FORM OF

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING

by

[_____________________________], as Grantor,

to

FIRST AMERICAN TITLE INSURANCE CO., as Trustee,

for the benefit of

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, as Beneficiary

Location: [___________]

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TABLE OF CONTENTS
ARTICLE I - GRANTING PROVISIONS
1

Section 1.01
Grant
1

ARTICLE II - Assignment of Rents and Leases; Security Agreement
3

Section 2.01
Assignment of Rents and Leases
3

Section 2.02
Security Agreement
3

ARTICLE III - REPRESENTATIONS AND WARRANTIES
4

Section 3.01
Title
4

Section 3.02
Legal Status and Authority
4

Section 3.03
Consents; No Contravention
4

Section 3.04
Proceedings
4

Section 3.05
Status of Property
4

Section 3.06
Tax Status of Borrower
5

Section 3.07
Bankruptcy and Equivalent Value
6

Section 3.08
Disclosure
6

Section 3.09
Illegal Activities and Criminal Proceedings
6

Section 3.10
Anti-Terrorism Laws
6

Section 3.11
ERISA
6

Section 3.12
Ground Leases
7

ARTICLE IV - COVENANTS AND AGREEMENTS
7

Section 4.01
Payment of Obligations
7

Section 4.02
Continuation of Existence
7

Section 4.03
Assessments
7

Section 4.04
Defense of Title, Proceedings and Rights under Loan Documents
8

Section 4.05
Compliance With Laws and Operation and Maintenance of Property
8

Section 4.06
Insurance
10

Section 4.07
Damage and Destruction of Property
14

Section 4.08
Condemnation
18

Section 4.09
Certain Liens and Liabilities
19

Section 4.10
Tax and Insurance Deposits
20

Section 4.11
ERISA
21

Section 4.12
Environmental Indemnity
21

Section 4.13
Intentionally Omitted
21

Section 4.14
Inspection
21

Section 4.15
Records, Reports, and Audits
22

Section 4.16
Borrower’s Certificates
23

Section 4.17
Criminal Proceedings
23

Section 4.18
Additional Security
23

Section 4.19
Further Acts
23

Section 4.20
Compliance With Anti-Terrorism Laws
24

Section 4.21
Expenses and Advances
24

Section 4.22
Subrogation
25

Section 4.23
Permits
25

Section 4.24
Parking
26

Section 4.25
Property Management and Leasing
26

ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY; LEASES OF THE
PROPERTY
27

Section 5.01
Due-on-Sale or Encumbrance
27

Section 5.02
Permitted Transfers
28

Section 5.03
Principals
31

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Section 5.04
Leases
32

ARTICLE VI - DEFAULTS AND REMEDIES
34

Section 6.01
Events of Default
34

Section 6.02
Remedies
36

Section 6.03
Expenses
38

Section 6.04
Rights Pertaining to Sales
38

Section 6.05
Application of Proceeds
38

Section 6.06
Additional Provisions as to Remedies
39

Section 6.07
Waiver of Rights and Defenses
39

ARTICLE VII - LIMITATION ON PERSONAL LIABILITY
40

Section 7.01
Limited Recourse Liability
40

ARTICLE VIII - INDEMNIFICATION
42

Section 8.01
General Indemnity
42

Section 8.02
Duty to Defend, Costs and Expenses
42

Section 8.03
Recourse Obligation and Survival
42

ARTICLE IX - ADDITIONAL PROVISIONS
43

Section 9.01
Usury Savings Clause
43

Section 9.02
Notices
43

Section 9.03
Sole Discretion of Lender
44

Section 9.04
Applicable Law; Submission and Consent to Jurisdiction; Service of Process
45

Section 9.05
Transfer of Loan
45

Section 9.06
Concerning the Trustee
46

Section 9.07
Waiver of Right to Trial by Jury; Waiver of Statute of Limitations
46

Section 9.08
State Specific Provisions
47

Section 9.09
Miscellaneous
47

ARTICLE X - Release AND SUBSTITUTION of Cross Defaulted Properties
49

Section 10.01
Release
49

Section 10.02
Substitution of Other Properties for Cross Defaulted Properties
50

EXHIBITS
Exhibit A- Legal Description of Land

ANNEXES

Annex A – Definitions
Annex B – State Specific Provisions

[__________] Deed of Trust

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THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (as amended, modified, extended, renewed, restated or
supplemented from time to time, this “Instrument”) is dated the ___ day of
___________, 2017, to be effective on the ____ day of October, 2017, by
[______________], a [_________] limited liability company, having its chief
executive office and place of business at 11501 Northlake Drive, Cincinnati,
Ohio 45249, as grantor (“Borrower”), to FIRST AMERICAN TITLE INSURANCE CO.,
having an address at 200 SW Market Street, Suite 250, Portland, OR 97201, as
trustee, for the benefit of THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, a
New York corporation, having an office at 7 Hanover Square, New York, New York
10004, its successors and assigns, as beneficiary (“Lender”).
RECITALS
A.    Lender has made a loan to Borrower in the original principal amount of
[____________] Dollars ($[___________]) (the “Loan”), which Loan is evidenced by
a Promissory Note dated the date hereof made by Borrower and payable to Lender
in the principal amount of the Loan (as amended, modified, extended, renewed,
restated or supplemented from time to time, the “Note”).
B.    Borrower has entered into this Instrument to secure the payment of the
Note and the payment and performance of all of the other Obligations (as defined
in Annex A hereto).
C.    For purposes of this Instrument, capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in Annex A
hereto, and the rules of construction set forth in Annex A shall govern the
interpretation of this Instrument.
ARTICLE I - GRANTING PROVISIONS
Section 1.01    Grant. In consideration of the principal sum of the Note, and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Borrower hereby grants, bargains, sells, assigns, transfers,
pledges, mortgages, warrants, and conveys to Trustee, for the benefit of Lender,
all right, title, and interest of Borrower in, to, and under the following to
the extent assignable (collectively, the “Property”):
(a)the Land;
(b)the Improvements;
(c)all easements, estates, and interests including hereditaments, servitudes,
appurtenances, tenements, mineral and oil/gas rights, water rights, air rights,
development power or rights, options, reversion and remainder rights, all land
lying within the rights-of-way, roads, or streets, open or proposed, adjoining
the Land to the center line thereof, and all sidewalks, alleys, and strips and
gores of land adjacent to or used in connection with the Property, and any other
rights owned by Borrower and relating to or usable in connection with or for
access to the Property;
(d)all plans, specifications, surveys, studies, reports, Permits, agreements,
contracts, instruments, books of account, insurance policies, and any other
documents in each case relating to the ownership, use, development,
construction, occupancy, leasing, maintenance, marketing, sale or operation of
the Property;

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(e)all of the fixtures and tangible Personal Property and substitutions and
replacements thereof, but excluding all Personal Property owned by any Tenant;
(f)all proceeds (including conversion to cash or liquidation claims) of (i)
insurance for or relating to the Property (whether or not such insurance is
required hereunder), including any Rent Loss Insurance; and (ii) all Awards;
(g)all tax refunds, including interest thereon, tax rebates, tax credits, and
tax abatements, and the right to receive the same, which may be payable or
available with respect to the Property (except, in each case, for income taxes
and franchise taxes);
(h)all Leases, including all guaranties thereof;
(i)all Rents and all proceeds from the cancellation, termination, surrender,
sale, transfer or other disposition of the Leases;
(j)all names under or by which the Property may at any time be operated or
known, and all rights to carry on business under any such names or any variant
thereof, and all trademarks, trade names, patents pending and goodwill
associated with the Property, other than any names, trademarks, trade names,
patents containing “Phillips Edison” or any derivation thereof;
(k)all permits, licenses, franchises, authorizations, warranties, guaranties,
and indemnities (including, without limitation, those for construction,
workmanship, materials, and performance) that exist, or may hereafter exist,
from, by, or against any contractor, subcontractor, manufacturer, supplier,
laborer, or other service provider relating to the Property; and
(l)all of Borrower’s other rights and privileges heretofore or hereafter
otherwise arising in connection with or pertaining to the Property, including
(i) all water and/or sewer capacity, all water, sewer and/or other utility
deposits or prepaid fees, and/or all water and/or sewer and/or other utility tap
rights or other utility rights; (ii) all advance payments of insurance premiums
made by Borrower with respect to the Property; (iii) the right, in the name and
on behalf of Borrower, to appear in and defend any Proceeding brought with
respect to the Property and to commence any Proceeding to protect the interest
of Borrower in the Property; (iv) any right or privilege of Borrower under any
loan commitment, lease, contract, declaration of covenants, restrictions and
easements or like instrument, developer’s agreement, or other agreement with any
third party pertaining to the ownership, use, development, construction,
occupancy, leasing, maintenance, marketing, sale or operation of the Property;
and (v) to the extent not otherwise described above in this granting clause, all
accounts, documents, inventory, equipment, fixtures, general intangibles
(including, without limitation, all trade names and contract rights),
as-extracted collateral, timber to be cut, chattel paper, commercial tort
claims, deposit accounts, instruments, letter of credit rights and investment
property (as such terms are defined in the UCC) related to the Property, and all
proceeds thereof.
TO HAVE AND TO HOLD the Property unto Trustee, and its successors and assigns
forever, subject to the provisions, terms and conditions of this Instrument, IN
TRUST, WITH POWER OF SALE, to secure payment and performance of the Obligations
in the time and manner set forth in the Loan Documents.

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PROVIDED, HOWEVER, if Borrower shall (i) pay the Debt as provided for in the
Loan Documents and the Cross Defaulted Borrowers shall have paid the debt as
provided for in the Cross Defaulted Loan Documents, (ii) comply with the
conditions precedent to a Release (as described in Section 10.01 hereof), or
(iii) if a Substitution occurs (in accordance with Section 10.02 hereof) in
which the Property is the Outgoing Property, then in each case the obligations
of Borrower hereunder and the Property hereby granted shall cease, terminate and
be void and this Instrument shall terminate and be of no further force and
effect (except as specifically stated in the Loan Documents to survive) and
Lender will record or provide such other instruments evidencing termination of
all liens on the Property in customary form in the Property State.
ARTICLE II - ASSIGNMENT OF RENTS AND LEASES;
SECURITY AGREEMENT
Section 2.01    Assignment of Rents and Leases. Borrower hereby assigns to
Lender all of Borrower's right, title and interest in and to the Leases and the
Rents. Borrower agrees to execute and deliver to Lender such additional
instruments, in form and substance satis-factory to Lender in its reasonable
discretion, as may hereafter be necessary from time to time to further evidence
and confirm such assignment. The assignment made in this Section 2.01
constitutes an absolute, present and irrevocable assignment and shall be fully
operative in accordance with its terms without any further action by the parties
hereto. It is expressly understood, however, that Borrower may collect the Rents
until the occurrence of an Event of Default under this Instrument. Upon the
occurrence and during the continuance of an Event of Default, Lender may collect
the Rents and exercise any and all of its other rights and remedies as specified
in the Assignment of Leases. In the event of any conflict or inconsistency
between the provisions of the Assignment of Leases and the provisions of this
Section 2.01, the provisions of the Assignment of Leases shall control.
Section 2.02    Security Agreement. Borrower hereby grants to Lender a security
interest in, to and under all of Borrower’s right, title and interest in, to and
under each and every item of the Personal Property, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof, to secure
the Obligations, and this Instrument shall constitute a security agreement
between Borrower and Lender with respect to the Personal Property. Borrower
agrees to file (or pay for the costs of Lender to file) in the appropriate
offices in the jurisdictions as Lender may require, financing or continuation
statements meeting the requirements of the UCC, to perfect the security
interests hereby granted including, without limitation, a financing statement
naming Borrower as debtor and Lender as secured party that describes the
collateral covered thereby as “all assets of Borrower, whether now owned or
existing, or hereafter acquired or arising and all proceeds and products
thereof”. Upon the occurrence of an Event of Default, the remedies of Lender as
secured party shall be, at the option of Lender, (a) those hereinafter set forth
in this Instrument, it being the understanding of the parties that upon the
occurrence of an Event of Default, Lender may proceed as to both real property
and Personal Property in accordance with the rights and remedies granted herein
with respect to real property; (b) those contained in the UCC; (c) those
prescribed by other Laws; or (d) any combination of the foregoing. All
substitutions for, replacements of, and additions to the Personal Property, and
the proceeds thereof, shall immediately be subject to the security interest
hereinabove granted, and Borrower agrees to maintain the Personal Property free
and clear of all liens, charges, encumbrances and security interests, other than
Permitted Encumbrances. This Instrument constitutes a financing statement filed
as a fixture filing, and for such purpose (i) the name of the debtor is the name
of Borrower; (ii) the name of the secured party is the name of Lender; and (iii)
the collateral covered hereby includes goods that are or are to become fixtures
related to the Land described in Exhibit A attached hereto. This Instrument is
to be filed for record in the real estate records of the city or county where
the Land is located and Borrower is the record owner of the Land.

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ARTICLE III - REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
Section 3.01    Title. Borrower owns the Land and Improvements in fee simple and
has good and marketable title to the Property, free and clear of all liens,
charges, encumbrances and security interests, except the Permitted Encumbrances.
Section 3.02    Legal Status and Authority. Borrower (a) is duly organized,
validly existing, and in good standing under the Laws of the Organization State
and, if the Property State is not the Organization State, is qualified to
transact business and is in good standing under the Laws of the Property State;
and (b) has all necessary approvals, governmental and otherwise, and full power
and authority to own the Property and carry on its business.
Section 3.03    Consents; No Contravention. The execution, delivery and
performance of the Loan Documents and the borrowing evidenced by the Note (a)
have received all necessary approvals and consents; (b) will not violate,
conflict with, breach, or constitute (with notice or lapse of time, or both) a
default under (i) any Law; (ii) the governing instrument of Borrower; or (iii)
any indenture, agreement, or other instrument to which Borrower is a party or by
which it or any of the Property is bound or affected; (c) will not result in the
creation or imposition of any lien, charge, or encumbrance upon the Property
except the liens granted in this Instrument and the other Loan Documents; and
(d) will not require any consent, authorization or license from, or any filing
with, any Governmental Authority (except for the recordation of this Instrument,
the Assignment of Leases, the Cross Collateralizing Security Documents and UCC
filings).
Section 3.04    Proceedings. As of the date hereof there is no Proceeding
pending or, to the knowledge of Borrower, threatened or contemplated against, or
affecting, Borrower or the Property.
Section 3.05    Status of Property.
(a)Flood Hazard Area. Except as disclosed on the survey of the Property
certified to the Lender, the Land and Improvements are not located in a Special
Flood Hazards Area or, if located within any such area, as of the date hereof
Borrower has and will maintain the insurance prescribed in Section 4.06 below.
(b)Permits; Compliance with Laws. Borrower has all necessary Permits including
those required for the Permitted Use and for the lawful operation of the
Property as currently operated and as contemplated herein and for the lawful
conduct of its business, all of which Permits are currently in full force and
effect, are not subject to ongoing Proceedings for revocation, suspension,
forfeiture, or modification, and, to Borrower’s knowledge, are not subject to
revocation, suspension, forfeiture, or modification. Except as disclosed in the
property condition report, the zoning report, and the environmental report
delivered to or received by Lender, to Borrower’s knowledge, the Property and
its use and occupancy are in compliance with all Laws, and Borrower has received
no notice of any violation or potential violation of the Laws which has not been
remedied or satisfied.
(c)Utilities. The Property is served by all utilities (including water and
sewer) required for the Permitted Use.
(d)Roads and Streets. Public roads and streets necessary to serve the Property
for the Permitted Use have been completed, are serviceable, are open, and to
Borrower’s knowledge have been dedicated to and accepted by the appropriate
Governmental Authorities. As of the date hereof, Borrower and all other
occupants of the Property have access to such public roads and streets.

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(e)Damage. As of the date hereof, except as disclosed in the property condition
report obtained by Lender, the Property is free from any Damage, other than de
minimis Damage.
(f)Payment for Improvements. As of the date hereof, all costs and expenses for
labor, materials, supplies, and equipment used in the construction of the
Improvements which are due and owing have been paid in full and there are no
liens on the Property with respect thereto except for the Permitted
Encumbrances.
(g)Furniture, Fixtures and Equipment. Borrower owns or leases and as of the date
hereof has paid in full all amounts due and owing for all furnishings, fixtures,
and equipment (other than Tenants’ property) used in connection with the
operation of the Property, free of all security interests, liens, or
encumbrances except the Permitted Encumbrances.
(h)Separate Tax Lot. The Property is assessed for real estate tax purposes as
one or more wholly independent tax lot(s), separate from any adjoining land or
improvements, and no other land or improvements are assessed and taxed together
with the Property, and no other land or improvements are necessary for the
operation of the Property.
Section 3.06    Tax Status of Borrower. Borrower is not a Foreign Person for
U.S. federal income tax purposes. If Borrower is a Disregarded Entity, the owner
of Borrower (which owner is not a Disregarded Entity) is not a Foreign Person
for U.S. federal income tax purposes.
Section 3.07    Bankruptcy and Equivalent Value.    As of the date hereof, no
Bankruptcy Proceeding has been instituted by or against any Borrower Party.
Borrower has received reasonably equivalent value for granting this Instrument.
Section 3.08    Disclosure. As of the date hereof, Borrower has not failed to
disclose any fact known to Borrower that could cause any representation or
warranty made herein to be materially misleading. To Borrower’s knowledge, as of
the date hereof, there has been no adverse change in any condition, fact,
circumstance, or event that would make any such information materially
inaccurate, incomplete or otherwise misleading.

