Exhibit 10.5

AMENDED AND RESTATED SENIOR MEZZANINE LOAN AGREEMENT

Originally Closed on April 1, 2008

Amendment Effective as of August 22, 2008

between

THE BORROWERS NAMED HEREIN

collectively, as Borrower

and

THE LENDERS NAMED HEREIN

collectively, as Lender

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TABLE OF CONTENTS

 

     Page DEFINITIONS    1

ARTICLE I

GENERAL TERMS

Section 1.1.    The Loan    34 Section 1.2.    The Term    34 Section
1.3.    Interest and Principal    34 Section 1.4.    Interest Rate Cap
Agreements    35 Section 1.5.    Method and Place of Payment    36 Section
1.6.    Regulatory Change    37 Section 1.7.    Taxes    37 Section
1.8.    Release    38

ARTICLE II

VOLUNTARY PREPAYMENT

Section 2.1.    Voluntary Prepayment    38 Section 2.2.    Property Releases   
40 Section 2.3.    Value Add Pool Equity Releases    42 Section 2.4.    Release
of Vacant Land    43 ARTICLE III ACCOUNTS Section 3.1.    Cash Management
Account    45 Section 3.2.    Distributions from Cash Management Account    46
Section 3.3.    Loss Proceeds Account    47 Section 3.4.     Environmental
Escrow Account    47 Section 3.5.    Intentionally Omitted    48 Section
3.6.    Account Collateral    48 Section 3.7.    Bankruptcy    49 ARTICLE IV
REPRESENTATIONS Section 4.1.    Organization    50 Section 4.2.    Authorization
   50 Section 4.3.    No Conflicts    50 Section 4.4.    Consents    50 Section
4.5.    Enforceable Obligations    50 Section 4.6.    No Default    51 Section
4.7.    Payment of Taxes    51 Section 4.8.    Compliance with Law    51

 

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Section 4.9.    ERISA    51 Section 4.10.    Investment Company Act    51
Section 4.11.    No Bankruptcy Filing    52 Section 4.12.    Other Debt    52
Section 4.13.    Litigation    52 Section 4.14.    Leases; Material Agreements
   52 Section 4.15.    Full and Accurate Disclosure    53
Section 4.16.    Financial Condition    53 Section 4.17.    Single-Purpose
Requirements    54 Section 4.18.    [Intentionally Omitted]    54
Section 4.19.    Not Foreign Person    54 Section 4.20.    Labor Matters    54
Section 4.21.    Title    54 Section 4.22.    No Encroachments    54
Section 4.23.    Physical Condition    55 Section 4.24.    Fraudulent Conveyance
   55 Section 4.25.    Management    56 Section 4.26.    Condemnation    56
Section 4.27.    Utilities and Public Access    56
Section 4.28.    Environmental Matters    56 Section 4.29.    Assessments    57
Section 4.30.    No Joint Assessment    57 Section 4.31.    Separate Lots    57
Section 4.32.    Permits; Certificate of Occupancy    57 Section 4.33.    Flood
Zone    57 Section 4.34.    Security Deposits    58 Section 4.35.    Acquisition
Documents    58 Section 4.36.    Insurance    58 Section 4.37.    Ground Leased
Parcels    58 Section 4.38.    Intentionally Omitted    59 Section
4.39.  Estoppel Certificates    59 Section 4.40.  Embargoed Person    60 Section
4.41.    Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money   
                        Laundering Laws    60 Section 4.42.    Tax Basis    60
Section 4.43.    Survival    60 ARTICLE V AFFIRMATIVE COVENANTS Section
5.1.    Existence    61 Section 5.2.    Maintenance of Property    61 Section
5.3.    Compliance with Legal Requirements    61 Section 5.4.    Impositions and
Other Claims    61 Section 5.5.    Access to Property    62 Section
5.6.Cooperate in Legal Proceedings    62 Section 5.7.    Leases    62

 

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Section 5.8.Plan Assets, etc    64 Section 5.9.    Further Assurances    65
Section 5.10.    Management of Properties    65 Section 5.11.    Notice of
Material Change    66 Section 5.12.    Annual Financial Statements    66 Section
5.13.    Quarterly Financial Statements    67 Section 5.14.    Monthly Financial
Statements    68 Section 5.15.    Insurance    69 Section 5.16.    Casualty and
Condemnation    73 Section 5.17.    Annual Budget    75 Section 5.18.    General
Indemnity    75 Section 5.19.    Nonbinding Consultation    76 Section
5.20.    Compliance with Encumbrances    76 Section 5.21.    Encumbered Property
Indebtedness    77 Section 5.22.    Disposition Assets    77 Section
5.23.    Distributions    77 Section 5.24.    Encumbered Property Defaults    78
ARTICLE VI NEGATIVE COVENANTS Section 6.1.    Liens on the Properties    78
Section 6.2.    Ownership    78 Section 6.3.     Transfer    79 Section
6.4.    Debt    80 Section 6.5.    Dissolution; Merger or Consolidation    80
Section 6.6.    Change In Business    80 Section 6.7.    Debt Cancellation    80
Section 6.8.    Affiliate Transactions    81 Section 6.9.    Misapplication of
Funds    81 Section 6.10.    Jurisdiction of Formation    81 Section
6.11.    Modifications and Waivers    81 Section 6.12.    ERISA    81 Section
6.13.    Alterations and Expansions    82 Section 6.14.    Advances and
Investments    82 Section 6.15.    Single-Purpose Entity    82 Section
6.16.    Zoning and Uses    82 Section 6.17.    Waste    83 ARTICLE VII DEFAULTS
Section 7.1.    Event of Default    83 Section 7.2.    Remedies    86 Section
7.3.    No Waiver    87 Section 7.4.   Application of Payments after an Event of
Default    87

 

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ARTICLE VIII CONDITIONS PRECEDENT Section 8.1. Conditions Precedent to Closing
   87 ARTICLE IX MISCELLANEOUS Section 9.1.    Successors    91 Section
9.2.    GOVERNING LAW    91 Section 9.3.    Modification, Waiver in Writing   
91 Section 9.4.    Notices    92 Section 9.5.    TRIAL BY JURY    93 Section
9.6.    Headings    93 Section 9.7.    Assignment and Participation    93
Section 9.8.    Severability    95 Section 9.9.    Preferences    95 Section
9.10.    Remedies of Borrower    95 Section 9.11.    Offsets, Counterclaims and
Defenses    95 Section 9.12.    No Joint Venture    96 Section
9.13.    Conflict; Construction of Documents    96 Section 9.14.    Brokers and
Financial Advisors    96 Section 9.15.    Counterparts    96 Section
9.16.    Estoppel Certificates    96 Section 9.17.    Payment of Expenses;
Mortgage Recording Taxes    96 Section 9.18.    No Third-Party Beneficiaries   
97 Section 9.19.    Recourse    97 Section 9.20.    Right of Set-Off    99
Section 9.21.    Exculpation of Lender    99 Section 9.22.    Servicer    99
Section 9.23.    Prior Agreements    100

 

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Exhibits

 

A   Organizational Chart B   Form of Interest Rate Cap Opinion C   Form of
Interest Rate Cap Confirmation D   Form of Tenant Notice E   Insurance Program F
  Form of Intercreditor Agreement G   Form of SNDA H   Form of Permitted TRS
Contribution Agreement I   Release Price Definitions

 

Schedules

A-1   Mortgage Loan Collateral Properties A-2   Encumbered Property A-3  
Scaling Factors B   Exception Report C   Flow of Funds D   Material Agreements E
  Aggregate Allocated Loan Amounts F   Environmental Conditions G  
[Intentionally Omitted] H   Encumbered Property Pledgors I   Mortgage Loan
Property Owners J   Value Add Pool Properties K   Joint Venture Agreements L  
[Intentionally Omitted] M   Other Ground Lease Collateral N   Net Leases O  
Encumbered Property Debt P   Joint Venture Properties Q   Dana Portfolio R  
Disposition Assets S   Lease Termination Options T   Property Management
Agreements U   Encumbered Property Debt Documents V   Ground Leases W   Existing
Intercreditor Agreements X   Encumbered Property Debt Outstanding Principal
Balances

 

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AMENDED AND RESTATED SENIOR MEZZANINE LOAN AGREEMENT

This Amended and Restated Senior Mezzanine Loan Agreement (this “Agreement”) is
effective as of August 22, 2008 (“Effective Date”) and is between GOLDMAN SACHS
MORTGAGE COMPANY, a New York limited partnership (“GSMC”), as successor in
interest to Goldman Sachs Commercial Mortgage Capital, L.P. (“GSCMC”), and
CITICORP NORTH AMERICA, INC., a New York corporation (“Citigroup” and, together
with GSMC and their respective successors and assigns, including any lawful
holder of any portion of the Indebtedness (as hereinafter defined) collectively,
“Lender”), as lender, and each REQUIRED EQUITY PLEDGOR (as hereinafter defined),
AMERICAN FINANCIAL REALTY TRUST, a Maryland real estate investment trust
(“AFRT”), GKK STARS ACQUISITION LLC, a Delaware limited liability company (“AFRT
Owner”), FIRST STATES GROUP, L.P., a Delaware limited partnership (“Operating
Partnership”), FIRST STATES GROUP, LLC, a Delaware limited liability company
(“Operating Partnership GP” and together with Operating Partnership, Required
Equity Pledgor, AFRT, AFRT Owner and Operating Partnership, collectively,
jointly and severally, together with their respective permitted successors and
assigns, “Borrower”), as borrower.

RECITALS

GSCMC, Citigroup and SL Green made the Loan (as hereinafter defined) to the
Borrower on the Closing Date (the “Original Mezzanine Loan”) on the terms and
conditions set forth in that certain Loan Agreement, dated as of April 1, 2008
(“Original Loan Agreement”).

GSCMC assigned its right, title and interest in the Loan to GSMC, and SL Green
has assigned its right, title and interest in the Loan to GSCMC and Citigroup in
exchange for a portion of the Junior Mezzanine Loan (as defined herein) and an
additional portion Mortgage Loan.

Lender desires to bifurcate the Loan into two separate mezzanine loans, and
Borrower and Lender desire to make certain modifications to the Original Loan
Agreement. In furtherance thereof, Lender and Borrower have agreed to amend and
restate the Original Loan Agreement in its entirety.

Borrower and Lender agree that from and after the Effective Date, the terms,
covenants and provisions of the Original Loan Agreement are hereby modified,
amended, replaced, superseded and restated in their entirety so that henceforth
the terms, covenants and provisions of this Agreement shall supersede the
Original Loan Agreement.

Lender and Borrower therefore agree as follows:

DEFINITIONS

(a)        When used in this Agreement, the following capitalized terms have the
following meanings:

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“Acceptable Counterparty” means any counterparty to an Interest Rate Cap
Agreement that has and maintains (a) either (i) a long-term unsecured debt
rating or counterparty rating of A+ or higher from S&P, or (ii) a short-term
unsecured debt rating of A-1 or higher from S&P, and (b) a long-term unsecured
debt rating of Aa3 or higher from Moody’s.

“Account Collateral” means, collectively, the Collateral Accounts and all sums
at any time held, deposited or invested therein, together with any interest or
other earnings thereon, and all proceeds thereof (including proceeds of sales
and other dispositions), whether accounts, general intangibles, chattel paper,
deposit accounts, instruments, documents or securities.

“Affiliate” means, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person (and “unaffiliated” means
not an Affiliate).

“Affiliated Release Price” has the meaning set forth in Exhibit I.

“AFRT Equity” means 100% of the real estate investment trust equity interests in
AFRT.

“Aggregate Allocated Loan Amount” means, with respect to each Property listed in
Schedule E, the amount set forth in Schedule E (which reflects the portion of
the sum of (x) the Loan Amount (y) the Junior Mezzanine Loan Amount and (z) the
initial Encumbered Property Debt allocated to such Property hereunder), subject
to reduction to the extent necessary to reflect Borrower’s then direct or
indirect interest therein with respect to any Joint Venture Property permitted
hereunder. The Aggregate Allocated Loan Amount of each Property not listed on
Schedule E shall be zero.

“Agreement” means this Amended and Restated Senior Mezzanine Loan Agreement, as
the same may from time to time hereafter be modified or replaced.

“Allocated Loan Amount” means, with respect to each Property, (x) the Aggregate
Allocated Loan Amount, minus (y) the portion of the applicable Encumbered
Property Debt allocated to such Property pursuant to the applicable Encumbered
Property Debt Documents (but in no event shall the Allocated Loan Amount of any
Property be less than zero).

“ALTA” means the American Land Title Association, or any successor thereto.

“Alteration” means any demolition, alteration, installation, improvement or
expansion of or to any of the Properties or any portion thereof other than
(i) Tenant Improvements required under Leases, (ii) any demolition, alteration,
installation, improvement or expansion performed in connection with the
restoration of any of the Properties as a result of a Casualty or Condemnation,
(iii) routine maintenance and repair worked performed at any of the Properties
in the ordinary course of business, and (iv) any demolition, alteration,
installation, improvement or expansion performed by any Tenant where such Tenant
is entitled to do the same without obtaining the consent or approval of the
relevant Property Owner pursuant to the applicable lease.

 

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“Annual Budget” means a capital and operating expenditure budget for the
Properties prepared by Borrower and specifying amounts sufficient to operate and
maintain the Properties at a standard at least equal to that maintained on the
Closing Date.

“Appraisal” means an as-is appraisal that is prepared by a member of the
Appraisal Institute selected by Lender, meets the minimum appraisal standards
for national banks promulgated by the Comptroller of the Currency pursuant to
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as amended (FIRREA) and complies with the Uniform Standards of
Professional Appraisal Practice (USPAP).

“Approved Accounting Firm” means (i) PricewaterhouseCoopers, (ii) Deloitte &
Touche, (iii) KPMG, (iv) The Schonbraun McCann Group, (v) Ernst & Young,
(vi) Berdon LLP or any other independent accounting firm reasonably approved by
Lender in writing.

“Approved Annual Budget” has the meaning set forth in Section 5.17.

“Approved Management Agreement” means, collectively or individually as the
context may require, those certain Property Management Agreements listed on
Schedule T, dated as of the Closing Date, between Borrower or a Property Owner
and the initial Approved Property Manager, as the same may be modified or
replaced in accordance herewith with the reasonable consent of Lender, and any
other management agreement that is approved by Lender, which approval shall not
be unreasonably withheld, conditioned or delayed, and with respect to which
Lender receives Rating Confirmation.

“Approved Property Manager” means (i) Sponsor, SL Green Realty Corp. and their
respective Affiliates, (ii) First States Management Corp, L.P., (iii) First
States Services Management LLC, (iv) GKK Manager LLC, so long as it is an
Affiliate of Sponsor, or (v) any other management company that is approved by
Lender, which approval shall not be unreasonably withheld, conditioned or
delayed, and with respect to which Lender receives Rating Confirmation, in each
case unless and until Lender requests the termination of that management company
pursuant to Section 5.10(d).

“Assignment” has the meaning set forth in Section 9.7(b).

“Assignment of Interest Rate Cap Agreement” means each collateral assignment of
an interest rate cap agreement executed by Borrower and an Acceptable
Counterparty in accordance herewith, each of which must be in the form executed
by Borrower and the initial Acceptable Counterparty on the Closing Date, as the
same may from time to time be modified or replaced in accordance therewith and
herewith.

“Bankruptcy Code” has the meaning set forth in Section 7.1(d).

“Blocked Account” has the meaning set forth in Section 3.1(b).

“Blocked Account Agreement” has the meaning set forth in Section 3.1(b).

“Borrower” has the meaning set forth in the first paragraph of this agreement.

 

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“Borrower’s knowledge,” “the knowledge of Borrower” and similar phrases shall
(and shall be limited to) the actual (as distinguished from imputed or
construction knowledge) of Edward J. Matey, Jr., Sonya A. Huffman, David
Schonbraun, Andrew Levine and, with respect to leasing matters, Neil Kessner
(and Borrower hereby represents that such individuals are charged with having
knowledge regarding the Borrower and the Properties relevant to the
representations made herein); provided, however, with respect to any use of this
defined term as of a date after the Closing Date, “Borrower’s knowledge” and
“the knowledge of Borrower” shall be deemed to include such knowledge of any
Person who shall assume any actual or contemplated function of the foregoing
persons in the context in which this defined term is being used as of the date
with respect to which such knowledge is determined. Lender acknowledges that the
foregoing individuals are identified solely for the purpose of defining the
scope of Borrower’s knowledge and not for the purpose of imposing personal
liability or creating any duties running from any such individual to Lender.

“Business Day” means any day other than (i) a Saturday and a Sunday and (ii) a
day on which federally insured depository institutions in the State of New York
or the state in which the offices of Lender, its trustee, its Servicer or its
Servicer’s collection account are located are authorized or obligated by law,
governmental decree or executive order to be closed. When used with respect to
an Interest Determination Date, “Business Day” shall mean a day on which banks
are open for dealing in foreign currency and exchange in London.

“Capital Expenditure” means hard and soft costs incurred by Borrower or its
Affiliates with respect to replacements and capital repairs made to the
Properties (including repairs to, and replacements of, structural components,
roofs, building systems, parking garages, parking lots, and expenditures for
building improvements or major repairs), Leasing Commissions and Tenant
Improvements, in each case to the extent capitalized in accordance with GAAP.

“Cash Management Bank” means a depository institution selected by Lender in
which Eligible Accounts may be maintained. The initial Cash Management Bank
shall be LaSalle Bank, N.A.

“Casualty” means a fire, explosion, flood, collapse, earthquake or other
casualty affecting all or any portion of any Property.

“Certificates” means, collectively, any senior and/or subordinate notes,
debentures or pass-through certificates, or other evidence of indebtedness, or
debt or equity securities, or any combination of the foregoing, representing a
direct or beneficial interest, in whole or in part, in the Loan or the Mortgage
Loan, as the case may be.

“Change of Control” means the occurrence of either or both of the following
excluding any Transfer permitted in connection with joint ventures pursuant to
Section 6.3(b) or Section 2.3: (i) the failure of any individual Borrower and/or
Property Owner (other than a Joint Venture Owner or any subsidiary thereof) to
be directly or indirectly 100% owned and controlled by Sponsor, or (ii) the
failure of any Single-Purpose Equityholder (if any) to be directly or indirectly
100% owned and controlled by Sponsor.

 

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“Closing Date” means April 1, 2008.

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

“Collateral” means all assets owned from time to time by Borrower including
(i) the AFRT Equity, (ii) the Encumbered Property Collateral, (iii) the Value
Add Pool Equity, (iv) the Mortgage Loan Property Owner Equity, (v) the Other
Ground Lease Collateral, (vi) the Revenues, (vii) all Distributions and
(viii) all other tangible and intangible property in respect of which Lender is
granted a Lien under the Loan Documents, and all proceeds thereof.

“Collateral Accounts” means, collectively, the Cash Management Account, any
Blocked Account, the Loss Proceeds Account, the Environmental Escrow Account and
any other Eligible Account established hereunder.

“Component Balance” has the meaning set forth in Section 1.3(c).

“Component Spread” has the meaning set forth in Section 1.3(c).

“Componentization Notice” has the meaning set forth in Section 1.3(c).

“Condemnation” means a taking or voluntary conveyance of all or part of any of
the Properties or any interest in or right accruing to or use of any of the
Properties, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority.

“Consumer Price Index” means the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the United States Department of
Labor, New York Metropolitan Statistical Area, All Items (1982-84=100), or any
successor index thereto, approximately adjusted, and in the event that the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, the determination of adjustments provided for herein shall be
made with the use of such conversion factor, formula or table for converting the
Consumer Price Index as may be published by the Bureau of Labor Statistics or,
if said Bureau shall not publish the same, then with the use of such conversion
factor, formula or table as may be published by Prentice-Hall, Inc., or any
other nationally recognized publisher of similar statistical information; and if
the Consumer Price Index ceases to be published, and there is no successor
thereto, such other index as Lender and Borrower, each acting reasonably, shall
agree upon in writing.

“Contingent Obligation” means, with respect to any Person, any obligation of
such Person directly or indirectly guaranteeing any Debt of any other Person in
any manner and any contingent obligation to purchase, to provide funds for
payment, to supply funds to invest in any other Person or otherwise to assure a
creditor against loss.

“Cooperation Agreement” means that certain Cooperation Agreement, dated as of
the Closing Date, among Borrower, Lender and Sponsor, as the same may from time
to time be modified or replaced in accordance herewith.

 

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“Damages” to a party means any and all liabilities, obligations, losses,
damages, penalties, assessments, actions, judgments, suits, claims, costs,
expenses (including reasonable attorneys’ fees whether or not suit is brought),
settlement costs and disbursements imposed on, incurred by or asserted against
such party; provided, however, Damages shall exclude consequential damages
incurred by Lender or Indemnified Parties, as the case may be.

“Dana Portfolio” means those certain Properties specified in Schedule Q, as
modified from time to time to reflect any Transfer permitted pursuant hereto.

“Dana Excess Cash Flow” means, for so long as the Dana Portfolio, or any
interest therein, shall be subject to the Liens of the Loan, all Distributions
deposited into the Cash Management Account that are attributable to the Dana
Portfolio.

“Dana Release Price” has the meaning set forth in Exhibit I.

“Debt” means, with respect to any Person, without duplication:

(i)        all indebtedness of such Person to any other party (regardless of
whether such indebtedness is evidenced by a written instrument such as a note,
bond or debenture), including indebtedness for borrowed money or for the
deferred purchase price of property or services;

(ii)       all letters of credit issued for the account of such Person and all
unreimbursed amounts drawn thereunder;

(iii)      all indebtedness secured by a Lien on any property owned by such
Person (whether or not such indebtedness has been assumed) except obligations
for impositions which are not yet due and payable;

(iv)      all Contingent Obligations of such Person;

(v)       all payment obligations of such Person under any interest rate
protection agreement (including any interest rate swaps, floors, collars or
similar agreements) and similar agreements;

(vi)      all contractual indemnity obligations of such Person, other than those
made in the ordinary course of business in connection with the provision of
goods and services to one or more of the Properties; and

(vii)     any material actual or contingent liability to any Person or
Governmental Authority with respect to any employee benefit plan (within the
meaning of Section 3(3) of ERISA) subject to Title IV of ERISA, Section 302 of
ERISA or Section 412 of the Code.

