenant’s bankruptcy). Such
options shall not survive any termination of this Lease.

OPTIONAL CLAUSE:

33 Rights of First Offer.

33.1 First Offer Space. Subject to the currently existing rights of “first
offer” or “first refusal” of other tenants in the Building, Landlord agrees that
if any part of the [        ] floor becomes available during the Term (the
“First Offer Space”), the following will apply:

(a) Prior to entering into a lease with any third party for all or any portion
of the First Offer Space, Landlord shall give Tenant notice (the “Notice”) of
its interest in commencing negotiations to lease such First Offer Space to a
prospective tenant. The Notice shall designate the First Offer Space; the Rent
Landlord proposes to charge therefor (which Rent shall be at fair market value,
as determined by Landlord based on its then offered Rent for a lease for
comparable space, terms and concessions); and any other material business terms,
including, without limitation, any proposed tenant improvement allowance. Tenant
shall have 10 business days after receipt of the Notice to lease such First
Offer Space on the terms and conditions and at the Rent set forth in the Notice;
otherwise, Tenant’s rights with respect to such First Offer Space shall
terminate. Tenant’s right of First Offer shall be restored in the event Landlord
does not consummate a lease transaction with a third party or, if Landlord does
enter into such a lease transaction, the space subsequently becomes available
during the term of this Lease.

 

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(b) If Tenant leases the First Offer Space, the First Offer Space shall become
part of the Premises and Tenant agrees to commence paying Rent for such First
Offer Space at the rate set forth in the Notice on the date of delivery thereof
to Tenant and such First Offer Space shall be leased to Tenant for the remaining
unexpired term of this Lease upon the same terms and conditions as provided
herein (with the exception of the Rent therefor, which will be as set forth in
the Notice).

(c) Notwithstanding anything to the contrary contained herein, Tenant shall only
have the right of first offer with respect to the First Offer Space if no Event
of Default has occurred and is continuing on the date of Tenant’s notice of its
intention to lease the First Offer Space or on the date of delivery of the First
Offer Space to Tenant.

(d) Prior to Landlord’s delivery of the First Offer Space to Tenant, Landlord
and Tenant shall execute an amendment to this Lease documenting the expansion of
the Premises pursuant to this Article.

(e) Landlord shall have no liability to Tenant for any damages resulting from
any delay in delivering possession of the First Offer Space to Tenant if said
delay is caused by the holding over of a previous tenant of the First Offer
Space; provided, that Landlord shall take all action reasonably necessary,
including required legal proceedings, to secure possession of the First Offer
Space.

As used herein, the term “High Rise Group” shall mean the 28th through 41st
floors of the Building.

33.2 Personal Option. The rights of first offer set forth above are personal to
Tenant and may not be assigned, transferred or conveyed to any party. Such
rights shall not survive any termination of this Lease.

OPTIONAL CLAUSE:

34 Option to Renew. As of the end of the original Term, Tenant shall have the
right to renew this Lease for an additional period of              years (the
“Renewal Term”), subject to the following terms and conditions:

(a) All terms and conditions of this Lease shall continue in effect during the
Renewal Term except that (i) Rent during the Renewal Term shall be the fair
market Rent for the Premises (as reasonably determined by Landlord as of the
date of receipt of Tenant’s notice based on Landlord’s current (or most recent)
bona fide written proposals for leases for comparable space, terms and
concessions in the Building); and (ii) Tenant shall have no further option to
renew at the end of the Renewal Term;

(b) Tenant shall exercise such right to renew by giving written notice thereof
to Landlord not less than 12 months before the end of the original Term;

(c) Within 60 days after receipt of such notice from Tenant, Landlord shall give
written notice to Tenant setting forth the Rent Landlord will charge for the
Premises during the Renewal Term. Within 30 days after receipt of such notice
from Landlord, Tenant shall give written notice to Landlord of whether it will
accept such Rent. If Tenant rejects the Rent, this Lease shall expire at the end
of the original Term. Failure to respond within the aforesaid 30-day period
shall be deemed a rejection of the Rent;

 

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(d) Landlord shall have no obligation to make any improvements or alterations to
the Premises or to provide any improvement allowance with respect thereto during
the Renewal Term;

(e) Notwithstanding anything to the contrary contained herein, Tenant shall only
have the right to renew this Lease if no Event of Default has occurred and is
continuing, and/or this Lease has not theretofor been terminated, on the date of
Tenant’s notice of its intention to renew or on the date of commencement of the
Renewal Term; and

(f) Prior to the commencement of the Renewal Term, Landlord and Tenant shall
execute an amendment to this Lease confirming the renewal of this Lease pursuant
to this Section; the commencement and expiration of the Renewal Term; and the
Rent payable during the Renewal Term.

OPTIONAL CLAUSE:

At the end of the Renewal Term, provided Tenant shall have exercised its right
to renew, Tenant shall have the right to renew for a second additional
             years (the “Second Renewal Term”), subject to all of the terms and
conditions set forth above, except that the Rent for the Second Renewal Term
shall be the fair market value determined as of the date Landlord receives
Tenant’s notice of its intent to exercise its second renewal.

35 General Provisions.

35.1 No Waiver. The waiver by Landlord of any breach of any provision contained
in this Lease, or the failure of Landlord to insist on strict performance by
Tenant, shall not be deemed to be a waiver of such provision as to any
subsequent breach thereof or of any other provision contained in this Lease. The
acceptance of Rents hereunder by Landlord shall not be deemed to be a waiver of
any breach or default by Tenant regardless of Landlord’s knowledge of such
breach or default at the time of acceptance of Rent.

35.2 Landlord’s Right to Perform. If Tenant shall fail to perform any act
required to be performed by Tenant, Landlord may, after giving any notice and
allowing any grace period required by Article 23 (“Defaults and Remedies”),
without obligation, and without waiving or releasing Tenant from any default or
obligations of Tenant, make any such payment or perform any other act which
Tenant should have performed. All sums so paid by Landlord and all costs
incurred by Landlord in making such payment or performing such other act or
obligation and/or in enforcing this Lease, including attorneys’ fees, together
with interest thereon at 10% per annum, shall be payable to Landlord on demand
and Tenant agrees to pay any such sums, and Landlord shall have (in addition to
any other right or remedy hereunder) the same rights and remedies in the event
of the non-payment thereof by Tenant as in the case of default by Tenant in the
payment of Rent.

 

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35.3 Terms; Headings. The words “Landlord” and “Tenant” as used herein shall
include the plural, as well as the singular. The words used in neuter gender
include the masculine and feminine and words in the masculine or feminine gender
include the neuter. If there is more than one Tenant, the obligations hereunder
imposed upon Tenant shall be joint and several. The headings or titles of this
Lease shall have no effect upon the construction or interpretation of any part
hereof.

35.4 Entire Agreement. This instrument along with any exhibits and attachments
or other documents attached hereto constitutes the entire and exclusive
agreement between Landlord and Tenant with respect to the Premises. This
instrument and said exhibits and attachments and other documents may be altered,
amended, modified or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant hereby agree that all prior or
contemporaneous oral and written understandings, agreements or negotiations
relative to the leasing of the Premises are merged into and superseded by this
instrument.

35.5 Successors and Assigns. Subject to the provisions of Article 15 relating to
Assignment and Sublease, this Lease is intended to and does bind the heirs,
executors, administrators, successors and assigns of any and all of the parties
hereto.

35.6 Notices. All notices, consents, approvals, requests, demands and other
communications (collectively “notices”) which Landlord or Tenant are required or
desire to serve upon, or deliver to, the other shall be in writing and shall be
sent by certified or registered U.S. mail, return receipt requested, or by
personal delivery, or by a reputable commercial overnight courier service (such
as, but not limited to, Federal Express), to the appropriate address indicated
below, or at such other place or places as either Landlord or Tenant may, from
time to time, designate in a written notice given to the other. If the term
“Tenant” in this Lease refers to more than one person or entity, Landlord shall
be required to make service or delivery, as aforesaid, to any one of said
persons or entities only. Notices shall be deemed sufficiently served or given
at the time of receipt. Any notice, request, communication or demand by Tenant
to Landlord shall be addressed to the Landlord at the management office in the
Building, Attention: Vice President-Property Management with a copy to David A.
Ebby, Esquire, Hangley Aronchick Segal & Pudlin, One Logan Square, 27th Floor,
Philadelphia, Pennsylvania 19103-6933, and if requested in writing by the
Landlord, given or served simultaneously to the Landlord’s mortgagee at the
address specified in such request. Any notice from Landlord to Tenant shall be
addressed as follows:

Rejection or other refusal to accept a notice or the inability to deliver the
same because of a changed address of which no notice was given, shall be deemed
to be receipt of the notice on the date delivery was first attempted.

35.7 Severability. If any provision of this Lease, the deletion of which would
not adversely affect the receipt of any material benefit by either party
hereunder, shall be held invalid or unenforceable to any extent, the remaining
provisions of this Lease shall not be affected thereby and each of said
provisions shall be valid and enforceable to the fullest extent permitted by
law.

 

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35.8 Time of Essence. Time is of the essence of this Lease and each provision
hereof in which time of performance is established.

35.9 Governing Law. This Lease shall be governed by, interpreted and construed
in accordance with the laws of the Commonwealth of Pennsylvania applicable to
contracts executed and performed entirely within the Commonwealth of
Pennsylvania.

35.10 Attorneys’ Fees. In the event of any litigation between the parties, the
prevailing party shall be entitled to obtain, as part of the judgment, all
reasonable attorneys’ fees, costs and expenses incurred in connection with such
litigation, except as may be limited by applicable law.

35.11 Light and Air. Any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Building or any other
portion of the Property shall in no manner affect this Lease or impose any
liability whatsoever on Landlord.

35.12 Bankruptcy Prior to Commencement. If, at any time prior to the
Commencement Date, any action is taken by or against Tenant in any court
pursuant to any statute pertaining to bankruptcy or insolvency or the
reorganization of Tenant, Tenant makes any general assignment for the benefit of
creditors, a trustee or receiver is appointed to take possession of
substantially all of Tenant’s assets or of Tenant’s interest in this Lease, or
there is an attachment, execution or other judicial seizure of substantially all
of Tenant’s assets or of Tenant’s interest in this Lease, then this Lease shall
ipso facto be canceled and terminated and of no further force or effect. In such
event, neither Tenant nor any person claiming through or under Tenant or by
virtue of any statute or of any order of any court shall be entitled to
possession of the Premises or any interest in this Lease and Landlord shall, in
addition to any other rights and remedies under this Lease, be entitled to
retain any Rent, security deposit or other monies received by Landlord from
Tenant as liquidated damages.

35.13 Force Majeure. Neither party shall be liable for any failure to comply or
delay in complying with its obligations hereunder (other than the obligation to
pay sums of money) if such failure or delay is due to force majeure events.
Landlord shall not be obliged to settle any strike to avoid a force majeure
event from continuing.

35.14 Applicable Laws. At its sole cost and expense, Tenant shall promptly
comply with all requirements of Applicable Laws, other than making structural
changes, relating to or arising out of the use, occupancy, repair or alteration
of the Premises.

35.15 Estoppel Certificates. Either party shall, without charge, at any time and
from time to time hereafter, within [10] days after written request of the
other, certify by written instrument duly executed and acknowledged to any
mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or any
other person, firm or corporation specified in such request: (a) as to whether
this Lease has been supplemented or amended, and, if so, the substance and
manner of such supplement or amendment; (b) as to the validity and force and
effect of this Lease, in accordance with its tenor as then constituted; (c) as
to the existence of any default thereunder; (d) as to the existence of any
offsets, counterclaims or defenses thereto on the part of

 

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such other party; (e) as to the commencement and expiration dates of the term of
this Lease and the date to which Rent has been paid; and (f) as to any other
matters as may reasonably be so requested. Any such certificate may be relied
upon by the party requesting it and any other person, firm or corporation to
whom the same may be exhibited or delivered and the contents of such certificate
shall be binding on the party executing same. OPTIONAL CLAUSE: [If any such
estoppel is not executed within such 10-day period, then, in addition to any
other right or remedy which Landlord may have, at Landlord’s option, Landlord
may execute any such estoppel on behalf of Tenant as Tenant’s attorney-in-fact,
and Tenant hereby appoints Landlord its attorney-in-fact for such purpose. Such
appointment and agency are coupled with an interest and are irrevocable.]

35.16 Examination of Lease. The submission of this instrument for examination or
signature by Tenant, Tenant’s agents or attorneys, does not constitute a
reservation of, or an option to lease, and this instrument shall not be
effective or binding as a lease or otherwise until its execution and delivery by
both Landlord and Tenant.

35.17 Landlord Liability. Notwithstanding anything in this Lease or any law to
the contrary, the liability of Landlord hereunder (including any successor
landlord hereunder) and any recourse by Tenant against Landlord shall be limited
solely to the interest of Landlord in the Property, and neither Landlord, nor
any of its constituent members, nor any of their respective affiliates,
partners, directors, officers, employees, agents or shareholders shall have any
personal liability therefor, and Tenant, for itself and all persons claiming by,
through or under Tenant, expressly waives and releases Landlord and such related
persons and entities from any and all personal liability.