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Section 3.09    Illegal Activities and Criminal Proceedings.
(a)Illegal Activities. No portion of the Property has been or will be purchased,
improved, fixtured, equipped or furnished with proceeds of any illegal activity
and, to Borrower’s knowledge, there are no illegal activities at, on or under
the Property.
(b)Criminal Proceedings. To Borrower’s knowledge, no Borrower Party has been
charged, indicted or convicted in any Proceeding, or is currently under threat
of charge, indictment or conviction in any Proceeding, for any felony or crime
punishable by imprisonment, including but not limited to the Racketeer
Influenced and Corruption Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”).
Section 3.10    Anti-Terrorism Laws.
(a)OFAC Lists.
(i)Borrower is not, and to Borrower’s knowledge, each other Borrower Party is
not a Prohibited Person; and
(ii)Borrower does not knowingly conduct any business with or engage in any
transaction or dealing with any Prohibited Person.
(b)Other Anti-Terrorism Laws. Borrower, and to the knowledge of Borrower, each
other Borrower Party, is in compliance with all Anti-Terrorism Laws. To the
extent (if any) that Borrower is required to do so, it has established policies
and procedures reasonably designed to prevent and detect money laundering and to
prevent other violations of the Anti-Terrorism Laws.
Section 3.11    ERISA. Borrower represents and warrants to Lender that (a)
Borrower is not (i) a Plan, (ii) a Governmental Plan, or (iii) an entity the
assets of which constitute “plan assets” of any Plan within the meaning of 29
C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA; (b) neither
Borrower nor any of its ERISA Affiliates maintains a Plan subject to Title IV of
ERISA or the minimum funding requirements of Section 303 of ERISA or contributes
to, or has any obligation to contribute to, or liability under, any active or
terminated Plan subject to Title IV of ERISA or the minimum funding requirements
of Section 303 of ERISA; and (c) Borrower is not subject to state Laws
regulating investments and fiduciary obligations with respect to Governmental
Plans.
Section 3.12    Ground Leases. The Ground Leases are the only ground leases
affecting the Property.
ARTICLE IV - COVENANTS AND AGREEMENTS
Borrower covenants and agrees with Lender as follows:
Section 4.01    Payment of Obligations. Subject to the provisions, terms and
conditions set forth in the Loan Documents, including, without limitation all
notice and cure periods, Borrower shall timely pay and cause to be performed the
Obligations.

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Section 4.02    Continuation of Existence. Borrower shall not (a) dissolve,
terminate, or otherwise dispose of, directly, indirectly or by operation of Law,
all or substantially all of its assets, except in connection with a Permitted
Transfer; (b) reorganize or change its legal structure without Lender’s prior
written consent, except as otherwise expressly permitted in this Instrument in
connection with a Permitted Transfer or otherwise; (c) change its name, address,
or the name under which Borrower conducts its business without promptly
notifying Lender; or (d) do anything to cause the representations in Section
3.02 to become untrue.
Section 4.03    Assessments.
(a)Obligation to Pay Assessments. Borrower shall pay when due all Assessments
and in all events prior to the date any fine, penalty, interest or charge for
nonpayment may be imposed. Unless Borrower is making Deposits in accordance with
Section 4.10, Borrower shall provide Lender with receipts evidencing such
payments (except for ground rents, maintenance charges, and utility charges)
within thirty (30) days after their due date.
(b)Right to Contest. Borrower may, prior to delinquency and at its sole expense,
contest any Assessment, but this shall not change or extend Borrower’s
obligation to pay the Assessment as required above unless (i) Borrower gives
Lender prior written notice of its contest of an Assessment; (ii) Borrower
demonstrates to Lender’s reasonable satisfaction that (1) the Property will not
be sold to satisfy the Assessment prior to the final determination of the
Proceeding; (2) Borrower has taken any action that is required or permitted to
accomplish a stay of any such sale; and (3) if Borrower is not required to pay
the contested amount at part of the contest, then if requested by Lender
Borrower has either at its election (x) furnished a bond or surety (satisfactory
to Lender in form and amount) sufficient to prevent a sale of the Property; or
(y) deposited one hundred fifty percent (150%) of the full amount necessary to
pay any unpaid portion of the Assessments with Lender; and (iii) such Proceeding
shall be permitted under any other instrument to which Borrower or the Property
is subject (whether superior or inferior to this Instrument).
(c)Transaction Taxes. Borrower shall pay all Transaction Taxes when assessed. If
Borrower fails to pay the Transaction Taxes after demand by Lender, Lender may
(but is not obligated to) pay such Transaction Taxes and Borrower shall
reimburse Lender within five (5) Business Days after written notice for any
amount so paid with interest at the Default Rate.
(d)Taxes on Loan Documents, Etc. If any change effective after the date hereof
in a Law requires (i) the deduction from the value of real property for the
purpose of taxation of any lien or encumbrance thereon; (ii) the imposition of
taxes on mortgages or deeds of trust, or debts secured by mortgages or deeds of
trust, for federal, state or local purposes or changes the manner of the
collection of any such existing taxes; and/or (iii) the imposition of a tax,
either directly or indirectly, on any of the Loan Documents or the Obligations,
Borrower shall, if permitted by Law, pay the additional tax, if any, resulting
from such change in Law within the statutory period or within twenty (20) days
after demand by Lender, whichever is less; provided, however, that if, in the
opinion of Lender, Borrower is not permitted by Law to pay such taxes, Lender
shall have the option to declare the Obligations immediately due and payable
(without any Prepayment Premium) upon one hundred twenty (120) days’ notice to
Borrower. This Section 4.03(d) shall not apply to any taxes imposed on or with
respect to Lender that are (A) imposed on or measured by net income (however
denominated) or franchise taxes or (B) attributable to Lender’s failure to
deliver to Borrower such documentation prescribed by applicable Law or
reasonably requested by Borrower as would reduce or eliminate the amount of such
taxes imposed on or with respect to Lender (to the extent Lender is legally
entitled to deliver such documentation to Borrower).

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Section 4.04    Defense of Title, Proceedings and Rights under Loan Documents.
Borrower shall forever warrant, defend and preserve Borrower’s title to the
Property, the validity, enforceability and priority of this Instrument and the
lien or security interest created hereby, and any rights of Lender and/or
Trustee under the Loan Documents against the claims of all Persons, and shall
promptly notify Lender and Trustee of any such claims. Lender and/or Trustee
(whether or not named as a party to such Proceedings) is authorized and
empowered (but shall not be obligated) to take such additional steps as it may
deem necessary or proper for the defense of any such Proceeding or the
protection of the lien, security interest, validity, enforceability, or priority
of this Instrument, title to the Property, or any rights of Lender and/or
Trustee under the Loan Documents, including the employment of counsel, the
prosecution and/or defense of such Proceedings, the compromise, release, or
discharge of such adverse claims, the purchase of any tax title, the removal of
any such liens and security interests, and any other actions Lender and/or
Trustee deems necessary to protect its or their interests. During the
continuance of an Event of Default, Borrower authorizes Lender and/or Trustee to
take any actions required to be taken by Borrower, or permitted to be taken by
Lender and/or Trustee, in the Loan Documents in the name and on behalf of
Borrower. Borrower shall reimburse Lender and Trustee within five (5) Business
Days after written notice for all payments and expenses (including Attorneys’
Fees) made or incurred by Lender and/or Trustee in connection with the foregoing
and Lender’s or Trustee’s exercise of its or their rights under the Loan
Documents. All such payments and expenses of Lender and/or Trustee, until
reimbursed by Borrower, shall be part of the Obligations, bear interest from the
date on which due at the Default Rate, and shall be secured by this Instrument.
Section 4.05    Compliance With Laws and Operation and Maintenance of Property.
(a)Maintenance, Use, of Property. Subject to ordinary wear and tear and the
rights and obligations of Tenants under Leases, (i) Borrower will operate and
maintain the Property in good order, repair, and operating condition, and (ii)
Borrower will promptly make all necessary repairs, replacements, additions, and
improvements necessary to maintain the Property in substantially the same
condition as of the date hereof. Borrower will not abandon the Property.
Borrower is currently using, and will continue to use, the Property for the
Permitted Use, and will not use the Property or permit the Property to be used
for any other use.
(b)Alterations. Except as otherwise permitted in this Section 4.05(b), Borrower
shall not, without first obtaining Lender’s approval, commence, nor allow to be
commenced, any construction, alteration or modification of the Improvements or
any new construction on the Land.
(i)Notwithstanding the foregoing Lender shall not unreasonably withhold, delay
or condition its consent to any non-structural construction on or non-structural
alterations to, the Property, which in the aggregate do not exceed $700,000 in
any calendar year (prorated for any partial year during the term of the Loan).
(ii)Lender’s approval shall not be required for (A) any non-structural
construction on, or non-structural alterations to, the Property aggregating less
than $700,000 per calendar year (prorated for any partial year during the term
of the Loan); and (B) ordinary and customary maintenance and repair of the
Property, including, without limitation, alterations to the Property that
require capital expenditures such as repairs and maintenance to the parking lot
or roof of the buildings on the Property and updating of the façade of the
buildings on the Property, that do not reduce the net rentable area or value of
the Property more than a de minimis amount and that do not render the Property
in violation of any requirement of the Loan Documents; and (C) alterations or
tenant improvements made pursuant to the provisions of any Lease existing on the
date hereof that has been approved by Lender or any new Lease or amendment

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to Lease approved by Lender or which does not, by the terms of the Loan
Documents, require Lender’s prior written consent.
(iii)If Lender’s approval is required for any new construction on, or alteration
to, the Property during the term of the Loan, Borrower requests Lender’s
approval in writing, and such written request is neither approved nor denied
within ten (10) Business Days following Lender’s receipt of such request
(together with plans and specifications, the budget for the work, the
construction contract, and such other documentation as Lender may reasonably
request), Lender’s approval shall be deemed given; provided that Borrower’s
request for Lender’s approval bore the following legend typed in bold, capital
letters at the top: “IF LENDER SHALL FAIL TO EITHER APPROVE OR DENY BORROWER’S
REQUEST FOR LENDER’S APPROVAL OF NEW CONSTRUCTION ON, OR ALTERATION TO, THE
PROPERTY AND THE DOCUMENTATION THEREFOR WITHIN TEN (10) BUSINESS DAYS AFTER
LENDER’S RECEIPT THEREOF, LENDER SHALL BE DEEMED TO HAVE APPROVED SUCH NEW
CONSTRUCTION ON, OR ALTERATION TO, THE PROPERTY”; and provided, further that,
the deemed approval provision in this sentence shall not apply in the event the
documentation for the new construction on, or alteration to, the Property, or
the request therefore does not comply with the provisions of this paragraph.
(c)Personal Property. Borrower will keep the Property fully equipped and will
replace all worn out or obsolete Personal Property in a commercially reasonable
manner with comparable fixtures or Personal Property, unless such Personal
Property is no longer necessary for the operation of the Property. Unless such
Personal Property is no longer necessary for the operation of the Property,
Borrower will not, without Lender’s prior written consent, remove any Personal
Property covered by this Instrument unless the same is replaced by Borrower in a
commercially reasonable manner with a comparable article (i) owned by Borrower
free and clear of any lien or security interest (other than the Permitted
Encumbrances); or (ii) leased by Borrower if the replaced Personal Property was
leased at the time of execution of this Instrument (or if otherwise consented to
in writing by Lender).
(d)Compliance with Laws. Borrower shall comply with and shall cause the Property
to be maintained, used, and operated in compliance with all (i) Laws; (ii)
orders, rules, and regulations of any regulatory, licensing, accrediting,
insurance underwriting or rating organization, or other body exercising similar
functions; (iii) duties or obligations of any kind imposed under any Permitted
Encumbrance or by covenant, condition, agreement, or easement, public or
private; and (iv) policies of insurance at any time in force with respect to the
Property. If Proceedings are initiated or Borrower receives notice that Borrower
or the Property is not in compliance with any of the foregoing, Borrower will
promptly send Lender notice and a copy of notice of such Proceedings or
violation.
(e)Rezonings, Encumbrances Etc. Borrower shall not, without Lender’s prior
written consent: (i) initiate or actively support any zoning reclassification of
the Property or variance under existing zoning ordinances; (ii) modify or
supplement any of the Permitted Encumbrances; (iii) impose any restrictive
covenants or encumbrances upon the Property other than Permitted Encumbrances;
(iv) execute or file any subdivision plat affecting the Property; (v) consent to
the annexation of the Property to any municipality; and (vi) permit the Property
to be used by the public or by any Person in a way that might make a claim of
adverse possession or any implied dedication or easement possible. With respect
to Lender’s approval for utility easements under subsection (ii) above, if
Borrower requests Lender’s approval in writing, and such written request is
neither approved nor denied within five (5) Business Days following Lender’s
receipt (together with the a copy of such utility easement), Lender’s approval
shall be deemed given; provided that Borrower’s request for Lender’s approval
shall bear the following legend typed in bold, capital letters at the top: “IF
LENDER SHALL FAIL TO EITHER APPROVE OR DENY BORROWER’S REQUEST FOR LENDER’S
APPROVAL OF THE ENCLOSED UTILITY

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EASEMENT WITHIN FIVE (5) BUSINESS DAYS AFTER LENDER’S RECEIPT THEREOF, LENDER
SHALL BE DEEMED TO HAVE APPROVED SUCH UTILITY EASEMENT”.

Section 4.06    Insurance.
(a)Property Insurance. Borrower shall keep the Property insured for the benefit
of Borrower and Lender (with Lender named as mortgagee/loss payee) by (i) an
“all risk” property insurance policy with an agreed amount endorsement for Full
Replacement Cost without any coinsurance provisions or penalties, or the
broadest form of coverage available, in an amount sufficient to prevent Lender
from ever becoming a coinsurer under the policy or Laws, and with a deductible
not to exceed One Hundred Thousand Dollars ($100,000.00); (ii) a policy or
endorsement insuring against both alien and domestic acts of terrorism in
accordance with Terrorism Risk Insurance Act, without co-insurance for damage to
the Property, or loss of Rents, caused by acts of terrorism; (iii) a policy or
endorsement insuring against claims applicable to the presence of Mold, if
required by Lender; (iv) a policy or endorsement providing Rent Loss Insurance
covering a period of not less than twelve (12) months of gross rent following
the date of the Damage; (v) a policy or endorsement insuring against damage by
flood if the Property is located in a Special Flood Hazard Area in an amount
equal to the amount of the full replacement costs of the Improvements without
depreciation; (vi) a policy or endorsement covering against Damage from
(1) sprinkler system leakage and (2) boilers, boiler tanks, HVAC and other
building systems and equipment, pressure vessels, auxiliary piping, and similar
apparatus, in an amount required by Lender; and (vii) during the period of any
construction, repair, restoration, or replacement of the Property, a standard
builder’s risk policy with extended coverage in an amount at least equal to the
Full Replacement Cost, and worker’s compensation, in statutory amounts. Full
Replacement Cost will be determined, at Borrower’s expense, periodically upon
policy expiration or renewal by the insurance company or an appraiser, engineer,
architect, or contractor approved by said company and Lender.

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(b)Liability Insurance. Borrower shall maintain commercial general liability
insurance with per occurrence limits of $1,000,000, a products/completed
operations limit of $2,000,000, and a general aggregate limit of $2,000,000,
with an excess/umbrella liability policy of not less than $5,000,000 per
occurrence and annual aggregate covering Borrower, with Lender named as an
additional insured, against claims for bodily injury or death or property damage
occurring in, upon, or about the Property or any street, drive, sidewalk, curb,
or passageway adjacent thereto. In addition to any other requirements, such
commercial general liability and excess/umbrella liability insurance shall
provide insurance against acts of terrorism and against claims applicable to the
presence of Mold, or such coverages shall be provided by separate policies or
endorsements. The insurance policies shall also include operations and blanket
contractual liability coverage which insures contractual liability under the
indemnification set forth in Section 8.01 below (but such coverage or the amount
thereof shall in no way limit such indemnification).
(c)Additional or Changed Insurance Requirements. Upon not less than sixty (60)
days’ advance notice to Borrower, Lender shall have the right to require that
Borrower carry such additional or different types, amounts or limits of
insurance as Lender may reasonably require to the extent that: (i) that such
coverage is then available, (ii) owners and/or operators of retail properties of
comparable quality to the Property and located in the market in which the
Property is located are generally obtaining such coverage; (iii) lenders
financing such retail properties are generally requiring such coverage, whether
as a condition to new financing or pursuant to documents governing existing
loans; or (iv) Borrower or Principal is obtaining such coverage on any other
properties owned or operated by Borrower or Principal in the market in which the
Property is located.
(d)Policy Requirements. All insurance required under this Section 4.06 shall be
fully paid for, nonassessable, and the policies shall contain such provisions,
endorsements, and expiration dates as Lender shall reasonably require. The
policies shall be issued by insurance companies authorized to do business in the
Property State and must be rated “A” or better by A.M. Best (or if a rating by
A.M. Best is no longer available, a similar rating from a similar or successor
service) and have a Financial Size Category of “X” or higher. Companies with
A.M. Best ratings of “B” or “C” with reinsurance endorsements are not
acceptable. In addition, all policies shall (i) in the case of insurance
required by Section 4.06(a), include a standard mortgagee clause, without
contribution, in the name of Lender (and that of its subsidiaries’, Affiliates’,
successors’ and assigns’), (ii) provide that they shall not be canceled,
amended, or materially altered (including reduction in the scope or limits of
coverage) without at least thirty (30) days’ prior written notice to Lender
except in the event of cancellation for non-payment of premium, in which case
only ten (10) days’ prior written notice will be given to Lender, and (iii)
include a waiver of subrogation clause substantially equivalent to the
following: “The Company may require from the Insured an assignment of all rights
of recovery against any party for loss to the extent that payment therefor is
made by the Company, but the Company shall not acquire any rights of recovery
which the Insured has expressly waived prior to loss, nor shall such waiver
affect the Insured’s rights under this policy”.
(e)Evidence of Insurance. Borrower shall deliver to Lender (i) original (upon
request) or certified copies of all policies (and renewals) required under this
Section 4.06; and (ii) receipts evidencing payment of all premiums on such
policies at least fifteen (15) days prior to their expiration. If original and
renewal policies are unavailable or if coverage is under a blanket policy,
Borrower shall deliver duplicate originals (upon request), or, if unavailable,
original ACORD 27 and ACORD 25-S certificates (or equivalent certificates)
evidencing that such policies are in full force and effect together with
certified copies of the original policies. If coverage is under a blanket
policy, such policy shall make specific reference to the Property and list all
locations and insurable values of the properties included in the blanket policy.
In the event that such policies of insurance and evidence of the payment of the
premiums therefor are not delivered to Lender, confirming that there will be no
gaps in coverage or underinsurance as required by this Instrument, Borrower
hereby expressly authorizes Lender to obtain, without notice to, or demand

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upon, Borrower and without releasing Borrower from any of Borrower’s obligations
hereunder, replacement insurance policies in such amounts, on such terms, and
from such insurance agencies or companies as are suitable to Lender in Lender’s
sole discretion, which replacement insurance, in Lender’s sole discretion, may
protect only Lender’s interest in the Property and may, but need not, protect
Borrower’s interest in the Property. If Lender obtains such replacement
insurance policies, Lender shall invoice Borrower for the amount of all fees,
costs, and expenses related thereto, including any premiums paid by Lender, and
Borrower shall remit payment to Lender for such amount within five (5) Business
Days of receiving such invoice. Nothing contained herein shall in any way
obligate Lender to obtain or maintain such replacement insurance policies, and
Lender shall not incur any liability for obtaining, maintaining, failing to
obtain, or failing to maintain any such replacement insurance policies, nor
shall Lender incur any liability for any of the contents, form, or legal
sufficiency of any such policies, the solvency of any agencies or companies
issuing such policies, or the payment or defense of any Proceedings related
thereto. Except to the extent prohibited by Law, Lender may furnish to any
insurance agency or company any information concerning the Loan or Borrower, and
any information contained in, or extracted from, any policy of insurance
delivered to Lender hereunder.
(f)Waiver of Subrogation. A waiver of subrogation required by Section 4.06(d)
hereof shall be obtained by Borrower from its insurers and, consequently,
Borrower for itself, and on behalf of its insurers, hereby waives and releases
any and all right to claim or recover against Lender, its officers, employees,
agents and representatives, for any Damage to Borrower, other Persons, the
Property, Borrower’s property or the property of other Persons from any cause
required to be insured against by the provisions of this Instrument or otherwise
insured against by Borrower.
(g)Additional Insurance Requirements. Borrower shall not carry separate or
additional insurance concurrent in form or contributing in the event of loss
with that required under this Section 4.06 unless endorsed in favor of Lender in
accordance with this Section 4.06 and approved by Lender in all respects. In the
event of foreclosure of this Instrument or other transfer of title or assignment
of the Property in extinguishment, in whole or in part, of the Obligations, all
right, title, and interest of Borrower in and to all policies of insurance then
in force regarding the Property and all proceeds payable thereunder and unearned
premiums thereon shall immediately vest in the purchaser or other transferee of
the Property. No approval by Lender of any insurer shall be construed to be a
representation, certification, or warranty of its solvency. No approval by
Lender as to the amount, type, or form of any insurance shall be construed to be
a representation, certification, or warranty of its sufficiency. Borrower shall
comply with all insurance requirements and shall not cause or permit any
condition to exist which would be prohibited by any insurance requirement or
would invalidate the insurance coverage on the Property.