“Debt Service” means, with respect to any Test Period, the product of (x) the
Principal Indebtedness plus the Junior Mezzanine Loan Principal Indebtedness as
of the last day of such Test Period, times (y) the sum of the LIBOR Strike Rate
plus the weighted average of the

 

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Spread and the “Spread” under and as defined in the Junior Mezzanine Loan
Agreement, times (z) a fraction, the numerator of which is 365 and the
denominator of which is 360.

“Default” means the occurrence and uncured continuance of any event which, but
for the giving of notice or the passage of time, or both, would be an Event of
Default.

“Default Rate” means, with respect to any Note or Note Component, the greater of
(x) 4% per annum in excess of the interest rate otherwise applicable to such
Note or Note Component hereunder and (y) 1% per annum in excess of the Prime
Rate from time to time.

“Deferred Maintenance Conditions” means the immediate repair and similar
maintenance items set forth in the Engineering Reports applicable to the
Properties and delivered to Borrower on or prior to the Closing Date.

“Disposition Assets” means the real property listed on Schedule R.

“Distributions” means all (i) payments and distributions and (ii) proceeds (as
defined in Article 9 of the UCC) in respect of the income, profits, payments,
returns of capital, dividends and other distributions (whether in the form of
cash or otherwise), in each case, actually distributed by the owner of an
Encumbered Property, the TRS Owner or any Joint Venture Owner to any Borrower.

“DSCR” means, with respect to any Test Period, the quotient of:

(i)        Net Operating Income for such period, less actual aggregate
principal, interest and required reserve payments (in each case, due and
payable, or then required to be reserved) in respect of Encumbered Property Debt
for such Test Period (adjusted to reflect Encumbered Properties that have been
theretofore released from the Liens of the Loan Documents), calculated, in the
case of floating rate Encumbered Property Debt, as if LIBOR were at all times
equal to the LIBOR strike rate on the interest rate cap purchased in accordance
with the corresponding Encumbered Property Debt Documents (or, if no interest
rate cap was required under such Encumbered Property Debt Documents, LIBOR plus
3%), less, for purposes of calculating the LIBOR Strike Rate for the Extension
Term, projected Tenant Improvements and Leasing Commissions reasonably approved
by Lender and Normalized Capital Expenditures; divided by

(ii)       the Debt Service for such period.

Notwithstanding the foregoing, (a) rental income under the Lease with Bank of
America in respect of the Dana Portfolio for purposes of calculating DSCR during
the Extension Term or for purposes of calculating the LIBOR Strike Rate for the
Extension Term shall be deemed to be equal to the annual rental payment that is
contractually required to be paid by Bank of America in respect of such Lease in
January 2011 (i.e., rental payments received under such Lease that are in excess
of such January 2011 rental amount shall be ignored for purposes of calculating
DSCR) and (b) for purposes of calculating DSCR at the time of the exercise of
the extension option described in Section 1.2(b), the LIBOR strike price for the
interest rate cap applicable to the Mortgage Loan shall be the LIBOR strike
price applicable to the extension term

 

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as described in clause (2) of the definition of “LIBOR Strike Rate” in the
Mortgage Loan Agreement.

“Eligible Account” means (i) a segregated account maintained with a federal or
state-chartered depository institution or trust company which complies with the
definition of Eligible Institution, or (ii) a segregated trust account or
accounts maintained with the corporate trust department of a federal depository
institution or state-chartered depository institution which has an
investment-grade rating and is subject to regulations regarding fiduciary funds
on deposit under, or similar to, Title 12 of the Code of Federal Regulations
Section 9.10(b) which, in either case, has corporate trust powers, acting in its
fiduciary capacity.

“Eligible Institution” means an institution (i) whose commercial paper,
short-term debt obligations or other short-term deposits are rated at least A–1,
Prime-1 or F-1, as applicable, by each of the Rating Agencies and
whose long-term senior unsecured debt obligations are rated at least A or A2, as
applicable, by each of the Rating Agencies, and whose deposits are insured by
the FDIC or (ii) with respect to which Lender shall have received Rating
Confirmation.

“Embargoed Person” has the meaning set forth in Section 4.40.

“Encumbered Property” means, individually or collectively, as the context may
require, each of the properties listed on Schedule A-2, including each of the
Properties securing the Mortgage Loan or otherwise owned by the Mortgage Loan
Property Owner, as modified from time to time to reflect any Transfer permitted
pursuant to Section 2.2.

“Encumbered Property Collateral” means the applicable percentage of the direct
and indirect equity interests in each Person that owns Encumbered Property, as
set forth on Schedule H hereto, as modified from time to time to reflect any
Transfer permitted pursuant to Section 6.3(b) or Section 2.2.

“Encumbered Property Debt” or “Encumbered Property Loan” means the Mortgage Loan
and all indebtedness secured by Liens on Encumbered Property pursuant to
Encumbered Property Debt Documents.

“Encumbered Property Debt Documents” means, collectively or individually, as the
context may require, all loan documents in favor of any Encumbered Property
Lender with respect to each Encumbered Property as and to the extent listed on
Schedule U, as the same may be amended, replaced (including, without limitation,
in connection with any refinancing thereof permitted hereunder) or otherwise
modified from time to time with the prior reasonable consent of Lender (Borrower
acknowledging it shall be reasonable for Lender to withhold such consent in
connection with any amendment, replacement or modification that would result in
(i) an increase in the principal amount, interest rate or the amortization of
principal, (ii) limitations on prepayments or the imposition of a fee in
connection therewith, (iii) a reduction on cash available for distribution or
(iv) a Material Adverse Effect). Lender hereby consents to the modifications
made to the Encumbered Property Debt Documents relating to the Dana Portfolio as
contemplated by that certain approval letter dated March 28, 2008 from the
lender thereunder, a copy of which was provided to Lender prior to the Closing
Date.

 

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“Encumbered Property Lender” means, individually or collectively, as the context
may require, each holder of Encumbered Property Debt.

“Encumbered Property Owner” means each owner of an Encumbered Property.

“Encumbered Property Pledgor” means, individually or collectively, as the
context may require, each Person listed on Schedule H hereto, as modified from
time to time to reflect any Transfer permitted pursuant to Section 6.3(b) or
Section 2.2.

“Engineering Report” means a structural and seismic engineering report or
reports with respect to each of the Properties prepared by an independent
engineer reasonably approved by Lender and delivered to Lender in connection
with the Loan, and any amendments or supplements thereto delivered to Lender.

“Environmental Claim” means any written notice, claim, proceeding, investigation
or demand by any Person or Governmental Authority alleging or asserting
liability with respect to Borrower, any Property Owner or any of the Properties
arising out of, based on or resulting from (i) the alleged presence, Use or
Release of any Hazardous Substance, (ii) any alleged violation of any
Environmental Law, or (iii) any alleged injury or threat of injury to property,
health or safety or to the environment caused by Hazardous Substances.

“Environmental Escrow Amount” means $850,000.

“Environmental Conditions” means those items described in Schedule F.

“Environmental Escrow Account” has the meaning set forth in Section 3.4(a).

“Environmental Indemnity” means, with respect to each Property, that certain
environmental indemnity agreement executed by Borrower and the Sponsor as of the
Closing Date, as the same may from time to time be modified or replaced in
accordance herewith.

“Environmental Laws” means any and all present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, any judicial or administrative orders, decrees or judgments
thereunder, and any permits, approvals, licenses, registrations, filings and
authorizations, in each case as now or hereafter in effect, relating to the
pollution, protection or cleanup of the environment, relating to the impact of
Hazardous Substances on property, health or safety, or the Use or Release of
Hazardous Substances, or relating to the liability for or costs of other actual
or threatened danger to health or the environment. The term “Environmental Law”
includes, but is not limited to, the following statutes, as amended, any
successors thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Materials Transportation Act; the Resource Conservation and Recovery
Act (including Subtitle I relating to underground storage tanks); the Clean
Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe
Drinking Water Act; the Occupational Safety and Health Act; the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Endangered Species Act; the National Environmental Policy Act; and the River
and Harbors

 

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Appropriation Act. The term “Environmental Law” also includes, but is not
limited to, any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law, conditioning
transfer of property upon a negative declaration or other approval of a
Governmental Authority of the environmental condition of a property; or
requiring notification or disclosure of Releases of Hazardous Substances or
other environmental conditions of a property to any Governmental Authority or
other Person, whether or not in connection with transfer of title to or interest
in property.

“Environmental Reports” means “Phase I Environmental Site Assessments” as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-05 (and, if necessary, “Phase II Environmental
Site Assessments”), prepared by an independent environmental auditor reasonably
approved by Lender and delivered to Lender and any amendments or supplements
thereto delivered to Lender or Mortgage Lender, and shall also include any other
environmental reports delivered to Lender pursuant to this Agreement, the
Mortgage Loan Documents and the Environmental Indemnities.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.

“ERISA Affiliate,” at any time, means each trade or business (whether or not
incorporated) that would, at the time, be treated together with Borrower or any
Property Owner as a single employer under Title IV or Section 302 of ERISA or
Section 412 of the Code.

“ERISA Event” means (i) the occurrence of a “reportable event” described in
Section 4043 of ERISA (other than a “reportable event” not subject to the
provisions for 30-day notice to the PBGC) or (ii) the provision or filing of a
notice of intent to terminate a Plan other than in a standard termination within
the meaning of Section 4041 of ERISA or the treatment of a Plan amendment as a
distress termination under Section 4041 of ERISA, or (iii) the institution of
proceedings to terminate a Plan by the PBGC, or (iv) the existence of any
“accumulated funding deficiency” or “liquidity shortfall” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived, or
(v) the occurrence or existence of any other event or condition which might
reasonably be expected to constitute grounds for the termination of, or the
appointment of a trustee to administer, any Plan other than in a standard
termination within the meaning of Section 4041 of ERISA or the imposition of any
lien on the assets of Borrower under ERISA, including as a result of the
operation of Section 4069 of ERISA.

“Event of Default” has the meaning set forth in Section 7.1.

“Exception Report” means the report prepared by Borrower and attached to this
Agreement as Schedule B, setting forth any exceptions to the representations set
forth in Article IV.

“Excess Transfer Proceeds” means Net Proceeds arising from the Transfer of a
Property to the extent such Net Proceeds exceed the applicable Release Price.

“Existing Debt Intercreditor Agreements” means the intercreditor agreements
listed on Schedule W hereto.

 

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“Extension Interest Rate Cap Agreement” means an interest rate cap confirmation
between an Acceptable Counterparty and Borrower, relating to the Extension Term,
which is, at all times, in substantially the form of Exhibit C (together with an
interest rate cap agreement and schedules relating thereto, which are consistent
in form and substance with the terms set forth in such confirmation).

“Extension Term” has the meaning set forth in Section 1.2(b).

“Fiscal Quarter” means the three-month period ending on
March 31, June 30, September 30 and December 31 of each year, or such other
fiscal quarter of Borrower as Borrower may select from time to time with the
prior consent of Lender, such consent not to be unreasonably withheld.

“Fiscal Year” means the 12-month period ending on December 31 of each year, or
such other fiscal year of Borrower as Borrower may select from time to time with
the prior consent of Lender, not to be unreasonably withheld.

“Fitch” means Fitch, Inc. and its successors.

“Force Majeure” means a delay due to acts of God, governmental restrictions,
stays, judgments, orders, decrees, enemy actions, civil commotion, fire,
casualty, strikes, work stoppage, shortages of labor or materials or similar
causes beyond the reasonable control of Borrower; provided that, with respect to
any of such circumstances, for the purposes of this Agreement, (1) any period of
Force Majeure shall apply only to performance of the obligations necessarily
affected by such circumstance and shall continue only so long as Borrower is
continuously and diligently using all reasonable efforts to minimize the effect
and duration thereof; and (2) Force Majeure shall not include the unavailability
or insufficiency of funds.

“Form W-8BEN” means Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding) of the Department of Treasury of the
United States of America, and any successor form.

“Form W-8ECI” means Form W-8ECI (Certificate of Foreign Person’s Claim for
Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America, and any successor form.

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied, or such other method of accounting used by
Borrower for books and records which is reasonably acceptable to Lender.

“Governmental Authority” means any federal, state, county, regional, local or
municipal government, any bureau, department, agency or political subdivision
thereof and any Person with jurisdiction exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(including any court).

“Ground Lease” means, with respect to each Property, any ground lease (but not a
space lease) encumbering such Property or otherwise creating the interest of
Borrower or its

 

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applicable Affiliate therein, which ground leases are more fully described on
Schedule V, as such ground lease may be modified or replaced from time to time
in accordance herewith.

“Ground Leased Parcel” means, with respect to each Property, any portion of such
Property with respect to which Borrower or its applicable Affiliate is the
lessee under a Ground Lease.

“Ground Rent” means rent payable pursuant to a Ground Lease, if any.

“Guaranty” means that certain guaranty, dated as of the Closing Date, executed
by Sponsor for the benefit of Lender.

“Hazardous Substances” means any and all substances (whether solid, liquid or
gas) defined, listed, or otherwise classified as pollutants, hazardous wastes,
hazardous substances, hazardous materials, extremely hazardous wastes, toxic
substances, toxic pollutants, contaminants, pollutants or words of similar
meaning or regulatory effect under any present or future Environmental Laws or
that may have a negative impact on human health or the environment or the
presence of which on, in or under any of the Properties is prohibited under
Environmental Law, including petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead and radon, and
compounds containing them (including gasoline, diesel fuel, oil and lead-based
paint), and radioactive materials, flammables and explosives and compounds
containing them, but excluding substances of kinds and in amounts which may
ordinarily and customarily be used or stored in bank branch or office properties
(as the case may be) of the same quality as the Property as of the date hereof
for the purposes of cleaning or other maintenance or operations or otherwise
ordinarily found in bank branch or office properties (as the case may be) of the
same quality as the Property as of the date hereof and otherwise in compliance
in all material respects with all Environmental Laws.

“Increased Costs” has the meaning set forth in Section 1.6.

“Indebtedness” means the Principal Indebtedness, together with interest and all
other obligations and liabilities of Borrower under the Loan Documents,
including all transaction costs and other amounts due or to become due to Lender
pursuant to this Agreement, under the Notes or in accordance with any of the
other Loan Documents, and all other amounts, sums and expenses reimbursable by
Borrower to Lender hereunder or pursuant to the Notes or any of the other Loan
Documents.

“Indemnified Liabilities” has the meaning set forth in Section 9.19(b).

“Indemnified Parties” has the meaning set forth in Section 5.18.

“Independent Director” of any corporation or limited liability company means an
individual who is duly admitted as an independent member of Borrower or
appointed as a member of the board of directors, board of managers or other
governing body of such corporation or limited liability company or, in the case
of a limited liability company, is a member of such limited liability company
and who is not, and has never been, and will not while serving as Independent
Director, be any of the following:

 

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(i)        a partner, equityholder, manager, director, officer or employee of
Borrower, any Single-Purpose Equityholder, any Property Owner or any of their
respective equityholders or Affiliates (other than as an independent member,
director or manager of an Affiliate of Borrower, any Property Owner or any
Single-Purpose Equityholder that is not in the direct chain of ownership of
Borrower and that is required by a creditor to be a single purpose bankruptcy
remote entity, provided that such independent director or manager is employed by
a company that routinely provides professional independent directors or
managers);

(ii)       a creditor, supplier or service provider (including provider of
professional services) to Borrower, any Property Owner, any Single-Purpose
Equityholder or any of their respective equityholders or Affiliates (other than
a company that routinely provides professional independent managers or directors
and which also provides lien search and other similar services to Borrower, any
Property Owner any Single-Purpose Equityholder or any of their respective
equityholders or Affiliates in the ordinary course of business);

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

(iv)      a Person that controls (whether directly, indirectly or otherwise) any
of (i), (ii) or (iii) above.

“Initial Interest Rate Cap Agreement” means an interest rate cap confirmation
between an Acceptable Counterparty and Borrower, relating to the initial term of
the Loan, which is, at all times, in substantially the form of Exhibit C
(together with an interest rate cap agreement and schedules relating thereto,
which are consistent in form and substance with the terms set forth in such
confirmation), as amended to reflect the reallocation of principal between the
Loan and the Junior Mezzanine Loan.

“Insurance Requirements” means, collectively, (i) all material terms of any
insurance policy required pursuant to this Agreement and (ii) all material
regulations and then-current standards applicable to or affecting any of the
Properties or any portion thereof or any use or condition thereof, which may, at
any time, be recommended by the board of fire underwriters, if any, having
jurisdiction over any of the Properties, or any other body exercising similar
functions.

“Intercreditor Reallocation Expenses means the reasonable fees and expenses
incurred by Lender in connection with amending the Existing Debt Intercreditor
Agreements to reflect the bifurcation of the Original Mezzanine Loan and the
creation of the Junior Mezzanine Loan, which reasonable fees and expenses shall
be limited to Lender’s reasonable out-of-pocket legal expenses together with
(but without duplication) (1) in the case of each of the Existing Debt
Intercreditor Agreements, except for the PB Capital Intercreditor, the fees and
expenses set forth in Section 29 of such Existing Debt Intercreditor Agreements
and (2) in the case of the PB Capital Intercreditor, such reasonable,
out-of-pocket expenses as may be imposed on Lender by the senior lenders under
the PB Capital Intercreditor in connection with any such amendment.

 

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“Interest Accrual Period” means, with respect to any specified Payment Date, the
period from and including the 15th day of the calendar month preceding such
specified Payment Date to but excluding the 15th day of the calendar month
containing such specified Payment Date; provided that, prior to a
Securitization, Lender shall have the right, in connection with a change in the
Payment Date in accordance with the definition thereof, to make a corresponding
change to the Interest Accrual Period provided same has no adverse effect on
Borrower in more than a de minimis extent. Notwithstanding the foregoing, the
first Interest Accrual Period shall commence on and include the Closing Date.

“Interest Determination Date” means, in connection with the calculation of
interest accrued for any Interest Accrual Period, the second Business Day
preceding the first day of such Interest Accrual Period.

“Interest Rate Cap Agreements” means collectively, the Initial Interest Rate Cap
Agreement and any Extension Interest Rate Cap Agreements.

“Joint Venture Cash Flow” has the meaning set forth in Section 3.5(b).

“Joint Venture Owner” means each joint venture that directly or indirectly owns
a Joint Venture Property.

“Joint Venture Property” means, individually or collectively, as the context may
require, each Property subject, directly or indirectly, to a Qualified Joint
Venture Agreement as listed on Schedule P, as modified from time to time to
reflect any Transfer permitted pursuant to Section 6.3(b) or Section 2.2 and any
additional joint venture permitted hereunder (including pursuant to
Section 2.3).

“Junior Mezzanine Borrower” means GKK Stars Junior Mezz 2 LLC, a Delaware
limited liability company.

“Junior Mezzanine Lender” means the holders from time to time of the Junior
Mezzanine Loan, and their respective successors and/or assigns.

“Junior Mezzanine Loan” means that certain mezzanine loan made by Junior
Mezzanine Lender to Junior Mezzanine Borrower as evidenced by the Junior
Mezzanine Loan Documents. If the Junior Mezzanine Loan is hereafter bifurcated
into multiple loans, then all references to the Junior Mezzanine Loan herein
shall be deemed to refer to all such loans in the aggregate.

“Junior Mezzanine Loan Agreement” means that certain Junior Mezzanine Loan
Agreement, dated as of the Effective Date, by and among Junior Mezzanine
Borrower and Junior Mezzanine Lender.

“Junior Mezzanine Loan Amount” means $99,410,498.78.

“Junior Mezzanine Loan Documents” means the “Loan Documents”, as defined in the
Junior Mezzanine Loan Agreement.

 

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“Junior Mezzanine Loan Event of Default” means the occurrence of any one or more
events that would constitute an “Event of Default” under and as defined in any
of the Junior Mezzanine Loan Documents, with respect to which Lender shall have
received written notice from Borrower or the Junior Mezzanine Lender.

“Junior Mezzanine Loan Principal Indebtedness” means the “Principal
Indebtedness” as defined in the Junior Mezzanine Loan Agreement.

“Lease” means any lease, license, letting, concession, occupancy agreement,
sublease to which Borrower is a party or has a consent right, or other agreement
(whether written or oral and whether now or hereafter in effect) under which
Borrower or a Property Owner is a lessor, existing as of the Closing Date or
hereafter entered into by Borrower or Property Owner, in each case pursuant to
which any Person is granted a possessory interest in, or right to use or occupy
all or any portion of any space in any of the Properties, and every modification
or amendment thereof, and every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed and observed by the
other party thereto.

“Lease Term Sheet” has the meaning set forth in Section 5.7(b).

“Leasing Commissions” means leasing commissions required to be paid by Borrower
or its Affiliates in connection with the leasing of space to Tenants at any of
the Properties pursuant to Leases either in effect on the date hereof or entered
into by Borrower or its Affiliates in accordance herewith and payable in
accordance with third-party/arm’s-length brokerage agreements, provided that the
commissions payable pursuant thereto are commercially reasonable based upon the
then current brokerage market for property of a similar type and quality to such
Property in the geographic market in which such Property is located.

“Legal Requirements” means all governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities (including Environmental Laws) affecting Borrower, any Property
Owner, the Collateral or any of the Properties or any portion of or the
construction, ownership, use, alteration or operation of, or any portion of any
Property (whether now or hereafter enacted and in force), and all permits,
licenses and authorizations and regulations relating thereto.

“Lender” has the meaning set forth in the first paragraph of this Agreement and
in Section 9.7.

“Letter of Credit” shall mean an irrevocable, unconditional, freely
transferable, clean sight draft evergreen letter of credit in favor of Lender,
with respect to which Borrower has no reimbursement obligation, entitling Lender
to draw thereon in New York, New York, issued by a domestic Eligible Institution
or the U.S. agency or branch of a foreign Eligible Institution.