35.18 Execution by Tenant. The persons executing this Lease on behalf of Tenant
represent and warrant to Landlord that they are duly authorized to execute and
deliver this Lease on Tenant’s behalf, and that this Lease is binding upon
Tenant in accordance with its terms.

OPTIONAL CLAUSE:

35.19 Landlord’s Waiver. Landlord agrees to execute waivers of Landlord’s
inchoate lien for Rent in conjunction with the financing of Tenant’s fixtures,
machinery, inventory and/or equipment in form reasonably satisfactory to Tenant
and Tenant’s lender(s), provided no Event of Default has occurred and remains
uncured at the time a waiver is requested.

OPTIONAL CLAUSE:

36 CONFESSION OF JUDGMENT.

36.1 CONFESSION OF JUDGMENT FOR RENT. TENANT HEREBY EMPOWERS ANY PROTHONOTARY OR
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR TENANT AFTER AN EVENT OF DEFAULT
IN ANY AND ALL ACTIONS WHICH MAY BE BROUGHT FOR RENT AND/OR THE CHARGES,
PAYMENTS, COSTS AND EXPENSES HEREIN RESERVED AS RENT, OR HEREIN AGREED TO BE
PAID BY TENANT AND TO SIGN FOR TENANT AN AGREEMENT FOR ENTERING IN ANY COMPETENT
COURT AN ACTION OR ACTIONS FOR RECOVERY OF SUCH RENT OR OTHER CHARGES OR
EXPENSES,

 

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AND IN SAID SUITS OR IN SAID ACTION OR ACTIONS TO CONFESS JUDGMENT AGAINST
TENANT FOR ALL OR ANY PART OF THE RENT SPECIFIED IN THIS LEASE THEN DUE AND
UNPAID, AND OTHER CHARGES, PAYMENTS, COSTS AND EXPENSES RESERVED AS RENT,
TOGETHER WITH AN ATTORNEY’S COMMISSION OF FIVE PERCENT OF THE AMOUNT DUE (BUT
NOT LESS THAN $15,000). SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ONE EXERCISE
THEREOF, BUT JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME AFTER
SUBSEQUENT EVENTS OF DEFAULT.

36.2 CONFESSION OF JUDGMENT FOR POSSESSION. UPON AN EVENT OF DEFAULT OR THE
EXPIRATION OF THE TERM, IT SHALL BE LAWFUL FOR ANY ATTORNEY OF ANY COURT OF
RECORD TO APPEAR AS ATTORNEY FOR TENANT AS WELL AS FOR ALL PERSONS CLAIMING BY,
THROUGH OR UNDER TENANT AND TO SIGN AN AGREEMENT FOR ENTERING IN ANY COMPETENT
COURT AN ACTION IN EJECTMENT AGAINST TENANT AND ALL PERSONS CLAIMING BY, THROUGH
OR UNDER TENANT AND THEREIN CONFESS JUDGMENT FOR THE RECOVERY BY LANDLORD OF
POSSESSION OF THE PREMISES, FOR WHICH THIS LEASE SHALL BE ITS SUFFICIENT
WARRANT, WHEREUPON, IF LANDLORD SO DESIRES, A WRIT OF POSSESSION OR OTHER
APPROPRIATE WRIT UNDER THE PENNSYLVANIA RULES OF CIVIL PROCEDURE THEN IN EFFECT
MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS; PROVIDED, HOWEVER,
IF THIS LEASE IS TERMINATED AND POSSESSION OF THE PREMISES REMAIN IN OR BE
RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT FOR THE SAME EVENT OF DEFAULT
AND UPON ANY SUBSEQUENT EVENT OF DEFAULT OR EVENTS OF DEFAULT, TO BRING ONE OR
MORE FURTHER ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION
OF THE PREMISES AND CONFESS JUDGMENT FOR THE RECOVERY OF POSSESSION OF THE
PREMISES AS HEREIN ABOVE PROVIDED.

36.3 PROCEEDINGS. IN ANY ACTION OF EJECTMENT, LANDLORD SHALL FIRST CAUSE TO BE
FILED IN SUCH ACTION AN AFFIDAVIT MADE BY IT OR SOMEONE ACTING FOR IT, SETTING
FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF JUDGMENT, AND, IF A TRUE
COPY OF THIS LEASE (AND OF THE TRUTH OF THE COPY SUCH AFFIDAVIT SHALL BE
SUFFICIENT EVIDENCE) BE FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE
THE ORIGINAL AS A WARRANT OF ATTORNEY, ANY RULE OF COURT, CUSTOM OR PRACTICE TO
THE CONTRARY NOTWITHSTANDING. TENANT RELEASES TO LANDLORD AND TO ANY AND ALL
ATTORNEYS WHO MAY APPEAR FOR TENANT, ALL PROCEDURAL ERRORS IN SAID PROCEEDINGS
AND ALL LIABILITY THEREOF. IF PROCEEDINGS SHALL BE COMMENCED BY LANDLORD TO
RECOVER POSSESSION UNDER THE PENNSYLVANIA ACTS OF ASSEMBLY AND RULES OF CIVIL
PROCEDURE UPON AN EVENT OF DEFAULT, TENANT SPECIFICALLY WAIVES THE RIGHT TO THE
THREE MONTHS’ NOTICE AND TO THE 15 OR 30 DAYS NOTICE REQUIRED BY THE
PENNSYLVANIA LANDLORD AND TENANT ACT OF 1951, AND AGREES THAT FIVE DAYS NOTICE
SHALL BE SUFFICIENT IN EITHER OR ANY SUCH CASE.

 

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36.4 ACKNOWLEDGMENT OF CONFESSION OF JUDGMENT. TENANT CONFIRMS TO LANDLORD THAT
(I) THIS LEASE AND THE FOREGOING WARRANT OF ATTORNEY HAVE BEEN NEGOTIATED AND
AGREED UPON IN A COMMERCIAL CONTEXT; (II) TENANT IS A BUSINESS ENTITY AND ITS
PRINCIPALS ARE KNOWLEDGEABLE IN COMMERCIAL MATTERS; (III) TENANT HAS CONSULTED
WITH ITS OWN SEPARATE COUNSEL REGARDING THIS LEASE; (IV) ON THE ADVICE OF ITS
OWN SEPARATE COUNSEL, TENANT HAS AGREED TO THE AFORESAID WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST TENANT; AND (V) TENANT UNDERSTANDS THAT IT IS WAIVING
CERTAIN RIGHTS WHICH IT WOULD OTHERWISE POSSESS.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
set forth in the first paragraph above.

 

LANDLORD:

PHILADELPHIA PLAZA-PHASE II, LP,

a Pennsylvania limited partnership

By:  

 

  James A. Thomas, Authorized Signatory TENANT: [INSERT TENANT NAME] By:  

 

Name:   Title:  

 

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EXHIBIT A

FLOOR PLAN

 

A-1

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EXHIBIT B

GLOSSARY OF DEFINED TERMS

1 Applicable Laws. All laws, statutes, ordinances and other governmental rules,
regulations and requirements, now or hereafter in effect, which apply to the
Building and/or the Premises and/or Tenant’s operations within the Premises,
including, without limitation, those pertaining to environmental protection.

2 Building. The 41-story office building known as Two Commerce Square, located
at 2005 Market Street, Philadelphia, Pennsylvania.

3 Building Systems. The electrical, mechanical, vertical transportation,
sprinkler, fire and life safety, structural, security, heating, ventilation and
air conditioning systems serving the Building, including pipes, ducts and
conduits forming an integral part of such systems.

4 OPTIONAL (See Articles 4 and 8) Commencement Date.                     , or
such sooner date as Tenant takes occupancy of the Premises.

5 Force Majeure Events. Acts of God, terrorism, inability to obtain labor,
strikes, lockouts, lack of materials, governmental restrictions, enemy actions,
civil commotion, riots, insurrection, war, fire, earthquake, unavoidable
casualty or other similar causes beyond such party’s reasonable control.

6 Garage. The subterranean parking garage located below the Building.

7 Gross Property Income. All Rent and other income actually collected from
operations during each year, except interest income derived from funds on
deposit in financial institutions. “Rent” shall mean all amounts collected from
tenants in the Property other than (i) security and other tenant deposits (other
than as applied to pay Rent) and (ii) Rents paid in advance by tenants, except
the portion of any such advance payment applied to the Rent due for the current
month. Gross Property Income shall include all income from the Property whether
or not characterized as Rent, including parking charges, operating expense
reimbursements and fees, amounts paid for after-hours or excess utilities, air
conditioning service or other services, amounts paid for special services
rendered to tenants of the Building, and vending machine rental charges, but
Gross Property Income shall not include any amounts received in settlement of
insurance claims by Landlord, as awards in litigation or other proceedings
(other than such amounts which compensate Landlord for income which Landlord
otherwise would have received from the Property), as costs and fees recovered in
litigation, or from refund or return of taxes paid or amounts paid under
construction or service contracts.

8 Lease Year. A period of 12 calendar months commencing on the Commencement Date
or on any anniversary thereof; provided, however, that if the Commencement Date
is not the first day of a calendar month, “Lease Year” shall mean a period of 12
calendar months commencing on the first day of the first calendar month after
the Commencement Date or any anniversary thereof and in such case, the first
Lease Year shall also include the period from the Commencement Date through the
last day of the calendar month in which the Commencement Date occurs.

 

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9 Mortgage. All existing and future mortgages, ground leases, and/or other
similar security instruments which may now or hereafter encumber the Property
and/or the Building, and all renewals, modifications, consolidations,
replacements and extensions thereof.

10 Manager. Thomas Development Partners LP, or any successor manager of the
Building.

11 Normal Working Hours. The periods from 8:00 a.m. to 6:00 p.m., Monday through
Friday, and 9:00 a.m. to 2:00 p.m. Saturday, except New Year’s Day, President’s
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day
(on the days such holidays are generally observed) and such other holidays as
are generally recognized in Philadelphia, Pennsylvania.

12 Operating Expenses. The total of all actual costs incurred by Landlord,
calculated in accordance with generally accepted accounting principles, in
connection with the management, operation, maintenance, cleaning, protecting,
servicing and repair of the Property. Operating Expenses shall include, without
limitation, (i) the cost of providing, managing, operating, maintaining and
repairing air conditioning, sprinkler, fire and life safety, electricity, steam,
heating, mechanical, ventilation, common area lighting, escalator and elevator
systems and all other utilities and the cost of supplies and equipment and
maintenance and service contracts in connection therewith; (ii) the cost of
repairs, general maintenance and cleaning, trash removal, telephone service,
janitorial service, and supplies, security and parking shuttle and other
Property services, if any; (iii) the cost of fire, extended coverage, boiler,
sprinkler, apparatus, commercial general liability, property damage, Rent,
earthquake and other insurance; (iv) wages, salaries and other labor costs
including taxes, insurance, retirement, medical and other employee benefits,
including, without limitation, such costs for a transportation system manager
and/or rideshare coordinator for the Building; (v) fees, charges and other
costs, including management fees, consulting fees, legal fees and accounting
fees, of all independent contractors engaged by Landlord or reasonably charged
by Landlord if Landlord performs management services in connection with the
Property, provided that at no time shall the management fee charged by Landlord
or any independent management company retained by Landlord to manage the
Property exceed 3% of Gross Property Income; (vi) the fair market rental value
of the Property manager’s offices and storage areas in the Building, provided
said offices and storage areas are devoted solely to the management, operation,
maintenance or repair of the Property; (vii) the cost of business taxes and
licenses; (viii) fees imposed by any federal, state or local government for fire
and police protection, trash removal or other similar services which do not
constitute Real Property Taxes as defined below; (ix) any charges which are
payable by Landlord pursuant to a service agreement with the City of
Philadelphia, under a special assessment district or pursuant to any other
lawful means; (x) the costs of contesting the validity or applicability of any
governmental enactment which would increase Operating Expenses; (xi) capital
costs incurred in connection with any equipment, device or other improvement
reasonably anticipated to achieve economies in the operation, maintenance or
repair of the Property or portion thereof, or to comply with Applicable Laws not
effective with respect to the Property as of the Commencement Date; provided,
however, the same shall be amortized (including interest on the unamortized
cost) over the cost recovery period (i.e., the anticipated period to recover the
full cost of such capital item from cost savings achieved by such capital item),
of the relevant capital item as reasonably determined by Landlord; and
(xii) depreciation of the cost of acquiring, or the rental expense of, personal
property used in the maintenance, operation and repair of the Building or
Property.

 

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Operating Expenses attributable to the items set forth in (iv), (v) and
(vi) above in any calendar year shall not increase more than five percent from
the immediately prior calendar year.

Operating Expenses shall be adjusted to reflect 100% occupancy of the Building
for any period in which the Building is not 100% occupied. Landlord shall have
the right, from time to time, to allocate some or all of the Operating Expenses
for the Property among different portions, such as office, retail or other
appropriate portions, of the Property (“Cost Pools”). The Operating Expenses
within each such Cost Pool shall be allocated and charged to the tenants within
such Cost Pool as an amount per square foot of Rentable Area, based on the total
Rentable Area within such Cost Pool.