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(h)Payment of Lender’s Costs and Expenses. Borrower shall pay all costs and
expenses, including Attorneys’ Fees, incurred by Lender in connection with
Lender’s review and approval of Borrower’s insurance and of the insurance to be
provided by each Ground Lessee as provided below (regardless of whether such
insurance is ultimately purchased by Ground Lessee, Tenant, Borrower or Lender).
(i)Ground Lessee Insurance Obligations. In addition to the foregoing, and
notwithstanding anything herein to the contrary (including Section 4.06(g)
hereof) Borrower shall cause each Ground Lessee to maintain the insurance
required to be maintained by such Ground Lessee pursuant to its Ground Lease.
Notwithstanding the foregoing, in the event that any Ground Lessee fails to
maintain the insurance that it is required to carry under its Ground Lease, or
fails to name Lender as a loss payee thereunder, or undertakes to self-insure,
Borrower shall provide notice to such Ground Lessee of such failure. If such
Ground Lessee shall fail to obtain such insurance or name Lender as loss payee
prior to the lapse of existing insurance which complies with the provisions of
this Section 4.06(i), then Borrower shall acquire and maintain insurance
covering the demised premises under such Ground Lease that is substantially
equivalent to the insurance that such Ground Lessee is required to carry under
its Ground Lease and which names Lender as loss payee. Borrower shall promptly
provide Lender with notice of any Ground Lessee’s failure to carry appropriate
insurance and shall provide evidence, reasonably satisfactory to Lender, that
Borrower has acquired sufficient, substitute insurance which names Lender as a
loss payee. Borrower shall carry such insurance until Lender is provided with
evidence, reasonably satisfactory to Lender, that such Ground Lessee has
obtained the insurance required to be maintained under its Ground Lease. In the
event that such policies of insurance and evidence of the payment of the
premiums therefor are not delivered to Lender, confirming that there will be no
gaps in coverage or underinsurance to what is required by this Instrument,
Borrower hereby expressly authorizes Lender to obtain, without notice to, or
demand upon, Borrower and without releasing Borrower from any of Borrower’s
obligations hereunder, replacement insurance policies in such amounts, on such
terms, and from such insurance agencies or companies as are suitable to Lender
in Lender’s sole discretion, which replacement insurance, in Lender’s sole
discretion, may protect only Lender’s interest in the Property and may, but need
not, protect Borrower’s interest in the Property. If Lender obtains such
replacement insurance policies, Lender shall invoice Borrower for the amount of
all fees, costs, and expenses related thereto, including any premiums paid by
Lender, and Borrower shall remit payment to Lender for such amount within five
(5) Business Days of receiving such invoice. Nothing contained herein shall in
any way obligate Lender to obtain or maintain such replacement insurance
policies, and Lender shall not incur any liability for obtaining, maintaining,
failing to obtain, or failing to maintain any such replacement insurance
policies, nor shall Lender incur any liability for any of the contents, form, or
legal sufficiency of any such policies, the solvency of any agencies or
companies issuing such policies, or the payment or defense of any Proceedings
related thereto. Except to the extent prohibited by Law, Lender may furnish to
any insurance agency or company any information concerning the Loan or Borrower,
and any information contained in, or extracted from, any policy of insurance
delivered to Lender hereunder.

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Section 4.07    Damage and Destruction of Property.
(a)Notification of Lender, Etc. In the event of any Damage other than de minimus
Damage, (i) Borrower shall promptly notify Lender, generally describing the
extent of the Damage, and shall take all necessary steps to preserve any
undamaged part of the Property; and (ii) Borrower shall comply with other
reasonable requirements established by Lender to preserve the security under
this Instrument. Borrower expressly assumes all risk of loss from any Damage,
whether or not insurable or insured against.
(b)Proof of Loss and Settlement of Claims. If any Damage occurs and some or all
of it is covered by insurance, then Lender may, but is not obligated to, make
proof of loss if not made by Borrower within fifteen (15) days after the date of
the Damage, and Lender is authorized and empowered by Borrower to settle,
adjust, or compromise any claims for the Damage. Notwithstanding the foregoing,
Borrower shall have the right to settle, adjust or compromise any claim for
Damage if the total amount of such claim is less than Two Hundred Fifty Thousand
Dollars ($250,000) (the “Damage Threshold”); provided that Borrower promptly
uses the full amount of such insurance proceeds for Restoration of the Damage
and provides evidence thereof to Lender in a manner acceptable to Lender.
(c)Lender to Hold Insurance Proceeds. Except as expressly provided in
Section 4.07(b) above, all insurance proceeds payable on account of any Damage
in excess of the Damage Threshold shall be delivered to and held by Lender, to
be applied in accordance with this Section 4.07, and each insurance company is
authorized and directed to make payment directly to Lender. Except as expressly
provided in Section 4.07(b) above, Borrower shall have no right to such proceeds
or to direct the use of the same. If Borrower receives any insurance proceeds
for the Damage in excess of the Damage Threshold, Borrower shall promptly
deliver the proceeds to Lender, except as expressly provided in Section 4.07(b)
above. Any insurance proceeds held by Lender shall be held without the payment
of interest thereon. Notwithstanding anything in this Instrument or at Law or in
equity to the contrary, none of the insurance proceeds paid to Lender shall be
deemed trust funds, and Lender may dispose of these proceeds as provided in this
Section 4.07.
(d)Obligation to Undertake Restoration. Upon the occurrence of any Damage,
Borrower shall diligently repair or restore the damaged Improvements in
accordance with this Section 4.07, regardless of the amount of Net Proceeds made
available to pay for such Restoration and regardless of whether Borrower was
required by this Instrument to insure against such Damage. If Borrower was
required to maintain insurance by this Instrument and failed to do so, such
failure shall not relieve Borrower of its obligation to undertake Restoration
necessitated by any Damage that would have been covered by such insurance.
(e)Lender’s Right to Condition Use of Proceeds. In the event the insurance
casualty proceeds are less than the Damage Threshold, all insurance proceeds
shall be delivered to Borrower and Borrower shall commence to restore the
Property to the same or better condition as that existing prior to such Damage
and shall diligently prosecute such Restoration to completion. In the event the
insurance casualty proceeds equal or exceed the Damage Threshold, all insurance
proceeds shall be delivered to, and held and disbursed towards Restoration by
Lender subject to the following terms and conditions being satisfied at the time
of the Damage and at all applicable times during the Restoration:
(i)    no Events of Default have occurred and be continuing;
(ii)    Lender shall have made a reasonable determination that the time needed
to complete the Restoration will (A) not result in its completion occurring
during the last three hundred sixty-

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five (365) days of the term of the Loan, and (b) not exceed twelve (12) months
from the date of the damage or destruction;
(iii)    Lender has determined in its reasonable discretion that the LTV will
not exceed fifty-five percent (55%) upon completion of the Restoration;
provided, however, that if the LTV exceeds fifty-five percent (55%) upon
completion of the Restoration as determined by Lender in its reasonable
discretion, then rather than having the casualty insurance proceeds applied to
reduce the Debt, Borrower may elect in its sole discretion to (x) cause a
Release of the Property pursuant to the terms and conditions of Section 10.01
(without prepayment penalty or premium) with the casualty insurance proceeds
applied to the amounts due with respect to such Release, (y) cause a
Substitution of the Property pursuant to the terms and conditions of Section
10.02 (without prepayment penalty or premium) with the casualty insurance
proceeds applied to the amounts due with respect to such Substitution (if
required) with any excess distributed to Borrower, or (z) repay a portion of the
Loan (without prepayment penalty or premium) in the amount necessary for the LTV
not to exceed fifty-five percent (55%) upon completion of the Restoration as
determined by Lender in its reasonable discretion, provided that Borrower shall
not be obligated to make such election (in which case the condition in this
clause (iii) to the use of casualty insurance proceeds shall be deemed not
satisfied);
(iv)     the DSCR based on Leases which are not terminable by reason of the
casualty is at least 2.00 to 1.00 as reasonably determined by Lender; provided
that if the DSCR is less than 2.00 to 1.00, then rather than having the casualty
insurance proceeds applied to reduce the Debt, Borrower may elect in its sole
discretion to (x) cause a Release of the Property pursuant to the terms and
conditions of Section 10.01 (without prepayment penalty or premium) with the
casualty insurance proceeds applied to the amounts due with respect to such
Release, (y) cause a Substitution of the Property pursuant to the terms and
conditions of Section 10.02 (without prepayment penalty or premium) with the
casualty insurance proceeds applied to the amounts due with respect to such
Substitution (if required) with any excess distributed to Borrower, or (z) repay
a portion of the Loan (without prepayment penalty or premium) in the amount
necessary for the DSCR of the Property to be at least 2.00 to 1.00 upon
completion of the Restoration, provided that Borrower shall not be obligated to
make such election (in which case the condition in this clause (iv) to the use
of casualty insurance proceeds shall be deemed not satisfied);
(v)    the insurance proceeds received, and being held by Lender, plus such
other funds which Borrower deposits with Lender, are sufficient, in Lender’s
reasonable opinion, to restore the Property in accordance with plans and
specifications approved by Lender; and if at any time Lender determines in its
good faith judgment that an upward revision of the total remaining cost of
Restoration, and as a result Lender does not have available a sufficient amount
of remaining insurance proceeds to pay the remaining cost of Restoration,
Borrower shall pay to Lender such additional amounts as are necessary to cover
the amount by which such upward revision exceeds the remaining proceeds;
(vi)     disbursement of the insurance proceeds shall be in accordance with
typical construction loan disbursement procedures established by Lender, as
Lender shall, in its sole opinion, deem necessary, appropriate or desirable;
(vii)    Borrower shall have in place and provide to Lender a policy or policies
of builder’s risk insurance in an amount not less than the full insurable value
of the Property insuring against

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such risks (including without limitation fire and extended coverage, collapse of
the improvements on the Property and earthquake coverage, if applicable, to
agreed limits) as Lender may request, and any other insurance as Lender may
reasonably request, in form and substance and from companies reasonably
acceptable to Lender;
(viii)    the work shall be performed under the supervision of an architect or
engineer approved in writing by Lender (such architect or engineer being
referred to hereinafter as the “Architect”) and, before Borrower commences any
work other than temporary work to protect property or prevent interference with
business, Lender shall have approved in writing the construction contract and
plans and specifications for such work; provided that if Borrower requests
Lender’s approval in writing, and such written request is neither approved nor
denied within fifteen (15) Business Days following Lender’s receipt (together
with the a copy of such plans and specifications), Lender’s approval shall be
deemed given; provided that Borrower’s request for Lender’s approval shall bear
the following legend typed in bold, capital letters at the top: “IF LENDER SHALL
FAIL TO EITHER APPROVE OR DENY BORROWER’S REQUEST FOR LENDER’S APPROVAL OF THE
ENCLOSED PLANS AND SPECIFICATION WITHIN FIFTEEN (15) BUSINESS DAYS AFTER
LENDER’S RECEIPT THEREOF, LENDER SHALL BE DEEMED TO HAVE APPROVED SUCH UTILITY
EASEMENT”.
(ix)    Lender receives each request for payment on seven (7) days’ prior
written notice accompanied by a certificate signed by the Architect stating
that: (1) the work completed to date has been performed in compliance with the
approved plans and specifications; (2) the sum requested is necessary to
reimburse Borrower for payments by Borrower to, or is due to, the contractor,
subcontractors, materialmen, laborers, engineers, architects or other persons
rendering services or materials for the work (giving a brief description of such
services, materials and related costs and to whom same is payable) and, when
added to all sums previously disbursed by Lender, does not exceed the value of
the work performed to the date of such certificate; and (3) the amount of the
remaining proceeds held by Lender (in addition to any amounts paid by Borrower
pursuant to this Section 4.07) shall be sufficient to pay for the work in full
upon completion of the same (giving in such reasonable detail as Lender may
require an estimate of the cost of such completion);
(x)    each request for disbursement by Lender shall be accompanied by a lien
waiver satisfactory to Lender covering that part of the work for which payment
or reimbursement was requested in the immediately preceding request for payment
and, if required by Lender and available at commercially reasonable rates, an
endorsement to Lender’s title policy insuring or a title commitment showing that
no liens have been filed in connection with the work performed to date;
(xi)    Lender receives, at Lender’s option, a satisfactory completion bond
covering the work;
(xii)    the Restoration work is performed in accordance with, and the Property
is at all times in compliance with all Laws affecting the Property and/or such
work;
(xiii)    Borrower commences Restoration within sixty (60) days of the
occurrence of the Damage, as such period may be extended for so long as Borrower
is diligently pursuing the issuance of any Permits necessary to complete such
Restoration, and diligently pursues the completion of the Restoration of the
Property subject to typical force majeure events, up to in all events a maximum
of ninety (90) days after the occurrence of the Damage;

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(xiv)    Lender receives the final request for payment after completion of the
work accompanied by a final lien waiver or waivers and a copy of any such
certificate or certificates as shall be required by law to render occupancy of
the improvements legal; and
(xvi)    Lender shall have the right to hire its own consultants (e.g.,
architect and/or engineer or other), to act on its behalf, in any capacity, and
Borrower shall pay such consultants’ fees.
(f)    Lender’s Discretion. In the event that at any time any of the terms and
conditions set forth in subparagraph (e) above are not satisfied and remain
unsatisfied for a period of thirty (30) days following written notice thereof to
Borrower, then Lender shall have the option, in its sole discretion, of paying
or applying all or any part of the insurance proceeds: (i) to any indebtedness
secured by the Loan Documents and in such order as Lender may determine; or (ii)
to the Restoration.
(g)    Administrative Fee. Lender shall receive an administrative fee equal to
Two Hundred Fifty and 00/100 Dollars ($250.00) for each disbursement of
insurance proceeds made by it and Borrower shall reimburse Lender for all costs
incurred by Lender in connection with the foregoing including, but not limited
to, consultants’ fees, attorney’s fees, and the fees and expenses of any
construction loan administrator or servicer retained by Lender to administer the
disbursement of insurance proceeds under this Section 4.07.
(h)    Intentionally Omitted.
(i) Additional Security. Borrower shall execute, deliver, file and/or record, at
its expense, such instruments as Lender requires to confirm and/or perfect
Lender’s security interest in insurance proceeds and other rights granted
pursuant to Section 1.01(f) hereof. Upon the occurrence and during the
continuance of an Event of Default, Lender may exercise all of its rights and
remedies as a secured party under the UCC with respect to such Net Proceeds,
Rent Loss Proceeds and other rights described above.