“LIBOR” means the rate per annum calculated as set forth below:

(i)        On each Interest Determination Date, LIBOR for the applicable period
will be the rate for deposits in United States dollars for a one-month period
which appears as the London interbank offered rate on the display designated as
“LIBOR01” on the Reuters Screen (or such other page as may replace that page on
that service, or such

 

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page or replacement therefor on any successor service) as the London interbank
offered rate as of 11:00 a.m., London time, on such date.

(ii)        With respect to an Interest Determination Date on which no such rate
appears as the London interbank offered rate on “LIBOR01” on the Reuters Screen
(or such other page as may replace that page on that service, or such page or
replacement therefor on any successor service) as described above, LIBOR for the
applicable period will be determined on the basis of the rates at which deposits
in United States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such date to prime banks in the London interbank
market for a one-month period (each a “Reference Bank Rate”). Lender shall
request the principal London office of each of the Reference Banks to provide a
quotation of its Reference Bank Rate. If at least two such quotations are
provided, LIBOR for such period will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR for such period will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
Lender, at approximately 11:00 a.m., New York City time, on such date for loans
in United States dollars to leading European banks for a one-month period.

(iii)        If, on any Interest Determination Date, Lender is required but
unable to determine LIBOR in the manner provided in paragraphs (i) and
(ii) above, LIBOR for the applicable period shall be LIBOR as determined on the
previous Interest Determination Date.

All percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards to the nearest multiple of 1/100 of 1%
and all U.S. dollar amounts used in or resulting from such calculations will be
rounded to the nearest cent (with one-half cent or more being rounded upwards).

“LIBOR Strike Rate” means (1) with respect to the Initial Interest Rate Cap
Agreement, 5.25%; and (2) with respect to any Extension Interest Rate Cap
Agreement, the lesser of (x) 6% and (y) the interest rate that would result in a
DSCR of 1.0x as of the first day of the Extension Term.

“Lien” means any mortgage, lien (statutory or other), pledge, hypothecation,
assignment, preference, priority, security interest, or any other encumbrance or
charge on or affecting any Collateral or any portion thereof, or any Encumbered
Property, or any interest therein (including any conditional sale or other title
retention agreement, any sale-leaseback, any financing lease or similar
transaction having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
Uniform Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanics’, materialmen’s and other similar liens and encumbrances,
as well as any option to purchase, right of first refusal, right of first offer
or similar right).

“Loan” has the meaning set forth in Section 1.1.

“Loan Amount” means $500,000,000.

 

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“Loan Documents” means this Agreement, each of the Notes, the Assignment of
Interest Rate Cap Agreement, each of the Environmental Indemnities, each of the
Subordination of Property Management Agreements, the Cash Management Agreement,
the Pledge Agreement, the Upper Tier Pledge, any Blocked Account Agreement, the
Cooperation Agreement, the Guaranty, any Letter of Credit and all other
agreements, instruments, certificates and documents necessary to effectuate the
granting to Lender of first-priority Liens on the Collateral or otherwise in
satisfaction of the requirements of this Agreement or the other documents listed
above, as all of the aforesaid may be modified or replaced from time to time in
accordance herewith.

“Loan Multiplier” means (i) for the period beginning on the Closing Date and
ending on the Effective Date, 5/6 (83.33 %) and (ii) from and after the
Effective Date, 83.43%.

“Loss Proceeds” means amounts, awards or payments payable to Borrower or its
Affiliates, any Property Owner, Mortgage Lender or Lender in respect of all or
any portion of any of the Properties in connection with a Casualty or
Condemnation thereof (after the deduction therefrom and payment to Borrower or
its Affiliates, any Property Owner, Mortgage Lender and Lender, respectively, of
any and all reasonable expenses incurred by Borrower or its Affiliates and
Lender in the recovery thereof, including all attorneys’ fees and disbursements,
the fees of insurance experts and adjusters and the costs incurred in any
litigation or arbitration with respect to such Casualty or Condemnation).

“Loss Proceeds Account” has the meaning set forth in Section 3.3(a).

“Major Lease” means the Lease covering the Dana Portfolio on the date hereof, as
amended or modified in accordance herewith, and any Lease which (i) when
aggregated with all other Leases at the applicable Property with the same Tenant
(or affiliated Tenants), and assuming the exercise of all expansion rights and
all preferential rights to lease additional space contained in each such Lease,
is expected to contribute more than 7.5% of Net Operating Income during any
12-month period (after adjustment to eliminate the effect of free rent periods),
(ii) is with an Affiliate of Borrower or a Property Owner as Tenant, or (iii) is
entered into during the continuance of an Event of Default.

“Material Adverse Effect” means a material adverse effect upon (i) the ability
of Borrower or any Property Owner to perform, or of Lender or Mortgage Lender to
enforce, any material provision of any Loan Document or any Encumbered Debt
Document, as the case may be, (ii) the enforceability of any material provision
of any Loan Document, or (iii) the value, Net Operating Income, use or enjoyment
of any of the Properties or the operation thereof.

“Material Agreements” means (x) each contract and agreement (other than the
Leases, the Ground Leases, the Approved Management Agreement, the Encumbered
Property Debt Documents, brokerage and leasing agreements negotiated at arm’s
length and the Loan Documents) relating to a Property, or otherwise imposing
obligations on Borrower or any Property Owner, under which Borrower or any
Property Owner would have the obligation to pay more than $1,000,000 per annum
and which cannot be terminated by Borrower or any Property Owner without cause
upon 90 days’ notice or less without payment of a termination fee or, in any
case, with respect to any covenant contained herein (but not with respect to any

 

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representation), imposing obligations on Borrower or any Property Owner under
which it would have the obligation to pay more than $5,000,000 per annum,
regardless of Borrower’s or any Property Owner’s right to terminate same, or
which is with an Affiliate of Borrower or any Property Owner, and (y) to the
extent the existence, breach or termination of same might have a Portfolio
Material Adverse Effect, any reciprocal easement agreement, declaration of
covenants, material parking agreement, condominium documents, or other material
Permitted Encumbrance.

“Material Alteration” means any Alteration to be performed by or on behalf of
Borrower or any Property Owner at any of the Properties which (a) is reasonably
likely to have a Material Adverse Effect with respect to the applicable
Property, (b) when aggregated with all contemporaneous Alterations at the
Properties is reasonably expected to cost in excess of $20,000,000, or (c) is
reasonably expected to permit (or is reasonably likely to induce) any Tenant
under a material Lease to terminate its Lease or abate rent.

“Maturity Date” means the maturity date of the Loan as set forth in Section 1.2.

“Merger” means the transactions contemplated by the Merger Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of
November 2, 2007, among Sponsor, GKK Capital LP, AFRT Owner, and the other
parties thereto, with only such modifications thereto as have been agreed in
writing by Lender.

“Minimum Balance” has the meaning set forth in Section 3.2(a).

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Mortgage” means, with respect to each Mortgage Loan Collateral Property, that
certain mortgage, deed of trust or deed to secure debt, as the case may be,
encumbering such Mortgage Loan Property, executed by Mortgage Loan Property
Owner as of the Closing Date, as the same may from time to time be modified or
replaced in accordance herewith.

“Mortgage Lender” means, collectively, Goldman Sachs Mortgage Company (as
successor in interest to Goldman Sachs Commercial Mortgage Capital, L.P.),
Citicorp North America, Inc., SL Green Realty Corp. and their respective
successors and assigns.

“Mortgage Loan” means that certain Loan in the original principal amount of
$250,000,000 from Mortgage Lender to Mortgage Loan Property Owner.

“Mortgage Loan Agreement” means that certain Loan Agreement, dated as of the
date hereof, between Mortgage Lender and the Mortgage Loan Property Owners, as
same may be amended or modified from time to time with the consent of Lender.

“Mortgage Loan Cash Management Account” means the “Cash Management Account”
under and as defined in the Mortgage Loan Agreement.

“Mortgage Loan Principal Indebtedness” means, from time to time, the outstanding
principal balance of the Mortgage Loan.

 

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“Mortgage Loan Collateral Properties” means the real property described on
Schedule A-1, together with all buildings and other improvements thereon, as
modified from time to time to reflect any Transfer permitted pursuant to
Section 2.2.

“Mortgage Loan Event of Default” means an “Event of Default” under and as
defined in the Mortgage Loan Agreement.

“Mortgage Loan Property Owner” means each borrower under the Mortgage Loan.

“Mortgage Loan Property Owner Equity” means 100% of the direct equity interests
in each Mortgage Loan Property Owner as set forth in the Pledge Agreement, as
modified from time to time to reflect any Transfer permitted pursuant hereto.

“Mortgage Loan Property Owner Pledgor” means, individually or collectively, as
the context may require, each owner of Mortgage Loan Property Owner Equity, as
set forth on Schedule I, as modified from time to time to reflect any Transfer
permitted pursuant hereto.

“Net Lease” means each of the Leases listed on Schedule N.

“Net Operating Income” means, with respect to any Test Period, the excess of
(i) Operating Income for such Test Period, minus (ii) Operating Expenses for
such Test Period.

“Net Proceeds” means, in connection with the sale or disposition to an
unaffiliated third party in an arms’-length transaction, 100% of the proceeds of
such sale or disposition, net of any repayment of any Encumbered Property Debt
(including any prepayment or release premiums) that is required to be and
actually is repaid in connection therewith, and ordinary and customary closing
costs payable to unaffiliated third parties, limited in the case of Joint
Venture Properties and any joint venture entered into in connection with the
Transfer of any portion of the Value Add Pool Equity pursuant to Section 2.3 to
the portion of such net proceeds payable to Borrower or its Affiliates pursuant
to the applicable Qualified Joint Venture Agreement in effect on the date hereof
or as hereafter amended with Lender’s reasonable consent (Borrower agreeing that
it shall be reasonable for Lender to withhold its consent in connection with any
amendment that would result in a reduction of Borrower’s percentage interest in
(except in connection with a Transfer permitted hereunder), or control rights
over, any Joint Venture Property or otherwise result in a Material Adverse
Effect).

“New Borrower Entity” means a Single Purpose Entity 100% of the equity interests
in which are directly or indirectly owned by Sponsor and 100% of the direct
equity interests in which are pledged to Lender in a manner reasonably
satisfactory to Lender (including the delivery, at Borrower’s expense, of UCC
insurance with respect to such pledge), which Single Purpose Entity: (i) shall
have executed and delivered to Lender an assumption agreement, in form and
substance reasonably acceptable to Lender, evidencing its agreement to abide and
be bound by the terms of the Loan Documents and containing representations
substantially equivalent to those contained in Article IV, and such other
representations (and evidence of the accuracy of such representations) as the
Lender shall reasonably request; (ii) shall have delivered such Uniform
Commercial Code financing statements as may be reasonably requested by

 

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Lender; (iii) if requested by Lender, shall have delivered to Lender legal
opinions of counsel reasonably acceptable to Lender which are equivalent to the
opinions delivered to Lender on the Closing Date, including new enforceability,
authorization and nonconsolidation opinions which are reasonably satisfactory to
Lender and satisfactory to each of the Rating Agencies; and (iv) shall have
delivered to Lender all documents reasonably requested by it relating to the
existence of such New Borrower Entity and the due authorization of such New
Borrower Entity to assume the Loan and to execute and deliver any related
documents, each in form and substance reasonably satisfactory to Lender.

“Nonconsolidation Opinion” means, collectively, the opinion letter dated the
Closing Date, and the opinion letter, dated the Effective Date, in each case
delivered by Borrower’s counsel to Lender and addressing issues relating to
substantive consolidation in bankruptcy.

“Normalized Capital Expenditures” means anticipated annual Capital Expenditures
at the Properties, as reasonably determined by Lender, based on historical
Capital Expenditures at the Properties during the initial term of the Loan
(taking into account any amounts actually reimbursed in respect of Capital
Expenditures under Leases).

“Note” means, collectively, the promissory notes from time to time issued
hereunder, as such notes may be consolidated, replaced by multiple Notes or
divided into multiple Note Components in accordance with Section 1.3(c) and as
otherwise modified, assigned (in whole or in part) and/or replaced from time to
time in accordance herewith.

“Note Component” has the meaning set forth in Section 1.3(c).

“OFAC List” means the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury
Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any applicable governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities, including, without limitation, trade embargo, economic sanctions,
or other prohibitions imposed by Executive Order of the President of the United
States. The OFAC List currently is accessible through the internet website at
www.treas.gov/ofac/t11sdn.pdf.

“Officer’s Certificate” means a certificate delivered to Lender which is signed
by an authorized officer of Borrower and certifies the information therein to
such officer’s knowledge.

“Operating Expenses” means, for any period, all operating, renting,
administrative, management, legal and other ordinary expenses of Borrower and,
without duplication, Property Owners, during such period (other than those
relating to the Disposition Assets and each other Property whose Release Price
is zero), determined in accordance with GAAP; provided, however, that such
expenses shall not include (i) depreciation, amortization or other noncash items
(other than expenses that are due and payable but not yet paid), (ii) interest,
principal or any other sums due and owing with respect to the Loan, (iii) income
taxes or other taxes in the nature of income taxes, (iv) Capital Expenditures,
or (v) equity distributions.

 

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“Operating Income” means, for any period, all operating income of Borrower and,
without duplication, Property Owners, from each of the Properties (other than
the Disposition Assets and each other Property whose Release Price or Aggregate
Allocated Loan Amount is zero) during such period, determined in accordance with
GAAP (but without straight-lining of rents), other than (i) Loss Proceeds (but
Operating Income will include rental loss insurance proceeds to the extent
allocable to such period), (ii) any revenue attributable to a Lease to the
extent it is paid more than 30 days prior to the due date, (iii) any interest
income from any source, (iv) any repayments received from any third party of
principal loaned or advanced to such third party by Borrower, (v) any proceeds
resulting from the Transfer of all or any portion of such Property, (vi) sales,
use and occupancy or other taxes on receipts required to be accounted for by
Borrower to any government or governmental agency, (vii) termination fees, and
(viii) any other extraordinary or non-recurring items.

“Original Mezzanine Loan” has the meaning set forth in the recitals hereto.

“Other Ground Lease Collateral” means the equity interests in the Persons listed
on Schedule M in the percentages set forth thereon, as modified from time to
time to reflect any Transfer permitted hereunder.

“Other Equity Pledgor” means, individually or collectively, as the context may
require, each owner of Other Ground Lease Collateral as set forth on Schedule M.

“Other Properties” means, collectively, each Property that is not a Mortgage
Loan Collateral Property.

“Par Prepayment Date” means the first Payment Date following the 6-month
anniversary of the Closing Date.

“Parcel Release Price” has the meaning set forth in Exhibit I.

“Participation” has the meaning set forth in Section 9.7(b).

“Payment Date” means the 9th day of each month (or, if such 9th day is not a
Business Day, the first preceding Business Day); provided, that, prior to a
Securitization, Lender shall have the right to change the Payment Date so long
as a corresponding change to the Interest Accrual Period is also made and same
has no adverse effect on Borrower in more than a de minimis extent.
Notwithstanding the foregoing, the Maturity Date shall be the second to last
Business Day of the Interest Accrual Period in which the Maturity Date falls.

“Permits” means all licenses, permits, variances and certificates used in
connection with the ownership, operation, use or occupancy of each of the
Properties (including certificates of occupancy, business licenses, state health
department licenses, licenses to conduct business and all such other permits,
licenses and rights, obtained from any Governmental Authority or private Person
concerning ownership, operation, use or occupancy of such Property).

 

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“Permitted Affiliate Sale” means the sale of a Property to an Affiliate of
Borrower that is not itself a Borrower, which Affiliate’s immediate intention is
to materially redevelop such Property as evidenced by an Officer’s Certificate
submitted to Lender describing such redevelopment in reasonable detail;
provided, however, no such sale shall be a “Permitted Affiliate Sale” if, after
giving effect thereto, the sum of the Allocated Loan Amounts of all Properties
subject to Permitted Affiliate Sales from and after the Closing Date would
exceed $25,000,000.

“Permitted Debt” means:

(i)         the Indebtedness;

(ii)        Trade Payables not represented by a note, customarily paid by
Borrower within 60 days of incurrence and in fact not more than 60 days
outstanding, which are incurred in the ordinary course of Borrower’s ownership
and operation of the Properties, in amounts reasonable and customary for similar
Properties and not exceeding 2.0% of the sum of the Loan Amount and the Junior
Mezzanine Loan Amount in the aggregate;

(iii)       the Encumbered Property Debt, to the extent that there is no
increase in the principal amount thereof from the principal balance as of the
date hereof (after giving effect to any prepayments made on the date hereof) or
any material amendment to any Encumbered Property Debt Document without Lender’s
prior written consent;

(iv)       refinancings of Encumbered Property Debt on terms not materially more
onerous (including as to interest rate, transfer restrictions, amortization,
prepayment provisions and cash trap provisions) as the Encumbered Property Debt
being refinanced, provided that, in the case of each such refinancing, (x) the
applicable Encumbered Property Lender enter into an intercreditor agreement with
Lender in form and substance reasonably satisfactory to Lender (the Form of
Intercreditor Agreement attached hereto as Exhibit F is hereby deemed to be
reasonably satisfactory to Lender), (y) Lender is granted a perfected
first-priority pledge of 100% of the equity interests in the entity owning the
Encumbered Property securing the Encumbered Property Debt being so refinanced,
and (z) if any such refinancing is in a principal amount greater than the
Encumbered Property Debt being refinanced, then an amount equal to the product
of the Loan Multiplier times 100% of the increase (without reduction for
transaction, prepayment, defeasance or other expenses) is applied toward
prepayment of the Loan in accordance with Section 2.1 hereof;

(v)        the Mortgage Loan; and

(vi)       the Junior Mezzanine Loan.

“Permitted Encumbrances” means:

(i)         the Liens created by the Loan Documents and the Encumbered Property
Debt Documents;

 

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(ii)         all Liens and other matters specifically disclosed on Schedule B of
the Qualified Title Insurance Policy;

(iii)        Liens, if any, for Taxes not yet delinquent;

(iv)        mechanics’, materialmen’s or similar Liens, if any, and Liens for
delinquent taxes or impositions, in each case only if being contested in good
faith and by appropriate proceedings, provided that no such Lien is in imminent
danger of foreclosure and provided further that either (a) each such Lien is
released or discharged of record or fully insured over by the title insurance
company issuing the Qualified Title Insurance Policy within 60 days of its
creation, or (b) Borrower deposits with Lender, by the expiration of such 60-day
period, an amount equal to 115% of the dollar amount of such Lien or a bond in
the aforementioned amount from such surety, and upon such terms and conditions,
as is reasonably satisfactory to Lender, as security for the payment or release
of such Lien (such 60-day period shall be extended to 90 days with respect to
any such Lien that is caused by a Tenant, provided Borrower exercises
commercially reasonable efforts during such 90-day period to cause such Tenant
to remove such Lien or provide the bond described above);

(v)        rights of existing Tenants under Leases heretofore disclosed to
Lender, and the rights of future Tenants and subtenants as tenants only pursuant
to written Leases entered into in conformity with the provisions of this
Agreement; and

(vi)       easements and other customary encumbrances customarily encumbering
like properties and entered into in the ordinary course of business, to the
extent such easements or encumbrances do not result in a Material Adverse
Effect.

“Permitted Investments” means the following, subject to the qualifications
hereinafter set forth:

(i)         obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality thereof, when
such obligations are backed by the full faith and credit of the United States of
America;

(ii)        federal funds, unsecured certificates of deposit, time deposits,
banker’s acceptances, and repurchase agreements having maturities of not more
than 365 days of any bank, the short-term debt obligations of which are rated
A-1+ (or the equivalent) by each of the Rating Agencies and, if it has a term in
excess of three months, the long-term debt obligations of which are rated AAA
(or the equivalent) by each of the Rating Agencies;

(iii)      deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC);

(iv)      debt obligations that are rated AAA or higher (or the equivalent) by
each of the Rating Agencies;

 

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(v)         commercial paper rated A–1+ (or the equivalent) by each of the
Rating Agencies;

(vi)        investment in money market funds rated AAAm or AAAm–G (or the
equivalent) by each of the Rating Agencies; and

(vii)       such other investments as to which Lender shall have received Rating
Confirmation.

Notwithstanding the foregoing, “Permitted Investments” (i) shall exclude any
security with the Standard & Poor’s “r” symbol (or any other Rating Agency’s
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
“strips”; (ii) shall not have maturities in excess of one year; (iii) shall be
limited to those instruments that have a predetermined fixed dollar of principal
due at maturity that cannot vary or change; and (iv) shall exclude any
investment where the right to receive principal and interest derived from the
underlying investment provides a yield to maturity in excess of 120% of the
yield to maturity at par of such underlying investment. Interest may either be
fixed or variable, and any variable interest must be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index. No investment shall be made which requires a payment above par for
an obligation if the obligation may be prepaid at the option of the issuer
thereof prior to its maturity. All investments shall mature or be redeemable
upon the option of the holder thereof on or prior to the earlier of (x) three
months from the date of their purchase or (y) the Business Day preceding the day
before the date such amounts are required to be applied hereunder.

“Permitted TRS Contribution Agreement” means a contribution agreement
substantially in the form of the contribution agreement attached as Exhibit H.

“Permitted TRS Entity” means a Person that becomes a Mortgage Borrower under the
Mortgage Loan , fulfills the requirements of a “New Borrower Entity” under and
as defined in the Mortgage Loan Agreement and is formed solely for the purpose
of entering into one or more Permitted TRS Contribution Agreements and matters
directly relating thereto.

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association or
Governmental Authority and any fiduciary acting in such capacity on behalf of
any of the foregoing.

“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA)
subject to Title IV or Section 302 of ERISA or Section 412 of the Code.

“Plan Assets” means assets of any (i) employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title I of ERISA or (ii) plan (as defined in
Section 4975(e)(1) of the Code) subject to Section 4975 of the Code.

“Pledge Agreement” means that certain Pledge and Security Agreement, dated as of
the date hereof, by the owners of the Required Equity Pledgors for the benefit
of Lender.

 

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“Policies” has the meaning set forth in Section 5.15(b).

“Portfolio Material Adverse Effect” means a material adverse effect upon (i) the
ability of Borrower to perform, or of Lender to enforce, any material provision
of any Loan Document, (ii) the enforceability of any material provision of any
Loan Document, or (iii) the value, Net Operating Income, use or enjoyment of the
Properties or the operation thereof, in each case, taken as a whole.