Operating Expenses shall not include the following:

(a) The cost of repair to the Building including the Premises, to the extent the
cost of the repairs is reimbursed by insurance or condemnation proceeds;

(b) Leasing commissions paid to agents of Landlord, other brokers or any other
persons in connection with the leasing of space in the Building or any other
portion of the Property;

(c) The cost of improving or renovating space for tenants (including Tenant) or
space vacated by any tenant (including Tenant);

(d) The cost of utilities charged to individual tenants (including Tenant) and
payroll, material and contract costs of other services charged to tenants
(including Tenant);

(e) The cost of painting and decorating the Premises or premises of other
tenants;

(f) Depreciation of the Building and other real property structures in the
Property;

(g) Interest, points, and fees on debt or amortization payments on any mortgages
on the Property or any part thereof;

(h) Legal and other related expenses associated with the negotiation or
enforcement of leases or the defense of (i) Landlord’s title to the Land, the
Building or other portions of the Property; or (ii) any action based solely on
an alleged breach by Landlord of a lease pertaining to space within the
Building;

(i) Advertising costs incurred directly for leasing individual space in the
Building or other portions of the Property;

(j) Landlord’s general corporate overhead, including salaries of officers or
other employees of Landlord, and Landlord’s general administrative expenses not
directly related to the operation of the Property;

 

B-3

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(k) Any compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord;

(1) All items and services for which Tenant or any other tenant in the Building
reimburses Landlord, provided that, any item or service supplied selectively to
Tenant shall be paid for by Tenant;

(m) To the extent reimbursed by parking fees, the cost of payroll for clerks,
attendants and other persons, bookkeeping, garage keepers liability insurance,
parking management fees, tickets and uniforms directly incurred in operating the
Garage;

(n) Costs of capital improvements to the Building and other portions of the
Property, except to the extent included in Operating Expenses pursuant to
(xi) above;

(o) Amounts paid to any party, including a division or affiliate of Landlord,
providing materials, services (except Building management), labor, or equipment
to the extent that such amounts exceed the competitive costs of such materials,
services (except Building management), labor or equipment when provided by an
independent party in an arm’s-length transaction;

(p) Any costs, fines or penalties imposed due to Landlord’s deliberate or
negligent actions or omissions with respect to any governmental rule or
authority;

OPTIONAL CLAUSE:

(q) Costs of installing any specialty service, such as a conference center or
other facility which is made available to tenants on a non-fee (or nominal fee)
basis; however, if any such service or facility, such as an athletic club, is
made available on the basis of material payment for use or membership, then the
costs of maintenance and operation, as well as the cost of installation, of such
service or facility, will be excluded from Operating Expenses; and

OPTIONAL CLAUSE:

(r) The cost of any environmental clean-up of the Property ordered by any
applicable environmental authority or agency having jurisdiction over the
Property.

13 Property. The Building, the Garage, and the land on which they are
constructed, which land consists of approximately 64,608 square feet located at
the northwest corner of 20th and Market Streets, Philadelphia, Pennsylvania.

14 Pro Rata Share. A percentage calculated by dividing the Rentable Square Feet
in the Premises by the total Rentable Square Feet in the Building. For purposes
of this Lease, Landlord and Tenant agree that at the inception of this Lease,
Tenant’s Pro Rata Share will be     %.

15 Real Property Taxes. All taxes, assessments (special or otherwise) and
charges levied upon or with respect to the Property and any ad valorem taxes on
personal property used in connection therewith. Real Property Taxes shall
include, without limitation, any tax, fee or excise on the act of entering into
this Lease, on the occupancy of Tenant, the Rent hereunder or

 

B-4

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in connection with the business of owning and/or renting space in the Property
which are now or hereafter levied or assessed against Landlord by the United
States of America, the Commonwealth of Pennsylvania, the City of Philadelphia or
any political subdivision, public corporation, district or other political or
public entity, and shall also include any other tax, assessment, fee or excise,
however described (whether general or special, ordinary or extraordinary,
foreseen or unforeseen), which may be levied or assessed in lieu of, or as a
substitute for, any Real Property Taxes. Landlord may pay any such special
assessments in installments when allowed by law, in which case Real Property
Taxes shall include any interest charged thereon. Real Property Taxes shall also
include any private assessments or the Building’s contribution towards a private
or quasi-public cost-sharing agreement for the purpose of augmenting or
improving the quality of service and amenities normally provided by governmental
agencies. Real Property Taxes shall also include legal fees, costs and
disbursements incurred in connection with proceedings to contest, determine or
reduce Real Property Taxes. Real Property Taxes shall not include income,
franchise, transfer, inheritance or capital stock taxes, unless, due to a change
in the method of taxation, any of such taxes are levied or assessed against
Landlord, in whole or in part, in lieu of, as a substitute for, any other tax
which would otherwise constitute a Real Property Tax. In the event that at any
time during the term of this Lease the assessment for the Property is reduced on
appeal with a result that Landlord receives a refund of any real estate taxes,
Landlord shall pay to Tenant its Pro Rata Share of any such refund (net of
Landlord’s out-of-pocket expenditures in connection with such appeal).

16 Rentable Area or Rentable Square Feet. The actual, measurable area (square
footage) within the Premises adjusted upward so as to allocate to the Premises a
portion of the common areas and non-usable areas of the Building. The parties
agree that at the inception of the Lease the Premises contain             
Rentable Square Feet and that the Building contains 953,276 Rentable Square Feet
(including the Premises).

17 Service Facilities. The janitorial, security and building maintenance
services used in the Building.

18 *[Tenant Improvements. Physical improvements to the Premises, including,
without limitation, partitions, wiring, floor coverings, wall coverings,
kitchens, HVAC, lighting, ceilings, outlets and millwork), all as specifically
shown or described in Tenant’s Final Plans (defined in Exhibit D).]*

 

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EXHIBIT C

MEMORANDUM OF LEASE COMMENCEMENT

THIS MEMORANDUM is made and entered into as of             , 200    , by and
between PHILADELPHIA PLAZA-PHASE II, LP, a Pennsylvania limited partnership,
(“Landlord”), and                              (“Tenant”) with respect to that
certain Office Lease between Landlord and Tenant dated as of             ,
200    , (the “Lease”).

The term of the Lease commenced on             , 200    , defined in the Lease
as the Commencement Date. The term of the Lease shall expire on
                     unless sooner terminated or extended pursuant to the terms
of the Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the
date set forth in the first paragraph above.

 

LANDLORD: PHILADELPHIA PLAZA-PHASE II, LP, a Pennsylvania limited partnership
By:  

 

  James A. Thomas, authorized signatory

TENANT: [INSERT TENANT NAME] By:  

 

Name:   Title:  

 

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EXHIBIT D

[ALLOWANCE/TENANT IMPROVEMENT BY TENANT]

TENANT IMPROVEMENT LETTER

This Tenant Improvement Letter supplements the Office Lease (the “Lease”) dated
            , 200    , executed concurrently herewith, by and between
PHILADELPHIA PLAZA-PHASE II, LP as Landlord, and                             ,
as Tenant, covering certain premises described in the Lease. Terms capitalized,
but not otherwise defined herein, shall have the meanings ascribed to them in
the Lease.

The parties hereby agree as follows:

1. Construction of the Building.

1.1 Base Building Definition. Landlord has constructed the Building consisting
of the following: (a) the Building shell and exterior, (b) the core area,
including necessary mechanical, electrical, sprinkler, plumbing, life safety,
heating, air conditioning, ventilation and structural systems within the
Building core, stubbed out to the face of the core wall at locations determined
by Landlord, (c) finished core area toilet rooms including necessary plumbing
fixtures, ceramic tile floors, accessories, ceilings and lighting, (d) unpainted
exterior dry wall or lath and plaster covering the exposed side of all exposed
core walls, core and perimeter columns and the interior exposed side of all
exterior building wall areas except at and under windows, (e) public stairways,
(f) passenger and freight elevators, (g) parking facilities, (h) ground floor
lobby, (i) unfinished elevator lobbies (except for dry-wall, taped walls, and
prime painted elevator doors), (j) exterior plazas and landscaping, (k) loading
dock, (1) sprinkler main loop from core into the Premises, (m) Building standard
window coverings and (n) drinking fountains as required by code (collectively
referred to as the “Base Building Improvements”). To the extent that the Base
Building Improvements must be changed or added to in order to accommodate the
special needs of Tenant in the Premises, such changes or additions shall be
considered Tenant Improvements. Any items provided by Landlord in the Premises
in addition to the Base Building Improvements shall be paid for by Tenant,
subject to Section 3 below.

1.2 Exclusions From Base Building Improvements. Base Building Improvements shall
include all of the items described in Section 1.1 and shall not include any
Tenant Improvements; without limiting the generality of the foregoing, Base
Building Improvements shall exclude the following:

(a) Tenant ceilings and lighting;

(b) Floor finish in the Premises;

(c) Interior finishes of any kind within the Premises (including elevator
lobbies);

(d) Interior partitions, doors, and hardware within the Premises;

 

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(e) Terminal boxes and reheat coils or other HVAC or air distribution devices,
including distribution duct work and controls, beyond the core of the Building;

(f) Tenant’s furniture, fixtures and equipment, including telephones, computers
and cabling therefor;

(g) Distribution of electrical services, plumbing services and sprinklers from
the core, and domestic hot water heater and associated hot water piping;

(h) Any and all signs for Tenant and the power therefor; and

(i) Security, fire and life-safety systems throughout the Premises, including
exit signs, intercoms and extinguishers.

2 Tenant’s Plans and Specifications.

2.1 Submission of Plans and Specifications.

(a) Tenant and Landlord, and their engineers and architects, shall coordinate
with each other in the design of Tenant’s Plans (defined below) prior to the
initial submission of Tenant’s Plans to Landlord.

(b) Tenant shall submit to Landlord for Landlord’s approval, fully completed and
engineered working drawings and specifications suitable for review and
permitting by local agencies having jurisdiction (if applicable), for the
layout, improvement and finish of the entire Premises consistent with the design
and construction of the Base Building Improvements, including electrical and
mechanical drawings, capacity reports, dimensioned partition plans, floor and
wall finish plans, reflected ceiling plans, power, telephone communications and
data plans, life safety devices, construction detail sheets including millwork
detail plans, showing the location of partitions, light fixtures, electrical
outlets, telephone outlets, sprinklers, doors, equipment specifications
(including weight specifications and cooling requirements) and power
requirements (including voltage, amps, phase, and special plugs and
connections), wall finishes, floor coverings, millwork and other Tenant
Improvements required by Tenant (collectively, “Tenant’s Plans”). The Tenant
Improvements shall include, and Tenant’s Plans shall provide for, electricity
and BTU meters for measuring electricity and HVAC use within the Premises.

(c) For any necessary engineering of Tenant’s Plans, Tenant shall directly
employ only mechanical, electrical and structural engineers approved by
Landlord, which approval shall not be unreasonably withheld or delayed. Landlord
shall have no responsibility for any of such engineering of Tenant’s Plans,
which shall be at Tenant’s expense, subject to Section 3 below. Tenant’s Plans
shall be prepared by a licensed architect, shall be sufficient for Tenant to
secure the approval of governmental authorities with jurisdiction over the
approval thereof (if applicable) and shall be in a form meeting Landlord’s
reasonable requirements. Tenant’s architect and engineers shall coordinate with
Landlord’s architect, engineers and tenant improvement manager to make all of
Tenant’s Plans consistent with the plans and specifications for construction of
the Building and the Premises. Landlord and Landlord’s engineers shall have the
right to review each phase of Tenant’s design development and Tenant’s Plans to
assure their compatibility and coordination with Building Systems. Tenant shall
be solely responsible for the design and function of Tenant’s Plans, including
their integration with Building Systems, notwithstanding Landlord’s review and
approval thereof.

 

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2.2 Approval by Landlord. Tenant’s Plans shall be subject to Landlord’s
approval, which approval shall not be unreasonably withheld or delayed. Landlord
agrees to approve or disapprove Tenant’s plans within 15 business days after
receipt thereof.

(a) Tenant’s Substitutions Before Plans Approved. After Landlord’s initial
review of Tenant’s Plans, Landlord shall give Tenant notice of all specified
materials and methods of construction required in connection with Tenant
Improvements the procurement or construction or the use of which, in Landlord’s
opinion, would violate any applicable codes, rules, laws or regulations.
However, notwithstanding the other provisions of this Section 2.2, Landlord
shall not be obligated to ascertain the existence of, or notify Tenant of any
such violations of applicable codes, rules, laws or regulations and the parties
agree that it is the responsibility of Tenant’s architect and engineers to
assure the compliance by Tenant with such codes, rules, laws and regulations.
Tenant shall make reasonable substitutions of such materials or methods of
construction, which such substitutions will not themselves cause such violation
of applicable codes, rules, laws and regulations, subject to Landlord’s
approval, which shall not be unreasonably withheld or delayed (provided that
Landlord’s disapproval based on the fact that the use of such materials or
methods of construction would violate such applicable codes, rules, laws or
regulations shall be deemed reasonable).

(b) Substitutions After Plans Approved. If during the course of construction and
after the approval of the Final Plans (as defined below) Landlord reasonably
determines that the procurement of particular materials or construction of
portions of the Tenant Improvements specified in the Final Plans will violate
any applicable codes, rules, laws or regulations, then Landlord shall give
notice thereof to Tenant and Tenant shall make reasonable substitutions of such
materials and construction, which such substitutions will not themselves cause
such violation of applicable codes, rules, laws and regulations, subject to
Landlord’s approval.