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Section 4.08     Condemnation.
(a)Notification of Lender, Etc. Borrower will promptly notify Lender of any
Taking. Borrower shall, at its expense, (i) diligently prosecute all Proceedings
in connection with such Taking, (ii) deliver to Lender copies of all papers
served in connection therewith; and (iii) consult and cooperate with Lender in
the handling of such Proceedings. No settlement of such Proceedings shall be
made by Borrower without Lender’s prior written consent. Lender may (but shall
not be obligated to do so) commence, appear in and prosecute in its own name any
Proceeding or make any compromise or settlement in connection with any Taking,
and Borrower will sign and deliver all instruments requested by Lender to permit
this participation.
(b)Payment of Award to Lender. Any Award is hereby assigned, and shall be paid,
to Lender. Borrower authorizes Lender to collect and receive all Awards, to give
receipts for them, to accept them in the amount received without question or
appeal, and/or to appeal any judgment, decree or order with respect to an Award.
Borrower will sign and deliver all instruments requested by Lender to permit
these actions.
(c)Application of Award. Lender may apply any Award in any order it determines
(i) to reimburse Lender for all costs related to collection of the Award; and
(ii) at Lender’s option, to (1) payment (without any Prepayment Premium) of all
or part of the Obligations, whether or not then due and payable, in the order
determined by Lender (provided that if any Obligations remain outstanding after
this payment, the unpaid Obligations shall continue in full force and effect and
Borrower shall not be excused in the payment thereof); or (2) the Restoration.
If all or any portion of the Award is applied to the Obligations, unless Lender
agrees otherwise, all regular installments of principal and interest payable
under the Note shall continue to be due and payable as provided therein until
the Obligations have been paid in full. If Borrower receives any Award, Borrower
shall promptly deliver such Award to Lender. Notwithstanding anything in this
Instrument or at Law or in equity to the contrary, none of the Award paid to
Lender shall be deemed trust funds and Lender may dispose of these proceeds as
provided in this Section 4.08.
(d)Payment of Obligations. Notwithstanding any Taking, Borrower shall continue
to pay and perform the Obligations as provided in the Loan Documents. Any
reduction in the Obligations due to application of the Award shall take effect
only upon Lender’s actual receipt and application of the Award to the
Obligations. If the Property shall have been foreclosed, sold pursuant to any
power of sale granted hereunder, or transferred by deed-in-lieu of foreclosure
prior to Lender’s actual receipt of the Award, Lender may apply the Award
received to the extent of any deficiency upon such sale and the incurrence of
costs by Lender in connection with such sale.
(e)Material Condemnation. If more than twenty-five percent (25%) of the income
producing square footage of the Property is taken as a result of a Proceeding
for a Taking or a Taking results in a decrease by twenty-five percent (25%) or
more of the Net Operating Income of the Property, then Lender upon written
notice to Borrower may require Borrower to cause a Release of the Property
pursuant to the terms and conditions of Section 10.01 or a Substitution of the
Property pursuant to the terms and conditions of Section 10.02, within ninety
(90) days after receipt of such notice with Borrower making the determination of
whether to effectuate a Release or Substitution and with the condemnation
proceeds applied to the amounts due with respect to the Release or if required
the Substitution, in each case with any prepayment made not being subject to any
prepayment penalty or premium and any unused condemnation proceeds being
distributed to Borrower. Borrower’s failure to cause such Release or
Substitution within such ninety (90) day period shall constitute an Event of
Default.

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Section 4.09    Certain Liens and Liabilities. Borrower shall pay, bond, or
otherwise discharge all liens, security interests, encumbrances and charges (a)
of mechanics, material men, laborers and other Persons for all materials
supplied and work performed in respect of the Property; (b) of judgment
creditors; and (c) created as a result of Borrower’s consensual acts and not
otherwise provided in clauses (a) - (b), which in each case, if unpaid, might
result in, or permit the creation of, a lien, security interest, encumbrance or
charge on the Property other than the Permitted Encumbrances, subject to the
same right to contest the same as provided in Section 4.03(b) for Assessments.
Borrower shall, at its sole expense, do everything necessary to preserve the
lien and security interest created by this Instrument and its priority. Nothing
in the Loan Documents shall be deemed or construed as constituting the consent
or request by Lender or Trustee, express or implied, to any contractor,
subcontractor, laborer, mechanic or materialman for the performance of any labor
or the furnishing of any material for any improvement, construction, alteration,
or repair of the Property. Borrower further agrees that neither Lender nor
Trustee stands in any fiduciary relationship to Borrower. Any contributions
made, directly or indirectly, to Borrower by or on behalf of any of its
partners, members, principals or any party related to such parties shall be
subordinate and inferior to the rights of Lender under the Loan Documents.
Section 4.10    Tax and Insurance Deposits. Borrower shall deliver to Lender all
tax bills, bond and assessment statements, statements of insurance premiums, and
statements for any other Impositions after receipt by Borrower. Borrower shall
promptly notify Lender of any changes to the amounts, schedules and instructions
for payment of the Impositions. Borrower shall make monthly Deposits to Lender
in an amount sufficient to pay the Impositions at least thirty (30) days before
they are due. Lender shall estimate the amount of the Deposits until
ascertainable. If Lender determines that the Deposits are insufficient, Borrower
shall promptly deposit any deficiency determined by Lender within five (5)
Business Days after notice from Lender. Borrower authorizes Lender or its agent
to obtain the bills for Assessments directly from the appropriate Governmental
Authority. All Deposits are pledged to Lender and shall constitute additional
security for the Obligations. The Deposits shall be held by Lender without
interest (except to the extent required by Law) and may be commingled with other
funds. If (a) Event of Default shall have occurred and be continuing at the time
of payment, (b) Borrower has delivered bills or invoices to Lender for the
Impositions in sufficient time to pay them when due; and (c) the Deposits are
sufficient to pay the Impositions or Borrower has deposited the necessary
additional amount, then Lender shall pay the Impositions prior to their due
date. Any Deposits remaining after payment of the Impositions shall, at Lender’s
option, be credited against the Deposits required for the following year or paid
to Borrower. If an Event of Default occurs, the Deposits may, at Lender’s
option, be applied to the Obligations in any order of priority, without
relieving Borrower of its obligation to pay the Impositions when they become
due. Any application to principal shall be deemed a prepayment subject to the
applicable Prepayment Premium. Borrower shall not claim any credit against the
principal and interest due under the Note for the Deposits. Upon an assignment
or other transfer of this Instrument pursuant to Section 9.05 of this
Instrument, Lender shall pay over the Deposits in its possession to the assignee
or transferee and then it shall be completely released from all liability with
respect to the Deposits, other than as a result of Lender gross negligence or
willful misconduct with respect to the Deposits. Borrower shall look solely to
the assignee or transferee with respect thereto. This provision shall apply to
every transfer of the Deposits to a new assignee or transferee. Subject to
Article V, a transfer of title to the Land shall automatically transfer to the
new owner the beneficial interest in the Deposits. Upon full payment of the
Debt, or, at Lender’s option, at any prior time, the balance of the Deposits in
Lender’s possession shall be paid over to the record owner of the Land and no
other party shall have any right or claim to the Deposits. Lender may transfer
all its rights and duties under this Section 4.10 to such servicer or financial
institution as Lender may periodically designate pursuant to Section 9.05 of
this Instrument and Borrower agrees to make the Deposits to such servicer or
institution.

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Section 4.11    ERISA.
(a)Borrower understands and acknowledges that, as of the date hereof, the source
of funds from which Lender is extending the Loan will include one or more of the
following accounts: (i) an “insurance company general account,” as that term is
defined in Prohibited Transaction Class Exemption 95-60 (60 Fed. Reg. 35925
(Jul. 12, 1995)), as to which Lender meets the conditions for relief in Sections
I and IV thereof; (ii) pooled and single client insurance company separate
accounts, which are subject to the provisions of ERISA; and (iii) one or more
insurance company separate accounts maintained solely in connection with fixed
contractual obligations of the insurance company, under which the amounts
payable or credited to the plan are not affected in any manner by the investment
performance of the separate account.
(b)Borrower covenants and agrees that it shall not engage in any transaction
which would cause any obligation or action, taken or to be taken, to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under ERISA and which would result in a material liability to
Borrower.
(c)Borrower shall deliver to Lender such certifications and/or other evidence
periodically requested by Lender, in its reasonable discretion, to verify the
representations and warranties in Section 3.11 and the covenants in Section
4.11(b) above. Notwithstanding anything in the Loan Documents to the contrary,
no sale, assignment, or transfer of any direct or indirect right, title, or
interest in Borrower or the Property (including creation of a junior lien,
encumbrance or leasehold interest) shall be permitted which would, in Lender’s
opinion, cause an ERISA Violation. At least fifteen (15) days before
consummation of any of the foregoing, Borrower shall obtain from the proposed
transferee or lienholder (i) a certification to Lender that the representations
and warranties of Section 3.11 will be true after consummation; and (ii) an
agreement to comply with this Section 4.11.
(d)The obligations of Borrower under this Section 4.11 shall survive repayment
and performance of the other Obligations and any transfer of title to the
Property or any portion thereof by foreclosure sale hereunder or by deed in lieu
of such foreclosure.

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Section 4.12    Environmental Indemnity. Subject to the provisions, terms and
conditions set forth therein, Borrower shall comply with all of the terms,
covenants and conditions of the Environmental Indemnity, and as of the date
hereof hereby re-makes all covenants, representations and warranties made by it
in the Environmental Indemnity, which are incorporated in this Instrument by
reference as if fully set forth herein. Certain obligations of Borrower under
the Environmental Indemnity shall survive repayment and performance of the Debt
and any transfer of title to the Property or any portion thereof by foreclosure
sale hereunder or by deed in lieu of such foreclosure.
Section 4.13    Intentionally Omitted.
Section 4.14    Inspection. Upon prior written notice, and subject in all
respects to the rights of Tenants under the Leases, Borrower shall allow Lender
and any Person who is not a Specified Prohibited Transferee, designated by
Lender to enter upon the Property and conduct tests or inspect the Property at
all reasonable times. Borrower shall reasonably assist Lender and such Person in
effecting said inspection.
Section 4.15    Records, Reports, and Audits.
(a)Maintenance of Books and Records; Required Reports. Borrower shall maintain
complete and accurate books and records with respect to all operations of, or
transactions involving, the Property. Annually, on or prior to March 31st of
each calendar year, Borrower shall furnish to Lender (i) financial statements,
prepared in accordance with generally accepted accounting principles,
consistently applied, for the immediately preceding calendar year for Borrower
and each of the Principals (including a schedule of all related obligations and
contingent liabilities for the Principals), financial statements to include a
net operating income statement and a capital expenditures statement; (ii) unless
Borrower is making Deposits in accordance with Section 4.10, copies of paid tax
receipts for the Property; (iii) a net operating income budget showing projected
income and expense and capital expenditures for the next twelve (12) month
fiscal budget period; and (iv) subject to any applicable confidentiality
restrictions contained in the applicable Leases, any sales figures reported to
Borrower by all retail Tenants of the Property for the prior calendar year. On
or prior to March 31st of each calendar year and within ten (10) days after
request from Lender for any other calendar quarter thereafter, Borrower shall
furnish to Lender a current rent roll for the Property.
(b)Intentionally Omitted.
(c)Delivery of Reports. All of the reports, statements, and items required under
this Section 4.15 (i) shall be certified as being true, correct, and accurate by
the delivering party; (ii) if an Event of Default occurred during the calendar
year to which such reports pertain, at Lender’s option, the operating statement
and financing statements shall be audited by a certified public accountant
acceptable to Lender at Borrower’s expense; and (iii) shall be on substantially
the same form as previously delivered to Lender; and (iv) shall be delivered on
or before the due date thereof. If any report, statement, or item is not
received by Lender on its due date, Borrower shall pay to Lender, to compensate
Lender for the administrative expense likely to be incurred by Lender as a
result of such delinquent report, statement or item, a late fee of Five Hundred
and No/100 Dollars ($500.00) for each such delinquent report, statement or item
for each month or partial month beyond the due date thereof that Lender has not
received same; provided that no such fee shall apply to the first month of
delinquency for the first report delivered later than the applicable due date.
Borrower hereby acknowledges that such late fee is applicable to each reporting
document that is delinquent and is not a single charge for all reporting
documents that are delinquent at the same time. Borrower shall (i) provide
Lender with such additional financial, management, or other information
regarding Borrower, the Principals, or the Property as Lender may reasonably
request; and (ii) deliver all

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items required by this Section 4.15 in an electronic format (i.e. on CD-ROM or
external hard drive) or by electronic transmission.
(d)Right to Examine Records. Upon written notice, Borrower shall allow Lender or
any Person designated by Lender to examine, audit, and make copies of all such
books and records and all supporting data at the place where these items are
located at all reasonable times after reasonable advance notice; provided that
no notice shall be required after any Event of Default. Borrower shall
reasonably assist Lender in effecting such examination. Upon five (5) days’
prior notice, Lender may inspect and make copies of the income tax returns of
Borrower, its general partner(s) (if Borrower is a partnership) or its manager
or member (if Borrower is a limited liability company) for the purpose of
verifying any items referenced in this Section 4.15.
Section 4.16    Borrower’s Certificates. Within ten (10) Business Days after
Lender’s request, Borrower shall furnish a written certification to Lender and
any Investor as to (a) the amount of the Debt outstanding; (b) the interest
rate, terms of payment, and maturity date of the Note; (c) the date to which
payments have been paid under the Note; (d) whether any offsets or defenses
exist against the Obligations and a detailed description of any listed; (e)
whether all Leases are in full force and effect and have not been modified (or
if modified, setting forth all modifications); (f) the date to which the Rents
have been paid; (g) whether, to the knowledge of Borrower, any defaults exist
under any of the Leases with Major Tenants; (h) the security deposit held by
Borrower under each Lease and that such amount is the amount required under such
Lease; (i) whether there are any Events of Default and a detailed description of
any listed events; (j) whether the Loan Documents are in full force and effect;
and (k) any other matters reasonably requested by Lender related to the Leases,
the Obligations, the Property, or the Loan Documents. In addition, concurrently
with delivery of such written certification to Lender, Borrower shall deliver to
Lender an aged account receivable report showing any monetary defaults by
Tenants under the Leases certified by Borrower as true and accurate in all
material respects. Except during the continuance of an Event of Default, Lender
shall not request a certificate under this Section 4.16 more than once every
twelve (12) months.
Section 4.17    Criminal Proceedings. Borrower shall deliver to Lender such
certifications and/or other evidence periodically requested by Lender, in its
reasonable discretion, to verify the representations and warranties in Section
3.09(b).

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Section 4.18    Additional Security. The taking of additional security,
execution of partial releases, or extension of the time for the payment
obligations of Borrower shall not diminish the effect and lien of this
Instrument and shall not affect the liability or obligations of any maker or
guarantor. During the continuance of an Event of Default, Lender and/or Trustee
may enforce the Loan Documents or any other security in such order and manner as
Lender may determine in its discretion.
Section 4.19    Further Acts. Borrower shall take all necessary actions to keep
valid and effective the lien and rights of Lender and Trustee under the Loan
Documents. Promptly upon request by Lender or Trustee, and at Borrower’s
expense, Borrower shall execute additional instruments and take such actions as
Lender and/or Trustee reasonably believes are necessary to (a) maintain or grant
Lender and Trustee a first-priority, perfected lien on the Property; (b) grant
to Lender and Trustee, to the fullest extent permitted by Law, the right to
foreclose on, or transfer title to, the Property non-judicially; and (c) correct
any error in the Loan Documents.
Section 4.20    Compliance With Anti-Terrorism Laws.
(a)Conducting Business with Certain Persons. Borrower hereby covenants and
agrees that it will not knowingly conduct business with or engage in any
transaction or dealing with any Prohibited Person.
(b)Compliance with Anti-Terrorism Laws. Borrower hereby covenants and agrees
that it, as well as the Principals, will comply at all times with the
requirements of the Anti-Terrorism Laws. Borrower hereby covenants and agrees
that, to the extent (if any) required to do so, it, as well as the Principals,
will maintain established policies and procedures reasonably designed to prevent
and detect money laundering and to prevent other violations of the
Anti-Terrorism Laws, including those relating to not knowingly conducting any
business or engaging in any transaction or dealing with any Prohibited Person.
(c)Notice of OFAC Violation. Borrower hereby covenants and agrees that, in the
event of an OFAC Violation, Borrower will promptly (i) give notice to Lender of
such OFAC Violation; and (ii) comply with all Laws applicable to such OFAC
Violation (regardless of whether the Prohibited Person is located within the
jurisdiction of the United States of America), including the Anti-Terrorism
Laws, and Borrower hereby authorizes and consents to Lender’s taking any and all
steps Lender deems necessary, in its sole discretion, to comply with all Laws
applicable to any such OFAC Violation, including the requirements of the
Anti-Terrorism Laws (including the “freezing” and/or “blocking” of assets).
(d)Confirmation of OFAC Information. Upon Lender’s request in its reasonable
discretion from time to time during the term of the Loan, Borrower agrees to
deliver a certification confirming that the representations and warranties set
forth in Section 3.10 above remain true and correct as of the date of such
certificate and confirming Borrower’s and the Principals’ compliance with this
Section 4.20.

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Section 4.21    Expenses and Advances.
(a)In addition to any payments specified in the Loan Documents, Borrower shall
pay, on demand, all fees, charges, costs, expenses, and disbursements incurred
by Lender, Borrower and/or Trustee in connection with the following:
(i)any amendment to, or consent, approval or waiver required or requested by
Borrower under this Instrument or any of the other Loan Documents (whether or
not any such amendment, consent, approval or waiver is entered into or granted);
(ii)defending or participating in any Proceeding arising from actions by third
parties and brought against or involving Lender with respect to: (1) the
Property; (2) any event, act, condition, or circumstance in connection with the
Property; or (3) the relationship between or among, Lender, Trustee, Borrower
and Principals in connection with this Instrument or any of the other Loan
Documents or any of the transactions contemplated by this Instrument or any of
the other Loan Documents;
(iii)the administration or enforcement of, or preservation of rights or remedies
under this Instrument or any of the other Loan Documents, including or in
connection with any sale, Transfer, lease, or other encumbrance of the Property
or any interest therein, any transfer of any of the Obligations, Proceedings,
and/or the foreclosure, sale or transfer by deed-in-lieu of foreclosure of the
Property pursuant to this Instrument or any of the other Loan Documents; and
(iv)the occurrence of an Insolvency Event or if any Bankruptcy Proceeding is
instituted by or against Borrower, any of the Principals, Principal General
Partner, REIT or any other REIT Subsidiary (other than by Lender), provided,
however, that in the case of any other REIT Subsidiary, the Insolvency Event or
Bankruptcy Proceedings with respect to such REIT Subsidiary results in a
substantive consolidation with Borrower.
(b)During the continuance of an Event of Default, or at such other time that
Lender determines that there exists an imminent threat of injury to persons or
property or Lender’s security, if Borrower fails to pay any amounts or perform
any actions required under the Loan Documents, then Lender or Trustee may (but
shall not be obligated to) advance sums to pay such amounts or perform such
actions. During the continuance of an Event of Default, or at such other time
that Lender determines that there exists an imminent threat of injury to persons
or property or Lender’s security, Lender and Trustee shall have the right to
enter upon and take possession of the Property to prevent or remedy any such
failure and the right to take such actions in Borrower’s name. No advance or
performance by Lender shall be deemed to have cured a Default. All (i) sums
advanced by or payable to Lender or Trustee pursuant to this Section 4.21 or
under Laws; or (ii) except as expressly provided in the Loan Documents, payments
due under the Loan Documents which are not paid in full when due, shall: (1) be
deemed demand obligations; (2) bear interest from the due date at the Default
Rate until paid if not paid within five (5) Business Days after written notice;
(3) be part of, together with such interest, the Obligations; and (4) be secured
by the Loan Documents. Lender or Trustee, upon making any such advance, shall
also be subrogated to the rights of the Person receiving such advance.