“Prepayment Fee” shall mean, with respect to any prepayment received by Lender
prior to the Par Prepayment Date (other than with respect to a prepayment
pursuant to Section 2.1(c)(i), (ii) and (iii)), any prepayment associated with
the release of a Disposition Asset or any release in connection with a Casualty
or Condemnation pursuant to Section 5.16(d)), an amount equal to 1.0% of the
principal amount prepaid.

“Prime Rate” means the “prime rate” published in the “Money Rates” section of
The Wall Street Journal. If The Wall Street Journal ceases to publish the “prime
rate,” then Lender shall select an equivalent publication that publishes such
“prime rate,” and if such “prime rate” is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Lender shall reasonably select a comparable interest rate index.

“Principal Indebtedness” means the principal balance of the Loan outstanding
from time to time.

“Properties” means, collectively, all real property from time to time owned or
leased directly or indirectly by AFRT, including without limitation the
Encumbered Properties and the Mortgage Loan Collateral Properties, together with
all buildings and improvements thereon. As used herein, “Property” means any of
the individual Properties. Any reference herein to a Transfer of a Property
shall mean a Transfer of such Property or of the direct or indirect equity
interests therein (other than a Transfer of a direct or indirect equity interest
in Sponsor).

“Property Owner” means, individually or collectively, as the context may
require, each owner from time to time of a Property. The current Property Owners
are listed on Schedule I.

“Qualified Joint Venture Agreement” means a (x) joint venture agreement entered
into prior to the date hereof and described in Schedule K, (y) any joint venture
agreement relating to a Value Add Pool Property entered into pursuant to
Section 2.3, and (z) a joint venture agreement hereafter entered into pursuant
to Section 6.3(b) that (i) provides Lender with the right to force a sale or
similar liquidation of the assets of the joint venture following a foreclosure
or transfer-in-lieu of foreclosure on the equity interests pledged to Lender
subject to customary rights of first offer or appraisal sale or other similar
rights reasonably acceptable to Lender, (ii) provides to Borrower or its
Affiliate (and, after a foreclosure or transfer-in-lieu of foreclosure on the
equity interests pledged to Lender subject to customary rights of first offer,
appraisal sale or other similar rights reasonably acceptable to Lender, provides
to Lender) the right to control the joint venture, subject to customary major
decisions, (iii) provides that distributions of operating

 

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revenues, capital proceeds and all other income of the applicable Properties, to
the extent available for distribution, shall be made to the equityholders in
proportion to their respective equity interests, and (iv) is otherwise
acceptable to Lender in its reasonable discretion.

“Qualified Survey” means, with respect to each of the Mortgage Loan Properties,
current title surveys of such Mortgage Loan Property, certified to Borrower, the
title company issuing the Qualified Title Insurance Policy and Lender and their
respective successors and assigns, in form and substance reasonably satisfactory
to Lender.

“Qualified Title Insurance Policy” means (i) with respect to each of the
Properties, (x) if applicable, an ALTA extended coverage mortgagee’s title
insurance policy in form and substance reasonably satisfactory to Lender,
together with such endorsements as Lender shall reasonably request, and (y) an
owner’s title insurance policy in favor of the applicable Mortgage Loan Property
Owner (except that Borrower shall not be required to purchase new or updated
owners’ policies) with a “Mezzanine Lender’s Financing Endorsement,” naming
Lender as an additional insured, in form and substance reasonably acceptable to
Lender (or in the alternative, a letter executed by the title company providing
substantially the same benefit to Lender), and (ii) with respect to the equity
pledged to Lender pursuant to the Loan Documents, a UCC insurance policy
insuring Lender’s first-priority security interest in 100% of the equity pledged
to Lender pursuant to the Loan Documents, and otherwise in form and substance
reasonably acceptable to Lender.

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

“Rating Confirmation” means, with respect to any proposed action, confirmation
in writing from each of the Rating Agencies that such action shall not result,
in and of itself, in a downgrade, withdrawal or qualification of any rating then
assigned to any outstanding Certificates; except that if any portion of the Loan
shall not have been securitized pursuant to a Securitization rated by the Rating
Agencies, then “Rating Confirmation” shall instead mean that the matter in
question is subject to the prior written approval of both (x) the applicable
Rating Agencies (if and to the extent that any portion of the Loan has been
securitized pursuant to a Securitization or series of Securitizations rated by
such Rating Agencies), and (y) Lender in its reasonable discretion (and Borrower
agrees that it shall be reasonable for Lender to withhold such approval, if such
proposed action does not satisfy Rating Agency criteria). No Rating Confirmation
shall be regarded as having been received unless and until any conditions
imposed on its effectiveness by any Rating Agency shall have been satisfied.

“Reference Banks” means four major banks in the London interbank market selected
by Lender.

“Regulatory Change” means any change after the Closing Date in federal, state or
foreign laws or regulations or the adoption or the making, after such date, of
any interpretations, directives or requests applying to a class of banks or
companies controlling banks, including Lender, of or under any federal, state or
foreign laws or regulations (whether or not having the

 

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

“Release” with respect to any Hazardous Substance means any release, deposit,
discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Substances into the indoor or outdoor environment (including the
movement of Hazardous Substances through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata) in violation of Environmental
Law.

“Release Parcel” has the meaning set forth Section 2.4.

“Release Price” has the meaning set forth in Exhibit I.

“Release Price Deficit” means has the meaning specified in Section 2.2(c).

“Rent Roll” has the meaning set forth in Section 4.14(a).

“Required Equity” means the equity pledged to Lender by Required Equity Pledgors
(or, in the case of First States Group, L.P. and its general partner, the equity
that is subject to the negative covenants contained herein) pursuant to the Loan
Documents.

“Required Equity Pledgor” means, individually or collectively, as the context
may require, AFRT Owner, each Value Add Pool Pledgor, each Encumbered Property
Pledgor, each Other Equity Pledgor and each Mortgage Loan Property Owner
Pledgor.

“Restricted Cash” means amounts released from collateral accounts maintained
pursuant and subject to Encumbered Debt Documents, except for reserves for
monthly expenses such as tax, insurance, capital expenditure reserves funded
monthly, but including reserves in the nature of deferred maintenance, interest
reserves, reserves for the purpose of credit enhancement and excess cash
reserves; provided that the foregoing shall not be required to be remitted to
Lender pursuant to the terms hereof at the time of a refinancing of Encumbered
Property Debt if, in connection with such refinancing, the same shall be
required to be maintained in a collateral account pursuant to the amended or
replacement Encumbered Debt Documents entered into in accordance with the terms
hereof.

“Revenues” means (i) to the extent attributable to any Property, all rents, rent
equivalents, moneys payable as damages pursuant to a Lease or in lieu of rent or
rent equivalents, royalties (including all oil and gas or other mineral
royalties and bonuses), income, receivables, receipts, revenues, deposits
(including security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered and other consideration of whatever form
or nature received by or paid to or for the account of or benefit of Borrower
from any and all sources including any obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of property or rendering of
services by Borrower and proceeds, if any, from business interruption or other
loss of income insurance; provided, however, that with respect to any Encumbered
Property, the foregoing shall not constitute “Revenues” to the extent that it is
subject to the Lien of an Encumbered Property Loan or is required to be applied
to an Encumbered Property

 

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pursuant to Encumbered Property Debt Documents, and (ii) all amounts released
from collateral accounts held by or on behalf of any Encumbered Property Lender
in connection with Encumbered Property Debt, to the extent such amounts are not
required to be applied to an Encumbered Property pursuant to Encumbered Property
Debt Documents. “Revenues” shall not include Loss Proceeds applied in accordance
with Section 5.16 (other than the proceeds of rental interruption insurance),
interest income (other than interest on amounts contained in the Collateral
Accounts), equity contributions or other amounts to be funded by a member
pursuant to Borrower’s operating agreement and amounts which are received from
the Collateral Accounts in accordance herewith or are otherwise free of the
Liens of the Loan Documents pursuant to the terms hereof.

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies, Inc., and its successors.

“Scaled Allocated Loan Amount” means, with respect to each Property constituting
Senior Collateral, (i) the Aggregate Allocated Loan Amount of each such
Property, times (ii) the Scaling Factor of such Property, minus, after such
multiplication has been made, (iii) the portion of the applicable Encumbered
Property Debt allocated to such Property pursuant to the applicable Encumbered
Property Debt Documents.

“Scaling Factor” means, with respect to each Property constituting Senior
Collateral, the percentage indicated in Schedule A-3.

“Securitization” means a transaction in which all or any portion of the Loan is
deposited into one or more trusts which issue Certificates to investors, or a
similar transaction.

“Senior Collateral” means all Collateral secured by a Mortgage or a
first-priority perfected pledge of equity that, in either case, would not be
subordinate (structurally or otherwise) to the Lien of a hypothetical secured
lender (such as a DIP lender) in a hypothetical bankruptcy of AFRT, Operating
Partnership or their respective subsidiaries, other than the Lien of the
Encumbered Property Debt as listed on Schedule O.

“Senior Collateral Value” means, with respect to each Property not constituting
Senior Collateral, zero; and with respect to each Property constituting Senior
Collateral, the product of (i) the Scaled Allocated Loan Amount of such
Property, times (ii) the applicable percentage of the equity interest therein
that is pledged pursuant to the Senior Mezzanine Lower Tier Pledge (but in no
event shall the Senior Collateral Value of any Property be less than zero).

“Senior Mezzanine Lower Tier Pledge” means that certain Pledge and Security
Agreement (Lower Tier), dated as of April 1, 2008, by Borrower for the benefit
of Lender.

“Service” means the Internal Revenue Service or any successor agency thereto.

“Servicer” means the entity or entities appointed by Lender from time to time to
serve as servicer and/or special servicer of the Loan. If at any time no entity
is so appointed, the term “Servicer” shall be deemed to refer to Lender.

 

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“Single Member LLC” means a limited liability company which either (x) has only
one member, or (y) has multiple members, none of which is a Single-Purpose
Equityholder.

“Single-Purpose Entity” means a Person which (a) was formed solely for the
purpose of acquiring and holding (i) in the case of a Property Owner, an
ownership interest in its Property, (ii) in the case of a Required Equity
Pledgor, an ownership interest in its Required Equity or (iii) in the case of a
Single-Purpose Equityholder, an ownership interest in the Borrower, (b) does not
engage in any business unrelated to (i) in the case of a Property Owner, such
Property, (ii) in the case of a Required Equity Pledgor, such Required Equity or
(iii) in the case of a Single-Purpose Equityholder, its ownership interest in
the Borrower, (c) does not have any assets other than those related to (i) in
the case of a Property Owner, such Property, (ii) in the case of a Required
Equity Pledgor, such Required Equity or (iii) in the case of a Single-Purpose
Equityholder, its ownership interest in the Borrower, (d) does not have any Debt
other than, in the case of Borrower, Permitted Debt, (e) maintains books,
accounts, records, financial statements, stationery, invoices and checks which
are separate and apart from those of any other Person (except that such Person’s
financial position, assets, results of operations and cash flows may be included
in the consolidated financial statements of an Affiliate of such Person in
accordance with GAAP, provided that any such consolidated financial statements
shall contain a note indicating that such Person and its Affiliates are separate
legal entities and maintain records, books of account separate and apart from
any other Person), (f) is subject to and complies with all of the limitations on
powers and separateness requirements set forth in the organizational
documentation of such Person as of the Closing Date, (g) holds itself out as
being a Person separate and apart from each other Person and not as a division
or part of another Person, (h) conducts its business in its own name (except for
services rendered under a management agreement with an Affiliate, so long as the
manager, or equivalent thereof, under such management agreement holds itself out
as an agent of such Person), (i) exercises reasonable efforts to correct any
known misunderstanding actually known to it regarding its separate identity, and
maintains an arm’s-length relationship with its Affiliates, (j) pays its own
liabilities out of its own funds (including the salaries of its own employees,
if any) and reasonably allocates any overhead that is shared with an Affiliate,
including paying for shared office space and services performed by any officer
or employee of an Affiliate, (k) maintains a sufficient number of employees in
light of its contemplated business operations, (l) conducts its business so that
the assumptions made with respect to it which are contained in the
Nonconsolidation Opinion shall at all times be true and correct in all material
respects, (m) except as contemplated by the Loan Documents, maintains its assets
in such a manner that it will not be costly or difficult to segregate, ascertain
or identify its individual assets from those of any other Person, (n) observes
all applicable corporate entity-level formalities in all material respects,
(o) except as contemplated by the Loan Documents, does not commingle its assets
with those of any other Person and holds such assets in its own name, (p) except
as contemplated by the Loan Documents, except as set forth in the Encumbered
Property Debt Documents and the Loan Documents, does not assume, guarantee or
become obligated for the debts of any other Person, and does not hold out its
credit as being available to satisfy the obligations or securities of others,
(q) does not acquire obligations or securities of its shareholders, members or
partners, (r) except as contemplated by the Loan Documents, except in connection
with the Loan, does not pledge its assets for the benefit of any other Person
and does not make any loans or advances to any Person, (s) intends to maintain
adequate capital in light of its contemplated business operations, (t) has two
Independent Directors, or, in the case of a limited partnership, has a
Single-Purpose

 

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Equityholder with two Independent Directors, (u) has by-laws or an operating
agreement, or, in the case of a limited partnership, has a Single-Purpose
Equityholder with by-laws or an operating agreement, which provides that, for so
long as the Loan is outstanding, such Person shall not take or consent to any of
the following actions except to the extent expressly permitted in this Agreement
and the other Loan Documents:

(i)         to the fullest extent permitted by law, the dissolution,
liquidation, consolidation, merger or sale of all or substantially all of its
assets (and, in the case of a Single-Purpose Equityholder, the assets of the
Borrower);

(ii)        the engagement by such Person (and, in the case of a Single-Purpose
Equityholder, the engagement by the Borrower) in, (x) in the case of any
Property Owner, any business other than the acquisition, development,
management, leasing, ownership, maintenance and operation of its Property, and
activities incidental thereto, (y) in the case of any Required Equity Pledgor,
any business other than the acquisition and ownership of its Required Equity,
and (iii) in the case of a Single-Purpose Equityholder, activities incidental to
the acquisition and ownership of its interest in the Borrower;

(iii)       the filing, or consent to the filing, of a bankruptcy or insolvency
petition, any general assignment for the benefit of creditors or the institution
of any other insolvency proceeding, or the seeking or consenting to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official in respect of such Person without the
affirmative vote of all of its Independent Directors (and, in the case of a
Single-Purpose Equityholder, in respect of the Borrower without the affirmative
vote of both of such Single-Purpose Equityholder’s Independent Directors); and

(iv)       any amendment or modification of any provision of its (and, in the
case of a Single-Purpose Equityholder, the Borrower’s) organizational documents
relating to qualification as a “Single-Purpose Entity”,

and (v) if such entity is a Single Member LLC that does not have an independent
non-equity member, has organizational documents which provide that upon the
occurrence of any event (other than a permitted equity transfer) that causes its
sole member to cease to be a member while the Loan is outstanding, at least one
of its Independent Directors shall automatically be admitted as the sole member
of the Single Member LLC and shall preserve and continue the existence of the
Single Member LLC without dissolution.

“Single-Purpose Equityholder” means a Single-Purpose Entity that (x) is a
limited liability company or corporation formed under the laws of the State of
Delaware, (y) owns at least a 0.5% direct equity interest in Borrower, and
(z) serves as the general partner or managing member of Borrower.

“SNDA” has the meaning set forth in Section 5.7(f).

“Sponsor” means Gramercy Capital Corp., or any successors and assigns thereof by
merger, consolidation, amalgamation, reorganization, acquisition of all or
substantially all of

 

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the shares or other ownership interests in Sponsor, by transfer of all or
substantially all of Sponsor’s assets in a single transaction, or through a
similar transaction.

“Spread” means:

(i)         initially, 5.2%; and

(ii)        following the bifurcation of the Note into multiple Note Components
pursuant to Section 1.3(c), the weighted average of the Component Spreads at the
time of determination, weighted on the basis of the corresponding Component
Balances.

“Subordination of Property Management Agreement” means that certain consent and
agreement of manager and subordination of management agreement executed by
Borrower and the Approved Property Manager as of the Closing Date, as the same
may from time to time be modified or replaced in accordance herewith.

“Taxes” means all real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents, facilities and other
governmental, municipal and utility district charges or other similar taxes or
assessments now or hereafter levied or assessed or imposed against the
Properties or Borrower with respect to the Properties or rents therefrom or
which may become Liens upon any of the Properties, without deduction for any
amounts reimbursable to Borrower by third parties.

“Tenant” means any Person liable by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) pursuant to a
Lease.

“Tenant Improvements” means, collectively, (i) tenant improvements to be
undertaken for any Tenant which are required to be completed by or on behalf of
Borrower or any Property Owner pursuant to the terms of such Tenant’s Lease,
(ii) tenant improvements paid or reimbursed through allowances to a Tenant
pursuant to such Tenant’s Lease, and (iii) other similar tenant inducements.

“Tenant Notice” has the meaning set forth in Section 3.1(b).

“Test Period” means each 12-month period ending on the last day of a Fiscal
Quarter; provided, however, “Test Period” shall mean the most recently completed
calendar quarter, annualized, for calculation of the “LIBOR Strike Rate”.

“Trade Payables” means unsecured amounts payable by or on behalf of Borrower for
or in respect of the operation of the Properties in the ordinary course and
which would under GAAP be regarded as ordinary expenses, including amounts
payable to suppliers, vendors, contractors, mechanics, materialmen or other
Persons providing property or services to the Properties or Borrower and the
capitalized amount of any ordinary-course financing leases.

“Transaction” means, collectively, the Merger and other transactions
contemplated and/or financed by the Loan Documents.

 

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“Transfer” means (i) with respect to a Property, the pledge, sale or other whole
or partial conveyance of all or any portion of any of the Properties or any
direct or indirect interest therein, or any direct or indirect equity interest
in the owner thereof, including granting of any purchase options, rights of
first refusal, rights of first offer or similar rights in respect of any portion
of such Property or the subjecting of any portion of such Property to
restrictions on transfer; except that the conveyance of a space lease at such
Property in accordance herewith shall not constitute a Transfer and (ii) with
respect to the Required Equity, unless expressly permitted hereunder, the
pledge, sale or other whole or partial conveyance of all or any portion thereof
or any direct or indirect equity interest therein.

“TRS Owner” means American Financial TRS, Inc.

“TRS Property” means any Property directly or indirectly owned by TRS Owner.

“Unaffiliated Release Price” has the meaning set forth in Exhibit I.

“Underfunding” means with respect to any Plan, the excess, if any, of the
“projected benefit obligations” (within the meaning of Statement of Financial
Accounting Standards 87) under such Plan (determined using the actuarial
assumption used for financial statement disclosure in the most recent financial
statements of the Plan sponsor) over the fair market value of the assets held
under the Plan.

“Upper Tier Pledge” means that certain Pledge and Security Agreement (Upper
Tier) by GKK Stars Acquisition LLC and First States Group, L.P. for the benefit
of Lender.

“Use” means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance.

“U.S. Person” means a United States person within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax” means any present or future tax, assessment or other charge or levy
imposed by or on behalf of the United States of America or any taxing authority
thereof.

“Value Add Pool Equity” means, collectively, 100% of the direct equity interests
in the owner of each Value Add Pool Owner.

“Value Add Pool Equity Release Price” has the meaning set forth in Exhibit I.

“Value Add Pool Owner” means, collectively or individually, as the context may
require, each Person that owns a Value Add Pool Property as listed on Schedule
J.

“Value Add Pool Pledgor” means each owner of a Value Add Pool Owner, as set
forth on Schedule J.

“Value Add Pool Property” means, collectively or individually, as the context
may require, each of the Properties listed on Schedule J.

 

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“Waste” means any material abuse or destructive use (whether by action or
inaction) of the Properties.

“Zoning Report” means a zoning report or reports with respect to each of the
Properties approved by Lender and delivered to Lender in connection with the
Loan, and any amendments or supplements thereto delivered to Lender.

(b)        Rules of Construction.  All references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified. Unless otherwise specified: (i) all meanings attributed to
defined terms in this Agreement shall be equally applicable to both the singular
and plural forms of the terms so defined, (ii) “including” means “including, but
not limited to”, (iii) references to Payment Dates that fall in specified months
ignore the preceding Business Day convention, and (iv) “mortgage” means a
mortgage, deed of trust, deed to secure debt or similar instrument, as
applicable, and “mortgagee” means the secured party under a mortgage, deed of
trust, deed to secure debt or similar instrument. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
GAAP, as same may be modified in this Agreement. Notwithstanding anything to the
contrary set forth herein or in the other Loan Documents, wherever the Loan
Documents provide that a Property Owner or Joint Venture Owner shall take or
refrain from taking an action, and all references to Borrower taking an action
with respect to a Property (e.g., requirements that Borrower maintain the
Property, perform obligations under Leases, etc.), such provision shall be
construed to mean that Borrower shall cause the applicable Property Owner or
Joint Venture Owner (to the fullest extent permitted under the applicable
Qualified Joint Venture Agreements with respect to the Joint Venture Properties)
to take or refrain from taking such action, as applicable; and all references to
the creation or release of a Lien of Lender on an Encumbered Property shall mean
the creation or release of Lender’s Lien on the Collateral specifically related
to such Property. The Schedules attached hereto reflect the state of affairs as
of the Closing Date but do not reflect subsequent changes that may have occurred
pursuant to and in accordance with this Agreement. The terms and provisions in
the Original Loan Agreement relating to the “Indenture”, as defined therein, the
obligations issued thereunder and the representations relating thereto, shall
apply with respect to the period from the Closing Date through and including the
day immediately following the Closing Date.

 

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ARTICLE I

GENERAL TERMS

1.1.        The Loan.  On the Closing Date, subject to the terms and conditions
of this Agreement, Lender shall make a loan to Borrower (the “Loan”) in an
amount equal to the Loan Amount. The Loan shall initially be represented by a
single Note which shall bear interest as described in this Agreement at a per
annum rate as provided in Section 1.3(a).  The Loan shall be secured by the
Collateral.