(c) Landlord Disapproval; Tenant Revisions. If Landlord disapproves Tenant’s
Plans, or any portion thereof, Landlord shall promptly notify Tenant thereof and
of the revisions which Landlord reasonably requires in order to obtain
Landlord’s approval. As promptly as reasonably possible thereafter, Tenant shall
submit to Landlord plans and specifications incorporating the revisions required
by Landlord. Said revisions shall be subject to Landlord’s approval, which shall
not be unreasonably withheld or delayed. If Landlord disapproves revised
Tenant’s Plans, Landlord shall so notify Tenant thereof and of the further
revisions Landlord reasonably requires in order to grant approval. The foregoing
process shall be repeated until Landlord finally approves all of Tenant’s Plans
required for the Tenant Improvements in all of the Premises, so that Landlord
and Tenant have an agreed upon set of final plans and specifications. The final
plans and specifications approved by Landlord shall be referred to as the “Final
Plans.” Approval by Landlord shall not be deemed to be a representation by
Landlord as to the adequacy or correctness of the design of the Tenant
Improvements.

 

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(d) Construction of Tenant Improvements. The Tenant Improvements shall be
constructed by contractors approved in advance by Landlord, which approval shall
not be unreasonably withheld or delayed. In addition to any amounts for which
Tenant may be responsible for under Article 8 of the Lease, Tenant shall be
solely responsible for (a) any delay or increased cost in completing the Tenant
Improvements; (b) the design, function and maintenance of all Tenant
Improvements; (c) all costs and expenses necessary to increase permitted
structural floor loading in order to accommodate Tenant’s libraries, file rooms,
unusual live loads and other such uses; and (d) incidental costs of construction
such as hoisting and utility consumption. No construction shall be commenced
until Tenant has delivered to Landlord (i) a certificate evidencing the
liability insurance coverages for Tenant’s general contractor consistent with
Article 12 of the Lease, in form and content satisfactory to Landlord and its
mortgagee, and (ii) a time-stamped copy of a waiver of liens signed by Tenant’s
general contractor and filed with the Prothonotary of Philadelphia, along with a
copy of the Prothonotary’s receipt for the filing fee.

2.3 Space Planning. Any space planner utilized by Tenant shall have experience
in space planning in high-rise office buildings in the Philadelphia central
business district and shall be subject to Landlord’s approval, which shall not
be unreasonably withheld or delayed. All design and programming, space planning
and interior decorating services such as selection of wall paint colors and/or
wall coverings, furniture, fixtures, carpeting and any or all other decorator
selection efforts required by Tenant shall be provided by Tenant at Tenant’s
expense, subject to Landlord’s obligations under Section 3 hereof.

2.4 Permits. Tenant, or Tenant’s representative, shall secure the approval of
governmental authorities and all permits required by governmental authorities
having jurisdiction over such approvals and permits for the Tenant Improvements,
with Landlord’s cooperation to the extent practicable. Tenant shall commence
construction of the Tenant Improvements as soon as practicable after issuance of
all such necessary permits.

2.5 Construction Management. If Tenant so requests, Landlord agrees to cause
Manager to supervise the construction of the Tenant Improvements in
consideration of Tenant’s payment to Manager of a construction supervision fee
equal to five percent of the total cost of the Tenant Improvements. Such fee
shall be paid to Manager periodically and pro rata with the disbursement of the
Tenant Improvement Allowance pursuant to Section 3.1 hereof.

2.6 Conformed Plans. Within 60 days after substantial completion of the Tenant
Improvements and receipt from the general contractor of all field changes, if
any, Tenant shall submit to Landlord a set of conformed plans (“as-builts”) on
mylar incorporating all field changes made and all changes and/or revisions that
have been made subsequent to the submission of the Final Plans specified in
Section 2.2.

3 Periodic Payments.

3.1 Tenant Improvement Allowance.

(a) Landlord will make available the sum of $         minus amounts disbursed
for relocation and moving expenses pursuant to Article          of the Lease
(the “Tenant Improvement Allowance”) to defray the cost of the Tenant
Improvements and certain related expenses, as more fully set forth in Articles
         and          of the Lease.

 

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(b) Beginning not sooner than 30 days after Tenant is provided access to the
Premises and continuing not more often than once every 30 days thereafter,
Tenant shall prepare and submit to Landlord a statement showing in reasonable
detail amounts expended or incurred by Tenant pursuant to Articles             
and              of the Lease which have not previously been paid for by
Landlord. Each such statement shall be accompanied by canceled checks or
receipted invoices and partial lien releases from any person or entity that has
provided supplies or services to the Premises. In addition, each such statement
shall include a certification from Tenant that all sales taxes applicable to the
Tenant Improvements have been paid, and that all labor and material for which
payment is sought have been furnished and are satisfactory to Tenant.

(c) Within 30 days after submission by Tenant of each such statement, Landlord
shall reimburse Tenant for the expenses covered by Tenant’s statement, up to the
amount of the Tenant Improvement Allowance. If Landlord fails to make such
payment, Tenant shall give Landlord notice of such failure and if such failures
continues for 10 days after receipt of such notice, Tenant’s sole and exclusive
remedy shall be to apply the amount of the defaulted payment (or payments, as
the case may be) in reduction of Rent next due under the Lease.

(d) Notwithstanding the foregoing, Landlord will, as an accommodation to Tenant,
pay directly to                              Construction Company (“the GC”), or
any other vendor, amounts due for labor and/or materials furnished in connection
with the Tenant Improvements. In such event, Tenant shall submit invoices in
lieu of canceled checks or paid bills as required by paragraph (b) above,
accompanied by Tenant’s request for payment. Each such request shall include
Tenant’s statement that it has approved the work for which payment is requested.
Any such payments shall be for the account of Tenant and shall not create any
contractual relationship between Landlord and the GC, or any other vendor, or in
any way obligate Landlord to the GC or any other vendor or any subcontractor or
supplier.

4 Changes, Additions or Alterations. If Tenant shall request any change,
addition, deletion or alteration in the Final Plans (“Change Order”), Tenant
shall prepare and submit to Landlord plans, specifications and permits with
respect to such Change Order for Landlord’s approval.

5 Default. Any default by Tenant under the terms of this Improvement Letter
shall constitute an Event of Default under the Lease to which this Improvement
Letter is attached, and shall entitle Landlord to exercise all remedies set
forth in the Lease.

6 Reasonable Diligence. Both Landlord and Tenant agree to use reasonable
diligence in performing all of their respective obligations and duties under
this Improvement Letter and in proceeding with the construction and completion
of the Tenant Improvements in the Premises.

7 Limited Liability. The provisions of Section 35.17 of the Lease (“Landlord
Liability”) are incorporated herein as if set forth in their entirety.

 

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[ALTERNATE: TURNKEY/LANDLORD RESPONSIBLE FOR T.I.]

EXHIBIT D

TENANT IMPROVEMENT LETTER

This Improvement Letter supplements the Office Lease (the “Lease”) dated
            , 200    , executed concurrently herewith, by and between
PHILADELPHIA PLAZA-PHASE II, LP as Landlord, and
                                 as Tenant, covering certain premises described
in the Lease. Terms capitalized, but not otherwise defined herein, shall have
the meanings ascribed to them in the Lease.

The parties hereby agree as follows:

1 Construction of the Building.

1.1 Base Building Definition. Landlord has constructed the Building consisting
of the following: (a) the Building shell and exterior, (b) the core area,
including necessary mechanical, electrical, sprinkler, plumbing, life safety,
heating, air conditioning, ventilation and structural systems within the
Building core, stubbed out to the face of the core wall at locations determined
by Landlord, (c) finished core area toilet rooms including necessary plumbing
fixtures, ceramic tile floors, accessories, ceilings and lighting, (d) unpainted
exterior dry wall or lath and plaster covering the exposed side of all exposed
core walls, core and perimeter columns and the interior exposed side of all
exterior building wall areas except at and under windows, (e) public stairways,
(f) passenger and freight elevators, (g) parking facilities, (h) ground floor
lobby, (i) unfinished elevator lobbies (except for dry-wall, taped walls, and
prime painted elevator doors), (j) exterior plazas and landscaping, (k) loading
dock, (1) sprinkler main loop from core into the Premises, (m) Building standard
window coverings and (n) drinking fountains as required by code (collectively
referred to as the “Base Building Improvements”). To the extent that the Base
Building Improvements must be changed or added to in order to accommodate the
special needs of Tenant in the Premises, such changes or additions shall be
considered Tenant Improvements. Any items provided by Landlord in the Premises
in addition to the Base Building Improvements shall be paid for by Tenant,
subject to Section 3 below.

1.2 Exclusions From Base Building Improvements. Base Building Improvements shall
include all of the items described in Section 1.1 and shall not include any
Tenant Improvements; without limiting the generality of the foregoing, base
Building Improvements shall exclude the following:

(a) Tenant ceilings and lighting;

(b) Floor finish in the Premises;

(c) Interior finishes of any kind within the Premises (including elevator
lobbies);

(d) Interior partitions, doors, and hardware within the Premises;

 

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(e) Terminal boxes and reheat coils or other HVAC or air distribution devices,
including distribution duct work and controls, beyond the core of the Building;

(f) Tenant’s furniture, fixtures and equipment, including telephones, computers
and cabling therefor;

(g) Distribution of electrical services, plumbing services and sprinklers from
the core, and domestic hot water heater and associated hot water piping;

(h) Any and all signs for Tenant and the power therefor; and

(i) Security, fire and life-safety systems throughout the Premises, including
exit signs, intercoms and extinguishers.

2 Tenant’s Plans and Specifications.

2.1 Submission of Plans and Specifications.

(a) Tenant and Landlord, Landlord’s and Tenant’s engineers and architects shall
coordinate with each other in the design of Tenant’s Plans prior to the initial
submission of Tenant’s Plans to Landlord.

(b) Promptly after execution of this Lease, Tenant shall submit to Landlord for
Landlord’s approval, fully completed and engineered working drawings and
specifications suitable for review and permitting by local agencies having
jurisdiction (if applicable), for the layout, improvement and finish of the
entire Premises consistent with the design and construction of the Base Building
Improvements, including electrical and mechanical drawings, capacity reports,
dimensioned partition plans, floor and wall finish plans, reflected ceiling
plans, power, telephone communications and data plans, life safety devices,
construction detail sheets

including millwork detail plans, showing the location of partitions, light
fixtures, electrical outlets, telephone outlets, sprinklers, doors, equipment
specifications (including weight specifications and cooling requirements) and
power requirements (including voltage, amps, phase, and special plugs and
connections), wall finishes, floor coverings, millwork and other Tenant
Improvements required by Tenant (collectively, “Tenant’s Plans”). The Tenant
Improvements shall include, and Tenant’s Plans shall provide for electricity and
BTU meters for measuring electricity and HVAC use within the Premises.

(c) For any necessary engineering of Tenant’s Plans, Tenant shall directly
employ only mechanical, electrical and structural engineers approved by
Landlord, which approval shall not be unreasonably withheld or delayed. Landlord
shall have no responsibility for any of such engineering of Tenant’s Plans,
which shall be at Tenant’s expense, subject to Section 3 below. Tenant’s Plans
shall be prepared by a licensed architect, shall be sufficient for Tenant to
secure the approval of governmental authorities with jurisdiction over the
approval thereof (if applicable) and shall be in a form meeting Landlord’s
reasonable requirements. Tenant’s architect and engineers shall coordinate with
Landlord’s architect, engineers and tenant improvement manager to make all of
Tenant’s Plans consistent with the plans and specifications for construction of
the Building and the Premises. Landlord and Landlord’s engineers shall have the
right to review each phase of Tenant’s design development and Tenant’s Plans to
assure their compatibility and coordination with Building Systems. Tenant shall
be solely responsible for the design and function of Tenant’s Plans, including
their integration with Building Systems, notwithstanding Landlord’s review and
approval thereof.

 

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2.2 Approval by Landlord. Tenant’s Plans shall be subject to Landlord’s
approval, which approval shall not be unreasonably withheld or delayed.

(a) Tenant’s Substitutions Before Plans Approved. After Landlord’s initial
review of Tenant’s Plans, Landlord shall give Tenant notice of all specified
materials and methods of construction required in connection with Tenant
Improvements the procurement or construction or the use of which would violate
any applicable codes, rules, laws or regulations. Notwithstanding the other
provisions of this Section 2.2, Landlord shall not be obligated to ascertain the
existence of, or notify Tenant of any such violations of applicable codes,
rules, laws or regulations and the parties agree that it is the responsibility
of Tenant’s architect and engineers to assure the compliance by Tenant with such
codes, rules, laws and regulations. Tenant shall make reasonable substitutions
of such materials or methods of construction, which such substitutions will not
themselves cause such violation of applicable codes, rules, laws and
regulations, subject to Landlord’s approval, which shall not be unreasonably
withheld or delayed (provided that Landlord’s disapproval based on the fact that
the use of such materials or methods of construction would violate such
applicable codes, rules, laws or regulations shall be deemed reasonable). If
Tenant fails to promptly make a reasonable substitution, Tenant shall be
responsible for any increases in the costs of the materials or construction of
the Tenant Improvements incurred by Landlord as a result of such failure.