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Section 4.22    Subrogation. If any proceeds of the Note were used to
extinguish, extend or renew any indebtedness on the Property, then, to the
extent of the funds so used, (a) Lender and Trustee shall be subrogated to all
rights, claims, liens, titles and interests existing on the Property held by the
holder of such indebtedness; and (b) these rights, claims, liens, titles and
interests are not waived but rather (i) shall continue in full force and effect
in favor of Lender and Trustee; and (ii) are merged with the lien and security
interest created by the Loan Documents as cumulative security for the payment
and performance of the Obligations.
Section 4.23    Permits. Borrower shall obtain and at all times shall keep in
full force and effect and shall use commercially reasonable efforts to cause all
occupants of the Property to keep in full force and effect all Permits necessary
or desirable for the lawful use, occupancy and operation of the Property for the
Permitted Use and the conduct of Borrower’s business and the businesses of all
occupants of the Property. From and after the date hereof, Borrower shall use
commercially reasonable efforts to obtain and deliver to Lender copies the
certificates of occupancy with respect to the premises leased by all Major
Tenants. Borrower shall comply at all times with all of the terms and conditions
of the Permits applicable to the Property or Borrower and shall promptly notify
Lender of any violation of or noncompliance with any such Permit of which
Borrower may become aware. Upon the occurrence and during the continuance of an
Event of Default, Lender may exercise all of its rights and remedies as a
secured party under the UCC with respect to such Permits.
Section 4.24    Parking. At all times Borrower will maintain or cause to be
maintained sufficient paved, on-site parking spaces to comply with the terms of
all Leases and all applicable zoning regulations.
Section 4.25    Property Management and Leasing.
(a)At all times Borrower will cause the Property to be managed (i) in accordance
with all Laws; (ii) by a property management company reasonably satisfactory to
Lender, it being understood that Phillips Edison Property Manager, Principal,
REIT and any REIT Subsidiary are each satisfactory to Lender, so long as they
are Affiliates of Borrower; and (c) pursuant to a written property management
agreement approved by Lender in writing (such approval not to be unreasonably
withheld, conditioned or delayed), which may include the Leasing Agreement (as
approved, the “Property Management Agreement”). The Property Management
Agreement shall be terminable at will by Borrower upon thirty (30) days prior
written notice and shall be subject and subordinate to the lien and terms of
this Instrument and the other Loan Documents by execution of a subordination of
management agreement on Lender’s then standard form with such changes as agreed
between Lender and Borrower. In no event shall the property manager be removed
or replaced (other than in connection with a Property Management Transfer) or
the terms of the Property Management Agreement be modified or amended without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. Upon the occurrence of an Event of Default,
Lender shall have the right to direct Borrower to terminate (and Borrower shall
so terminate or cause to be terminated) the Property Management Agreement upon
thirty (30) days’ notice. In the event that the property manager provides cause
for termination as the result of gross negligence, willful misconduct, fraud,
breach of fiduciary duty, bankruptcy, criminal liability or civil liability,
Lender shall have the right to direct Borrower to immediately terminate (and
Borrower shall so immediately terminate or cause to be immediately terminated)
such Property Management Agreement.

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(b)At all times during the term of the Loan, the Property shall be leased (i) in
accordance with all Laws; (ii) by Phillips Edison Property Manager, Principal,
REIT, any REIT Subsidiary or a leasing agent reasonably satisfactory to Lender;
and (iii) pursuant to a written leasing agreement that is either (x) approved by
Lender, such approval not to be unreasonably withheld, conditioned or delayed,
or (y) included as part of the Property Management Agreement approved by Lender
in accordance with Section 4.25(a) above (as approved, the “Leasing Agreement”).
The Leasing Agreement shall be subject and subordinate to the lien and terms of
this Instrument and the other Loan Documents by execution of a subordination of
leasing agreement on Lender’s then standard form with such changes as agreed
between Borrower and Lender. In no event shall the leasing agent be removed or
replaced or the terms of the Leasing Agreement be modified or amended without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed. Upon the occurrence of an Event of Default,
Lender shall have the right to direct Borrower to terminate (and Borrower shall
so terminate or cause to be terminated) the Leasing Agreement upon thirty (30)
days’ notice. In the event that the leasing agent provides cause for termination
as the result of gross negligence, willful misconduct, fraud, breach of
fiduciary duty, bankruptcy, criminal liability or civil liability, Lender shall
have the right to direct Borrower to immediately terminate (and Borrower shall
so immediately terminate or cause to be immediately terminated) such Leasing
Agreement.
ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY;
LEASES OF THE PROPERTY
Section 5.01    Due-on-Sale or Encumbrance. Except as otherwise provided in this
Article V, Lender may accelerate the Obligations and the entire Obligations
(including a Prepayment Premium calculated by using the Alternate Prepayment
Premium) shall become immediately due and payable, if any of the following shall
occur, whether occurring in a single transaction or in a series of transactions
(each and collectively, a “Prohibited Transfer”):
(a)a direct or indirect sale, conveyance, assignment, transfer or disposal of,
divesting of title to, mortgage, pledge or encumbrance of or grant of a security
interest or other lien on, or grant of any easement or right-of-way (each and
collectively, a “Transfer”) with respect to all or any portion of the Property
or any interest in the Property, in any manner whatsoever, whether voluntary or
involuntary, except (i) for Permitted Encumbrances, (ii) any Transfer as a
result of any Taking of the Property or any portion thereof, (iii) liens,
security interests, encumbrances and charges that Borrower pays, bonds or
otherwise discharges, or is contesting, in accordance with the Loan Documents,
and (ii) as otherwise permitted by this Section 5.01;
(b)any merger or consolidation of, or any Transfer or dissolution involving all
or substantially all of the assets of, (i) Borrower; (ii) any Principal; or
(iii) REIT, where Borrower, Principal or REIT is not the surviving company or
acquirer of such assets;
(c)if Borrower is a corporation, any Transfer of more than forty-nine percent
(49%) of the voting shares in such corporation;
(d)if Borrower is a partnership, any Transfer of a general partnership interest
or of more than forty-nine percent (49%) of voting limited partnership interests
in Borrower or the conversion of any Person holding any general partnership
interest in Borrower to a corporation, limited partnership interest, limited
liability company or any other type of entity with limited liability;

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(e)if Borrower is a limited liability company, any Transfer of the membership
interest of any managing member of Borrower or of the sole member of Borrower,
if any, or of more than forty-nine percent (49%) of the non-managing membership
interests of Borrower to any Person that is not wholly-owned by Principal;
(f)if Borrower is a trust, any resignation, removal or substitution of the
trustee or any Transfer of more than forty-nine percent (49%) of the beneficial
interests of Borrower;
(g)any other Transfer of more than forty-nine percent (49%) of the voting
interests in Borrower; or
(h)any other event resulting in a Change of Control of Borrower or any
Principal.
Except as otherwise permitted by Section 5.02 direct or indirect interests or
management Control in (i) the Property, (ii) Borrower, (iii) any member of
Borrower, and/or (iv) any Person that has Control of Borrower, may be not
Transferred without Lender’s approval and the occurrence of any such event will
constitute an Event of Default.
Notwithstanding the foregoing, any Transfers under the Loan Documents or under
the Cross Defaulted Loan Documents that would result in more borrowers under the
Loan or the Cross Defaulted Loans than originally contemplated during the term
of the Loan and the Cross Defaulted Loans shall be strictly prohibited.
Notwithstanding the foregoing if the death of or the removal from Control of
Borrower of any natural person who has a direct or indirect ownership,
beneficial or voting interest in Borrower or who is a general partner, managing
member, sole member, manager or trustee of Borrower or is otherwise in Control
of Borrower would cause a Prohibited Transfer, then the provisions of this
Section 5.01 shall not apply to such Transfer; provided, however, that if such
natural person is a general partner, managing member, sole member, manager or
trustee of Borrower or is otherwise in Control of Borrower, then any successor
to such natural person must be reasonably satisfactory to Lender.
Section 5.02    Permitted Transfers.
(a)Permitted Transfers. For so long as Phillips Edison Grocery Center Operating
Partnership I, L.P. is the Principal under the Loan and [_________] LLC is
Borrower under the Loan, the following shall not constitute Prohibited Transfers
(and by virtue thereof shall be permitted hereunder without Lender’s approval):
(i)the listing of REIT Shares on an Exchange (the "REIT Listing"); provided that
(A) REIT satisfies all of the listing requirements of the SEC at the time of and
as a condition of the REIT Listing, including, but not limited to, the net worth
requirements, and (B) the REIT Listing does not result in or cause a Change of
Control;
(ii)without limiting subparagraph (iii) of this Section 5.02(a), Transfers,
issuances or redemptions of any REIT Shares (each, a "REIT Share Transfer");
provided that (A) at the time of such REIT Share Transfer, the REIT Shares are
listed on an Exchange, and (B) the REIT Share Transfer does not result in or
cause a Change of Control;
(iii)any REIT Share Transfers, issuances or redemptions during the period prior
to the REIT Listing (i.e., while REIT is a public entity but a non-listed
entity) that are made in accordance with REIT's charter and other governing
documents, including, but not limited to, REIT's share repurchase

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program and/or dividend reinvestment program; provided that (A) such activities,
singularly or taken as a whole, do not result in or cause a Change of Control;
and (B) prior to such REIT Share Transfers, issuances or redemptions, Borrower
shall have delivered to Lender a copy of REIT’s charter and governing documents;
(iv)Transfers, issuances, conversions or redemptions of interests in Principal
to limited partners in Principal; provided that such Transfers do not result in
or cause a Change of Control;
(v)Transfers of indirect interests in Principal and REIT; provided that such
Transfers do not result in or cause a Change of Control;
(vi)any merger or consolidation of REIT or Principal with any Person that is an
Affiliate of REIT; provided that (A) REIT or Principal is the surviving entity;
(B) such transaction does not result in or cause a Change of Control; and (C)
the General Transfer Requirements are satisfied;
(vii)any Transfer of interests in Phillips Edison Property Manager to REIT (the
“Property Management Transfer”); provided that (A) Phillips Edison Property
Manager is Controlled by REIT, a REIT Subsidiary or Principal; (B) such
transaction does not result in or cause a Change of Control; and (C) the General
Transfer Requirements are satisfied;
(viii)any replacement of Phillips Edison Property Manager with Principal or an
entity Controlled by Principal; provided that, at the time of the Transfer,
there shall not exist an Event of Default;
(ix)any removal or replacement of REIT Manager; provided that (A) (1) Jeffrey S.
Edison, or (2) two (2) or more of Devin Murphy, Mark Addy, Robert F. Myers,
Joseph Schlosser, Ryan Moore and John Caulfield (or replacement executives
having a similar level of experience and seniority to any replaced executive as
determined by Lender in its reasonable discretion), shall continue to be
executives of REIT or Principal; and (3) the General Transfer Requirements are
satisfied;
(x)any Transfer, issuance or redemption of any direct or indirect beneficial or
legal ownership interests in any Public REIT Shareholder (it being understood
that Borrower has no control over the ownership structure of any Public REIT
Shareholder); and
(xi)the Transfer of one hundred percent (100%) of the membership interests in
Borrower to a wholly-owned subsidiary of Principal; provided that (A) such
transaction does not result in or cause a Change of Control; and (B) the General
Transfer Requirements are satisfied.

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(b)No Release; Information.
(i)Neither any REIT Share Transfer nor any Transfer of interests of any of the
limited partners in Principal shall relieve Borrower or Principal of any of its
respective obligations and liabilities under any of the Loan Documents,
including the Limited Guaranty or the Environmental Indemnity; and
(ii)Borrower shall cause REIT to cause Lender to automatically receive
notifications whenever REIT posts and files any documents with the SEC.
Additionally, from time to time, upon written request of Lender, Borrower shall
cause REIT to furnish to Lender copies of (A) mailings by REIT to its
shareholders, (B) to the extent not confidential, reports furnished by REIT to
rating agencies and relating to its outstanding commercial paper, and (C) to the
extent not confidential, information generally supplied by REIT in writing to
security analysts.
(c)One-Time Right to Transfer Property. Notwithstanding the above, (1) Borrower
shall have a one- time right to sell its entire interest in the Property and
assign all of its rights and obligations under the Loan Documents and the Cross
Collateralizing Security Documents encumbering the Property to a third party; or
(2) all of the membership interests in Borrower may be transferred directly or
indirectly to a third party (such third party described in clauses (1) or (2)
being the “Transferee” and any such sale, assignment or transfer described in
clauses (1) or (2) being the “One- Time Right to Transfer”); provided that:
(i)at the time of the One-Time Right to Transfer, there shall not exist an Event
of Default;
(ii)the closing of the One-Time Right to Transfer will not occur unless and
until the satisfaction of the conditions to the closing of (A) the sales of the
other Cross Defaulted Properties and the assignments of all of the other Cross
Defaulted Borrowers’ rights and obligations under the Cross Defaulted Loan
Documents to a third party or its affiliates; or (B) the transfers directly or
indirectly of all of the membership interests in the other Cross Defaulted
Borrowers to a third party, in either case, pursuant to provisions in such loan
documents substantially similar to this Section 5.02(c). For avoidance of doubt,
the One-Time Right to Transfer may not be exercised unless and until the
one-time right to transfer provision included in each of the Cross Defaulted
Loan Documents is also exercised;
(iii)Transferee and the principal(s) of Transferee (“Transferee’s Principal(s)”)
expressly assume all of the obligations of Borrower and Principal(s) under and
pursuant to the Note, this Instrument, the Environmental Indemnity, the Limited
Guaranty and all other Loan Documents on such terms and conditions and pursuant
to such documentation as is acceptable to Lender, in its sole discretion,
including, without limitation, the representations, warranties and covenants set
forth therein and any amendments deemed necessary by Lender in its reasonable
discretion as a result of the structure of the Transferee;
(iv)Lender shall have given its approval to Transferee’s and Transferee’s
Principal(s)’ credit history, reputation, legal organization, financial strength
and experience in the ownership, operation and management of grocery anchored
retail properties similar to the Property and other Cross Defaulted Properties
in the areas where the Property and other Cross Defaulted Properties are
located;
(v)Lender, at its option, receives a then current phase I environmental report
with respect to the Property in form and substance satisfactory to Lender from a
consultant approved by Lender;

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(vi)Lender shall have received a transfer premium equal to six-tenths of one
percent (0.6%) of the principal amount outstanding under the Note as of the date
of the One-Time Right to Transfer;
(vii)Borrower shall pay all costs incurred by Lender in connection with the
One-Time Right to Transfer, including, without limitation, Attorneys’ Fees, and
the cost of an endorsement to Lender’s title insurance policy, insuring the
continuing first priority of Lender’s lien;
(viii)Lender receives a legal opinion reasonably acceptable to it from counsel
for Transferee and Transferee’s Principal(s) addressing (A) the due organization
and authorization of Transferee and Transferee’s Principal(s); (B) the continued
enforceability of the Loan Documents and any ancillary transaction documents
against them; and (C) such other matters reasonably required by Lender given the
context of the transaction;
(ix)the DSCR for all Cross Defaulted Properties shall be no less than 2.00 to
1.00;
(x)the Debt Yield for all Cross Defaulted Properties shall be equal to or
greater than twelve percent (12.0%);
(xi)at the time of the closing of the One-Time Right to Transfer, the LTV shall
be no greater than fifty-five percent (55%); and
(xii)within five (5) Business Days of Lender’s request therefor Borrower shall
provide Lender with Borrower’s proposed calculation of Net Operating Income,
certified by an appropriate authorized officer or authorized signatory of
Borrower, together with all relevant supporting detail reasonably required to
determine the same. Lender shall then perform Lender’s own independent
calculation of Net Operating Income, which shall be the definitive determination
of Net Operating Income absent manifest error.
Section 5.03    Principals.
(a) If any Principal is a natural person and dies or is removed from Control
while the Note is outstanding then, not later than five (5) months following the
death or removal of such Principal, Borrower shall provide to Lender for its
approval (which approval shall not be unreasonably withheld or delayed, it being
understood and agreed that the estate of such deceased Principal is not
acceptable to Lender), a substitute Principal or Principals and documentation to
verify that such substitute Principal or Principals are in Control of Borrower.
If approved by Lender, the substitute Principal or Principals shall execute and
deliver to Lender, within thirty (30) days after Lender approves in writing the
substitute Principal or Principals, a limited guaranty and an environmental
indemnity agreement identical (except as to the name of the obligor thereunder
and similar conforming changes) in form and substance to the Limited Guaranty
and the Environmental Indemnity, respectively, executed by the Principal who
died or was removed from Control.