1.2.        The Term.

(a)         The Maturity Date of the Loan shall initially be the Payment Date in
March 2010, or such earlier date as may result from acceleration.

(b)         Borrower shall have a single option to extend the scheduled Maturity
Date of the Loan to the Payment Date in the month containing the one-year
anniversary of the Maturity Date (the period of such extension, the “Extension
Term”), provided that (i) Borrower shall deliver to Lender written notice of
such extension at least 30 and not more than 60 days prior to the Maturity Date;
(ii) no monetary or other material Default shall be continuing on either the
date of such notice or the Maturity Date as theretofore in effect;
(iii) Borrower shall have obtained an Extension Interest Rate Cap Agreement for
the Extension Term and collaterally assigned such Extension Interest Rate Cap
Agreement to Lender pursuant to an Assignment of Interest Rate Cap Agreement;
(iv) the term of the Mortgage Loan shall have been extended in accordance with
the provisions of Section 1.2(b) of the Mortgage Loan Agreement and Mortgage
Borrower shall have obtained and collaterally assigned to Mortgage Lender an
“Extension Interest Rate Cap Agreement” (as defined in the Mortgage Loan
Agreement) for the applicable Extension Term; and (v) Borrower shall have paid
to Lender an extension fee in an amount equal to 0.75% of the Principal
Indebtedness and all reasonable out-of-pocket expenses incurred by Lender in
connection with such extension. If Borrower fails to exercise the extension
option in accordance with the provisions of this Agreement, the extension
option, and any subsequent extension option hereunder, will automatically cease
and terminate.

1.3.        Interest and Principal.

(a)         On each Payment Date, Borrower shall pay interest on the Principal
Indebtedness for the Interest Accrual Period in which such Payment Date falls at
a rate per annum equal to the sum of LIBOR, determined as of the Interest
Determination Date immediately preceding such Interest Accrual Period, plus the
Spread (except that interest shall be payable on the Indebtedness, including due
but unpaid interest, at the Default Rate with respect to any portion of such
Interest Accrual Period falling during the continuance of an Event of Default).
Interest accruing for the first Interest Accrual Period shall be prepaid on the
Closing Date from the Loan proceeds otherwise to be disbursed to Borrower at
Closing. Interest payable hereunder shall be computed on the basis of a 360-day
year and the actual number of days elapsed.

 

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(b)        No prepayments of the Loan shall be permitted except as provided in
Sections 2.1 and 5.16(d). The entire outstanding Principal Indebtedness,
together with all interest thereon through the end of the Interest Accrual
Period in which the Maturity Date falls (calculated as if such Principal
Indebtedness were outstanding for the entire Interest Accrual Period) and all
other amounts then due under the Loan Documents shall be due and payable by
Borrower to Lender on the Maturity Date, as such date may be extended pursuant
to Section 1.2(b).

(c)        Upon written notice from Lender to Borrower (the “Componentization
Notice”), the Note will be deemed to have been subdivided (retroactively as of
the Closing) into multiple components (“Note Components”). Each Note Component
shall have such notional balance (a “Component Balance”) as Lender shall specify
in the Componentization Notice and an interest rate equal to the sum of LIBOR
plus such amount as Lender shall specify in the Componentization Notice (each
such amount, a “Component Spread”); provided that (i) the sum of the Component
Balances of all Note Components shall equal the then-applicable Principal
Indebtedness, and (ii) except following a prepayment as the result of an Event
of Default or as a result of the application of Loss Proceeds in connection with
a Casualty or Condemnation (x) all payments of interest and principal hereunder
shall be applied to the Note Components on a pro rata basis and (y) the weighted
average of the Component Spreads, weighted on the basis of their respective
Component Balances, shall equal the percentage set forth in clause (i) of the
definition of “Spread”. If requested by Lender, each Note Component shall be
represented by a separate physical Note (and subject to any intercreditor
agreement among Lender, Junior Mezzanine Lender and/or any Encumbered Property
Lender, and/or any co-lender agreement among the Lenders hereunder, all payments
of interest and principal hereunder shall be applied to the Notes on a pro rata
basis). Borrower shall execute and return to Lender each such Note within a
reasonable period of time, but in any event not in excess of four Business Days
after Borrower’s receipt of an execution copy thereof.

(d)        Any payments of interest and principal not paid when due hereunder
shall bear interest at the applicable Default Rate and, when paid, shall be
accompanied by a late fee in an amount equal to 4% times the amount of such late
payment in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment. Borrowers shall have no obligation hereunder to
pay Default Rate interest or a late charge if such failure to timely make a
payment is due to Lender not complying with its obligations under Article 3
hereof and the Cash Management Agreement and no Default or Event of Default
shall result under the Loan Documents by reason thereof.

1.4.        Interest Rate Cap Agreements.

(a)         On or prior to the Closing Date, Borrower shall obtain, and
thereafter maintain in effect, an Initial Interest Rate Cap Agreement, which
shall be coterminous with the initial term of the Loan and have a notional
amount equal to the Loan Amount. Any Initial Interest Rate Cap Agreement shall
have a LIBOR strike rate equal to or less than the LIBOR Strike Rate.

 

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(b)        If Borrower exercises its option to extend the term of the Loan
pursuant to Section 1.2(b), then on or prior to the commencement of the
Extension Term Borrower shall obtain, and thereafter maintain in effect, an
Extension Interest Rate Cap Agreement having (x) a term coterminous with the
Extension Term, (y) a notional amount at least equal to the Principal
Indebtedness as of the first day of the Extension Term, and (z) a LIBOR strike
rate equal to or less than the LIBOR Strike Rate.

(c)        Borrower shall collaterally assign to Lender pursuant to an
Assignment of Interest Rate Cap Agreement all of its right, title and interest
in any and all payments under each Interest Rate Cap Agreement and shall deliver
to Lender an executed counterpart of such Interest Rate Cap Agreement and obtain
the consent of the Acceptable Counterparty to such collateral assignment (as
evidenced by the Acceptable Counterparty’s execution of such Collateral
Assignment of Interest Rate Cap Agreement).

(d)        Borrower shall comply with all of its obligations under the terms and
provisions of each Interest Rate Cap Agreement. All amounts paid under an
Interest Rate Cap Agreement shall be deposited directly into the Cash Management
Account. Borrower shall take all actions reasonably requested by Lender to
enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a
default by the counterparty thereunder and shall not waive, amend or otherwise
modify any of its rights thereunder.

(e)        If, at any time during the term of the Loan, the counterparty to the
Interest Rate Cap Agreement then in effect ceases to be an Acceptable
Counterparty and thereafter fails to abide by the requirements set forth in such
Interest Rate Cap Agreement with respect to ratings downgrades, then Borrower
shall promptly obtain a replacement Interest Rate Cap Agreement satisfying the
requirements set forth in paragraph (a) or (b) above, as applicable, with a
counterparty that is an Acceptable Counterparty.

(f)        At Closing and at any time that Borrower obtains a replacement
Interest Rate Cap Agreement pursuant to this Section 1.4, Borrower shall deliver
to Lender a legal opinion or opinions from counsel to the applicable Acceptable
Counterparty (which counsel may be internal counsel) in substantially the form
of Exhibit B.

1.5.      Method and Place of Payment.  Except as otherwise specifically
provided in this Agreement, all payments and prepayments under this Agreement
and the Notes (including any deposit into the Cash Management Account pursuant
to Section 3.2(c)) shall be made to Lender not later than 1:00 p.m., New York
City time, on the date when due and shall be made in lawful money of the United
States of America by wire transfer in federal or other immediately available
funds to the account specified from time to time by Lender. Any funds received
by Lender after such time shall be deemed to have been paid on the next
succeeding Business Day. Lender shall notify Borrower in writing of any changes
in the account to which payments are to be made. If the amount received from
Borrower (or from the Cash Management Account pursuant to Section 3.2(b)) is
less than the sum of all amounts then due and payable hereunder, such amount
shall be applied, at Lender’s sole discretion, either toward the components of
the Indebtedness (e.g., interest, principal and other amounts payable hereunder)
and the Note Components in such sequence as Lender shall elect in its sole
discretion, or toward the payment of Property expenses.

 

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1.6.        Regulatory Change.  If, as a result of any Regulatory Change, any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with, any Lender is imposed, modified
or deemed applicable and the result is to increase the cost to such Lender of
making LIBOR-based loans, or to reduce the amount receivable by Lender hereunder
in respect of any portion of the Loan with respect to LIBOR-based loans by an
amount deemed by such Lender to be material (such increases in cost and
reductions in amounts receivable, “Increased Costs”), then Borrower agrees that
it will pay to Lender upon Lender’s request such additional amount or amounts
(based upon a reasonable allocation thereof by such Lender to the LIBOR-based
loans made by such Lender) as will compensate such Lender for such Increased
Costs to the extent that such Increased Costs are reasonably allocable to the
Loan. Lender will notify Borrower in writing of any event occurring after the
Closing Date which will entitle Lender to compensation pursuant to this
Section 1.6 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation and will designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. If such Lender shall fail to notify
Borrower of any such event within 90 days following the end of the month during
which such event occurred, then Borrower’s liability for any amounts described
in this Section incurred by such Lender as a result of such event shall be
limited to those attributable to the period occurring subsequent to the 90th day
prior to the date upon which such Lender actually notified Borrower of the
occurrence of such event. Notwithstanding the foregoing, in no event shall
Borrower be required to compensate any Lender for any portion of the income or
franchise taxes of Lender, whether or not attributable to payments made by
Borrower. If a Lender requests compensation under this Section 1.6, Borrower
may, by notice to Lender, require that such Lender furnish to Borrower a
statement setting forth in reasonable detail the basis for requesting such
compensation and the method for determining the amount thereof.

1.7.        Taxes.

(a)         Borrower agrees to indemnify Lender against any present or future
stamp, documentary or other similar or related taxes or other similar or related
charges now or hereafter imposed, levied, collected, withheld or assessed by any
United States Governmental Authority by reason of the execution and delivery of
the Loan Documents and any consents, waivers, amendments and enforcement of
rights under the Loan Documents.

(b)         If Borrower is required by law to withhold or deduct any amount from
any payment hereunder in respect of any U.S. Tax, Borrower shall withhold or
deduct the appropriate amount, remit such amount to the appropriate Governmental
Authority and pay to each Person to whom there has been an Assignment or
Participation of a Loan and who is not a U.S. Person such additional amounts as
are necessary in order that the net payment of any amount due to such non-U.S.
Person hereunder after deduction for or withholding in respect of any U.S. Tax
imposed with respect to such payment (or in lieu thereof, payment of such U.S.
Tax by such non-U.S. Person), will not be less than the amount stated in this
Agreement to be then due and payable; except that the foregoing obligation to
pay such additional amounts shall not apply (i) to any assignee that has not
complied with the obligations contained in Section 9.7(c), (ii) to any U.S.
Taxes withheld or deducted from, or imposed on, any payment hereunder or under
the Note or any Note Components by reason of any present or former connection
between any non-U.S.

 

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Person and the United States of America (other than solely on account of the
execution and performance of, the enforcement of any right under or the receipt
of any payment under, this Agreement or a Note), (iii) to any U.S. Taxes
withheld or deducted from, or imposed on, any payment hereunder or under the
Note or any Note Components at the time of any Assignment or Participation of a
Loan or the Note or any Note Components to any non-U.S. Person, (iv) to any U.S.
Taxes imposed solely by reason of the failure by such Person (or, if such Person
is not the beneficial owner of the relevant Loan, such beneficial owner) to
comply with applicable certification, information, documentation or other
reporting requirements concerning the nationality, residence, identity or
connections with the United States of America of such Person (or beneficial
owner, as the case may be) if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Taxes; or (v) with respect to any Person who is a
fiduciary or partnership or other than the sole beneficial owner of such
payment, to any U.S. Tax imposed with respect to payments made under any Note to
a fiduciary or partnership to the extent that the beneficial owner or member of
the partnership would not have been entitled to the additional amounts if such
beneficial owner or member of the partnership had been the holder of the Note.

(c)         Within 30 days after paying any amount from which it is required by
law to make any deduction or withholding, and within 30 days after it is
required by law to remit such deduction or withholding to any relevant taxing or
other authority, Borrower shall deliver to such non-U.S. Person satisfactory
evidence of such deduction, withholding or payment (as the case may be).

1.8.        Release.  Upon payment of the Indebtedness in full when permitted or
required hereunder, Lender shall execute instruments prepared by Borrower and
reasonably satisfactory to Lender, which, at Borrower’s election: (a) release
and discharge all Liens on all Collateral securing payment of the Indebtedness
(subject to Borrower’s obligation to pay any associated fees and expenses),
including all balances in the Collateral Accounts, terminate the Loan Documents
(other than those provisions thereof that expressly survive repayment of the
Indebtedness in full) and provide notice to third parties, including the Cash
Management Bank and Tenants; or (b) assign such Liens (and the applicable Loan
Documents) to a new lender designated by Borrower.

ARTICLE II

PREPAYMENT

2.1.        Voluntary and Mandatory Prepayment.

(a)          Borrower shall have the right, at its option, upon ten Business
Days’ prior written notice to Lender (which notice may be revocable at any time
by Borrower, provided that Borrower shall reimburse Lender for all of its
reasonable out-of-pocket costs and expenses incurred as a result of any such
revocation), to prepay the Loan in whole or in part at any time, provided that
if such prepayment is made prior to the Par Prepayment Date then Borrower shall
pay to Lender simultaneously with such prepayment the applicable Prepayment Fee;
provided, however, that no Prepayment Fee shall be payable with respect to (i) a
prepayment of the Loan in connection with the release of one or more Value Add
Pool Properties or the release of one or

 

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more of the Properties within the Dana Portfolio, except, in each case, to the
extent that aggregate prepayments of the Loan shall exceed 30% of the Loan
Amount, (ii) a prepayment of the Loan in connection with the sale of a
Disposition Asset or (iii) any prepayment of the Loan pursuant to
Section 5.16(d). Each such prepayment shall be accompanied by the amount of
interest theretofore accrued but unpaid in respect of the principal amount so
prepaid, plus the amount of interest that would have accrued on the principal
amount so prepaid had it remained outstanding through the end of the Interest
Accrual Period in which such prepayment is made and, if such prepayment is made
during the last two Business Days in any Interest Accrual Period, the amount of
additional interest that would have accrued on the principal amount so prepaid
had it remained outstanding through the end of the following Interest Accrual
Period. Following any such prepayment, Borrower may release or transfer, free
and clear of the Lien of the Loan Documents, a portion of the notional amount of
the Interest Rate Cap Agreement equal to the amount of such prepayment. Any
partial prepayment shall be applied to the last payments of principal due under
the Loan.

(b)        Borrower shall not be permitted to make a voluntary prepayment of the
Principal Indebtedness (excluding any payment of any Affiliated Release Price,
Unaffiliated Release Price, Dana Release Price or any application of Loss
Proceeds) unless simultaneously therewith a prepayment of the Mortgage Loan and
the Junior Mezzanine Loan shall also be made in the amount necessary so that the
Principal Indebtedness, the Mortgage Loan Principal Indebtedness and the Junior
Mezzanine Loan Principal Indebtedness immediately after such prepayment are in
the same proportion as they were immediately prior to such prepayments (but
Borrower shall be permitted, and is required, to make the mandatory prepayments
set forth in Section 2.1(c)). If the Note has been bifurcated into multiple Note
Components pursuant to Section 1.3(c), all prepayments of the Loan, except those
made during the continuance of an Event of Default or pursuant to Section 5.16,
shall be applied to the Note Components on a pro rata basis. All prepayments of
the Loan made during the continuance of an Event of Default or pursuant to
Section 5.16 shall be applied to the Note Components in ascending order of
interest rate (i.e., first to the Note Component with the lowest Component
Spread until its outstanding principal balance has been reduced to zero, then to
the Note Component with the second lowest Component Spread until its outstanding
principal balance has been reduced to zero, and so on) or in such other order as
Lender shall determine.

(c)        Borrower shall make the following mandatory prepayments of the Loan:

(i)         on the first Payment Date following the date on which any Restricted
Cash is no longer required to be maintained as collateral for the benefit of the
applicable Encumbered Property Lender pursuant to the applicable Encumbered
Property Debt Documents, Borrower shall prepay the Loan in accordance with
Section 2.1 in an amount equal to the product of (x) the amount of any such
Restricted Cash, times (y) the Loan Multiplier, provided that Borrower shall not
be required to pay any Prepayment Fee or other similar amount in connection
therewith;

(ii)        on any Payment Date on which Dana Excess Cash Flow is contained in
the Cash Management Account, Borrower shall prepay the Loan in an amount equal
to the product of (x) the amount of such Dana Excess Cash Flow times (y) the
Loan Multiplier, provided that (i) Borrower shall not be required to pay any
Prepayment Fee or

 

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other similar amount in connection therewith and (ii) the aggregate amount of
prepayments of the Loan and the Junior Mezzanine Loan made pursuant to this
Section 2.1(c)(ii) shall not be required to exceed $10,000,000 in the aggregate
in any calendar year (which amount shall be reduced on a proportionate basis to
reflect any reduction in Borrower’s interest in the Dana Portfolio in the event
Borrower enters into a Qualified Joint Venture Agreement with respect to the
Dana Portfolio in accordance herewith, and any release of a Property in the Dana
Portfolio in accordance herewith, in each case provided the Release Price
required to be paid in accordance therewith has been paid);

(iii)        simultaneously with, and as a condition to, any sale and/or
financing of any Disposition Asset (including subsequent sales and/or financings
to the extent any initial sale or financing is with or to an Affiliate of
Borrower) that shall cause the aggregate gross proceeds theretofore realized
from the sale and/or financing of Disposition Assets to exceed $184,000,000
(which gross proceeds shall include the assumption of Debt without reduction for
repayment of Debt, but shall be net of customary transaction costs, including
legal fees, actually paid to third parties, in each case with respect to any
such sale or financing of a Disposition Asset), subject to the last sentence of
Section 3.1(b) below, Borrower shall prepay the Loan in accordance with
Section 2.1 in an amount equal to the product of (x) the amount of any such
excess, times (y) the Loan Multiplier, provided that Borrower shall not be
required to pay any Prepayment Fee or other similar amount in connection
therewith (by way of example only: if the Disposition Assets are encumbered by
$100,000,000 and are purchased for $100,000,000 subject to existing Debt, or are
purchased for $200,000,000 and existing Debt is repaid, then in either case the
Loan shall be reduced or repaid, as applicable, in the amount of $16,000,000
(net of customary third party transaction costs paid to unaffiliated third
parties) times the Loan Multiplier; and

(iv)        simultaneously with any voluntary prepayment of all or any portion
of the Mortgage Loan Principal Indebtedness and/or the Junior Mezzanine Loan
Principal Indebtedness, Borrower shall make a prepayment hereunder in the amount
necessary so that the Principal Indebtedness, the Mortgage Loan Principal
Indebtedness and the Junior Mezzanine Loan Principal Indebtedness immediately
after such prepayments are in the same proportion as they were immediately prior
to such prepayments.

2.2.        Property Releases.

(a)          So long as no Event of Default is then continuing and all amounts
then due and owing to Lender have been paid in full, Borrower may from time to
time obtain the release of one or more of the Properties or direct or indirect
equity interests therein from the Liens of the Loan Documents in connection with
a sale to an unaffiliated third-party in an arms’-length transaction or a
Permitted Affiliate Sale, or pursuant to Section 5.24, provided that: (1) at the
time of such release (but provided that no Event of Default has occurred and is
continuing, not in connection with the transfer of any Disposition Asset),
Borrower shall prepay the Loan in accordance with Section 2.1 in an amount equal
to the applicable Release Price, plus any additional amount required to be
prepaid in accordance with Section 2.2(c) in order to reduce the Release Price
Deficit, which aggregate prepayment shall be accompanied by the other amounts
specified in Section 2.1, including the applicable Prepayment Fee if such
prepayment is made

 

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prior to the Par Prepayment Date (for the avoidance of doubt, provided no Event
of Default or Junior Mezzanine Event of Default is continuing, Borrower shall
not be required to deposit into the Cash Management Account the proceeds from
the permitted sale of any Disposition Assets, except if and to the extent that
Borrower is required hereunder to pay to Lender a Release Price or other amount
in connection therewith), (2) except with respect to the sale of the Dana
Portfolio to an unaffiliated third party, DSCR for the Test Period most recently
ended, recalculated to include only income and expense attributable to
Borrower’s interest in the Properties remaining after the contemplated release
and to exclude the interest expense and principal payments on the aggregate
amount to be prepaid, shall be equal to or greater than DSCR immediately prior
to such release (as reasonably determined by Lender) (for these purposes, in the
case of the sale of a Mortgage Loan Collateral Property, DSCR shall be adjusted
to ignore the effect of so-called “rate creep” resulting from the fact that the
prepayment of the Loan and the Mortgage Loan will not result in a pro-rata
reduction of their respective principal amounts), (3) after giving effect to
such release, the aggregate Senior Collateral Value shall not be less than 120%
of the sum of the Principal Indebtedness and the Junior Mezzanine Loan Principal
Indebtedness and (4) Borrower shall reimburse Lender for any actual reasonable
out-of-pocket costs and expenses incurred by Lender in connection with this
Section 2.2 (including the reasonable fees and expenses of legal counsel and the
Servicer). Notwithstanding anything to the contrary in this Section 2.2(a)
(x) the release price for a Disposition Asset shall be zero, subject to the
requirement specified in Section 2.1(c)(iii), and the foregoing requirements set
forth in clauses (1) through (4) inclusive shall not apply, (y) with respect to
the release of any Joint Venture Property, the Release Price applicable to such
Property shall be adjusted to reflect the Joint Venture Owner’s percentage
interest in the Joint Venture Property as of the date of any such release, and
(z) the release price for any asset acquired by a Borrower from and after the
date hereof (to the extent Borrower is permitted to acquire any such asset
pursuant this Agreement) shall be zero, and the foregoing requirements set forth
in clauses (1) through (4) inclusive shall not apply.