(b) Substitutions After Plans Approved. If during the course of construction and
after the approval of the Final Plans (as defined below) Landlord reasonably
determines that the procurement of particular materials or construction of
portions of the Tenant Improvements specified in the Final Plans will exceed the
Tenant Improvement Allowance or violate any applicable codes, rules, laws or
regulations, then Landlord shall give notice thereof to Tenant and Tenant shall
(i) in the case of materials or construction which will cause the Tenant
Improvement Allowance to be exceeded, either pay such excess or make a
reasonable substitution of such materials and construction, and (ii) in all
other cases, make reasonable substitutions of such materials and construction,
which such substitutions will not themselves cause such violation of applicable
codes, rules, laws and regulations, subject to Landlord’s approval. If Tenant
fails to promptly make a reasonable substitution, Tenant shall be responsible
for any increases in the costs of the materials or construction of the Tenant
Improvements incurred by Landlord as a result of such failure.

(c) Landlord Disapproval; Tenant Revisions. If Landlord disapproves Tenant’s
Plans, or any portion thereof, Landlord shall promptly notify Tenant thereof and
of the revisions which Landlord reasonably requires in order to obtain
Landlord’s approval. As promptly as reasonably possible thereafter, Tenant shall
submit to Landlord plans and specifications incorporating the revisions required
by Landlord. Said revisions shall be subject to Landlord’s approval, which shall
not be unreasonably withheld or delayed. If Landlord disapproves revised
Tenant’s Plans, Landlord shall so notify Tenant thereof and of the further
revisions Landlord reasonably requires in order to grant approval. The foregoing
process shall be repeated until Landlord finally approves all of Tenant’s Plans
required for the Tenant Improvements in all of the Premises, so that Landlord
and Tenant have an agreed upon set of final plans and specifications. The final
plans and specifications approved by Landlord shall be referred to as the “Final
Plans.” Approval by Landlord shall not be deemed to be a representation by
Landlord as to the adequacy or correctness of the design of the Tenant
Improvements.

 

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2.3 Construction of and Payment for Tenant Improvements. The Tenant Improvements
shall be constructed by Landlord’s contractors. In addition to any amounts for
which Tenant may be responsible under Article 7 of the Lease, Tenant shall be
solely responsible for (a) the design, function and maintenance of all Tenant
Improvements; (b) all costs and expenses necessary to increase permitted
structural floor loading in order to accommodate Tenant’s libraries, file rooms,
unusual live loads and other such uses; and (c) incidental costs of construction
such as hoisting and utility consumption. In addition to the foregoing, Tenant
shall be solely responsible for any delay or increased cost in completing the
Tenant Improvements if and to the extent caused by Tenant’s failure to comply
with its obligations under this Exhibit D.

2.4 Space Planning. Any space planner utilized by Tenant shall have experience
in space planning in high-rise office buildings in downtown Philadelphia and
shall be subject to Landlord’s approval, which shall not be unreasonably
withheld or delayed. All design and programming, space planning and interior
decorating services such as selection of wall paint colors and/or wall
coverings, furniture, fixtures, carpeting and any or all other decorator
selection efforts required by Tenant shall be provided by Tenant at Tenant’s
expense, subject to Landlord’s obligations under Section 3 hereof.

2.5 Permits. Landlord shall secure the approval of governmental authorities and
all permits required by governmental authorities having jurisdiction over such
approvals and permits for the Tenant Improvements. Landlord’s contractors shall
commence construction of the Tenant Improvements as soon as practicable after
issuance of all such necessary permits.

2.6 Conformed Plans. Within 60 days after substantial completion of the Tenant
Improvements and receipt from the general contractor of all field changes, if
any, Landlord shall submit to Tenant a set of conformed plans (“as-builts”) on
mylar incorporating all field changes made and all changes and/or revisions that
have been made subsequent to the submission of the Final Plans specified in
Section 2.2.

3 Tenant Improvement Allowance.

3.1 Tenant Improvement Allowance. Tenant shall be credited with an allowance
(the “Tenant Improvement Allowance”) of $         against the cost of the Tenant
Improvements. Subject to Section 3.5 hereof, the Tenant Improvement Allowance
shall be used solely for the design, including engineering plans and
specifications, purchase, installation and construction of the Tenant
Improvements which constitute permanent improvements to the Premises (including,
without limitation, carpeting), and shall not be used for furniture, furnishings
or equipment or other personal property. Tenant may not use more than [$1.00]
per square foot of Rentable Area in the Premises of the Tenant Improvement
Allowance for payment of space planning, architectural and engineering expenses
pursuant to Sections 2.1 and 2.4 above.

 

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3.2 Tenant Obligation. Tenant, at its sole expense, shall pay for the cost of
all Tenant Improvements to the extent such cost exceeds the Tenant Improvement
Allowance.

3.3 Tenant Improvements General Contractors. Landlord shall enter into contracts
(the “Construction Contracts”) for the Tenant Improvements with general
contractors selected from Landlord’s list of approved contractors.

3.4 Total Cost. Prior to commencement of construction of the Tenant
Improvements, Landlord shall submit to Tenant a written estimate (the
“Estimate”) of the Total Cost. The Estimate shall include “allowance(s)”,
defined as an estimate of cost for an item of work not sufficiently defined in
the documents to allow a fixed price to be obtained by the general contractor
for which the Total Cost is to be increased or decreased, respectively, by the
precise amount that the actual cost of the allowance item is, either in excess
of or less than the amount of the allowance for that item. Tenant shall approve
the Estimate within five days of Tenant’s receipt thereof. If Tenant does not
approve or disapprove the Estimate within such period, Tenant shall be deemed to
have approved the Estimate. Landlord shall be under no obligation to construct
any of the Tenant Improvements until Tenant has expressly approved the Estimate.
The “Total Cost” is defined as the sum of (a) the amounts payable under the
Construction Contracts, including the general contracts, subcontracts, purchase
orders and labor and materials cost of the Tenant Improvements, contractors’
fees, overhead and general conditions charges, plus (b) the cost of Change
Orders (as defined in Article 4), if any, plus (c) design costs, including space
planning, architectural and engineering expenses pursuant to Sections 2.1 and
2.4 above, plus (d) an amount equal to five percent of the sum of items
(a) through (c) above for Landlord’s construction management fee (“Landlord’s
Construction Fee”) as compensation for Landlord’s direction, coordination and
supervision of the Tenant Improvements.

3.5 Payment. If based on the Estimate, the Total Cost will exceed the Tenant
Improvement Allowance, then prior to commencement of construction of the Tenant
Improvements, Tenant shall pay to Landlord a down payment of 25% of such
projected excess amount. Landlord shall keep Tenant fully informed with respect
to construction progress of the Tenant Improvements, the occupancy of the
Premises by Tenant and costs thereof. Landlord shall submit to Tenant monthly
progress statements illustrating the cost to date of the improvements. Within 10
days after submission by Landlord of the foregoing statement, Tenant shall pay
Landlord the amount, pro rata, as set forth in such notice, by which the total
cost exceeds the Tenant Improvement Allowance. Landlord shall disburse the
Tenant Improvement Allowance directly to the general contractor and to suppliers
and subcontractors as Landlord deems appropriate. As soon as practicable upon
completion of the Tenant Improvements, Landlord shall prepare and submit to
Tenant a statement showing, in reasonable detail an accounting for the Total
Cost and the total amount payable hereunder by Landlord to Tenant or Tenant to
Landlord. Within 10 days after submission by Landlord of the foregoing
statement, Tenant shall pay Landlord the amount, as set forth in such notice, by
which the Total Cost exceeded the Tenant Improvement Allowance or, if the Total
Cost is less than the Tenant Improvement Allowance, up to $         of the sum
of such unused balance and any unused balance of the Moving Allowance may be
used to offset minimum Rent; otherwise, Tenant shall not be entitled to any
payment, Rent reduction or offset for any part of the Tenant Improvement
Allowance not used by Tenant.

 

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3.6 Punchlist. Prior to the Commencement Date, Landlord shall cause the general
contractor to inspect the Premises with a representative of Tenant and complete
a written punchlist of unfinished items of Tenant Improvements prior to Tenant’s
moving into the Premises. Tenant’s representative shall execute said punchlist
to indicate approval thereof, and if Tenant does not disapprove the punchlist
within five days after receipt thereof, Tenant shall be deemed to have approved
the same. Landlord shall complete such punchlist within a reasonable period of
time.

3.7 Changes, Additions or Alterations. If Tenant shall request any change,
addition, deletion or alteration in the Final Plans (“Change Order”), any such
Change Order shall be subject to the provisions of Sections 2.2 and shall be
authorized only in writing by Tenant. To the extent the cost of such Change
Order, when added to the Estimate referred to in Section 3.4 will cause the
Total Cost (based on such Estimate) to exceed the Tenant Improvement Allowance,
Tenant shall promptly pay Landlord the additional cost, if any, of the Tenant
Improvements attributable to such Change Order. Landlord shall not be obligated
to proceed with such Change Order until Landlord receives said payment.

4 Default. Any default by Tenant under the terms of this Improvement Letter
shall constitute an Event of Default under the Lease to which this Improvement
Letter is attached, and shall entitle Landlord to exercise all remedies set
forth in the Lease.

5 Reasonable Diligence. Both Landlord and Tenant agree to use reasonable
diligence in performing all of their respective obligations and duties under
this Improvement Letter and in proceeding with the construction and completion
of the Tenant Improvements in the Premises.

6 Limited Liability. The provisions of Section 35.17 of the Lease are
incorporated herein as if set forth in their entirety.

 

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EXHIBIT E

RULES AND REGULATIONS

1. Except as otherwise provided in the Lease or any exhibits thereto, no sign,
placard, picture, advertisement, name or notice shall be inscribed, displayed or
printed or affixed on or to any part of the outside or inside of the Building
without the prior written consent of Landlord. Landlord shall have the right to
remove any such sign, placard, picture, advertisement, name or notice, unless
Landlord has given written consent, without notice to and at the expense of
Tenant. Landlord shall not be liable in damages for such removal unless the
written consent of Landlord had been obtained. All approved signs or lettering
on doors and walls to the Premises shall be printed, painted, affixed or
inscribed at the expense of Tenant by Landlord or by a person approved by
Landlord in a manner and style acceptable to Landlord. Tenant shall not use any
blinds, shades, awnings, or screens in connection with any window or door of the
Premises unless approved in writing by Landlord. Tenant shall use the Building
standard window covering specified by Landlord and Landlord reserves the right
to disapprove interior improvements visible from the ground level outside the
Building on wholly esthetic grounds. Such improvements must be submitted for
Landlord’s written approval prior to installation, or Landlord may remove or
replace such items at Tenant’s expense.

2. Except as otherwise provided in the Lease or any exhibits thereto, Tenant
shall not obtain for use upon the Premises, food, milk, soft drinks, bottled
water, plant maintenance or any other services, except from persons authorized
by Landlord and at the hours and under regulations fixed by Landlord. No vending
machines shall be installed, maintained or operated upon the Premises without
the prior written consent of Landlord.

3. The bulletin board or directory of the Building shall be provided exclusively
for the display of the name and location of tenants only and Landlord reserves
the right to exclude any other names therefrom.

4. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by any tenants nor used by them for any purpose other
than for ingress to and egress from their respective premises. The halls,
passages, exits, entrances, elevators, stairways, balconies and roof are not for
the use of the general public and Landlord shall in all cases retain the right
to control and prevent access thereto by all persons whose presence in the
judgment of Landlord shall be prejudicial to the safety, character, reputation
and interests of the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of Tenant’s business unless such persons
are engaged in illegal activities. No tenant and no employees or invitees of any
tenant shall go upon the roof of the Building.

5. Tenant, upon the termination of its tenancy, shall deliver to Landlord the
parking and security access cards issued to Tenant and all keys of offices,
rooms and toilet rooms which shall have been furnished to Tenant or which Tenant
shall have made, and in the event of loss of any access cards or keys so
furnished, shall pay Landlord therefor. Tenant shall not alter any lock or
install any new or additional locks or any bolts on any door of the Premises
without the written consent of Landlord.

 

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6. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the expense
of any breakage, stoppage, or damage resulting from the violation of this rule
shall be borne by Tenant who, or whose employees or invitees, shall have caused
it.

7. Tenant shall not use the Premises in any manner which exceeds the floor load
capacity of the floor on which the Premises are located or mark, drive nails,
screw or drill into the partitions, woodwork or plaster or in any way deface the
Premises or any part thereof.

8. No furniture, packages, supplies, merchandise, freight or equipment which
cannot be hand carried shall be brought into the Building without the consent of
Landlord. All moving of the same into or out of the Building shall be via the
Building’s freight handling facilities, unless otherwise directed by Landlord,
at such time and in such manner as Landlord shall prescribe. No hand trucks or
vehicles (other than a wheelchair for an individual) shall be used in passenger
elevators. Any hand trucks permitted in the Building must be equipped with soft
rubber tires and side guards.

9. Landlord shall have the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the Building and also the times
and manner of moving the same in and out of the Building. Safes or other heavy
objects shall, if considered necessary by Landlord, stand on a platform of such
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such safe or property from any
cause, and all damage done to the Building by moving or maintaining any such
safe or other property shall be repaired at the expense of Tenant. Tenant’s
business machines and mechanical equipment shall be installed, maintained and
used so as to minimize vibration and noise that may be transmitted to the
Building structure or beyond the Premises.