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(b)    Borrower shall pay all costs and expenses, including Attorneys’ Fees,
incurred by Lender in connection with any approval by Lender under this Section
5.03 and the preparation and execution of any documentation required under this
Section 5.03.
Section 5.04    Leases.
(a)Subordination of Leases. Unless otherwise approved in writing by Lender, all
Leases entered into after the date hereof shall be absolutely subordinate to the
lien of this Instrument, but may contain a provision reasonably satisfactory to
Lender that, in the event of the exercise of the private power of sale or a
judicial foreclosure hereunder, such Lease, at the sole and exclusive option of
the purchaser at such sale, shall not be terminated and the Tenant thereunder
shall attorn to such purchaser and, if requested to do so, shall enter into a
new Lease for the balance of the term then remaining upon the same terms and
conditions.
(b)Obligations of Borrower as to Leases. Borrower: (i) shall observe and perform
all the obligations imposed upon the lessor under the Leases in all material
respects; (ii) shall enforce all of the terms, covenants and conditions
contained in the Leases upon the part of lessee thereunder to be observed or
performed in all material respects; (iii) shall not collect any of the Rents
more than one (1) month in advance; (iv) shall not execute any other assignment
of lessor’s interest in the Leases or the Rents; (v) subject to the rights set
forth in Section 5.04(c) below, shall not, without the prior written consent of
Lender, surrender or terminate or consent to the cancellation, surrender or
termination of any Lease or any part thereof, now existing or hereafter made, or
consent to the release of any party thereto, except in the ordinary course of
operating the Property; (vi) shall not convey or transfer or suffer or permit a
conveyance or transfer of the Property or of any interest therein so as to
effect a merger of the estates and rights of, or a termination or material
diminution of the obligations of, any lessee thereunder; (vii) shall not consent
to any assignment of or subletting under the Leases not in accordance with their
terms or in the ordinary course of operating the Property; (viii) shall execute
and deliver at the request of Lender all such further assurances, confirmations
and assignments as Lender shall from time to time reasonably require in order to
maintain or grant Lender and Trustee a first-priority assignment of all Leases
and Rents; and (ix) shall notify Lender of any event of default of any Major
Tenant or Borrower for which notice is given or any circumstance or other event
arising under a Lease that would entitle or permit Borrower or any Major Tenant
to cancel the Lease, abate any rent payable thereunder, or pursue any
“self-help” remedy thereunder.
(c)New Leases, Amendment, Modification, Etc., of Leases.
(i)Except as otherwise expressly set forth in this Section 5.04, Borrower shall
not enter into any Lease for any portion of the Property without the prior
written consent of Lender, which shall not be unreasonably withheld or delayed.
As a condition to granting such consent, Lender may require an estoppel
certificate from the Tenant, and if such Lease does not include subordination,
non-disturbance and attornment language acceptable to Lender, a subordination,
non-disturbance and attornment agreement (“SNDA”) among Lender, Borrower, and
the Tenant, which SNDA shall subject and subordinate such Lease to the lien and
terms of this Instrument, the other Loan Documents and any Cross Collateralizing
Security Documents encumbering the Property and shall further subordinate the
Tenant’s rights to casualty and condemnation proceeds. Such tenant estoppel
certificate and such SNDA shall be based on the forms attached to such Tenant’s
Lease, or if no forms are attached to such Tenant’s Lease, then on Lender’s then
standard forms or such Tenant’s standard forms with such changes as Lender shall
reasonably request. Without limiting the generality of the foregoing, each Lease
entered into after

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the date hereof shall contain a provision, where applicable, stating that (i)
the Tenant uses, generates, stores and disposes of no Hazardous Materials,
except those customarily and currently used in Tenant’s normal business
operations, and that in any event all such Hazardous Materials will only be used
in the leased premises in compliance with all Environmental Requirements; and
(ii) Lender and Lender’s environmental consultant may conduct periodic
inspections at the expense of Borrower to verify that such use, storage,
generation, treatment, disposal or release is in compliance with all
Environmental Requirements.
(ii)Borrower shall not, without Lender’s prior written approval (not to be
unreasonably withheld or delayed), amend, modify, extend, renew or supplement
any Lease or consent to any sublease except for: (A) subleases, amendments or
modifications memorializing options or rights contained in Leases previously
approved by Lender or (B) Leases not requiring Lender’s approval. A Lease shall
require Lender’s approval for purposes of clause (B) if either the initial Lease
so required Lender approval hereunder, or such Lease as so amended, modified,
extended, renewed or supplemented would have required Lender’s approval
hereunder as a new Lease.
(iii) Notwithstanding the foregoing, Lender’s approval shall not be required for
any new Lease or amendment or modification of an existing Lease provided (i) no
Event of Default has occurred and is continuing, and (ii) the Lease or Lease as
amended or modified (A) is not with a Major Tenant, (B) is on market terms, (C)
represents a bona-fide arm’s length transaction with a third party not
Affiliated with Borrower, (D) does not contain tenant purchase options,
above-market tenant improvement allowances, above-market concessions or offsets,
(E) is for a term not longer than twenty (20) years (including any renewal
options), and (F) is either (1) written on Borrower’s standard form Lease which
has been approved by Lender with changes negotiated in good faith by Borrower
that are customary market changes made by similar owners in the ordinary course
of business or (2) written on the Tenant’s form Lease but containing provisions
for limitations on landlord’s liability and subordination and attornment of the
Lease in favor of Lender. As used herein, the term “Major Tenant” means any
Tenant of the Property and their Affiliates then leasing or subleasing space
pursuant to one or more Leases at the Property aggregating more than 15,000
rentable square feet of the Property’s net rentable area.
(iv)Borrower shall provide Lender with a copy of any new Leases, amendments and
modifications for Leases with a Tenant within thirty (30) days of execution, and
within fifteen (15) days after a request from Lender for any other Lease or
amendment. If Lender’s approval is required for any new Lease or any amendment
or modification of an existing Lease and Borrower requests Lender’s approval in
writing, and such written request is neither approved nor denied within ten (10)
Business Days following Lender’s receipt (together with the Lease and/or the
amendment or modification of an existing Lease (as applicable), a comparison of
the proposed, unexecuted new Lease to Borrower’s standard form Lease previously
approved by Lender (as applicable), Tenant financials, if appropriate, and such
other documentation which Lender may reasonably request), Lender’s approval
shall be deemed given; provided that Borrower’s request for Lender’s approval
shall bear the following legend typed in bold, capital letters at the top: “IF
LENDER SHALL FAIL TO EITHER APPROVE OR DENY BORROWER’S REQUEST FOR LENDER’S
APPROVAL OF THE ENCLOSED NEW LEASE OR AMENDMENT OR MODIFICATION OF A LEASE
WITHIN TEN (10) BUSINESS DAYS AFTER LENDER’S RECEIPT THEREOF, LENDER SHALL BE
DEEMED TO HAVE APPROVED SUCH NEW LEASE OR AMENDMENT OR MODIFICATION”; and
provided, further that, the deemed approval provision in this sentence shall not
apply in the event the new Lease or the amendment or modification of an existing
Lease, or the request for such new Lease or amendment or modification of an
existing Lease does not comply with the provisions of this subparagraph.

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ARTICLE VI - DEFAULTS AND REMEDIES
Section 6.01    Events of Default. Each of the following shall be an “Event of
Default”:
(a)if Borrower fails to make any payment of principal or interest when due under
the Note (excluding the payment due on the Maturity Date) or fails to make any
Deposits if and when required under the Loan Documents, and such failure
continues uncured for ten (10) days after the applicable due date, without any
requirement for notice thereof from Lender;
(b)if Borrower fails to make any payment of principal or interest when due under
the Note on the Maturity Date or fails to make any other payment when due on the
Maturity Date under the Note, this Instrument or the other Loan Documents;
(c)if Borrower fails to make any other payment when due under the Note, this
Instrument or the other Loan Documents (except as specified in Section 6.01(a)
or Section 6.01(b)), and such failure continues for ten (10) days after written
notice thereof from Lender;
(d)if any representation or warranty made in connection with the Loan or the
Obligations in the Loan Documents shall be false or misleading in any material
respect at the time when made, provided, however, that if (A) such
misrepresentation was not intentional, and (B) the condition causing the
representation or warranty to be false is susceptible of being cured, the same
shall be an Event of Default hereunder only if the same is not cured within
thirty (30) days after written notice to Borrower from Lender;
(e)if Borrower shall, without Lender’s prior written consent, take any action
that, in accordance with the terms of the Loan Documents, expressly requires
Lender’s consent, including, without limitation, in connection with the
provisions of Article V, without first obtaining Lender’s prior written consent
(or deemed consent);
(f)if a Prohibited Transfer occurs;
(g)if an “Event of Default” described in any other provision of this Instrument
occurs;
(h)if Borrower fails to comply with the provisions of Section 5.03;
(i)if an Insolvency Event occurs;
(j)if any Bankruptcy Proceeding is instituted by (other than by Lender) or
against Borrower, any of the Principals, Principal General Partner, REIT or any
other REIT Subsidiary, and, if instituted against such Person, is allowed,
consented to, or not dismissed within the earlier to occur of (i) ninety (90)
days after such institution; or (ii) the filing of an order for relief, provided
that in the case of any other REIT Subsidiary, the bankruptcy of such REIT
Subsidiary results in a substantive consolidation with Borrower;
(k)[Intentionally Omitted];
(l)if Borrower shall fail at any time to obtain, maintain, renew, or keep in
force the insurance policies required by Section 4.06 hereof or any of the other
Loan Documents;
(m)if an event of default, subject to all notice and cure rights, by Borrower
under any other mortgage, deed of trust, or security agreement covering any part
of the Property, whether it be superior

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or junior in lien to this Instrument or under any other loan or indebtedness has
occurred and is continuing, whether secured or unsecured, or if an event of
default shall occur under any loan secured by a pledge of a direct or indirect
ownership interest in Borrower other than a pledge of (y) direct or indirect
ownership interests by limited partners in Principal or (z) direct or indirect
interests by Public REIT Shareholders in REIT;
(n)if any claim of priority (except based upon a Permitted Encumbrance) to the
Loan Documents by title, lien, or otherwise shall be upheld by any court of
competent jurisdiction or shall be consented to by Borrower;
(o)the occurrence of any RICO Violation;
(p)the occurrence of any ERISA Violation;
(q)the occurrence of any OFAC Violation;
(r)if any report, statement or item required under Section 4.15 is not received
by Lender after the expiration of (i) thirty (30) days after written notice from
Lender (the “First Notice”); and (ii) ten (10) days after delivery of a second
written notice from Lender (the “Second Notice”), which Second Notice shall not
be delivered before the date that is thirty (30) days after delivery of the
First Notice;
(s)the occurrence of any event or circumstance identified as an “Event of
Default” under any Loan Document other than this Instrument, under any Cross
Collateralizing Security Document, or under any of the other Cross Defaulted
Loan Documents; and
(t)except for the occurrence of the events listed in the other clauses of this
Section 6.01, if Borrower fails to perform or comply with any other provision
contained in this Instrument or in any of the other Loan Documents and such
failure is not cured within thirty (30) days after written notice thereof by
Lender (the “Grace Period”); provided, however, that the Grace Period may be
extended for up to an additional sixty (60) days (for a total of ninety (90)
days from the date of Default) if (i) Borrower promptly commences and diligently
pursues the cure of such Default and delivers (within the Grace Period) to
Lender a written request for more time; and (ii) Lender determines in good faith
that (1) such Default cannot be cured within the Grace Period but can be cured
within ninety (90) days after the Default; (2) no lien or security interest
created by the Loan Documents will be impaired prior to completion of such cure;
and (3) Lender’s immediate exercise of any remedies provided hereunder or by Law
is not necessary for the protection or preservation of the Property or Lender’s
or Trustee’s security interest.

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Section 6.02    Remedies. If an Event of Default occurs and is continuing,
Lender, or any Person designated by Lender or Lender acting by or through
Trustee, may (but shall not be obligated to) take any action (separately,
concurrently, cumulatively, and at any time and in any order) permitted under
any Laws, without notice, demand, presentment, or protest (all of which are
hereby waived), to protect and enforce Lender’s or Trustee’s rights under the
Loan Documents or Laws including the following actions:
(a)accelerate and declare the entire unpaid Obligations immediately due and
payable, except for Events of Defaults under Section 6.01(i) or (j) which shall
automatically make the Obligations immediately due and payable;
(b)judicially or otherwise, (i) completely foreclose this Instrument; or (ii)
partially foreclose this Instrument for any portion of the Obligations due and
the lien and security interest created by this Instrument shall continue
unimpaired and without loss of priority as to the remaining Obligations not yet
due;
(c)sell for cash or upon credit the Property and all right, title and interest
of Borrower therein and rights of redemption thereof, pursuant to power of sale,
to the extent permitted by Law, Borrower hereby waiving all such rights of
redemption upon the occurrence of an Event of Default;
(d)subject to the limitations in Article VII, recover judgment on the Note
either before, during or after any Proceedings for the enforcement of the Loan
Documents and without any requirement of any action being taken to (i) realize
on the Property; or (ii) otherwise enforce the Loan Documents;
(e)seek specific performance of any provisions in the Loan Documents;
(f)apply for the appointment of a receiver, custodian, trustee, liquidator, or
conservator of the Property without (i) notice to any Person; (ii) regard for
(1) the adequacy of the security for the Obligations; or (2) the solvency of
Borrower or any Person liable for the payment of the Obligations; and Borrower
and any Person so liable waives or shall be deemed to have waived the foregoing
and any other objections to the fullest extent permitted by Law and consents or
shall be deemed to have consented to such appointment;
(g)with or without entering upon the Property, (i) exclude Borrower and any
Person from the Property without liability to Borrower for trespass, damages, or
otherwise; (ii) take possession of, and Borrower shall surrender within five (5)
Business Days after written notice, all books, records, and accounts relating to
the Property; (iii) give notice to Tenants or any Person, make demand for,
collect, receive, sue for, and recover in its own name all Rents and cash
collateral derived from the Property; (iv) use, operate, manage, preserve,
control, and otherwise deal with every aspect of the Property, including (1)
conducting its business; (2) insuring it; (3) making all repairs, renewals,
replacements, alterations, additions, and improvements to or on it; (4)
completing the construction of any Improvements in manner and form as Lender
deems advisable; and (5) executing, modifying, enforcing, and terminating new
and existing Leases on such terms as Lender deems advisable and evicting any
Tenants in default; (v) apply the receipts from the Property to payment of the
Obligations, in any order or priority determined by Lender, after first
deducting all costs, expenses, and liabilities incurred by Lender or Trustee in
connection with the foregoing operations and all amounts needed to pay the
Impositions and other expenses of the Property, as well as just and reasonable
compensation for the services of Lender, Trustee, and their attorneys, agents,
and employees; and/or (vi) in every case in connection with the foregoing,
exercise all rights and powers of Borrower, Lender, or Trustee with respect to
the Property, either in Borrower’s name or otherwise;
(h)release any portion of the Property for such consideration, if any, as Lender
may require without, as to the remainder of the Property, impairing or affecting
the lien or priority of this Instrument

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or improving the position of any subordinate lienholder with respect thereto,
except to the extent that the Obligations shall have been actually reduced, and
Lender may accept by assignment, pledge, or otherwise any other property in
place thereof as Lender may require without being accountable for so doing to
any other lienholder;
(i)apply any Deposits to the following items in any order and in Lender’s sole
discretion: (i) the Obligations; (ii) costs incurred by Lender in administering
or enforcing its rights under this Instrument; (iii) advances made by Lender
under the Loan Documents; or (iv) the Impositions; or
(j)take all actions permitted under the UCC of the Property State including (i)
the right to take possession of Personal Property and take such actions as
Lender or Trustee deems advisable for the care, protection and preservation of
the Personal Property; and (ii) request Borrower at its expense to assemble the
Personal Property and make it available to Lender or Trustee at a convenient
place acceptable to Lender or Trustee. Any notice of sale, disposition or other
intended action by Lender or Trustee with respect to the Personal Property sent
to Borrower at least ten (10) Business Days prior to such action shall
constitute commercially reasonable notice to Borrower.
If Lender or Trustee exercises any of its rights under Section 6.02(g), Lender
and Trustee shall not (1) be deemed to have entered upon or taken possession of
the Property except upon the exercise of its option to do so and physically
taking possession of the Property; (2) be deemed a beneficiary or mortgagee in
possession by reason of such entry or taking possession; or (3) be liable (x) to
account for any action taken pursuant to such exercise other than for Rents
actually received by Lender or Trustee except for Losses caused by Lender’s or
Trustee’s willful misconduct or gross negligence and not covered by Borrower’s
insurance; (y) for any Loss sustained by Borrower resulting from any failure to
lease the Property; or (z) any other act or omission of Lender or Trustee except
for Losses caused by Lender’s or Trustee’s willful misconduct or gross
negligence and not covered by Borrower’s insurance. During the continuance of an
Event of Default, Borrower hereby consents to, ratifies, and confirms the
exercise by Lender and Trustee of its or their rights under this Instrument and
appoints Lender and Trustee as its attorney-in-fact for such purposes.

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Section 6.03    Expenses. All costs, expenses, or other amounts paid or incurred
by Lender or Trustee in the exercise of its or their rights under the Loan
Documents, including, without limitation, Attorneys’ Fees (together with
interest thereon at the applicable interest rate specified in the Note, which
shall be the Default Rate unless prohibited by Law, in the event such cost,
expense or other amount incurred by Lender or Trustee is not paid within five
(5) days of written demand therefor) shall be (a) part of the Obligations; (b)
secured by this Instrument; and (c) allowed and included as part of the
Obligations in any foreclosure, decree for sale, power of sale, or other
judgment or decree enforcing Lender’s and/or Trustee’s rights under the Loan
Documents.
Section 6.04    Rights Pertaining to Sales. To the extent permitted under (and
in accordance with) any Laws, the following provisions shall, as Lender or
Trustee may determine in its or their sole discretion, apply to any sales of the
Property under this Article VI, whether by judicial Proceeding, judgment,
decree, power of sale, foreclosure or otherwise: (a) Lender or Trustee may
conduct a single sale of the Property or multiple sales of any part of the
Property in separate tracts or in any other manner as Lender deems in its best
interest and Borrower waives any right to require otherwise; (b) if Lender
elects more than one sale of the Property, Lender may at its option cause the
same to be conducted simultaneously or successively, on the same day or on such
different days or times and in such order as Lender may deem to be in its best
interest, no such sale shall terminate or otherwise affect the lien of this
Instrument on any part of the Property not then sold, and Borrower shall pay the
costs and expenses of each such sale; (c) any sale may be postponed or adjourned
by public announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice or such sale may occur,
without further notice, at the time fixed by the last postponement or a new
notice of sale may be given; and (d) Lender may acquire the Property and, in
lieu of paying cash, may pay by crediting against the Obligations the amount of
its bid, after deducting therefrom any sums which Lender or Trustee is
authorized to deduct under the provisions of the Loan Documents. After any such
sale, Trustee shall deliver to the purchaser at such sale the trustee’s deed
conveying the property so sold, but without any covenant or warranty, express or
implied in customary form. Any Person, including Borrower or Lender, may
purchase at such sale.
Section 6.05    Application of Proceeds. Any proceeds received from any sale or
disposition under this Article VI or otherwise, together with any other sums
held by Lender or Trustee, shall, except as expressly provided by Law or this
Instrument, be applied in the order determined by Lender to: (a) payment of all
costs and expenses of any enforcement Proceeding, or foreclosure sale, transfer
of title by power of sale (including the expenses of the Trustee), or otherwise
(including interest thereon at the applicable interest rate specified in the
Note, which shall be the Default Rate unless prohibited by Law, in the event
such cost or expense incurred by Lender or Trustee is not paid within five (5)
days of written demand therefor); (b) all Assessments, unless the Property was
sold subject to such Assessments; (c) payment of the Obligations in such order
as Lender may elect; (d) payment of any other sums secured or required to be
paid by Borrower; and (e) payment of the surplus, if any, to Borrower. Borrower
and Lender intend and agree that during any period of time between any
foreclosure judgment that may be obtained and the actual foreclosure sale that
the foreclosure judgment will not extinguish the Loan Documents or any rights
contained therein including the obligation of Borrower to pay all costs and to
pay interest at the applicable interest rate specified in the Note, which shall
be the Default Rate unless prohibited by Law.