(b)        Upon satisfaction of the requirements set forth in Sections 2.1 and
2.2, Lender will execute and deliver to Borrower such instruments, prepared by
Borrower and approved by Lender, as shall be necessary to release the applicable
Property or Properties from the Liens of the Loan Documents or to assign the
applicable portion of such Liens to a third party to the extent necessary to
avoid the incurrence of mortgage recording taxes.

(c)        Notwithstanding anything herein to the contrary, in the case of a
sale of a Property to an unaffiliated third party in an arms’-length
transaction, if the Net Proceeds are less than the amount specified in clause
(B)(x) of the definition of “Unaffiliated Release Price”, then the amount of
principal payable by Borrower under Section 2.2(a)(1) in connection with the
release of such Property shall be the Loan Multiplier times 100% of such Net
Proceeds, subject to the following:

(i)         the Release Price Deficit (as defined below) may not at any time
exceed $30,000,000 times the Loan Multiplier; and

(ii)        if and to the extent the Release Price Deficit is greater than zero,
an amount equal to the product of the Excess Transfer Proceeds times the Loan
Multiplier shall be applied toward prepayment of the Loan in accordance with
Section 2.1 (and shall

 

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be accompanied by any applicable Prepayment Fee) until the Release Price Deficit
is reduced to zero.

“Release Price Deficit” means, from time to time, the excess, if any, of (x) the
sum of all Release Prices of all Properties theretofore released, minus (y) the
sum of all amounts theretofore applied toward the prepayment of the Loan in
connection with Transfers of Properties pursuant to Section 2.2(a)(1).

2.3.        Value Add Pool Equity Releases.  So long as no Event of Default is
then continuing and all amounts then due and owing to Lender have been paid in
full, Borrower may obtain the release of up to and including 80% of the Value
Add Pool Equity in the aggregate from the Liens of the Loan Documents in
connection with the sale of such equity interests to an unaffiliated third
party, provided that (1) at the time of each such release, Borrower shall prepay
the Loan, in accordance with Section 2.1, in an amount equal to the applicable
Value Add Pool Equity Release Price, which prepayment shall be accompanied by
the other amounts specified in Section 2.1, (2) DSCR for the Test Period most
recently ended, recalculated to include only Borrower’s share of income and
expense attributable to the Properties remaining after the contemplated sale and
to exclude the interest expense and principal payments on the aggregate amount
to be prepaid, shall be equal to or greater than DSCR immediately prior to such
sale (as reasonably determined by Lender), (3) after giving effect to such
release, the aggregate Senior Collateral Value shall not be less than 120% of
the sum of the Principal Indebtedness and the Junior Mezzanine Loan Principal
Indebtedness (as reasonably determined by Lender), (4) Borrower shall reimburse
Lender for any actual reasonable out-of-pocket costs and expenses incurred by
Lender in connection with this Section 2.2 (including the reasonable fees and
expenses of legal counsel and the Servicer), (5) Lender shall retain a
first-priority perfected pledge of the remaining Value Pool Property Equity,
which shall not be less than 20% of the initial Value Add Pool Equity,
(6) Lender shall have reasonably approved the joint venture or other applicable
agreement between Borrower and the purchaser(s) of Value Add Pool Equity and any
subsequent amendments and modifications thereof, and such joint venture or other
applicable agreement shall provide that (x) if Lender forecloses on the Value
Add Pool Equity pledged to Lender under the Loan Documents, then unless 80% of
the Value Add Pool Equity has been released in accordance with this Section 2.3
(which 80% threshold may be reduced to 66.67% in Lender’s reasonable
discretion), Lender shall have the right to require that the Value Add Pool
Properties be liquidated, subject to customary rights of first offer or
appraisal sale or other similar rights reasonably acceptable to Lender, and
(y) distributions of operating revenues, capital proceeds and all other income
of the Value Add Pool Properties, to the extent available for distribution,
shall be made to the equityholders in proportion to their respective equity
interests and (7) in the event that 80% of the Value Add Pool Equity has been
released in accordance with the provisions of this Section 2.3, any subsequent
sale of a Value Add Pool Property or of Borrower’s entire remaining 20% equity
interest referenced in the preceding clause (5) shall be subject to the
requirements of foregoing clauses (1) through (6), provided, however, that the
applicable Unaffiliated Release Price shall be paid in lieu of the Value Add
Pool Equity Release Price, except that, for purposes of this subsection
(7) only, the Release Price payable in connection therewith shall be the
Unaffiliated Release Price (taking into account 100% of the Aggregate Allocated
Loan Amounts of the respective Properties, without reduction for prior equity
sales) reduced by multiplying the amount specified in clause (x) of the
definition of

 

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Unaffiliated Release Price by 20%, and the percentage specified in clause (y) of
the definition of Unaffiliated Release Price shall be replaced with “100%”.

2.4  Release of Vacant Land.  So long as no Event of Default is then continuing,
Borrower may obtain the release of one or more vacant non-income producing
parcels of land (each such parcel, a “Release Parcel”) from the restrictions and
Liens of the Loan Documents in connection with the Transfer of such Release
Parcel to an unaffiliated third party in a bona fide arms-length transaction
upon satisfaction of the following conditions:

(i)         Borrower shall deliver to Lender notice of its intent to release one
or more Release Parcels, which notice must be given at least 10 Business Days
and not more than 60 days prior to the Business Day upon which the release is to
be made and shall specify the Release Parcel(s) that Borrower intends to
release. Borrower shall promptly reimburse Lender for any actual out-of-pocket
costs and expenses (including the reasonable fees and expenses of legal counsel
and the Servicer) incurred by Lender in connection with a release pursuant to
this Section 2.4.

(ii)         At the time of such release, Borrower shall prepay a portion of the
Loan, in accordance with Section 2.1, in an amount equal to the applicable
Parcel Release Price.

(iii)        Lender shall have received evidence reasonably satisfactory to it
that the Mortgage Borrower shall have satisfied all of the conditions to the
proposed release set forth in the applicable Encumbered Debt Documents.

(iv)        Borrower shall have delivered to Lender satisfactory evidence that
(1) the applicable Release Parcel has been legally subdivided from the remaining
Property, a separate tax identification number shall have been issued for such
Release Parcel and all necessary variances, if any, shall have been obtained
(with the result that, upon the transfer and release of such Release Parcel, no
part of the remaining Property shall be part of a tax lot which includes any
portion of such Release Parcel); (2) after giving effect to such transfer, each
of the Release Parcel and the remaining Property conforms to and is in
compliance in all material respects with applicable Legal Requirements
(including, without limitation, all zoning and subdivision laws, setback
requirements, sideline requirements, parking ratio requirements, use
requirements, building and fire code requirements, environmental requirements
and wetlands requirements) and constitutes a separate tax lot, (3) the Release
Parcel is not necessary for the remaining Property to comply with any zoning,
building, land use or parking or other Legal Requirements applicable to it or
for the then current use of the remaining Property, including without limitation
for access, driveways, parking, utilities or drainage or, to the extent that the
Release Parcel is necessary for any such purpose, a reciprocal easement
agreement or other agreement has been executed and recorded that would allow the
owner of the remaining Property to continue to use the release Parcel (at no
cost or expense to Borrower) to the extent necessary for such purpose, and
(4) the lots have been demised to Lender’s satisfaction in its reasonable
discretion;

(v)        In the case of a Mortgage Loan Collateral Property, Borrower shall
deliver to Mortgage Lender an endorsement to the Qualified Title Insurance
Policy insuring the

 

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applicable Mortgage (1) extending the effective date of the policy to the
effective date of the release; (2) confirming no change in the priority of the
Mortgage on the remaining Property (exclusive of the Release Parcel) or in the
amount of the insurance or the coverage of the Property (exclusive of the
Release Parcel) under the policy; and (3) insuring the rights and benefits under
any new or amended reciprocal easement agreement or such other agreement
required pursuant to clause (v)(3) of this Section that has been executed and
recorded, if any;

(vi)        Borrower shall have complied with any requirements applicable to the
release in the Leases, reciprocal easement agreements, operating agreements,
parking agreements or other similar agreements affecting the remaining Property
and the release does not violate any of the provisions of such documents in any
respect that would result in a termination (or give any other party thereto the
right to terminate), extinguishment or other loss of material rights of Borrower
or in a material increase in Borrower’s obligations under such documents and, to
the extent necessary to comply with such documents, the transferee of the
Release Parcel has assumed Borrower’s obligations, if any, relating to the
Release Parcel under such documents;

(vii)        ingress to and egress from all portions of the remaining Property
shall be over (i) physically open and fully dedicated public roads or
(ii) vehicle and pedestrian easements which (1) provide vehicular and pedestrian
access to a physically open and fully dedicated public road, (2) are recorded in
the chain of title to both the property which is encumbered thereby and the
remaining Property, (3) are irrevocable and non-terminable without the consent
of the owner of the remaining Property; and provided further that, if lawfully
obtainable, in the case of a Mortgage Loan Collateral Property, Borrower
delivers to Mortgage Lender an endorsement to the Qualified Title Insurance
Policy, which endorsement shall insure that (A) the benefit of each such
easement inures and runs to the benefit of the owner of the remaining Property,
(B) the Lien of the Mortgage is a first Lien on Mortgage Borrower’s beneficial
interest in such easement, subject to no exceptions other than Permitted
Encumbrances and those approved by Lender in its reasonable discretion and
(C) no then-existing mortgages, Liens, security interests or other encumbrances
(other than Permitted Encumbrances) on the Release Parcel burdened by such
easement are superior to, or under any circumstances could terminate, impair or
limit the terms of such easement;

(viii)      Borrower shall have delivered an Officer’s Certificate to the effect
that the conditions in this Section 2.4 have occurred or shall occur
concurrently with the transfer and release of the applicable Release Parcel; and

(ix)        Borrower shall execute such documents and instruments and obtain
such opinions of counsel as are typical for similar transactions.

 

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ARTICLE III

ACCOUNTS

3.1.        Cash Management Account.

(a)          On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank a cash management account into
which income from the Properties will be deposited (the “Cash Management
Account”), subject to and in accordance with the terms hereof. As a condition
precedent to the closing of the Loan, Borrower shall cause the Cash Management
Bank to execute and deliver an agreement (as modified or replaced in accordance
herewith, a “Cash Management Agreement”) which provides, inter alia, that no
party other than Lender and Servicer shall have the right to withdraw funds from
the Cash Management Account. The fees and expenses of the Cash Management Bank
shall be paid by Borrower.

(b)          Subject to the requirements of the Encumbered Property Debt
Documents, within five Business Days following the Closing Date, Borrower shall
deliver to each Tenant in the Properties (except for Tenants at Other
Properties) a written notice (a “Tenant Notice”) in the form of Exhibit D
instructing that (i) all payments under the Leases shall thereafter be
transmitted by them directly to, and deposited directly into, the Cash
Management Account or a Blocked Account and (ii) such instruction may not be
rescinded unless and until such Tenant receives from Borrower or Lender a copy
of Lender’s written consent to such rescission or Lender’s written notice that
the Loan has been repaid in full. Borrower shall send a copy of each such
written notice to Lender and shall redeliver such notices to each Tenant until
such time as such Tenant complies therewith. Subject to the Encumbered Property
Debt Documents and any Qualified Joint Venture Agreement, Borrower shall cause
(i) all cash Revenues relating to the Properties (other than the Encumbered
Properties and the TRS Properties) and all other money received by Borrower or
the Approved Property Manager (other than tenant security deposits required to
be held in escrow accounts) with respect to the Properties (other than the
Encumbered Properties and the TRS Properties) to be deposited in the Cash
Management Account or a Blocked Account by the end of the first Business Day
following Borrower’s or the Approved Property Manager’s receipt thereof and
(ii) all Distributions to be deposited in the Cash Management Account or a
Blocked Account by the end of the second Business Day following Borrower’s
receipt thereof. “Blocked Account” means an Eligible Account maintained with a
financial institution reasonably satisfactory to Lender that enters into a
blocked account agreement or similar irrevocable direction instruction (as
modified or replaced in accordance herewith, the “Blocked Account Agreement”)
reasonably satisfactory to Lender pursuant to which such financial institution
will remit, at the end of each Business Day, all amounts contained therein to an
account specified by Lender (Lender hereby agreeing to specify the Cash
Management Account so long as no Event of Default has occurred and is then
continuing). For the avoidance of doubt, notwithstanding anything to the
contrary in this Agreement, no amounts shall be deposited into the Cash
Management Account with respect to any Encumbered Property or TRS Property,
except for Distributions pursuant to Section 5.23. Notwithstanding the
foregoing, provided no Event of Default is continuing, Borrower shall not be
required to deposit into the Cash Management Account the proceeds from the
permitted sale

 

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of any Disposition Assets, except to the extent that Borrower is required
hereunder to pay to Lender a Release Price or other amount in connection
therewith.

(c)        Lender shall have the right at any time, upon not less than 30 days’
prior written notice to Borrower, to replace the Cash Management Bank with any
Eligible Institution at which Eligible Accounts may be maintained that will
promptly execute and deliver to Lender a Cash Management Agreement substantially
identical to the Cash Management Agreement executed at Closing. In addition,
subject to the provisions of the Encumbered Property Debt Documents, during the
continuance of an Event of Default or if the Blocked Account Bank fails to
comply with the Blocked Account Agreement or ceases to be an Eligible
Institution, Lender shall have the right at any time, upon not less than 30
days’ prior written notice to Borrower, to replace the Blocked Account Bank with
any Eligible Institution at which Eligible Accounts may be maintained that will
promptly execute and deliver to Lender a Blocked Account Agreement satisfactory
to Lender.

(d)        Borrower and Lender agree that the flow of funds with respect to the
Cash Management Account and the Blocked Account as depicted in the diagrams
attached hereto as Schedule C is in compliance with this Section 3.1.

3.2.       Distributions from Cash Management Account.

(a)         The Cash Management Agreement shall provide that the Cash Management
Bank shall remit to the Junior Mezzanine Cash Management Account, at the end of
each Business Day (or, at Borrower’s election, on a less frequent basis), the
amount, if any, by which amounts then contained in the Cash Management Account
(other than Dana Excess Cash Flow and Restricted Cash) exceed the aggregate
amount required to be paid to or reserved with Lender, or prepaid pursuant to
Section 2.1(c)(i), on the next Payment Date pursuant to Section 3.2(b) (the
“Minimum Balance”); provided, however, that Lender shall terminate such
remittances during the continuance of an Event of Default upon notice to the
Cash Management Bank. Lender may notify the Cash Management Bank at any time of
any change in the Minimum Balance. Lender shall deliver a copy of any notice of
a change in the Minimum Balance to Borrower, for information only (but any
failure by Lender to do so shall not in any way limit Borrower’s obligations or
liabilities hereunder). Any payment received by any Borrower pursuant to this
Section 3.2 shall be received free of the Lien of the Loan Documents.

(b)        On each Payment Date, provided no Event of Default has occurred and
is continuing, Lender shall transfer amounts from the Cash Management Account,
to the extent available therein, to make the following payments in the following
order of priority:

(i)         to Lender, the amount of all scheduled or delinquent interest on the
Loan and all other amounts then due and payable under the Loan Documents;

(ii)        to Lender, any Restricted Cash required to be used to prepay the
Loan pursuant to Section 2.1(c)(i);

(iii)       to Lender, any Dana Excess Cash Flow required to be used to prepay
the Loan pursuant to Section 2.1(c)(ii);

 

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(iv)       for so long as the Junior Mezzanine Loan remains outstanding, all
remaining amounts to the Junior Mezzanine Cash Management Account; and

(v)        if the Junior Mezzanine Loan is no longer outstanding, all remaining
amounts to such account as shall be designated by Borrower from time to time,
unless a Mortgage Loan Event of Default shall be continuing, in which case, all
remaining amounts shall be remitted to the Mortgage Loan Cash Management
Account.

(c)        If on any Payment Date the amount in the Cash Management Account
shall be insufficient to make the transfer described in Section 3.2(b)(i),
Borrower shall deposit into the Cash Management Account on such Payment Date the
amount of such deficiency. If Borrower shall fail to make such deposit, the same
shall constitute an Event of Default and, in addition to all other rights and
remedies provided for under the Loan Documents, Lender may disburse and apply
the amounts in the Collateral Accounts in accordance with Section 3.5(c).

(d)        Notwithstanding anything to the contrary contained in this Agreement,
the Loan Documents, and/or the Junior Mezzanine Loan Documents, the parties
hereto acknowledge and agree that, as to any clause or provision contained in
this Agreement, the other Loan Documents, and/or the Junior Mezzanine Loan
Documents to the effect that payments, distributions, or other similar effect
are to be made by Borrower to Junior Mezzanine Lender or applied to the Junior
Mezzanine Loan or to any account specified by Junior Mezzanine Lender, such
clause or provision shall be deemed to mean, and shall be construed as meaning,
that Lender shall pay to Borrower, and Borrower shall then immediately
distribute to Junior Mezzanine Borrower, pursuant to and in accordance with the
organizational documents of Borrower and applicable law, which distribution
shall be immediately payable to Junior Mezzanine Lender, and any such clause or
provision shall not be construed as meaning that Borrower and/or Junior
Mezzanine Borrower is acting on behalf of, holding out its credit for, or paying
the obligations of, Junior Mezzanine Borrower, as applicable, directly or in any
other manner that would violate any of the single purpose entity covenants
contained in this Agreement or other similar covenants contained in Borrower’s
organizational documents or Junior Mezzanine Borrower’s organizational
documents, respectively.

3.3.        Loss Proceeds Account.

(a)         On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
depositing any Loss Proceeds (the “Loss Proceeds Account”).

(b)         Provided no Event of Default is continuing, funds in the Loss
Proceeds account shall be applied in accordance with Section 5.16.

3.4.        Environmental Escrow Account.

(a)          On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts

 

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anticipated to be required to correct Environmental Conditions (the
“Environmental Escrow Account”).

(b)         On the Closing Date, Borrower shall deposit into the Environmental
Escrow Account, from the proceeds of the Loan, an amount equal to the
Environmental Escrow Amount.

(c)         Upon the request of Borrower at any time that no Event of Default is
continuing (but not more often than once per calendar month), Lender shall cause
disbursements to Borrower from the Environmental Escrow Account to reimburse
Borrower for reasonable costs and expenses incurred in order to correct
Environmental Conditions, provided that

(i)          Borrower shall deliver to Lender invoices evidencing that the costs
for which such disbursements are requested are due and payable;

(ii)         Borrower shall deliver to Lender an Officer’s Certificate
confirming that all such costs have been previously paid by Borrower or will be
paid from the proceeds of the requested disbursement; and

(iii)        Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses to
which specific draws made hereunder relate, (2) reasonably satisfactory site
inspections, and (3) receipt of lien releases and waivers from any contractors,
subcontractors and others with respect to such amounts.

(d)         Upon substantial resolution (as reasonably determined by Lender) of
the portion of the Environmental Conditions identified on any line on Schedule
F, and provided no Event of Default is then continuing, the remainder of the
portion of the Environmental Escrow Account held for such line item (as shown
adjacent to such line item on Schedule F) shall promptly be remitted to
Borrower. Upon the correcting of all Environmental Conditions or other
resolution reasonably satisfactory to Lender with respect thereto, provided no
Event of Default is then continuing, any amounts then remaining in the
Environmental Escrow Account shall promptly be remitted to Borrower and the
Environmental Escrow Account will no longer be maintained.

3.5.        Intentionally Omitted.

3.6.        Account Collateral.

(a)          Borrower hereby grants a perfected first-priority security interest
in favor of Lender in and to the Account Collateral as security for the
Indebtedness, together with all rights of a secured party with respect thereto.
Each Collateral Account shall be an Eligible Account under the sole dominion and
control of Lender and shall be in the name of Borrower, as pledgor, and Lender,
as pledgee. Borrower shall have no right to make withdrawals from any of the
Collateral Accounts. Funds in the Collateral Accounts shall not be commingled
with any other monies at any time. Borrower shall execute any additional
documents that Lender in its

 

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reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral. Funds in the Collateral Account
shall be invested in Permitted Investments selected by Lender. Unless otherwise
required by applicable law, provided no Event of Default is continuing, all
income and gains from the investment of funds in the Collateral Accounts shall
be for the account of Borrower and shall be paid to Borrower upon written
request therefor (but in any event, not more often than monthly). After the Loan
and all other Indebtedness have been paid in full, the Collateral Accounts shall
be closed and the balances therein, if any, shall be paid to Borrower.

(b)          The insufficiency of amounts contained in the Collateral Accounts
shall not relieve Borrower from its obligation to fulfill all covenants
contained in the Loan Documents.

(c)          During the continuance of an Event of Default, Lender may, in its
sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, either toward the components of the Indebtedness (e.g., interest,
principal and other amounts payable hereunder), the Loan and the Note Components
in such sequence as Lender shall elect in its sole discretion, and/or toward the
payment of Property expenses.

3.7.        Bankruptcy.  Borrower and Lender acknowledge and agree that upon the
filing of a bankruptcy petition by or against Borrower under the Bankruptcy
Code, the Account Collateral and the Revenues (whether then already in the
Collateral Accounts, or then due or becoming due thereafter) shall be deemed not
to be property of Borrower’s bankruptcy estate within the meaning of Section 541
of the Bankruptcy Code. If, however, a court of competent jurisdiction
determines that, notwithstanding the foregoing characterization of the Account
Collateral and the Revenues by Borrower and Lender, the Account Collateral
and/or the Revenues do constitute property of Borrower’s bankruptcy estate, then
Borrower and Lender further acknowledge and agree that all such Revenues,
whether due and payable before or after the filing of the petition, are and
shall be cash collateral of Lender. Borrower acknowledges that Lender does not
consent to Borrower’s use of such cash collateral and that, in the event Lender
elects (in its sole discretion) to give such consent, such consent shall only be
effective if given in writing signed by Lender. Except as provided in the
immediately preceding sentence, Borrower shall not have the right to use or
apply or require the use or application of such cash collateral (i) unless
Borrower shall have received a court order authorizing the use of the same, and
(ii) Borrower shall have provided such adequate protection to Lender as shall be
required by the bankruptcy court in accordance with the Bankruptcy Code.

ARTICLE IV

REPRESENTATIONS

Borrower represents to Lender that, as of the Closing Date, except as set forth
in the Exception Report:

 

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4.1.       Organization.