10. Tenant shall not use the Premises in any manner which would injure or annoy,
or obstruct or interfere with the rights of other tenants or occupants of the
Building.

11. Tenant shall not employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the Premises unless otherwise agreed to by
Landlord. Except with the written consent of Landlord no person or persons other
than those approved by Landlord shall be permitted to enter the Building for the
purpose of cleaning the same. Tenant shall not cause any unnecessary labor by
reason of Tenant’s carelessness or indifference in the preservation of good
order and cleanliness. Landlord shall not be responsible to any Tenant for any
loss of property on the Premises, however occurring, or for any damage done to
the effects of any Tenant by the janitor or any other employee or other person.
Janitor service shall include ordinary dusting and cleaning by the janitor
assigned to such work and shall not include shampooing of carpets or rugs or
moving of furniture or other special services. Janitor service will not be
furnished on nights when rooms are occupied after 6:00 p.m. Window cleaning
shall be done only by Landlord.

12. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in any manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals (other than as required for handicapped persons) or birds be
brought in or kept in or about the Premises or the Building.

 

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13. Other than heating and reheating in areas designed for such use, no cooking
shall be done or permitted by Tenant on the Premises, nor shall the Premises be
used for the manufacture or storage of merchandise, for washing clothes, for
lodging, or for any improper, objectionable or immoral purpose.

14. Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable, explosive or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.

15. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires or
stringing of wires will be allowed without written consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the approval of Landlord.

16. Tenant shall not lay linoleum, tile, carpet or other similar floor covering
so that the same shall be affixed to the floor of the Premises in any manner
except as approved by Landlord. The expenses of repairing any damage resulting
from a violation of this rule or removal of any floor covering shall be borne by
Tenant.

17. Landlord reserves the right to close and keep locked all entrance and exit
doors and otherwise regulate access of all persons to the halls, corridors,
elevators and stairways in the Building on Saturdays, Sundays and legal holidays
and on other days between the hours of 7:00 p.m. and 7:00 a.m., and at such
other times as Landlord may deem advisable for the adequate protection and
safety of the Building, its tenants and property in the Building. Access to the
Premises may be refused unless the person seeking access is known to the
employee of the Building in charge, and has a pass or is otherwise properly
identified. Landlord shall in no case

be liable for damages for any error with regard to the admission or exclusion
from the Building of any person.

18. Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Building and must observe strict care and caution that
all water apparatus are entirely shut off before Tenant or Tenant’s employees
leave the Building, and that all electricity, gas or air shall likewise be
carefully shut off, so as to prevent waste or damage.

19. Tenant shall not use the Premises in any manner which would increase the
amount of water typically furnished for office use, nor connect any appliance
directly to the water pipes.

20. Landlord may refuse admission to the Building outside of ordinary business
hours to any person not known to the watchman in charge or not having a pass
issued by Landlord or not properly identified, and may require all persons
admitted to or leaving the Building outside of ordinary business hours to
register. Any person whose presence in the Building at any time shall, in the
sole judgment of Landlord, be prejudicial to the safety, character, reputation
and interests of the Building or its tenants may be denied access to the
Building or may be ejected

 

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therefrom. Landlord may require any person leaving the Building with any package
or other object to exhibit a pass from the tenant from whose premises the
package or object is being removed, but the establishment and enforcement of
such requirement shall not impose any responsibility on Landlord for the
protection of any tenant against the removal of property from the premises of
any tenant.

21. The requirements of Tenant shall be attended to only upon application at the
office of the Building. Employees of Landlord shall not perform any work or do
anything outside of their regular duties unless under special instructions from
the Landlord.

22. No person shall be allowed to transport or carry (except for individual,
personal consumption) beverages, food, food containers, smoking objects, etc.,
on any passenger elevators. The transportation of such items shall be via the
service elevators in such manner as prescribed by Landlord.

23. Tenant shall cooperate with Landlord in obtaining maximum effectiveness of
the cooling system by closing the window coverings when the sun’s rays fall
directly on windows of the Premises. Tenant shall not obstruct, alter or in any
way impair the efficient operation of Landlord’s heating, ventilating and
air-conditioning system and shall not place bottles, machines, parcels or other
articles on the induction unit enclosure, intake or other vents so as to
interfere with air flow. Tenant shall not tamper with or change the setting of
any thermostats or temperature control valves.

24. Landlord shall have the right to prohibit any advertising by any tenant
which, in Landlord’s opinion, tends to impair the reputation of the Building or
its desirability as a location for offices, and upon written notice from
Landlord, any tenant shall refrain from or discontinue such advertising.

25. Canvassing, soliciting and peddling within the entire Property is prohibited
unless specifically approved by Landlord and each tenant shall cooperate to
prevent such activity.

26. All parking ramps and areas plus other public areas forming a part of the
Property shall be under the sole and absolute control of Landlord with the
exclusive right to regulate and control these areas. Tenant agrees to conform to
the reasonable rules and regulations that may be established by Landlord for
these areas from time to time.

27. The Premises shall not be used for manufacturing or the storage of
merchandise except as such storage may be incidental to the use of the Premises
for general office purposes. No tenant shall occupy nor permit any portion of
its premises to be occupied for the manufacture or sale of narcotics, liquor, or
tobacco in any form, or as a barber or manicure shop. No tenant shall engage or
pay any employees on its premises except those actually working for such tenant
on the premises nor advertise for laborers giving an address at the Premises or
Property. The Premises shall not be used for lodging or sleeping or for any
immoral or illegal purposes.

28. Tenant shall not conduct any auction, fire, bankruptcy, going out of
business, liquidation or similar sales at the Property.

 

E-4

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29. Tenant shall not place any radio or television antennae on the roof of the
Property or on any exterior part of the Premises or the Property.

30. Tenant understands that smoking is prohibited anywhere within the Building.
Landlord will designate certain areas outside the Building where smoking will be
permitted and Tenant will require its employees to smoke only in such designated
areas.

 

E-5

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EXHIBIT F

HVAC SPECIFICATIONS

Landlord shall provide a high-quality air conditioning system on a year-round
basis throughout the Premises and the Building. The system shall operate with
thermostatically controlled zones. The system shall maintain an average inside
temperature of 75 degrees +/-2 degrees during summer outdoor temperatures of 90
degrees F.D.B., and 74 degrees F.W.B. and 70 degrees F.D.B. at winter outside
temperatures of 14 degrees F.D.B., and in accordance with an occupancy of one
person per 150 square feet (average per floor) and an electrical load of 5 watts
per square foot (lighting and power). These temperatures are subject to the
conditions and requirements of State and Federal energy regulating bodies for
non-residential buildings (collectively “regulatory requirements”).

All conditions are ASHRAE Standard 90 A-1980 for energy conservation and
building design.

 

F-1

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EXHIBIT G

JANITORIAL SPECIFICATIONS

OFFICE AREAS:

Daily:

Five (5) days each week, including Monday through Friday, and excluding the
holidays set forth in Exhibit B (“Normal Working Hours”) of the Lease:

 

1. Empty and clean all waste receptacles; remove waste materials from the
Premises.

 

2. Dry-mop all uncarpeted areas.

 

3. Vacuum all rugs and carpet areas in offices, lobbies and corridors.

 

4. Hand-dust all office furniture, fixtures and all other horizontal surfaces
(but only to the extent surfaces are cleared of all materials such as papers,
documents and files).

 

5. Sweep all private stairways, vacuum if carpeted.

 

6. Police all stairwells throughout the entire Building and keep in clean
condition.

 

7. Spot-clean spill marks on resilient floor tile.

 

8. Spot-clean all water coolers and fountains.

 

9. It is understood that Landlord shall have no obligations to (a) wash or
otherwise clean dishes, glasses and other utensils used for preparing food or
beverages, or (b) to remove or store such dishes, glasses and other utensils in
order to clean any area, fixture or surface of the Premises.

Weekly:

 

1. Hand-dust all door louvers.

 

2. Dust and/or wash directory boards and display glass.

 

3. Wipe clean and polish all metal and bright work.

 

4. Damp-mop and polish all resilient flooring in the Premises, public corridors
and elevator lobbies.

 

5. Wash, clean and polish all water coolers and fountains.

 

6. Dust in place all picture frames, charts, graphs and similar wall hangings.

 

7. Clean glass around tenant entrances, including conference rooms and other
interior rooms.

 

G-1

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Monthly:

 

1. Dust all paneled walls, doors and other similar surfaces not reached in
nightly or weekly cleaning.

 

2. Vacuum high moldings and other areas not reached in nightly or weekly
cleaning.

 

3. Remove all finger marks and smudges from doors, door frames, around light
switches, private entrance glass and partitions.

Quarterly:

 

1. Vacuum all ventilating and air conditioning louvers.

 

2. Dust exterior of lighting fixtures.

LAVATORIES:

Daily:

Five (5) days each week, including Monday through Friday, and excluding the
holidays set forth in Exhibit B (“Normal Working Hours”) of the Lease:

 

1. Clean and damp-mop floors.

 

2. Wash and polish all mirrors, bright work and enameled surfaces.

 

3. Wash and sanitize all basins, bowls and urinals.

 

4. Wash and sanitize toilet seats.

 

5. Dust, clean and wash, where necessary, all partitions, tile walls, dispensers
and receptacles.

 

6. Empty and sanitize all receptacles and sanitary disposals.

 

7. Provide materials and fill towel, sanitary napkin and soap dispensers.

Monthly:

 

1. Machine-scrub lavatory floors, apply floor finishing where applicable.

 

2. Wash and polish all partitions, tile walls and enamel surfaces.

 

G-2

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Quarterly:

 

1. Dust light fixtures.

 

2. Vacuum all louvers and ventilating grills.

MISCELLANEOUS SERVICES:

 

1. Maintain building lobby, corridors and other public areas in a clean and
orderly condition.

 

2. Damp-mop spillage in office and public areas as required.

 

3. Interior curtain-wall window washing two times per year.

These janitorial specifications may be changed or altered from time to time to
facilitate the inclusion of the latest methods of maintenance and cleaning
technology generally recognized as acceptable for a first-class office building.

 

G-3

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Morgan Stanley Mortgage Capital Inc.

(Lender)

- and -

                                                             

(Tenant)

 

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

 

Dated:

Location:

Section:

Block:

Lot:

County:

PREPARED BY AND UPON

RECORDATION RETURN TO:

Messrs. Cadwalader, Wickersham & Taft

100 Maiden Lane

New York, New York 10038

Attention:         Annie George

File No.:

Title No.:

 

 

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

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”)
is made as of the      day of         , 2003 by and between MORGAN STANLEY
MORTGAGE CAPITAL INC., having an address at 1221 Avenue of the Americas, 27th
Floor, New York, NY 10020 (“Lender”) and                              having an
address at                                          (“Tenant”).

RECITALS:

A. Lender has made a loan in the approximate amount of $132,000,000.00 to
Landlord (defined below), which Loan is given pursuant to the terms and
conditions of that certain Loan Agreement dated as of July     , 2003, between
Lender and Landlord (the “Loan Agreement”). The Loan is evidenced by those
certain four Promissory Notes, each dated July     , 20    , given by Landlord
to Lender (the “Note”) and secured by a certain Mortgage and Security Agreement
dated as of July , 2003, given by Landlord to Lender (the “Mortgage”), which
encumbers the fee estate of Landlord in certain premises described in Exhibit A
attached hereto (the “Property”);

B. Tenant occupies a portion of the Property under and pursuant to the
provisions of a certain lease dated                             ,             
between PHILADELPHIA PLAZA-PHASE II, a Pennsylvania limited partnership, as
landlord (“Landlord”) and Tenant, as tenant (the “Lease”); and

C. Tenant has agreed to subordinate the Lease to the Mortgage and to the lien
thereof and Lender has agreed to grant non-disturbance to Tenant under the Lease
on the terms and conditions hereinafter set forth.

AGREEMENT:

For good and valuable consideration, Tenant and Lender agree as follows:

1. Subordination. Tenant agrees that the Lease and all of the terms, covenants
and provisions thereof and all rights, remedies and options of Tenant thereunder
are and shall at all times continue to be subject and subordinate in all
respects to the Mortgage and to the lien thereof and all terms, covenants and
conditions set forth in the Mortgage and the Loan Agreement including without
limitation all renewals, increases, modifications, spreaders, consolidations,
replacements and extensions thereof and to all sums secured thereby with the
same force and effect as if the Mortgage and Loan Agreement had been executed,
delivered and (in the case of the Mortgage) recorded prior to the execution and
delivery of the Lease.

2. Non-Disturbance. Lender agrees that if any action or proceeding is commenced
by Lender for the foreclosure of the Mortgage or the sale of the Property,
Tenant shall not be named as a party therein unless such joinder shall be
required by law, provided,

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

however, such joinder shall not result in the termination of the Lease or
disturb the Tenant’s possession or use of the premises demised thereunder, and
the sale of the Property in any such action or proceeding shall be made subject
to all rights of Tenant under the Lease except as set forth in Section 3 below,
provided that at the time of the commencement of any such action or proceeding
or at the time of any such sale or exercise of any such other rights (a) the
term of the Lease shall have commenced pursuant to the provisions thereof,
(b) the Lease shall be in full force and effect and (c) Tenant shall not be in
default under any of the terms, covenants or conditions of the Lease or of this
Agreement on Tenant’s part to be observed or performed beyond the expiration of
any applicable notice or grace periods (a, b and c, the “Conditions”).