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Section 6.06    Additional Provisions as to Remedies. No failure, refusal,
waiver, or delay by Lender or Trustee to exercise any rights under the Loan
Documents upon any Event of Default shall impair Lender’s or Trustee’s rights or
be construed as a waiver of, or acquiescence to, such or any subsequent Default
or Event of Default. No recovery of any judgment by Lender or Trustee and no
levy of an execution upon the Property or any other property of Borrower shall
affect the lien and security interest created by this Instrument and such liens,
rights, powers, and remedies shall continue unimpaired as before until this
Instrument is terminated in accordance with Section 1.01. Lender or Trustee may
resort to any security given by this Instrument or any other security now given
or hereafter existing to secure the Obligations, in whole or in part, in such
portions and in such order as Lender or Trustee may deem advisable, and no such
action shall be construed as a waiver of any of the liens, rights, or benefits
granted hereunder. Acceptance of any payment after any Event of Default shall
not be deemed a waiver or a cure of such Event of Default and such acceptance
shall be deemed an acceptance on account only. If Lender or Trustee has started
enforcement of any right by foreclosure, sale, entry, or otherwise and such
Proceeding shall be discontinued, abandoned, or determined adversely for any
reason, then Borrower, Lender and Trustee shall be restored to their former
positions and rights under the Loan Documents with respect to the Property,
subject to the lien and security interest hereof.
Section 6.07    Waiver of Rights and Defenses. To the fullest extent Borrower
may do so by Law, Borrower (a) will not at any time insist on, plead, claim, or
take the benefit of any Law now or later enacted providing for any appraisement,
valuation, stay, extension, moratorium, redemption, or any statute of
limitations; (b) for itself, its successors and assigns, and for any Person ever
claiming an interest in the Property (other than Lender), to the extent
permitted by Law, waives and releases all rights of redemption, reinstatement,
valuation, appraisement, notice of intention to mature or declare due the whole
of the Obligations, all rights to a marshaling of the assets of Borrower,
including the Property, or to a sale in inverse order of alienation, in the
event of foreclosure (or extinguishment by transfer of title by power of sale)
of the liens and security interests created under the Loan Documents; and (c)
shall not be relieved of its obligation to pay the Obligations as required in
the Loan Documents nor shall the lien or priority of the Loan Documents be
impaired by any agreement renewing, extending, or modifying the time of payment
or the provisions of the Loan Documents (including a modification of any
interest rate), unless expressly released, discharged, or modified by such
agreement. Regardless of consideration and without any notice to or consent by
the holder of any subordinate lien, security interest, encumbrance, right,
title, or interest in or to the Property, (i) Lender may release any Person
liable for payment of the Obligations or any portion thereof or any part of the
security held for the Obligations; or (ii) Lender and Borrower may modify any of
the provisions of the Loan Documents without impairing or affecting the Loan
Documents or the lien, security interest, or the priority of the modified Loan
Documents as security for the Obligations over any such subordinate lien,
security interest, encumbrance, right, title, or interest.

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ARTICLE VII - LIMITATION ON PERSONAL LIABILITY
Section 7.01    Limited Recourse Liability. Lender will not hold Borrower
personally liable for repayment of the Obligations or any other sums due under
the Loan Documents, or for any deficiency established after judicial foreclosure
or a trustee’s sale, except to the extent of Borrower’s interest in the Property
and all other collateral given as security for the Loan; provided, however,
that:
(a)the foregoing limitation of liability shall not affect Borrower’s liability
under the Environmental Indemnity;
(b)Borrower shall be subject to full personal liability to the extent of any and
all actual Losses of any kind whatsoever (but excluding consequential, special,
punitive or exemplary damages and diminution of the value of the Property that
was not caused by the acts or omissions of any Borrower Party, except to the
extent that such consequential, special, punitive or exemplary damages are
required to be paid by Lender to a third party), incurred or suffered by Lender
and its successors and assigns as a result of any of the following:
(i)    Borrower’s misapplication or misappropriation of Tenant security
deposits, Rents paid more than thirty (30) days in advance, insurance proceeds,
Awards or other sums received in connection with the Property (to the extent of
the amount misapplied or misappropriated);
(ii)    Borrower’s failure to apply Rents to the Obligations or to the normal
operating expenses of the Property in violation of the Loan Documents or Law, to
the extent of rents wrongfully applied; provided that, prior to the occurrence
of an Event of Default of which Borrower has knowledge, Borrower shall be
entitled to make distributions to its partners, shareholders, members or other
owners in the ordinary course of business until such Rents are applied in
violation of the Loan Documents or Law;
(iii)    Borrower’s failure to deliver to Lender or its assignee(s), at its or
their request and following foreclosure of the Property, any tangible Personal
Property, including Leases, books, records and files relating to the leasing,
use, enjoyment, occupancy, operation or maintenance of the Property in
Borrower’s possession that are not confidential or proprietary, or any Personal
Property taken from the Property by or on behalf of Borrower and not replaced
with Personal Property of substantially the same utility and of the same or
greater value;
(iv)    any willful misconduct, material misrepresentation or theft by any
Borrower Party in connection with the Loan or the Property;
(v)    Borrower’s failure to pay when due any Impositions with respect to the
Property, or to maintain terrorism insurance with respect to the Property if
required, in each case to the extent the cash flow of the Property is sufficient
to pay such Impositions and other premiums; provided, however, Borrower shall
not have any liability under this clause (v) if the Deposits held by Lender
contain sufficient funds to pay such Impositions and other premiums;
(vi)    the costs and expenses (including, without limitation, Attorneys’ Fees)
incurred by Lender in enforcing its rights and remedies under this Article VII;
(vii) any act of intentional waste committed by any Borrower Party; provided the
failure to restore, repair, or maintain the Property shall not constitute
intentional waste if the cash flow of the Property is insufficient to pay the
same;

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(viii)    Borrower or any Borrower Party contests, delays or otherwise hinders
any action taken by Lender in connection with the appointment of a receiver for
the Property or the foreclosure of the liens, mortgages or other security
interests created by the Loan Documents or the Cross Collateralizing Security
Documents encumbering the Property; and
(ix) if Borrower is a single member limited liability company, the bankruptcy or
insolvency of the sole member of Borrower which causes Borrower to cease to
exist.
(c)the foregoing limitation of liability shall not apply and the Loan will be
fully recourse to Borrower in the event:
(i)of any fraud or act of arson by any Borrower Party related to the Property or
the Loan;
(ii)of a Prohibited Transfer;
(iii)that Borrower, Principal, Principal General Partner, REIT or any other REIT
Subsidiary commences a voluntary Bankruptcy Proceeding; provided, however, that
in the case of any other REIT Subsidiary, the bankruptcy of such REIT Subsidiary
results in a substantive consolidation with Borrower;
(iv)that (1) any Affiliate of Borrower or of any Principal (except any Public
REIT Shareholders) becomes a creditor of Borrower or of any Principal in any
involuntary Bankruptcy Proceeding; or (2) an involuntary Bankruptcy Proceeding
is commenced against Borrower, Principal, Principal General Partner, REIT, or,
if the bankruptcy of such REIT Subsidiary results in a substantive consolidation
with Borrower, any other REIT Subsidiary by an Affiliate of Borrower or of any
Principal (except any Public REIT Shareholders), and in any event such
Bankruptcy Proceeding is not dismissed within ninety (90) days of filing; or
that the Property or any part thereof becomes an asset in a voluntary Bankruptcy
Proceeding that is not dismissed within ninety (90) days of filing.
Notwithstanding anything to the contrary contained herein, no present or future,
direct or indirect, shareholder, officer, director, employee, trustee,
beneficiary, advisor, member, partner, principal, participant or agent of or in
Borrower (“Constituent Member”), or of or in any Person that is or becomes a
Constituent Member in Borrower (other than Principal and Principal General
Partner under the Limited Guaranty and Environmental Indemnity), shall have any
personal liability, directly or indirectly, under or in connection with this
Instrument, the Loan Documents, and each of the parties hereto, on behalf of
itself and its successors and assigns, hereby waives any and all such personal
liability, provided, however, that the foregoing shall not release any
individual from any tort claims actually committed by such individual. For
purposes hereof, to the extent applicable, neither the negative capital account
of any Constituent Member in Borrower, nor any obligation of any Constituent
Member in Borrower to restore a negative capital account or to contribute or
loan capital to Borrower or to any other Constituent Member in Borrower shall at
any time be deemed to be the property or an asset of Borrower (or any such other
Constituent Member) 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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ARTICLE VIII - INDEMNIFICATION
Section 8.01    General Indemnity. Borrower agrees that while Lender has no
liability to any Person in tort or otherwise as lender and that Lender is not an
owner or operator of the Property, Borrower shall, at its sole expense,
Indemnify the Indemnified Parties from any actual Losses imposed on, incurred
by, or asserted against any of the Indemnified Parties, directly or indirectly,
arising out of or in connection with (a) the ownership or operation of the
Property; provided, however, that the foregoing indemnity shall not apply to any
Losses caused by the gross negligence or willful misconduct of the Indemnified
Parties not covered by Borrower’s insurance; and (b) the Transaction Taxes.
Section 8.02    Duty to Defend, Costs and Expenses. Upon request, whether
Borrower’s obligation to Indemnify Lender arises under this Article VIII or in
the other Loan Documents, Borrower shall defend at its cost the Indemnified
Parties (in Borrower’s or the Indemnified Parties’ names) by attorneys and other
professionals approved by the Indemnified Parties. Notwithstanding the
foregoing, during the continuance of an Event of Default, the Indemnified
Parties may, in their sole discretion, engage their own attorneys and
professionals at Borrower’s cost to defend or assist them and, at their option,
their attorneys shall control the resolution of any claims or Proceedings.
Within five (5) Business Days after written notice, Borrower shall pay or, in
the sole discretion of the Indemnified Parties, reimburse and/or Indemnify the
Indemnified Parties for all actual Losses imposed on, incurred by, or asserted
against the Indemnified Parties by reason of any items set forth in this Article
VIII and/or the enforcement or preservation of the Indemnified Parties’ rights
under the Loan Documents. Any amount payable to the Indemnified Parties under
this Section 8.02 shall (a) be deemed a demand obligation; (b) be part of the
Obligations; (c) bear interest from the date of demand at the Default Rate until
paid if not paid within five (5) Business Days after written notice; and (d) be
secured by this Instrument.
Section 8.03    Recourse Obligation and Survival. Notwithstanding anything to
the contrary in the Loan Documents, the obligations of Borrower under this
Article VIII shall survive (a) repayment of the other Obligations; (b) any
termination, satisfaction, transfer of title by power of sale, assignment or
foreclosure of this Instrument; (c) the acceptance by Lender (or any nominee) of
a deed in lieu of foreclosure; (d) a plan of reorganization filed under the
Bankruptcy Code; and (e) the exercise by Lender of any rights in the Loan
Documents. Borrower’s obligations under this Article VIII shall not be affected
by the absence or unavailability of insurance covering the same or by the
failure or refusal by any insurance carrier to perform any obligation under any
applicable insurance policy, solely to the extent that such event which gave
rise to the Indemnification obligation arose prior to the events set forth in
this Section 8.03.

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ARTICLE IX - ADDITIONAL PROVISIONS
Section 9.01    Usury Savings Clause. All agreements in the Loan Documents are
expressly limited so that in no event whatsoever shall the amount paid or agreed
to be paid under the Loan Documents for the use, forbearance, or detention of
money exceed the highest lawful rate permitted by Law. If, at the time of
performance, fulfillment of any provision of the Loan Documents results in
exceeding the limit of validity prescribed by Law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity. If
Lender shall ever receive as interest an amount which would exceed the highest
lawful rate, the receipt of such excess shall be deemed a mistake and (a) shall
be canceled automatically; or (b) if paid, such excess shall be, in Lender’s
discretion, either (i) credited against the principal amount of the Obligations
to the extent permitted by Law without regard to any Prepayment Premium; or (ii)
rebated to Borrower if it cannot be so credited under Laws. Furthermore, all
sums paid or agreed to be paid under the Loan Documents for the use,
forbearance, or detention of money shall to the extent permitted by Law be
amortized, prorated, allocated, and spread throughout the full stated term of
the Note until payment in full so that the rate or amount of interest on account
of the Obligations does not exceed the maximum lawful rate of interest from time
to time in effect and applicable to the Obligations for so long as the
Obligations are outstanding.
Section 9.02    Notices. Except to the extent expressly allowed to be given by
Lender orally under the Loan Documents, any notice, request, demand, consent,
approval, direction, agreement, or other communication required or permitted
under the Loan Documents shall be in writing and shall be validly given if (a)
sent by a nationally-recognized courier that obtains receipts; (b) delivered
personally by a courier that obtains receipts; or (c) mailed by United States
certified mail (with return receipt requested and postage prepaid); in each case
(under (a), (b), or (c) above) addressed to the applicable Person as follows:

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If to Lender:    With a copy of notices sent to Lender to:

The Guardian Life Insurance Company     The Guardian Life Insurance Company
of America                    of America
7 Hanover Square, Floor 20-C        7 Hanover Square, Floor 23-B
New York, New York 10004            New York, New York 10004
Attn:    Manager, Mortgage Servicing        Attn:    Vice President, Investment
and
Real Estate Counsel, Law Department

If to Borrower:

[___________] LLC
11501 Northlake Drive
Cincinnati, Ohio 45249
Attn: General Counsel
With copies of notices sent to Borrower to:

Latham & Watkins LLP
330 N. Wabash Street, Suite 2800
Chicago, Illinois 60611
Attn: Robert Buday
and
 
[____________] LLC
11501 Northlake Drive
Cincinnati, Ohio 45249
Attn: Chief Accounting Officer
 
If to any Party identified as a
“Guarantor” under the Limited
Guaranty:

Phillips Edison Grocery Center Operating Partnership I, L.P.
11501 Northlake Drive
Cincinnati, Ohio 45249
With copies of notices to such Guarantor(s) to:

Latham & Watkins LLP
330 N. Wabash Street, Suite 2800
Chicago, Illinois 60611
Attn: Robert Buday
If to any party identified as an
“Indemnitor” under the Environmental
Indemnity:

Phillips Edison Grocery Center Operating Partnership I, L.P.
11501 Northlake Drive
Cincinnati, Ohio 45249
With a copy of notices sent to such Indemnitor(s):

Latham & Watkins LLP
330 N. Wabash Street, Suite 2800
Chicago, Illinois 60611
Attn: Robert Buday
 
 
If to Trustee:

[___________________]
[___________________]
[___________________]
 

Each notice shall be effective upon being so sent, delivered, or mailed, but the
time period for response or action shall run from the date of receipt as shown
on the delivery receipt. Refusal to accept delivery or the inability to deliver
because of a changed address for which no notice was given shall be deemed
receipt. Any party may periodically change its address for notice and specify up
to two (2) additional addresses for copies by giving the other party at least
ten (10) days’ prior notice.
Section 9.03    Sole Discretion of Lender. Except as otherwise expressly stated,
whenever Lender’s judgment, consent, or approval is required or Lender shall
have an option or election under the

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Loan Documents, such judgment, the decision as to whether or not to consent to
or approve the same, or the exercise of such option or election shall be in the
sole and absolute discretion of Lender.
Section 9.04    Applicable Law; Submission and Consent to Jurisdiction; Service
of Process.
(a)This Instrument and the other Loan Documents shall be governed by and
construed in accordance with the Laws of the Property State without regard to
any principles of conflicts of law requiring the application of the laws of
another state and the applicable Laws of the United States of America. Without
limiting Lender’s right to bring any Proceeding in the courts of any other
jurisdiction in which a Cross Defaulted Property is located, Borrower and Lender
by its acceptance of this Instrument, irrevocably (i) submit to the jurisdiction
of any state or federal court in the Property State; (ii) agree that any
Proceeding may be heard and determined in such court; (iii) waive, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of any Proceeding in such jurisdiction; (iv) waive any claim that
any such courts lack personal jurisdiction over Borrower; and (v) agree not to
plead or claim, in any Proceeding with respect to this Instrument and the other
Loan Documents brought in any of the aforementioned courts, that such courts
lack personal jurisdiction over Borrower or Lender.
(b)Borrower further irrevocably consents to the service of process out of any of
the aforementioned courts in any such Proceeding, in addition to such other
methods as are permitted under Laws, by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Borrower at its address for
notice purposes pursuant to Section 9.02 hereof, such service to become
effective thirty (30) days after such mailing. Borrower hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any Proceeding commenced hereunder that
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of Lender to serve process in any other manner permitted by Law
or to commence Proceedings or otherwise proceed against guarantor in any other
jurisdiction.
Section 9.05    Transfer of Loan.
(a)Lender’s Right to Transfer Loan, Etc. Lender may, at any time, (i) sell,
transfer or assign the Loan in whole or in part and the Loan Documents and any
servicing rights with respect thereto; and/or (ii) grant participations therein,
provided that if no Event of Default shall then exist, Lender may not sell,
transfer or assign the Loan, the Loan Documents, or the servicing rights with
respect to the Loan or grant participations in the Loan to Specified Prohibited
Transferees. Lender may forward to any actual or prospective Investor all
documents and information which Lender now has or may later acquire relating to
the Obligations, Borrower, the Principals, the Leases, and the Property, whether
furnished by Borrower, any of the Principals or otherwise, as Lender determines
advisable. Following any such sale, transfer, assignment or participation,
Lender shall provide notice thereof to Borrower. Notwithstanding anything to the
contrary contained herein or in any other Loan Document, Borrower shall not be
required to make payment to any transferee of the Loan until Borrower has
received notice of such transfer and the identity of the transferee thereunder.
Borrower and the Principals agree to cooperate with Lender in connection with
any transfer or participation made pursuant to this Section 9.05, including the
delivery of a written certification in accordance with Section 4.16 and such
other documents as may be reasonably requested by Lender. Without limiting the
generality of the foregoing, if requested by Lender, Borrower shall execute one
or more replacement promissory notes in favor of Lender or any such Investor;
provided that the aggregate principal amounts of all replacement notes shall
equal the then outstanding principal amount of the Loan and the aggregate
interest rates of such notes shall equal the interest rate provided in the Note,
and none of the foregoing shall increase or expand Borrower’s or Principal’s
obligations under the Loan Documents or limit or impair Borrower’s or
Principal’s rights under the Loan Documents. Borrower shall also use
commercially reasonable efforts obtain the written consent of any Person in
order to permit Lender