(a)        Each Borrower is duly formed, validly existing and in good standing
under the laws of the state of its formation, and is in good standing in each
other jurisdiction where ownership of its properties or the conduct of its
business requires it to be so, and each Borrower has all power and authority
under such laws and its organizational documents and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.

(b)        Each Property Owner is duly formed, validly existing and in good
standing under the laws of the state of its formation, and is in good standing
in each other jurisdiction where ownership of its properties or the conduct of
its business requires it to be so, and each Property Owner has all power and
authority under such laws and its organizational documents and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.

(c)        No Borrower has any subsidiaries and no Borrower owns any equity
interest in any other Person except as shown on the organizational chart
contained in Exhibit A, which organizational chart is true and correct as of the
date hereof.

4.2.       Authorization.  Each Borrower has the power and authority to enter
into this Agreement and the other Loan Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by the
Loan Documents and has by proper action duly authorized the execution and
delivery of the Loan Documents.

4.3.       No Conflicts.  Neither the execution and delivery of the Loan
Documents, nor the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof will
(i) violate or conflict with any provision of its formation and governance
documents, (ii) violate any law, regulation (including Regulation U, Regulation
X or Regulation T), order, writ, judgment, injunction, decree or permit
applicable to it, (iii) violate or conflict with contractual provisions of, or
cause an event of default under, any indenture, loan agreement, mortgage or
contract to which any Borrower, any Property Owner or Sponsor is a party or by
which Borrower, any Property Owner or Sponsor may be bound which violation,
conflict or event of default is reasonably likely to result in a Portfolio
Material Adverse Effect, or (iv) result in or require the creation of any Lien
or other charge or encumbrance upon or with respect to the Collateral in favor
of any party other than Lender.

4.4.       Consents.  No consent, approval, authorization or order of, or
qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by any Borrower of this
Agreement or the other Loan Documents, or by any Required Equity Pledgor of the
Loan Documents to which it is a party, the failure to obtain which is reasonably
likely to result in a Portfolio Material Adverse Effect, except for any of the
foregoing which have already been obtained.

4.5.       Enforceable Obligations.  This Agreement and the other Loan Documents
have been duly executed and delivered by Borrower and constitute each Borrower’s
legal, valid and binding obligations, enforceable in accordance with their
respective terms, subject to

 

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bankruptcy, insolvency and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity principles. The Loan Documents
are not subject to any right of rescission, set-off, counterclaim or defense by
any Borrower, including the defense of usury.

4.6.       No Default.  No Default or Event of Default will exist immediately
following the making of the Loan.

4.7.       Payment of Taxes.  Each Borrower and each Property Owner has filed,
or caused to be filed, all tax returns (federal, state, local and foreign)
required to be filed and paid all amounts of taxes due (including interest and
penalties) except for taxes which are not yet delinquent and has paid all or
made provision with the title company for the payment of all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangible taxes) owing by it necessary to preserve
the Liens in favor of Lender (or in the case of an Encumbered Property, to
preserve the Liens under the Encumbered Property Debt Documents).

4.8.       Compliance with Law.  Except as disclosed in the Zoning Reports, each
Borrower, each Property and the uses thereof comply with all applicable
Insurance Requirements and Legal Requirements, including building and zoning
ordinances and codes, except to the extent that failure to comply therewith
would not result in a Portfolio Material Adverse Effect. Except as disclosed in
the Zoning Reports, each Mortgage Loan Collateral Property, and to Borrower’s
knowledge, each Other Property conforms in all material respects to current
zoning requirements (including requirements relating to parking) and is not an
illegal nonconforming use. No Borrower is in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority the violation
of which is reasonably likely to result in a Material Adverse Effect. There has
not been committed by or on behalf of any Borrower or to Borrower’s knowledge
any other person in occupancy of or involved with the operation or use of any
Mortgage Loan Collateral Property, or to Borrower’s knowledge, any other person
in occupancy of or involved with the operation or use of any Other Property, any
act or omission affording any federal Governmental Authority or any state or
local Governmental Authority the right of forfeiture as against any Property or
any portion thereof or any monies paid in performance of its obligations under
any of the Loan Documents. No Borrower, Property Owner nor Sponsor has purchased
any portion of the Properties with proceeds of any illegal activity.

4.9.       ERISA.  Neither Borrower nor any ERISA Affiliate of Borrower has
incurred or could be subjected to any liability under Title IV or Section 302 of
ERISA or Section 412 of the Code or maintains or contributes to, or is required
to maintain or contribute to, any Plan. The consummation of the transactions
contemplated by this Agreement will not constitute or result in any non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under federal, state or local laws, rules or
regulations; provided that the foregoing representation is subject to the assets
used by the Lender not being or being treated under ERISA as Plan Assets.

4.10.      Investment Company Act.  No Borrower is an “investment company”, or a
company “controlled” by an “investment company”, registered or required to be
registered under the Investment Company Act of 1940, as amended.

 

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4.11.      No Bankruptcy Filing.  No Borrower is contemplating either the filing
of a petition by it under any state or federal bankruptcy or insolvency laws or
the liquidation of all or a major portion of its assets or property. No Borrower
has any knowledge of any Person contemplating the filing of any such petition
against it.

4.12.      Other Debt.  Borrower does not have outstanding any Debt other than
Permitted Debt. Borrower has no obligations under the Encumbered Property Debt
Documents except, in the case of AFRT and the Operating Partnership, certain
customary non-recourse carveouts. As of June 30, 2008, (x) the aggregate
principal amount of outstanding Encumbered Property Debt equals approximately
$1,912,796,638 and (y) the aggregate principal amount of outstanding Encumbered
Property Debt excluding amounts attributable to Disposition Assets equals
approximately $1,841,044,035. Schedule X hereto is true and correct in all
material respects and accurately reflects the outstanding principal balances
attributable to the Encumbered Property Debt as of June 30, 2008. For the
avoidance of doubt, for purposes of this representation, the stated amounts of
Encumbered Property Debt in (x) and (y) above and as set forth on Schedule X
hereto (i) exclude any portion of actually outstanding Encumbered Property Debt
that is secured by defeasance collateral, (ii) exclude the pro rata portion of
the Encumbered Property Debt secured by the Property located at 801 Market
Street, Philadelphia, Pennsylvania, that is attributable to the 11% equitable
ownership interest held by Borrower’s joint venture partner at such Property,
(iii) allocate the amortized aggregate principal amounts of Encumbered Property
Debt on a pro rata basis among the Properties based on the original allocated
loan amounts for the Properties under their respective Encumbered Property Debt
Documents, and (iv) may be less than the respective amounts Borrower would be
required to pay to release the Properties from the Encumbered Property Debt on
an individual Property basis.

4.13.      Litigation.  There are no actions, suits, proceedings, arbitrations
or governmental investigations by or before any Governmental Authority or other
court or agency now pending, and there are no such actions, suits, proceedings,
arbitrations or governmental investigations threatened, against or affecting any
Borrower, any Property Owner or any Property, which individually or collectively
would have a Portfolio Material Adverse Effect if determined against Borrower.

4.14.      Leases; Material Agreements.

(a)        Borrower has delivered to Lender true and complete copies of all
Leases requested by Lender. No person has any possessory interest in any of the
Properties or right to occupy the same except under and pursuant to the
provisions of the Leases. The certified rent roll delivered to Lender as of the
Closing Date (the “Rent Roll”) is true and correct in all material respects as
of February 29, 2008, and since such date, there have been no changes to the
Rent Roll that would have a Portfolio Material Adverse Effect, no new Major
Leases have been entered into and no Major Lease has been terminated. Borrower
is holding approximately $2,150,000 in respect of Tenant security deposits and
is holding no security deposits with respect to Major Leases, no fixed rent has
been paid more than 30 days in advance of its due date and no payments of rent
are more than 30 days delinquent. Except as set forth on Schedule S, no Tenant
under any of the Leases referenced in Schedule S has any remaining termination
or contraction options. Except as set forth in the Leases, no Tenant has any
extension or renewal options. Except as set forth in the Qualified Title
Policies, with respect to the Mortgage Loan Collateral

 

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Properties, or the Leases, with respect to the Other Properties, no Tenant or
other party has any option, right of first refusal or similar preferential right
to purchase or lease all or any portion of any Property.

(b)        Except as set forth on the Exception Report, to Borrower’s knowledge
(x) all material work to be performed by the landlord under Major Leases has
been substantially performed, all material contributions to be made by the
landlord to the Tenants thereunder have been made and all other material
conditions to each Tenant’s obligations thereunder have been satisfied, in each
case, in all material respects, and (y) no Tenant under a Major Lease has the
right to require any Borrower to perform or finance any material Tenant
Improvements or Material Alterations and no material Leasing Commissions are
owed or would be owed upon the exercise of any such Tenant’s existing renewal or
expansion options. Without limiting the foregoing, Wachovia is required to pay
for 100% of the cost of the “Demising Work” referenced in the Wachovia estoppel
letter delivered at Closing.

(c)        To Borrower’s knowledge, there are no Material Agreements except as
described in Schedule D and no Encumbered Property Debt Documents except as
described in Schedule U. To Borrower’s knowledge, Borrower has made available to
Lender true and complete copies of all Material Agreements and all Encumbered
Property Debt Documents. To Borrower’s knowledge, each Material Agreement has
been entered into at arm’s length in the ordinary course of business by or on
behalf of Borrower.

(d)        The Leases and the Material Agreements are in full force and effect
and, except as set forth on the Rent Roll, there are no defaults thereunder by
any Borrower or any other party thereto which is reasonably likely to result in
a Portfolio Material Adverse Effect. No Borrower is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or any of the Properties are
bound which default is reasonably likely to result in a Portfolio Material
Adverse Effect.

4.15.      Full and Accurate Disclosure.  To Borrower’s knowledge, no statement
of fact heretofore delivered by Sponsor or Borrower to Lender in writing in
respect of the Properties or any Borrower contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained therein not misleading unless subsequently corrected. There is no fact
presently actually known to Borrower which has not been disclosed to Lender
which is reasonably likely to result in a Portfolio Material Adverse Effect.

4.16.      Financial Condition.  To Borrower’s knowledge, except as otherwise
disclosed in writing to Lender, all financial data concerning Borrower and the
Properties heretofore provided to Lender fairly presents in accordance with GAAP
the financial position of Borrower in all material respects, as of the date on
which it was made, and does not omit to state any material fact necessary to
make statements contained herein or therein not misleading. Since the delivery
of such data, except as otherwise disclosed in writing to Lender there have
occurred no changes or circumstances which have had or are reasonably likely to
result in a Portfolio Material Adverse Effect.

 

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4.17.      Single-Purpose Requirements.  Each Borrower, each Property Owner and
their respective Single-Purpose Equityholders, except as disclosed on Exhibit A,
is now a Single-Purpose Entity, and has always been a Single-Purpose Entity to
the extent relevant to the Nonconsolidation Opinion. All statements of fact
contained in the Nonconsolidation Opinion and in the certificates referenced
therein and attached thereto are true and correct in all material respects.

4.18.      [Intentionally Omitted].

4.19.      Not Foreign Person. No Borrower is a “foreign person” within the
meaning of Section 1445(f)(3) of the Code.

4.20.      Labor Matters. Except as listed on the Exception Report, no Borrower
is a party to any collective bargaining agreements.

4.21.      Title.  Mortgage Loan Property Owners own good, marketable and
insurable title to the Mortgage Loan Collateral Properties and good and
marketable title to the related personal property, to the Collateral Accounts
and to any other Collateral, in each case free and clear of all Liens whatsoever
except the Permitted Encumbrances. Owners of Other Properties own good,
marketable and insurable title to the Other Properties and good and marketable
title to the related personal property free and clear of all Liens whatsoever
except the Encumbered Property Debt and the encumbrances permitted under, or
created by, the Encumbered Property Loan Documents. Each Required Equity Pledgor
has good title to its Required Equity, in each case free and clear of all Liens
except the Permitted Encumbrances. The Mortgages, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) valid,
perfected first priority Liens on the Mortgage Loan Collateral Properties and
the rents therefrom, enforceable as such against creditors of and purchasers
from Borrower and subject only to Permitted Encumbrances, and (ii) perfected
Liens (pursuant to the Uniform Commercial Code of the State of Delaware) in and
to all personalty, all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances. The Loan Documents
creating a security interest in the Required Equity, upon the filing of a UCC
financing statement in the appropriate jurisdiction and/or delivery of the
certificates evidencing the securities included in the Collateral, create and
constitute a valid and perfected first priority Lien on the Required Equity,
free and clear of all Liens other than the Loan Permitted Encumbrances. The
Permitted Encumbrances do not and will not materially and adversely affect or
interfere with the value, or current use or operation, of the Mortgage Loan
Collateral Properties, or the security intended to be provided by the Mortgages
and the Loan Documents creating a security interest in the Required Equity or
Borrower’s ability to repay the Indebtedness in accordance with the terms of the
Loan Documents. Except as insured over by a Qualified Title Insurance Policy,
there are no claims for payment for work, labor or materials affecting the
Mortgage Loan Collateral Properties which are or may become a Lien prior to, or
of equal priority with, the Liens created by the Loan Documents. No creditor of
any Borrower other than Lender has in its possession any goods that constitute
or evidence the Collateral.

4.22.      No Encroachments.  Except as shown on the applicable Qualified
Survey, all of the improvements on each Mortgage Loan Collateral Property lie
wholly within the

 

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boundaries and building restriction lines of the such Mortgage Loan Collateral
Property, and no improvements on adjoining property encroach upon any Mortgage
Loan Collateral Property, and no easements or other encumbrances upon any
Mortgage Loan Collateral Property encroach upon any of the improvements, so as,
in either case, to adversely affect the value or marketability of the applicable
Mortgage Loan Collateral Property, except those which are insured against by a
Qualified Title Insurance Policy. All of the improvements on each of the Other
Properties lie wholly within the boundaries and building restriction lines of
the such Other Properties, except to the extent that failure of any improvements
to lie wholly within such boundaries and building restriction lines does not
cause a Portfolio Material Adverse Effect; and no improvements on adjoining
property encroach upon any of the Other Properties, and no easements or other
encumbrances upon any of the Other Properties encroach upon any of the
improvements, so as, in either case, to cause a Portfolio Material Adverse
Effect.

4.23.     Physical Condition.

(a)        Based solely on the Engineering Reports, each Mortgage Loan
Collateral Property (including sidewalks, storm drainage system, roof, plumbing
system, HVAC system, fire protection system, electrical system, equipment,
elevators, exterior sidings and doors, irrigation system and all structural
components) is in good condition, order and repair in all respects material to
its use, operation or value. Each Other Property (including sidewalks, storm
drainage system, roof, plumbing system, HVAC system, fire protection system,
electrical system, equipment, elevators, exterior sidings and doors, irrigation
system and all structural components) is in good condition, order and repair in
all respects material to its use, operation or value, except to the extent that
the failure of such Other Property to be in good condition, order and repair
does not result in a Portfolio Material Adverse Effect.

(b)        Based solely on the Engineering Reports, Borrower is not aware of any
material structural or other material defect or damages in any of the Mortgage
Loan Collateral Properties, whether latent or otherwise. Borrower is not aware
of any material structural or other material defect or damages in any of the
Other Properties, whether latent or otherwise, that would have a Portfolio
Material Adverse Effect.

(c)        No Borrower has received or is aware of any other party’s receipt of
written notice from any insurance company or bonding company of any defects or
inadequacies in any of the Properties which would, alone or in the aggregate,
adversely affect in any material respect the insurability of the same or cause
the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.

4.24.      Fraudulent Conveyance.  Borrower has not entered into the Transaction
or any of the Loan Documents with the actual intent to hinder, delay or defraud
any creditor. Borrower has received reasonably equivalent value in exchange for
its obligations under the Loan Documents. On the Closing Date, the fair salable
value of each Borrower’s aggregate assets is and will, immediately following the
making of the Loan and the use and disbursement of the proceeds thereof, be
greater than such Borrower’s probable aggregate liabilities (including
subordinated, unliquidated, disputed and Contingent Obligations). Each
Borrower’s aggregate assets do not and, immediately following the making of the
Loan and the use and disbursement of the proceeds thereof will not, constitute
unreasonably small capital to carry out its business as

 

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conducted or as proposed to be conducted. No Borrower intends to, and does not
believe that it will, incur debts and liabilities (including Contingent
Obligations and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts to be payable on or in
respect of obligations of such Borrower).

4.25.    Management.  Except for any Approved Management Agreement, no property
management agreements are in effect with respect to the Properties, other than
sub-management agreements entered into in accordance with the terms of the
Approved Management Agreements.

4.26.    Condemnation.  Except as listed on the Exception Report, no
Condemnation has been commenced or is contemplated with respect to all or any
material portion of any of the Mortgage Loan Collateral Properties or for the
relocation of roadways providing access to any of the Mortgage Loan Collateral
Properties or, to Borrower’s knowledge, is contemplated with respect to all or
any material portion of any of the Other Properties or for the relocation of
roadways providing access to any of the Other Properties.

4.27.    Utilities and Public Access.  Each Property has adequate rights of
access to dedicated public ways (and makes no material use of any means of
access or egress that is not pursuant to such dedicated public ways or recorded,
irrevocable rights-of-way or easements) and is adequately served by all public
utilities necessary to the continued use and enjoyment of such Property as
presently used and enjoyed.

4.28.    Environmental Matters.  Except as disclosed in the Environmental
Reports and except as disclosed on the Exception Report:

(i)        To Borrower’s knowledge, each Property is in compliance in all
material respects with all Environmental Laws applicable to such Property (which
compliance includes, but is not limited to, the possession of, and compliance
with, all environmental, health and safety permits, approvals, licenses,
registrations and other governmental authorizations required in connection with
the ownership and operation of such Property under all Environmental Laws).

(ii)       No Environmental Claim is pending with respect to any of the
Properties, nor, to Borrower’s knowledge, is any threatened, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to any Borrower or any of the Properties.

(iii)      Without limiting the generality of the foregoing, to Borrower’s
knowledge, there is not present at, on, in or under any Property, any Hazardous
Substances, PCB-containing equipment, asbestos or asbestos containing materials,
underground storage tanks or surface impoundments for any Hazardous Substance,
lead in drinking water (except in concentrations that comply with all
Environmental Laws), or lead-based paint, in each case in violation of
Environmental Law.

 

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(iv)       To Borrower’s knowledge, there have not been and are no past, present
or threatened Releases of any Hazardous Substance from or at any of the
Properties that are reasonably likely to form the basis of any Environmental
Claim, and, to Borrower’s knowledge, there is no threat of any Release of any
Hazardous Substance migrating to any of the Properties.

(v)        To Borrower’s knowledge, no Liens are presently recorded with the
appropriate land records under or pursuant to any Environmental Law with respect
to any of the Properties and, to Borrower’s knowledge, no Governmental Authority
has been taking any action to subject any of the Properties to Liens under any
Environmental Law.

(vi)       To Borrower’s knowledge, there have been no material environmental
investigations, studies, audits, reviews or other analyses conducted by or that
are in the possession of Borrower in relation to any of the Properties which
have not been made available to Lender.

4.29.      Assessments.  There are no pending or, to Borrower’s knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties, nor are there any contemplated improvements to
any of the Properties that may result in such special or other assessments. No
extension of time for assessment or payment by Borrower of any federal, state or
local tax is in effect.

4.30.      No Joint Assessment.  No Borrower has suffered, permitted or
initiated the joint assessment of any of the Properties (i) with any other real
property constituting a separate tax lot, or (ii) with any personal property, or
any other procedure whereby the Lien of any Taxes which may be levied against
such other real property or personal property shall be assessed or levied or
charged to any of the Properties as a single Lien.

4.31.      Separate Lots.  No portion of any of the Properties is part of a tax
lot that also includes any real property that is not Collateral.

4.32.      Permits; Certificate of Occupancy.  Borrower has obtained all
material Permits necessary for the present and contemplated use and operation of
each Property and that Borrower is obligated to obtain under Legal Requirements.
The permitted uses set forth in the Leases are in conformity in all material
respects with the certificate of occupancy and/or material Permits for such
Property and any other restrictions, covenants or conditions affecting such
Property and, to Borrower’s knowledge, the actual uses being made of each
Property are in conformity in all material respects with the certificate of
occupancy and/or Permits for such Property and any other restrictions, covenants
or conditions affecting such Property, in each case where non-conformity would
not have a Material Adverse Effect.

4.33.      Flood Zone.  None of the Improvements on any of the Properties is
located in an area identified by the Federal Emergency Management Agency or the
Federal Insurance Administration as a “100 year flood plain” or as having
special flood hazards (including Zones A, B, C, V and X and Shaded X areas), or,
to the extent that any portion of any of the Properties is located in such an
area, such Property is covered by flood insurance meeting the requirements set
forth in Section 5.15(a)(ii).

 

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4.34.    Security Deposits.  Each Borrower is in compliance in all material
respects with all Legal Requirements relating to security deposits.

4.35.    Acquisition Documents.  Borrower has made available to Lender true and
complete copies of all material agreements and instruments under which Borrower
or any of its Affiliates or the seller of any of the Properties have remaining
material rights or material obligations in respect of Borrower’s acquisition of
the Properties.

4.36.    Insurance.  Except with respect to the Properties subject to a Net
Lease, Borrower has obtained insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. All
premiums on such insurance policies required to be paid as of the Closing Date
have been paid for the current policy period. Borrower has not done, and to
Borrower’s knowledge, no other Person has done, by act or omission, anything
which would impair the coverage of any such policy.