3. Attornment. Lender and Tenant agree that upon the conveyance of the Property
by reason of the foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or otherwise, the Lease shall not be
terminated or affected thereby (at the option of the transferee of the Property
(the “Transferee”) if the Conditions set forth in Section 2 above have not been
met at the time of such transfer) but shall continue in full force and effect as
a direct lease between the Transferee and Tenant upon all of the terms,
covenants and conditions set forth in the Lease and in that event, Tenant agrees
to attorn to the Transferee and the Transferee shall accept such attornment, and
the Transferee shall not be (a) obligated to complete any construction work
required to be done by Landlord pursuant to the provisions of the Lease or to
reimburse Tenant for any construction work done by Tenant, (b) liable (i) for
Landlord’s failure to perform any of its obligations under the Lease which have
accrued prior to the date on which the Transferee shall become the owner of the
Property, or (ii) for any act or omission of. Landlord, whether prior to or
after such foreclosure or sale, (c) required to make any repairs to the Property
or to the premises demised under the Lease required as a result of fire, or
other casualty or by reason of condemnation unless the Transferee shall be
obligated under the Lease to make such repairs and shall have received
sufficient casualty insurance proceeds or condemnation awards to finance the
completion of such repairs, (d) required to make any capital improvements to the
Property or to the premises demised under the Lease which Landlord may have
agreed to make, but had not completed, or to perform or provide any services not
related to possession or quiet enjoyment of the premises demised under the
Lease, (e) subject to any offsets, defenses, abatements or counterclaims which
shall have accrued to Tenant against Landlord prior to the date upon which the
Transferee shall become the owner of the Property, (f) liable for the return of
rental security deposits, if any, paid by Tenant to Landlord in accordance with
the Lease unless such sums are actually received by the Transferee, (g) bound by
any payment of rents, additional rents or other sums which Tenant may have paid
more than one (1) month in advance to any prior Landlord unless (i) such sums
are actually received by the Transferee or (ii) such prepayment shall have been
expressly approved of by the Transferee, (h) bound to make any payment to Tenant
which was required under the Lease, or otherwise, to be made prior to the time
the Transferee succeeded to Landlord’s interest, (i) bound by any agreement
amending, modifying or terminating the Lease made without the Transferee’s prior
written consent prior to the time the Transferee succeeded to Landlord’s
interest or (j) bound by any assignment of the Lease or sublease of the
Property, or any portion thereof, made prior to the time the Transferee
succeeded to Landlord’s interest other than if pursuant to the provisions of the
Lease.

 

-2-

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4. Notice to Tenant. After notice is given to Tenant by Lender that the Landlord
is in default under the Note and the Mortgage and that the rentals under the
Lease should be paid to Lender pursuant to the terms of the assignment of leases
and rents executed and delivered by Landlord to Lender in connection therewith,
Tenant shall thereafter pay to Lender or as directed by the Lender, all rentals
and all other monies due or to become due to Landlord under the Lease and
Landlord hereby expressly authorizes Tenant to make such payments to Lender and
hereby releases and discharges Tenant from any liability to Landlord on account
of any such payments made in accordance with Lender’s instructions.

5. Lender’s Consent. Tenant shall not, without obtaining the prior written
consent of Lender, (a) enter into any agreement amending, modifying or
terminating the Lease, (b) prepay any of the rents, additional rents or other
sums due under the Lease for more than one (1) month in advance of the due dates
thereof, (c) voluntarily surrender the premises demised under the Lease or
terminate the Lease without cause or shorten the term thereof, or (d) assign the
Lease or sublet the premises demised under the Lease or any part thereof other
than pursuant to the provisions of the Lease; and any such amendment,
modification, termination, prepayment, voluntary surrender, assignment or
subletting, without Lender’s prior consent, shall not be binding upon Lender.

6. Lender to Receive Notices. Tenant shall provide Lender with copies of all
written notices sent to Landlord pursuant to the Lease simultaneously with the
transmission of such notices to the Landlord. Tenant shall notify Lender of any
default by Landlord under the Lease which would entitle Tenant to cancel the
Lease or to an abatement of the rents, additional rents or other sums payable
thereunder, and agrees that, notwithstanding any provisions of the Lease to the
contrary, no notice of cancellation thereof or of such an abatement shall be
effective unless Lender shall have received notice of default giving rise to
such cancellation or abatement and shall have failed within sixty (60) days
after receipt of such notice to cure such default, or if such default cannot be
cured within sixty (60) days, shall have failed within sixty (60) days after
receipt of such notice to commence and thereafter diligently pursue any action
necessary to cure such default.

7. Notices. All notices or other written communications hereunder shall be
deemed to have been properly given (i) upon delivery, if delivered in person or
by facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (hereinafter
defined) after having been deposited for overnight delivery with any reputable
overnight courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the U.S.
Postal Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If to Tenant:                                                       
                                                   
                                                    Attention:
                                 Facsimile No.                        

 

-3-

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If to Lender:    Morgan Stanley Mortgage Capital Inc.   

1221 Avenue of the Americas, 27th Floor

New York, New York 10020

  

Attention: James Flaum and Kevin Swartz

Facsimile No.: (212) 762-9494

With a copy to:    Cadwalader, Wickersham & Taft    100 Maiden Lane    New York,
New York 10038    Attention: John M. Zizzo    Facsimile No. (212) 504-6666

or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section, the term “Business Day” shall
mean a day on which commercial banks are not authorized or required by law to
close in New York, New York.

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

8. Joint and Several Liability. If Tenant consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Agreement shall be binding upon and inure to the benefit of Lender
and Tenant and their respective successors and assigns.

9. Definitions. The term “Lender” as used herein shall include the successors
and assigns of Lender and any person, party or entity which shall become the
owner of the Property by reason of a foreclosure of the Mortgage or the
acceptance of a deed or assignment in lieu of foreclosure or otherwise. The term
“Landlord” as used herein shall mean and include the present landlord under the
Lease and such landlord’s predecessors and successors in interest under the
Lease, but shall not mean or include Lender. The term “Property” as used herein
shall mean the Property, the improvements now or hereafter located thereon and
the estates therein encumbered by the Mortgage.

10. No Oral Modifications. This Agreement may not be modified in any manner or
terminated except by an instrument in writing executed by the parties hereto.

11. Governing Law. This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State where the Property is located and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State where the Property is located.

 

-4-

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12. Inapplicable Provisions. If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.

13. Duplicate Originals; Counterparts. This Agreement may be executed in any
number of duplicate originals and each duplicate original shall be deemed to be
an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

14. Number and Gender. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.

15. Transfer of Loan. Lender may sell, transfer and deliver the Note and assign
the Mortgage, this Agreement and the other documents executed in connection
therewith to one or more investors in the secondary mortgage market
(“Investors”). In connection with such sale, Lender may retain or assign
responsibility for servicing the loan, including the Note, the Mortgage, this
Agreement and the other documents executed in connection therewith, or may
delegate some or all of such responsibility and/or obligations to a servicer
including, but not limited to, any subservicer or master servicer, on behalf of
the Investors. All references to Lender herein shall refer to and include any
such servicer to the extent applicable.

16. Further Acts. Tenant will, at the cost of Tenant, and without expense to
Lender, do, execute, acknowledge and deliver all and every such further acts and
assurances as Lender shall, from time to time, require, for the better assuring
and confirming unto Lender the property and rights hereby intended now or
hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of this Agreement or for filing, registering or
recording this Agreement, or for complying with all applicable laws.

17. Limitations on Lender’s Liability. Tenant acknowledges that Lender is
obligated only to Landlord to make the Loan upon the terms and subject to the
conditions set forth in the Loan Agreement. In no event shall Lender or any
purchaser of the Property at foreclosure sale or any grantee of the Property
named in a deed-in-lieu of foreclosure, nor any heir, legal representative,
successor, or assignee of Lender or any such purchaser or grantee (collectively
the Lender, such purchaser, grantee, heir, legal representative, successor or
assignee, the “Subsequent Landlord”) have any personal liability for the
obligations of Landlord under the Lease and should the Subsequent Landlord
succeed to the interests of the Landlord under the Lease, Tenant shall look only
to the estate and property of any such Subsequent Landlord in the Property for
the satisfaction of Tenant’s remedies for the collection of a judgment (or other
judicial process) requiring the payment of money in the event of any default by
any Subsequent Landlord as landlord under the Lease, and no other property or
assets of any Subsequent Landlord shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant’s remedies, under or with
respect to the Lease; provided, however, that the Tenant may exercise any other
right or remedy provided thereby or by law in the event of any failure by
Subsequent Landlord to perform any such material obligation.

 

-5-

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IN WITNESS WHEREOF, Lender and Tenant have duly executed this Agreement as of
the date first above written.

 

LENDER:

MORGAN STANLEY MORTGAGE

CAPITAL INC.

By:  

 

Name:   Title:   TENANT:

 

a                                                           By:  

 

Name:   Title:  

 

The undersigned accepts and agrees to the provisions of Section 4 hereof:
LANDLORD:                                        
                                     , a

 

By:  

 

Name:   Title:  

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ACKNOWLEDGMENTS

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

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EXHIBIT A

LEGAL DESCRIPTION

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

SCHEDULES AND EXHIBITS

 

Schedules    Schedule I    Debt Service Schedule II    Monthly Senior Debt
Service Payment Schedule 3.1.9    Compliance Schedule 3.1.10    Liabilities
Schedule 3.1.22    Leases Schedule 3.1.28    Organizational Chart Schedule
3.1.43    Environmental Matters Schedule 9.1    Tenants and Subtenants Exhibits
   Exhibit A    Cash Management Agreement Exhibit B    Form Lease

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

Schedule I

Debt Service

 

Year

   Morgan Stanley
Amount    DB Mezz Fund
Amount    Total
Amount

2003

   307,600    92,400    400,000

2004

   448,809    92 857    541 566

2005

   442,424    165,909    608,333

2006

   459,259    207,407    666,666

2007

   378,733    362,267    741,000

2008

   120,000    146,666    266,666

2009

   39,583    2,083    41,666

2010

   41,666    N/A    41,666

2011

   41,666    N/A    41,666

2012

   41,666    N/A    41,666

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Schedule 3.1.9

Compliance

Zoning and compliance information disclosed on the Title Commitment No.
PHI-03-16760-HSE issued by LandAmerica, Qualified Survey by Barton & Martin,
dated July 18, 2003, and the Zoning Information Systems report dated July 30,
2003.

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Schedule 3.1.10

Liabilities

Contingent liabilities and obligations as set forth in the Conrail Payment
Agreement dated as of March 28, 1990 as amended by the Amendment to Payment
Agreement dated as of June 23, 1997

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Disclosure Notes for Related Party Balances

The following notes are meant to provide additional information about certain
account balances for Philadelphia Plaza Phase 11, LP as of June 30, 2003. The
balances have been prepared on a GAAP basis.

ACCOUNTS RECEIVABLE RELATED PARTY – Commerce Square Partners – Philadelphia
Plaza: The balance of $20,597.27 relates to reconciling parking activity from
One Commerce Square. Under the Reciprocal Easement Agreement, parking revenue is
allocated by tenant use.

ACCOUNTS PAYABLE RELATED PARTY – Philadelphia Plaza Phase 3: The balance of
$227.00 relates to reconciling parking activity from the Phase 3 surface lot.

ACCOUNTS PAYABLE RELATED PARTY – Thomas Development Partners: The balance of
$15,120.73 relates to amounts owed for payroll costs.

ACCOUNTS PAYABLE RELATED PARTY – Thomas Investment Partners: The balance of
$1,200,000.00 is from the $200,000 earnest deposit from the refinancing and the
$1 million rate lock fee. This balance will be reclassified as a capital
contribution upon closing of the refinancing.

ACCOUNTS PAYABLE RELATED PARTY – TDP Lease Commissions: The balance of $7,722.76
represents the outstanding commission owed on the Cort Furniture least renewal.

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

Schedule 3.1.22

Leases

See Attached Rent Roll dated as of July 1, 2003.

One Commerce Square restaurant tenant Commerce Restaurant Corporation has a rent
delinquency of more than 90 days. Revenues and expenses for this tenant are
allocated between One and Two Commerce Square according to the REA. The Two
Commerce Square allocation of the delinquency is approximately $32,700 as of
June 30, 2003, approximately $29,000 of which has been reserved on the
statements of Philadelphia Plaza-Phase 11 as of that date.

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Page 1 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge   
Base    Percent   Break

ATT/TCG

   30    1    0    1/9/03   1/1/03    MTM    1/1/03    $ 1200    N/A      N/A   
 

Commerce Restaurant Corporation

   100    1    1,621    4/3/01   5/20/01    5/31/07    12/1/01    $ 24.22   
Op. Ex.      Net    6.0%     Annual

    “Twenty21”

                    1/1/02    $ 16.87    Taxes      Net    Effective     Sales >
                    4/1/02    $ 24.22                                6/1/04    $
24.80          12/1/01   $ 3,750,000                     6/1/05    $ 25.44      
   1/1/02   $ 3,465,463             3/18/02:                     1/1/03   $
3,750,000             Option to                     6/1/04   $ 3,840,000      
      Exercise                     6/1/05   $ 3,940,000             and Amnd  
                   

Cort Furniture Rental Corp.