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to furnish any such Investor with any and all information concerning the
Property, the Leases, the financial condition of Borrower and the Principals, as
may be reasonably requested by Lender or any such Investor and which may be
complied with without undue expense.
(b)Release of Lender. Borrower agrees that upon any assignment or transfer of
the Loan Documents by Lender to any third party, Lender shall have no
obligations or liabilities under the Loan Documents for events occurring after
such assignment or transfer, such third party shall be substituted as the lender
under the Loan Documents for all purposes and Borrower shall look solely to such
third party for the performance of any of Lender’s obligations under the Loan
Documents or with respect to the Loan.
Section 9.06    Concerning the Trustee. By recording a written substitution in
the county or city where the Property is located or by any other means permitted
by Law, Lender may (a) remove Trustee or any successor Trustee at any time (or
times) without notice or cause; and (b) replace any Trustee who dies or resigns
or is removed. To the extent permitted by Law, Trustee waives any statutory fee
for its services and agrees to accept reasonable compensation in lieu thereof.
Trustee may resign upon thirty (30) days’ notice to Lender and Borrower. If more
than one Person is appointed Trustee, all rights granted to Trustee under this
Instrument may be exercised by any of them, without the others, with the same
effect as if exercised by all of them jointly. In addition to exercising all
rights set forth in this Instrument, Trustee may exercise all rights under Law.
Section 9.07    Waiver of Right to Trial by Jury; Waiver of Statute of
Limitations
(a)EACH OF BORROWER AND LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING FILED BY EITHER PARTY, WHETHER
IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN,
THIS INSTRUMENT AND THE OTHER LOAN DOCUMENTS), ANY ALLEGED ACTS OR OMISSIONS OF
BORROWER OR LENDER IN CONNECTION THEREWITH, OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS INSTRUMENT AND THE OTHER LOAN DOCUMENTS. BORROWER AND LENDER
EACH ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND REPRESENTS TO THE
OTHER THAT THIS WAIVER IS MADE KNOWINGLY AND VOLUNTARILY. BORROWER AND LENDER
EACH AGREES THAT ALL SUCH PROCEEDINGS SHALL BE TRIED BEFORE A JUDGE OF A COURT
OF COMPETENT JURISDICTION, WITHOUT A JURY. BORROWER AND LENDER EACH AGREES THAT
THIS SECTION 9.07 CONSTITUTES WRITTEN CONSENT THAT TRIAL BY JURY SHALL BE WAIVED
IN ANY SUCH PROCEEDINGS AND AGREE THAT BORROWER AND LENDER EACH SHALL HAVE THE
RIGHT AT ANY TIME TO FILE ANY OR ALL OF THE LOAN DOCUMENTS WITH THE CLERK OR
JUDGE OF ANY COURT IN WHICH ANY SUCH PROCEEDINGS MAY BE PENDING AS STATUTORY
WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY.
(b)BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO
PLEAD ANY AND ALL STATUTES OF LIMITATION AS A DEFENSE TO THE PAYMENT OF THE
DEBT.

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Section 9.08    State Specific Provisions. Notwithstanding anything contained in
this Instrument to the contrary, the provisions set forth in Annex B hereto are
incorporated into this Instrument, and, in the event of any conflict or
inconsistency between the provisions set forth in Annex B and other provisions
of this Instrument, the provisions of Annex B shall govern.
Section 9.09    Miscellaneous.
(a)Severability. If any provision of the Loan Documents shall be held to be
invalid, illegal, or unenforceable in any respect, this shall not affect any
other provisions of the Loan Documents and such provision shall be limited and
construed as if it were not in the Loan Documents.
(b)Vesting of Title in Another Person. If title to the Property becomes vested
in any Person other than Borrower, Lender and Trustee may, without notice to
Borrower, deal with such Person regarding the Loan Documents or the Obligations
in the same manner as with Borrower without in any way vitiating or discharging
Borrower’s liability under the Loan Documents or being deemed to have consented
to the vesting.
(c)Merger of Estates. If both the lessor’s and lessee’s interest under any Lease
ever becomes vested in any one Person, this Instrument and the lien and security
interest created hereby shall not be destroyed or terminated by the application
of the doctrine of merger and Lender and Trustee shall continue to have and
enjoy all its rights and privileges as to each separate estate. Upon foreclosure
(or transfer of title by power of sale) of this Instrument, none of the Leases
shall be destroyed or terminated as a result of such foreclosure (or sale), by
application of the doctrine of merger or as a matter of Law, unless Lender or
Trustee takes all actions required by Law to terminate the Leases as a result of
foreclosure or sale.
(d)Covenants Running with the Land; Time of the Essence. All of the Borrower’s
covenants and agreements under the Loan Documents shall run with the land until
such time as the Debt is repaid in full and the other conditions precedent set
forth in this Instrument to the termination of this Instrument shall have been
satisfied, and time shall be of the essence with respect to the performance of
the covenants and agreements under the Loan Documents by Borrower and Lender.
(e)Lender as Attorney-In-Fact. During the continuance of an Event of Default,
Borrower appoints Lender as its attorney-in-fact with respect to the execution,
acknowledgment, delivery, filing or recording for and in the name of Borrower of
any of the documents which Borrower is required to execute, acknowledge,
deliver, file or record under this Instrument or any of the other Loan
Documents. Whenever this Instrument or any of the other Loan Documents provides
for the appointment of Lender as attorney-in-fact for Borrower, whether pursuant
to the immediately preceding sentence or otherwise, each such appointment shall
be deemed to be coupled with an interest and irrevocable.
(f)Amendments, Etc. in Writing. The Loan Documents cannot be amended,
terminated, or discharged except in a writing signed by the party against whom
enforcement is sought. No waiver, release, or other forbearance by Lender will
be effective unless it is in a writing signed by Lender and then only to the
extent expressly stated.
(g)Successors and Assigns. The provisions of this Instrument and the other Loan
Documents shall be binding upon Borrower, Trustee and Lender and their heirs,
devisees, representatives, successors, and assigns including successors in
interest to the Property and shall inure to the benefit of Borrower, Lender and
Trustee and its or their heirs, successors, substitutes, and assigns.

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(h)Joint and Several Obligations. Where two or more Persons have executed any
Loan Document, the obligations of such Persons shall be joint and several with
respect to the Obligations in that Loan Document, except to the extent the
context clearly indicates otherwise.
(i)Counterparts. The Loan Documents may be executed in any number of
counterparts with the same effect as if all parties had executed the same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to produce
one such counterpart.
(j)Loss of Loan Document. Upon receipt of an affidavit of an officer of Lender
as to the loss, theft, destruction or mutilation of any Loan Document which is
not of public record, and, in the case of any mutilation, upon surrender and
cancellation of the Loan Document, Borrower will issue, in lieu thereof, a
replacement Loan Document, dated the date of the lost, stolen, destroyed or
mutilated Loan Document containing the same provisions; provided that Borrower
shall not be obligated to issue a new Note until Lender provides Borrower a
customary lost note indemnity.
(k)No Liability for Reports, Etc. Any reviews, inspections, reports, approvals
or similar items conducted, made or produced by or on behalf of Lender with
respect to Borrower, the Property or the Loan are for loan underwriting and
servicing purposes only, and shall not constitute an acknowledgment,
representation or warranty of the accuracy thereof, or an assumption of
liability with respect to Borrower, Borrower’s contractors, architects,
engineers, employees, agents or invitees, present or future Tenants or owners of
the Property, or any other party.
(l)Entire Agreement. The Loan Documents constitute the entire understanding and
agreement between Borrower, Lender and Trustee with respect to the Loan and
supersede all prior written or oral understandings and agreements with respect
to the Loan including the Loan Commitment and Borrower is not relying on any
representations or warranties of Lender except as expressly set forth in the
Loan Documents.
(m)Incorporation of Recitals and Exhibits. The recitals set forth in this
Instrument, Annex A hereto, Annex B hereto, and all exhibits to this Instrument
are incorporated herein and shall be deemed an integral part of this Instrument.
(n)Correction of Loan Documents. If Lender determines that the Note, this
Instrument or any of the other Loan Documents contains any provision with regard
to the amount of the Loan, the interest rate or the payment of principal or
interest that erroneously does not conform to the terms and conditions of the
Loan Commitment, Borrower agrees to execute and deliver to Lender upon request
any and all amendments, restated Loan Documents or other instruments, in form
and substance reasonably acceptable to Borrower and Lender, correcting such
erroneous provision.
(o)Acceptance of Cure After an Event of Default. Lender shall not be under any
obligation to accept any proffered cure from Borrower subsequent to the
occurrence of an Event of Default nor shall Lender be obligated in any way to
discontinue any exercise of remedies which Lender may have initiated subsequent
to the occurrence of an Event of Default upon any such proffer by Borrower. An
Event of Default shall be continuing until such time as Lender have waived such
Event of Default or expressly accepted a cure thereof.

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ARTICLE X - RELEASE AND SUBSTITUTION OF CROSS DEFAULTED PROPERTIES.
Section 10.01    Release. At any time after the expiration of the Lock-Out
Period, Borrower shall have the right to request in writing Lender’s consent to
the release (the “Release”) of one or more of the Cross Defaulted Properties
(such released property or properties, each a “Released Property” and,
collectively, the “Released Properties”) from the lien of the applicable Cross
Collateralizing Security Documents, or any other security instrument pertaining
to the Loan and/or the Cross Defaulted Loans encumbering the Released Properties
upon and subject to the following provisions, terms and conditions (it being
understood that Lender shall endeavor to effect any such Release on the date
specified in Borrower’s written request, but no earlier than fifteen (15)
Business Days after receipt of Borrower’s written request):
(a)At both the time of Borrower’s written notice and at the effective date of
the Release, there shall not exist an Event of Default;
(b)The Release shall not violate any applicable Laws;
(c)Lender shall have received copies of any purchase and sale agreement
regarding the Transfer of the Released Property;
(d)Borrower shall provide Lender with updated title searches with respect to any
Remaining Properties and, if an endorsement to Lender’s mortgagee title
insurance policy(ies) for any Remaining Properties is available in any state in
which any Remaining Property is located at a commercially reasonable rate to the
effect that the priority of Lender’s lien on such Remaining Properties is not
affected by the Release and insuring the continued first priority of the lien of
the security instruments encumbering the applicable Remaining Properties, then
Borrower shall provide Lender with such endorsements;
(e)The DSCR for the Remaining Properties shall be no less than a DSCR equal to
2.0 to 1.0; provided that Borrower shall have the right to prepay the portion of
the outstanding principal necessary for the Remaining Properties to satisfy the
DSCR requirement of this subparagraph;
(f)The Debt Yield for the Remaining Properties shall be equal to or greater than
a Debt Yield of twelve percent (12.0%); provided that Borrower shall have the
right to prepay the portion of the outstanding principal necessary for the
Remaining Properties to satisfy the Debt Yield requirement of this subparagraph;
(g)Borrower shall pay Lender an amount (the “Principal Payment”) equal to the
sum of (A) a prepayment equal to one hundred ten percent (110%) of the Allocable
Loan Amount; (B) an amount, if any, necessary to satisfy the conditions set
forth in clauses (e) and (f) above; (C) an amount equal to Exercised Prepayment
Premium with respect to the Allocable Loan Amount and any prepayment necessary
to satisfy the conditions set forth in clauses (e) and (f) above; (D) an
administrative fee of $15,000; and (E) all of Lender’s actual out-of-pocket
costs and expenses incurred in connection with the Release, including without
limitation, Attorneys’ Fees, and title fees and charges (any amounts received by
Lender over and above the amount necessary to repay the Debt shall be allocated
by Lender to the repayment of the other Cross Defaulted Loans as determined by
Lender in its sole and absolute discretion);
(h)Borrower shall deliver to Lender any other document that Lender shall
reasonably request; and

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(i)Within five (5) Business Days of Lender’s request therefor Borrower shall
provide Lender with Borrower’s proposed calculation of Net Operating Income,
certified by an appropriate authorized officer or authorized signatory of
Borrower, together with all relevant supporting detail reasonably required to
determine the same. Lender shall then perform Lender’s own independent
calculation of Net Operating Income, which shall be the definitive determination
of Net Operating Income absent manifest error.
Section 10.02    Substitution of Other Properties for Cross Defaulted
Properties. Not more than six (6) times during the term of the Loan, Borrower
shall have the right to request in writing Lender’s consent to the substitution
(the “Substitution”) of a grocery anchored retail property or properties
acceptable to Lender in its sole discretion for one or more of the Cross
Defaulted Properties (such Cross Defaulted Property or Properties being
released, each an “Outgoing Property” and, collectively, the “Outgoing
Properties”, and such property or properties becoming subject to the Loan
Documents and Cross Collateralizing Security Documents, each an “Incoming
Property” and, collectively, the “Incoming Properties”) as collateral encumbered
by the Cross Collateralizing Security Documents or any other security instrument
encumbering the Outgoing Properties upon and subject to the following
provisions, terms and conditions (it being understood that Lender shall endeavor
to effect any such Substitution on the date specified in Borrower’s written
request, but no earlier than forty-five (45) days after receipt of Borrower’s
written request):
(a)At both the time of Borrower’s written notice and at the effective date of
the Substitution, there shall not exist an Event of Default;
(b)All representations and warranties of Borrower shall remain true and correct
as of the date of the Substitution, except to the extent any such representation
or warranty is no longer true or correct due to (i) the mere passage of time,
(ii) events contemplated by Lender and Borrower to have occurred in the ordinary
course since the date hereof, or (iii) the occurrence of one or more events that
are permitted to occur under the Loan Documents, and Borrower shall certify to
Lender to such effect;
(c)The Substitution shall not violate any applicable Laws;
(d)Lender shall have received copies of any purchase and sale agreement
regarding the Transfer of the Outgoing Properties being substituted by the
Incoming Properties;
(e)Borrower shall provide Lender with: (i) a mortgagee title insurance
policy(ies) for the newly added Cross Defaulted Properties with an aggregate
liability limit of not less than the aggregate principal amount of the Loan
and/or Cross Defaulted Loan(s) corresponding to the applicable Release
Property(ies) issued by the title insurance company which issued the mortgagee
title insurance policy for the Loan and the other Cross Defaulted Loans and with
such endorsements as included the title insurance policies for the Cross
Defaulted Properties to the extent available in the state where the newly added
Cross Defaulted Property is located, (ii) updated title searches with respect to
any Remaining Properties and, (iii) if an endorsement to Lender’s mortgagee
title insurance policy(ies) for any Remaining Properties is available in any
state in which any Remaining Property is located at a commercially reasonable
rate to the effect that the priority of Lender’s lien on such Remaining
Properties is not affected by the Substitution and insuring the continued first
priority of the lien of the security instruments encumbering the applicable
Remaining Properties, such endorsements;
(f)The DSCR for the Remaining Properties shall be no less than 2.0 to 1.0;
provided that Borrower shall have the right to repay the portion of the
outstanding principal (which prepayment shall

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be subject to the Exercised Prepayment Premium) necessary for the Remaining
Properties to satisfy the DSCR requirement of this subparagraph;
(g)The Debt Yield for the Remaining Properties shall be equal to or greater than
twelve percent (12.0%) (and Borrower shall have provided to Lender the
information required for the calculation thereof); provided that Borrower shall
have the right to prepay the portion of the outstanding principal (which
prepayment shall be subject to the Exercised Prepayment Premium) necessary for
the Remaining Properties to satisfy the Debt Yield requirement of this
subparagraph;
(h)Borrower shall pay Lender an administrative fee of $15,000 and all of
Lender’s actual out-of-pocket costs and expenses incurred in connection with the
Substitution, including without limitation, Attorneys’ Fees, and title fees and
charges;
(i)Borrower shall deliver to Lender any other document that Lender shall
reasonably request; and
(j)Within five (5) Business Days of Lender’s request therefor Borrower shall
provide Lender with Borrower’s proposed calculation of Net Operating Income,
certified by an appropriate authorized officer or authorized signatory of
Borrower, together with all relevant supporting detail reasonably required to
determine the same. Lender shall then perform Lender’s own independent
calculation of Net Operating Income, which shall be the definitive determination
of Net Operating Income absent manifest error.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the undersigned has executed this Instrument under seal as
of the day first set forth above.
BORROWER:

            
[_____________] LLC,
a Delaware limited liability company
            
By:    Phillips Edison Grocery Center Operating Partnership I, L.P.,
a Delaware limited partnership, its sole member

By:     Phillips Edison Grocery Center OP GP I LLC,
a Delaware limited liability company,
Its     General Partner

By: ________________________________________                            
Name:
Title:

STATE OF OHIO         )
             : SS:
COUNTY OF ____________)

The foregoing instrument was acknowledged before me this      day of
________________, 2017 by _______________, the ________________ of Phillips
Edison Grocery Center OP GP I LLC, a Delaware limited liability company, the
General Partner of Phillips Edison Grocery Center Operating Partnership I, L.P.,
a Delaware limited partnership, the sole member of [______________], a Delaware
limited liability company, on behalf of said company.
_______________________________                                    Notary Public
- State of Ohio

[SEAL]

My commission expires :    
____________________