   110    1    4,477    1/5/93   10/1/93    9/30/03    10/1/93    $ 8.25    Op.
Ex.      Net     

    “Coif Furniture Rental”

                    10/1/94    $ 15.50    Taxes      Net                      
   10/1/95    $ 16.50                                10/1/96    $ 17.50         
                      10/1/97    $ 18.50                                10/1/98
   $ 19.00                                10/1/01    $ 20.00                    
   1st Amnd.   10/01/03    9/30/06    10/1/03    $ 23.00    Op. Ex.      Net   
              10/18/02               Taxes      Net     

Marathon Grill

   120    1    7,938    10/25/00   4/1/01    3/31/11    4/1/01    $ 8.31    Op.
Ex.      Net    6.0%     Annual                     4/1/02    $ 9.15    Taxes   
  Net    Effective     Sales >             1st Amnd:         4/1/03    $ 9.98   
                    5/1/01         4/1/04    $ 11.22          4/1/01   $
1,100,000                     4/1/06    $ 14.55          4/1/02   $ 1,210,000   
                 4/1/07    $ 15.80          4/1/03   $ 1,320,000              
      4/1/09    $ 17.04          4/1/04   $ 1,485,000                     4/1/10
   $ 17.88          4/1/06   $ 1,925,000                                 4/1/07
  $ 2,090,000                                 4/1/09   $ 2,255,000              
                  4/1/10   $ 2,365,000

Salad Works, Inc.

   130    1    3,606    3/31/97   10/1/97    9/30/07    10/1/97    $ 20.00   
Op. Ex.      Net    6.0%     LY 1-5:

    “Salad Works”

                    4/1/00    $ 22.00    Taxes      Net      $ 1.75mm         
   1st Amnd:         4/1/02    $ 24.00                        9/30/97        
4/1/04    $ 26.00              LY 6-10:                     4/1/05    $ 27.00   
        $ 1.85mm

Kinko’s of Ohio, Inc.

   140    1    4,650    12/2/96   5/12/97    5/11/07    5/1/97    $ 33.79    Op.
Ex.      Tot     

    “Kinko’s”

                    5/1/98    $ 34.79    Taxes      Base                      
   5/1/99    $ 35.79       $ 6.85                          5/1/00    $ 38.79   
                            5/1/01    $ 37.79                               
5/1/02    $ 41.29           

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Page 2 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease    Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet   

Date

   Start    End    Steps    Rent    Charge    Base    Percent    Break

Citizens Bank

   170    1    2,896    7/12/02    12/16/02    12/31/12    12/16/02    $ 28.00
   Op. Ex.    Net                            1/1/06    $ 29.00    Taxes    Net
                           1/1/08    $ 31.00                                 
1/1/11    $ 32.00            

Shoe Shine Service

   180    1    180    N/A                        

NYCL - (Delaware Mgt.)

   060    P-1    10,198    3/28/90    5/15/92    6/23/07    5/15/92    $ 19.00
   Op. Ex.    Net      

NYCL - (Delaware Mgt.)

   200    2    41,936             5/15/93    $ 20.00    Taxes    Net      

NYCL - (Delaware Mgt.)

   300    3    31,817    1st Amnd:          6/24/97    $ 25.25            

NYCL - (Delaware Mgt.)

   400    4    33,572    10/1/92          6/24/02    $ 30.00            

NYCL - Vacant

   500    5    33,572                            NYCL - (Citizens Bank)    800
   8    33,572    2nd Amnd:                         NYCL - (Biological Abstr.)
   700    7    33,572    6/20/99                         NYCL - Alliance    800
   8    16,186                            NYCL - (Biological Abstr.)    810    6
   7,551    3rd Amnd:                         NYCL - CSX    830    8    5,640   
9/30/99                         NYCL - (McCormick Teyl.)    900    9    29,392
                           NYCL - (McCormick Tayl.)    1000    10    29,376   
                        NYCL - (ADR Options)    1100    11    10,969   
4th Amnd:                         NYCL - (Reliance Stand.)    1110    11   
18,761    12/10/99                         NYCL - (Reliance Stand.)    1200   
12    29,730                            NYCL - (Reliance Stand.)    1400    14
   29,724    5th Amnd:                         NYCL - (Reliance Stand.)    1600
   15    29,724    1/5/00                         NYCL - Conrail    1800    16
   29,724                            NYCL - (PWC)    1700    17    29,773   
6th Amnd:                         NYCL - (PWC)    1800    18    23,440   
5/17/01                         NYCL - (PWC)    1900    19    23,037            
               NYCL - (PWC)    2000    20    23,037    Ltr Agmnts:            
            NYCL - (PWC)    2100    21    22,825    3/28/90                     
   NYCL - (PWC)    2200    22    23,037    6/3/93                         NYCL -
(PWC)    2300    23    23,037    9/9/94                         NYCL - (PWC)   
2400    24    23,037                            NYCL - (PWC)    2500    25   
23,037                            NYCL - Vacant    2600    26    23,037         
                  NYCL - (GreenbergTrourig)    2700    27    22,825            
               NYCL - (PP Ph 2/E&Y)    2800    28    22,981                     
      NYCL - (Norfolk South.)    2900    29    14,677                           
NYCL - Vacant    4110    41    224                                            
                              752,999                            Delaware
Management    000    P-1    See    12/10/99    N/A                         200
   2    NYCL                               300    3                           
      400    4                               Citizens Bank    600    6    See   
11/8/01    N/A                               NYCL                           

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Page 3 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge  
Base    Percent    Break Biological Abstracts    700    7    See    4/30/99  
6/24/09    11/30/09    6/24/09    $ 9.55    Op. Ex.     Net          810    8   
NYCL                  Taxes     Net                   1st Amend:                
                  2/28/01                      

Alliance

   800    8    See    2/18/01   6/24/08    12/31/09    6/24/08    $ 25.90    Op.
Ex.     Net                NYCL                  Taxes     Net      

McCormick Taylor

   1000    10    See    7/8/99   8/24/09    1/31/10    6/24/09    $ 20.50   
Op. Ex*   $ 5.89          900    9    NYCL                  Taxes*   $ 3.09   
               1st Amend:                                   7/6/99              
                    2nd Amend:                                   5/17/00        
             

ADR Options, Inc.

   1100    11    See    8/15/01   N/A                              NYCL        
                

Reliance Standard Life

   1110    11    See    1/05/00   06/24/08    06/23/09    06/24/08    $ 24.00   
Op. Ex*   $ 5.89      

Reliance Standard Life

   1200    12    NYCL                  Taxes*   $ 3.09      

Reliance Standard Life

   1400    14       Amended                      

Reliance Standard Life

   1500    15       &
Restated                                   Sublease:                            
      5/1/00                      

PriceWaterhouseCoopers

   1700    17    See    8/20/99   8/24/09    4/24/15    8/24/09    $ 25.00   
Op. Ex   $ 5.94          1800    18    NYCL            4/24/10    $ 27.00   
Taxes   $ 3.15          1900    19                                2000    20   
                            2100    21                                2200    22
                               2300    23                                2400   
24                                2500    25                            

Greenberg Traurlg

   2700    27    See    7/11/00   N/A                              NYCL        
                

Norfolk Southern

   2900    29    See    10/1/99   N/A                              NYCL        
                             1st Amnd:                                  
10/26/99                      

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Page 4 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square    Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet    Date   Start    End    Steps    Rent    Charge   
Base    Percent    Break

Vacant

   3020    30    4,745                          

Grant Thornton, LLP

   3010    30    9,856    7/29/94   12/5/94    12/4/04    9/2/96    $ 25.00   
Op. Ex.    Net                           9/2/97    $ 6.75    Taxes    Net      
                    9/2/98    $ 7.75                                 9/2/99    $
8.75                                 9/2/00    $ 9.75                          
      9/2/01    $ 10.75                                 9/2/02    $ 11,75      
                          9/2/03    $ 12.75                                
9/2/04    $ 13.75            

Grant Thornton, LLP

   3100    31    14,633    1st Amend:         12/5/94    $ 25.71               
                                           24,489    3/14/88         12/5/95   
$ 4.70                                 12/5/98    $ 5.00                        
        12/5/99    $ 6.00                                 12/5/00    $ 7.00   
                             12/5/01    $ 8.00                                
12/5/02    $ 9.00                                 12/6/03    $ 10.00            

Shrager, McDaid, Loftus,

   3210    32    8,989    6/15/92   12/18/93    12/31/03    1/1/93    $ 8.75   
Op. Ex.    Net      

    Fium, & Spivey

                    12/1/94    $ 9.50    Taxes    Net                          
12/1/95    $ 10.25                3209    32    *972    Ltr Agmnt:   N/A      
12/1/96    $ 11.00                                                          
9,981    8/14/92         12/1/97    $ 14.50                                
12/1/98    $ 15.00                                 12/1/99    $ 16.00         
                       12/1/00    $ 17.00                                
12/1/01    $ 20.00                                 12/1/02    $ 21.00         
                       12/1/03    $ 22.00            

Barrack, Rodos & Bacine

   3220    32    4,672    2/1/93   5/10/93    9/30/11    5/10/93    $ 14.57   
Op. Ex.    Net      

Barrack, Rodos & Becine

   3300    33    14,633            5/10/96    $ 15,25    Taxes    Net         
                                           19,305            9/22/01    $ 15.50
                                10/1/02    $ 16.00                        
1st Amend:         10/1/03    $ 17.00                         12/26/00        
10/1/04    $ 18.00                                 10/1/05    $ 18.75         
                       10/1/06    $ 19.00                                
10/1/07    $ 18.50                                 10/1/08    $ 20.25         
                       10/1/09    $ 21.00                                
10/1/10    $ 21.75            

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Page 5 of 5

Two Commerce Square

Rent Roll

July 1, 2003

 

               Square   Lease   Term    Rent         Recoveries    Percentage
Rent

Tenant Name

   Suite    Floor    Feet   Date   Start    End    steps    Rent    Charge   
Base    Percent    Break

Eizan, Fineburg & McCarthy

   3410    34    7,183   9/14/93   11/1/93    7/31/05    11/1/93    $ 9.75   
Op. Ex.    Net                          11/1/94    $ 13.00    Taxes    Net      
         Effective   1st Amend:         9/1/96    $ 13.50                     
9/1/99:   5/14/98         9/1/99    $ 10.47                               
6/1/00    $ 11.75                      9,506   2nd Amend:         8/1/00    $
12.00                        7/31/99         8/1/01    $ 12.25                  
             8/1/02    $ 12.75                                8/1/03    $ 13.00
                               8/1/04    $ 13.25            

P. G Corbin & Co., Inc.

   3420    34    5,127   3/7/94   6/1/94    7/31/04    6/1/94    $ 11.26    Op.
Ex.    Net                          8/1/01    $ 12.70    Taxes    Net         
        1st amend:         8/1/02    $ 13.70                        11/30/98  
      8/1/03    $ 14.70                        2nd Amend:                       
           2/28/01                       

Ernst & Young, LLP

   2800    28    22,961   Sublease   1/1/00    8/22/08    1/1/00    $ 12,02   
Op. Ex    Net                  7/1/00         1/1/04    $ 13.05    Taxes      
  

 

Ernst & Young, LLP

   3500    35    14,633  

 

12/19/91

  9/21/92    9/30/07    9/21/92    $ 0            

Ernst & Young, LLP

   3600    36    14,633           9/21/93    $ 7.00    Op. Ex.    Net      

Ernst & Young, LLP

   3700    37    14,633   1st Amend.   7/1/00    9/29/07    9/21/94    $ 10.50
   Taxes    Net      

Ernst & Young, LLP

   3800    38    14,633   9/30/99         9/21/95    $ 15.50            

Ernst & Young, LLP

   3900    39    14,833           9/21/96    $ 16.00            

Ernst & Young, LLP

   4000    40    14,833           9/21/97    $ 20.00            

Ernst & Young, LLP**

   4100    41    13,998           9/21/99    $ 21.00                           
                              124,757           9/21/00    $ 22.00            

Less: NYCL Sublease

         (22,961)           9/21/01    $ 23.00                                 
              

Original Direct Lease

         101,796           9/21/02    $ 24.00                               
9/21/04    $ 26.00                                9/21/05    $ 27.00            
                   9/21/08    $ 28.00            

Total Leased Space

         948,531   98.3%                       

Total Vacant Space

         4,746   1.7%                       

Total Space

         953,276   100%                       

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Schedule 3.1.28

Organizational Charts

See Attached

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LOGO [g16024g14z84.jpg]

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Schedule 3.1.43

Environmental Matters

Matters disclosed in the pre-survey questionnaire dated June 19, 2003 and
transmitted by Borrower on June 23, 2003, and that certain Phase I Environmental
Site Assessment dated July 7, 2003 by IVI International, Inc. (Project
No. 30611642).

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Schedule 9.1

Tenants and Subtenants

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Exhibit A

Senior Cash Management Agreement

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Exhibit B

Form Lease