4.37.    Ground Leased Parcels.  With respect to each Ground Leased Parcel, each
of the following is true with respect to the related Ground Lease (taking into
account the terms of any applicable estoppel letter):

(i)        true and complete copies of the Ground Leases have been delivered to
Lender, and except as set forth in the Exception Report the Ground Leases or
memoranda thereof have been duly recorded;

(ii)       to Borrower’s knowledge, the Ground Leases are in full force and
effect and no material default beyond applicable grace, cure or notice periods
has occurred thereunder nor, to Borrower’s knowledge, is there any existing
condition which, but for the passage of time or the giving of notice or both,
would result in a material default under the terms of any of the Ground Leases;

(iii)       except as set forth in the Exception Report, the Ground Leases have
original terms which extend not less than 30 years beyond the Maturity Date
(assuming the exercise of all extension options hereunder), taking into account
any extension options that are freely exercisable by the lessee under the Ground
Lease, and all such extension options have either been previously exercised or
are first exercisable not less than five years after the Maturity Date;

(iv)       except as set forth in the Exception Report, the Ground Leases do not
restrict the use of any portion of the Properties by the lessee, its successors
or its assigns in a manner that would cause a Material Adverse Effect;

(v)        except as set forth in the Exception Report, the Ground Leases permit
the interest of the lessee thereunder to be encumbered by leasehold mortgages
and contains no restrictions on the identity of a leasehold mortgagee;

(vi)       except as set forth in the Exception Report, the Ground Leases may
not be amended, modified, cancelled or terminated without the prior written
consent of a leasehold mortgagee;

 

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(vii)      with respect to the Mortgage Loan Collateral Properties, to
Borrower’s knowledge, other than Permitted Encumbrances, the Ground Leases are
not subject to any Liens or encumbrances superior to, or of equal priority with,
the Mortgage (other than the ground lessor’s fee interest);

(viii)     with respect to the Mortgage Loan Collateral Properties, to
Borrower’s knowledge, other than Permitted Encumbrances, there are no Liens
encumbering the ground lessor’s fee interests, and, except as permitted herein,
Borrower shall not permit or cause any Lien to become superior to the Ground
Lease upon the related fee interest that may hereafter be granted;

(ix)       except as set forth in the Exception Report, the Ground Leases are
assignable by a holder of a leasehold mortgage upon a foreclosure of such
mortgage without the consent of the lessor thereunder;

(x)        except as set forth in the Exception Report, the Ground Leases
require the lessor thereunder to give notice of any default by the lessee to a
holder of a leasehold mortgage; and the Ground Leases further provide that no
notice given thereunder is effective against such holder, unless a copy has been
given to such holder in the manner described in such Ground Lease;

(xi)       except as set forth in the Exception Report, a holder of a leasehold
mortgage is permitted at least 30 days in addition to Borrower’s applicable cure
period to cure any default under each of the Ground Leases which is curable
after the receipt of notice of any such default before the lessor thereunder may
terminate such Ground Lease (and, where necessary, is permitted the opportunity
to gain possession of the interest of the lessee under such Ground Lease through
legal proceedings or to take other action so long as such holder is proceeding
diligently);

(xii)      except as set forth in the Exception Report, in the case of any
default which is not curable by a holder of a leasehold mortgage, or in the
event of the bankruptcy or insolvency of the lessee under one of the Ground
Leases, such holder has the right, following termination of such existing Ground
Lease or rejection thereof by a bankruptcy trustee or similar party, to enter
into a new ground lease with the lessor on the same terms as such existing
Ground Lease, and all rights of the lessee under such Ground Lease may be
exercised by or on behalf of such holder; and

(xiii)    except as set forth in the Exception Report, the Ground Leases do not
impose any restrictions on subletting.

4.38.    Intentionally Omitted.

4.39.    Estoppel Certificates.  Borrower has delivered to Lender true and
complete copies of (a) the form(s) of estoppel certificate heretofore sent by
Borrower or an Affiliate to Tenants and lessors under Ground Leases, and
(b) each estoppel certificate received back from any such Tenant or lessor prior
to the Closing Date.

 

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4.40    Embargoed Person .  (a) None of the funds or other assets of any of
Borrower, any Single-Purpose Equityholder or Sponsor constitute property of, or,
to Borrower’s knowledge, are beneficially owned, directly or indirectly, by any
person, entity or government subject to trade restrictions under federal law,
including, without limitation, the International Emergency Economic Powers Act,
50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et
seq. , and any executive orders or regulations promulgated thereunder, with the
result that (i) the investment in any Borrower, any Single-Purpose Equityholder
or Sponsor, as applicable (whether directly or indirectly), is prohibited by law
or (ii) the Loan is in violation of law (any such person, entity or government,
an “Embargoed Person”); (b) to Borrower’s knowledge, no Embargoed Person has any
interest of any nature whatsoever in any Borrower, any Single-Purpose
Equityholder or Sponsor, as applicable (whether directly or indirectly), with
the result that (i) the investment in any Borrower, any Single-Purpose
Equityholder or Sponsor, as applicable (whether directly or indirectly) is
prohibited by law or (ii) the Loan is in violation of law and (c) to Borrower’s
knowledge, none of the funds of any Borrower, any Single-Purpose Equityholder or
Sponsor, as applicable, have been derived from any unlawful activity with the
result that (i) the investment in any Borrower, any Single-Purpose Equityholder
or Sponsor, as applicable (whether directly or indirectly) is prohibited by law
or (ii) the Loan is in violation of law. Notwithstanding Section 4.42 to the
contrary, the representations and warranties contained in this Section 4.40
shall survive in perpetuity.

4.41    Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws.  Each Borrower, and to Borrower’s knowledge, (a) each Person
owning an interest in any Borrower, any Single-Purpose Equityholder or Sponsor,
(b) each Single-Purpose Equityholder, if any, (c) Sponsor, and (d) each property
manager (including each Approved Property Manager): (i) is not currently
identified on the OFAC List and (ii) is not a Person with whom a citizen of the
United States is prohibited to engage in transactions by any trade embargo,
economic sanction, or other prohibition of any Legal Requirement. Borrower has
implemented procedures, and will consistently apply those procedures throughout
the term of the Loan, to ensure the foregoing representations and warranties
remain true and correct during the term of the Loan.

4.42.    Tax Basis.  After giving effect to the Transaction and certain other
actions related thereto that will be completed on or prior to the Closing Date,
the U.S. Federal Income tax basis of the Stepped-Up Properties (as defined
below) will be increased in an aggregate amount equal to the portion of the
acquisition cost under the Merger Agreement allocable to such Stepped-Up
Properties on a pro rata basis, which allocation shall be based on the ratio of
the fair market value of such Stepped-Up Properties to the fair market value of
the total acquisition cost. For purposes of this Section 4.42, the term
“Stepped-Up Properties” means properties other than those held through
partnerships or other similar joint ventures with third parties not related to
AFRT.

4.43.    Survival.  Borrower agrees that all of the representations of Borrower
set forth in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Indebtedness is outstanding. All representations,
covenants and agreements made by Borrower in this Agreement or in the other Loan
Documents shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. On the
date of any Securitization, on not less than 10 Business Days’ prior written

 

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notice, Borrower shall deliver to Lender a certification (x) confirming that all
of the representations contained in this Agreement are true and correct in all
material respects as of the date of such Securitization, or (y) otherwise
specifying any changes in or qualifications to such representations as of such
date as may be necessary to make such representations consistent in all material
respects with the facts as they exist on such date. Except as expressly required
by this Agreement and the other Loan Documents, Borrower shall have no further
obligation to update any representation or warranty nor shall any representation
or warranty be deemed to have been made on any date other than the Closing Date
or as of the date of any Securitization.

ARTICLE V

AFFIRMATIVE COVENANTS

5.1.       Existence.  Each Borrower, each Property Owner and, if applicable,
each Single-Purpose Equityholder shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence and
all rights, licenses, Permits, franchises and other agreements necessary for the
continued use and operation of its business. Each Borrower and, if applicable,
each Single-Purpose Equityholder shall deliver to Lender a copy of each
amendment or other modification to any of its organizational documents promptly
after the execution thereof.

5.2.       Maintenance of Properties.

(a)        Borrower or its designee will keep or cause each Property to be kept
in good working order and repair, reasonable wear and tear excepted. Subject to
Section 6.13, the rights and obligations of Tenants under Leases and with
respect to any Encumbered Property, the provisions of any Encumbered Property
Debt Documents, Borrower shall from time to time make, or cause to be made, all
reasonably necessary and desirable repairs, renewals, replacements, betterments
and improvements thereto.

(b)        Subject to the terms of any applicable Leases, if and to the extent
reasonably required by Lender, Borrower shall remediate the Deferred Maintenance
Conditions reasonably promptly following the Closing Date, subject to Force
Majeure, and upon request from Lender after the expiration of such period shall
deliver to Lender an Officer’s Certificate confirming that such remediation has
been substantially completed and that all associated expenses then due and
payable have been paid; provided that Borrower shall be deemed to have satisfied
its obligations hereunder with respect to any matter that is the obligation of a
Tenant under a Lease if Borrower shall be using commercially reasonable efforts
to cause such Tenant to complete such matter pursuant to the terms of such
Lease.

5.3.       Compliance with Legal Requirements.  Borrower shall comply with, and
shall cause each Property to comply with and be operated, maintained, repaired
and improved in compliance in all material respects with, all Legal
Requirements, Insurance Requirements and all material contractual obligations by
which Borrower is legally bound.

5.4.       Impositions and Other Claims.  Each Borrower shall pay and discharge,
or cause to be paid and discharged, all taxes, assessments and governmental
charges levied upon it,

 

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its income and its assets and the Properties prior to delinquency, as well as
all lawful claims for labor, materials and supplies or otherwise, subject to any
rights to contest contained in the definition of Permitted Encumbrances. Each
Borrower shall file or cause to be filed all federal, state and local tax
returns and other reports that it or its subsidiaries are required by law to
file. If any law or regulation applicable to Lender, any Note, any of the
Mortgage Loan Collateral Properties or any of the Mortgages is enacted that
deducts from the value of property for the purpose of taxation any Lien thereon,
or imposes upon Lender the payment of the whole or any portion of the taxes or
assessments or charges or Liens required by this Agreement to be paid by
Borrower, or changes in any way the laws or regulations relating to the taxation
of mortgages or security agreements or debts secured by mortgages or security
agreements or the interest of the mortgagee or secured party in the property
covered thereby, or the manner of collection of such taxes, so as to affect any
of the Mortgages, the Indebtedness or Lender, then Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or Liens, or reimburse Lender
for any amounts paid by Lender. If in the opinion of Lender’s counsel it might
be unlawful to require Borrower to make such payment or the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by applicable Law, Lender may elect to declare all of the Indebtedness
to be due and payable 90 days from the giving of written notice by Lender to
Borrower.

5.5.       Access to Properties.  Subject to the rights of Tenants under Leases,
Borrower shall permit agents, representatives and employees of Lender and the
Servicer to inspect the Properties or any portion thereof, and/or the books and
records of Borrower, at such reasonable times as may be requested by Lender upon
reasonable advance notice.

5.6.       Cooperate in Legal Proceedings.  Except with respect to any claim by
Borrower against Lender, Borrower shall cooperate fully with Lender with respect
to any proceedings before any Governmental Authority which may in any way affect
the rights of Lender hereunder or under any of the Loan Documents and, in
connection therewith, Lender may, at its election, participate or designate a
representative to participate in any such proceedings.

5.7.       Leases.

(a)        Upon Lender’s request, Borrower shall furnish Lender with executed
copies of all Leases, together with a detailed breakdown of income and cost
associated therewith to the extent the same has been prepared by Borrower. All
new Leases and renewals or amendments of Leases must be entered into on an
arms-length basis with Tenants whose identity and creditworthiness, in
Borrower’s good faith judgment, is appropriate for tenancy in property of
comparable quality, must provide for rental rates and other economic terms
which, in Borrower’s good faith judgment, taken as a whole, are at least
equivalent to then-existing market rates, based on the applicable market, and
must contain terms and conditions that are commercially reasonable (in each
case, unless Lender consents to such Lease in its sole discretion). Subject to
the terms of the Encumbered Property Debt Documents, all new Leases must provide
that they are subject and subordinate to any current or future mortgage
financing on the applicable Property and that the Tenant agrees to attorn to any
foreclosing mortgagee at such mortgagee’s request, provided such mortgagee
agrees to not disturb such Tenant’s tenancy except in accordance with its Lease.

 

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(b)        All new Leases which are Major Leases, and all terminations, renewals
and material amendments of Major Leases, and any surrender of rights under any
Major Lease, shall be subject to the prior written consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed. To
facilitate Borrower’s leasing process, Borrower shall have the right to present
prospective leasing transactions to Lender for its approval prior to the
negotiation of a final Lease. Such presentation shall include a summary term
sheet of all material terms of the proposed Lease or a draft of the proposed
Lease together with any additional information concerning such proposed Lease
and the proposed Tenant thereunder as may be reasonably requested by Lender (the
“Lease Term Sheet”). Each request for approval of a Lease or a Lease Term Sheet
shall be submitted to Lender in an envelope marked “URGENT – LENDER’S ATTENTION
REQUIRED WITHIN 7 BUSINESS DAYS”, together with (i) a copy of the proposed Lease
or the Lease Term Sheet, (ii) a summary of the economic terms thereof and any
termination options contained therein together with a detailed breakdown of
income and costs associated with the proposed Lease, and (iii) copies of all
written materials obtained by the applicable Borrower in connection with its
evaluation of the creditworthiness of the proposed Tenant, and shall be deemed
approved if Lender shall not have notified Borrower in writing of its
disapproval thereof and the reasons for such disapproval within three Business
Days after Borrower shall have given Lender written notice confirming that at
least seven Business Days have elapsed since such submission, which written
notice shall be submitted to Lender in an envelope marked “URGENT – SECOND AND
FINAL NOTICE – LENDER’S ATTENTION REQUIRED BY [DATE]”. If Lender approves or is
deemed to have approved the Lease Term Sheet, Lender’s approval of the final
Lease shall be limited to Lender’s reasonable confirmation that the final Lease
does not (i) deviate in any material adverse respect from the terms set forth on
the Lease Term Sheet or contain any material adverse terms not set forth in the
Lease Term Sheet, or (ii) deviate in any material respect from the approved
Lease form (and otherwise such final Lease shall be subject to Lender’s
reasonable written approval). Borrower shall deliver to Lender a copy of any
Lease executed pursuant to a Lease Term Sheet together with an Officer’s
Certificate indicating any material deviations from such Lease Term Sheet.

(c)        Borrower shall (i) observe and perform all the material obligations
imposed upon the lessor under the Leases; (ii) enforce, to the extent
commercially reasonable, all of the material terms, covenants and conditions
contained in the Leases on the part of the lessee thereunder to be observed or
performed, short of termination thereof, except that Borrower may terminate any
Lease following a material default thereunder by the respective Tenant;
(iii) not collect any of the rents thereunder more than one month in advance;
(iv) not execute any assignment of lessor’s interest in the Leases or associated
rents other than the assignments of rents and leases under the Mortgages and the
Encumbered Debt Documents; and (v) not cancel or terminate any guarantee of any
of the Major Leases without the prior written consent of Lender. Borrower shall
deliver to each new Tenant at a Mortgage Loan Collateral Property a Tenant
Notice upon execution of such Tenant’s Lease or include same in such Tenant’s
Lease or invoices, and promptly thereafter deliver to Lender a copy thereof and
evidence of such Tenant’s receipt thereof.

(d)        To the extent required by applicable law, security deposits of
Tenants under all Leases, whether held in cash or any other form, shall not be
commingled with any other funds of Borrower and, if cash, shall be deposited by
Borrower in an Eligible Account or such other account at such commercial or
savings bank as may be reasonably satisfactory to Lender,

 

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which account (if any) is hereby pledged to Lender. Borrower shall, upon
Lender’s request, provide Lender with evidence reasonably satisfactory to Lender
of Borrower’s compliance with the foregoing. During the continuance of any Event
of Default, subject to the Encumbered Property Debt Documents, Borrower shall,
upon Lender’s request, deposit with Lender in an Eligible Account pledged to
Lender an amount equal to the aggregate security deposits of the Tenants (and
any interest theretofore earned on such security deposits and actually received
by Borrower) which Borrower had not returned to the applicable Tenants or
applied in accordance with the terms of the applicable Lease.

(e)        Whenever a Lease at a Mortgage Loan Collateral Property is
terminated, whether by buy-out, cancellation, default or otherwise, and Borrower
is entitled to any payment, fee or penalty in respect of such termination,
Borrower shall promptly cause such payment, fee or penalty to be deposited into
an Eligible Account pledged to Mortgage Lender in accordance with the Mortgage
Loan Agreement. Subject to the terms of the Encumbered Property Debt Documents,
whenever a Lease at an Other Property is terminated, whether by buy-out,
cancellation, default or otherwise, and Borrower or a Property Owner is entitled
to any payment, fee or penalty in respect of such termination (a “Termination
Fee”), Borrower shall promptly cause such Termination Fee to be deposited into
an Eligible Account pledged to Lender. Provided no Event of Default has occurred
and is continuing, (i) Lender shall disburse such Termination Fee to Borrower at
the written request of Borrower in respect of Leasing Commissions and Tenant
Improvement costs incurred by Borrower in connection with replacement Leases at
any Properties other than Value Add Pool Properties, Disposition Asset
Properties or any Property with an Aggregate Allocated Loan Amount of zero, in
each case provided such Lease is entered into in accordance with the terms of
this Agreement.

(f)        Within ten Business Days after receipt of written request therefor,
provided Lender has received a copy of the executed corresponding Lease, Lender
shall execute and deliver to Borrower a subordination, non-disturbance and
attornment agreement (an “SNDA”). If the form of the SNDA shall be prescribed by
the Lease in question, and Lender shall have approved (or been deemed, in
accordance with Section 5.7(b) hereof, to have approved) such Lease (and the
form of SNDA was attached to the draft Lease that was delivered to Lender as
part of Borrower’s request for approval), Lender shall execute and deliver the
SNDA in the form prescribed by such approved Lease. Notwithstanding the
foregoing, in the case of any Lease as to which Lender’s approval is not
required pursuant to this Section 5.7 where such tenant thereunder requests an
SNDA, the SNDA to be executed and delivered by Lender shall be in substantially
the form attached hereto as Exhibit G, and such form shall also be attached to
Borrower’s standard form of Lease as approved by Lender. Lender agrees to
reasonably negotiate the terms of the SNDA with any Tenant under any Lease, but
shall not be required to execute an SNDA that differs in any material respect
from the form attached hereto as Exhibit G. All reasonable out-of-pocket
attorneys’ fees and disbursements incurred by Lender in connection with such
SNDA shall be payable by Borrower within ten Business Days after Lender’s
written request therefor, whether or not the SNDA is ultimately executed and/or
recorded.

5.8.       Plan Assets, etc.  Each Borrower will do, or cause to be done, all
things necessary to ensure that it will not be deemed to hold Plan Assets at any
time.

 

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5.9.      Further Assurances.  Each Borrower shall, at such Borrower’s sole cost
and expense, from time to time as reasonably requested by Lender, execute,
acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including Uniform
Commercial Code financing statements and amended or replacement mortgages) as
Lender may reasonably request to evidence, confirm, perfect and maintain the
Liens securing or intended to secure the obligations of Borrower under the Loan
Documents or to facilitate a replacement of the Cash Management Bank pursuant to
Section 3.1(c) or a bifurcation of the Note pursuant to Sections 1.3(c) and/or
9.7(a), in each case if requested by Lender, and do and execute all such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents as Lender shall reasonably request from time to time. Each
Borrower hereby authorizes and appoints Lender as its attorney-in-fact to
execute, acknowledge, record, register and/or file such instruments, agreements,
certificates and documents, and to do and execute such acts, conveyances and
assurances, should such Borrower fail to do so itself in violation of this
Agreement within 5 Business Days following written request from Lender, in each
case without the signature of such Borrower. The foregoing grant of authority is
a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term of this Agreement. Each Borrower hereby ratifies all
actions that such attorney shall lawfully take or cause to be taken in
accordance with this Section 5.9. Lender shall provide Borrower with copies on
any instruments executed by Lender in accordance with this Section 5.9.

5.10.     Management of Properties.

(a)        Subject to the terms of the Encumbered Property Debt Documents, each
Property, other than a Property that is entirely subject to a Lease under which
the Tenant is responsible for the management of the Property and liable for all
related costs thereunder, shall be managed at all times by an Approved Property
Manager pursuant to an Approved Management Agreement. Pursuant to the
Subordination of Property Management Agreement or Agreements, each Approved
Property Manager shall agree that its Approved Management Agreement and all fees
thereunder (including any incentive fees) are subject and subordinate to the
Indebtedness. Borrower may from time to time appoint an Approved Property
Manager to manage the applicable Property pursuant to an Approved Management
Agreement, and such successor manager shall execute for Lender’s benefit a
Subordination of Property Management Agreement in form and substance reasonably
satisfactory to Lender (and Lender hereby agrees that a Subordination of
Property Management Agreement in substantially the same form as the
Subordination of Property Management Agreement delivered to Lender by Borrower
as of the date hereof is deemed to be reasonably satisfactory to Lender). The
per annum fees of the Approved Property Manager (including any incentive fees)
shall not, at any time, exceed 3.5% of the gross revenues of the relevant
Property for the then most recently concluded Test Period.

(b)        Borrower shall cause each Approved Property Manager (including any
successor Approved Property Manager) to maintain at all times worker’s
compensation insurance as required by Governmental Authorities.

(c)        Borrower shall notify Lender in writing of any material default of
any Borrower or an Approved Property Manager under any of the Approved
Management

 

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Agreements, after the expiration of any applicable cure periods, of which
Borrower has actual knowledge. Lender shall have the right, after reasonable
notice to Borrower and in accordance with such Subordination of Management
Agreement, to cure defaults of Borrower under such Approved Management
Agreement. Any reasonable out-of-pocket expenses incurred by Lender to cure any
such default shall constitute a part of the Indebtedness and shall be due from
Borrower upon demand by Lender.

(d)        Subject in the case of Encumbered Properties to the Encumbered
Property Debt Documents, and in the case of the Joint Venture Properties to
their respective Qualified Joint Venture Agreements, upon the occurrence and
during the continuance of an Event of Default, or a material default by an
Approved Property Manager under an Approved Management Agreement after the
expiration of any applicable cure period, which default is reasonably likely to
result in a Material Adverse Effect, or upon the filing of a bankruptcy petition
or the occurrence of a similar event with respect to an Approved Property
Manager, Lender may, in its sole discretion, require Borrower to terminate the
Approved Management Agreement and engage an Approved Property Manager selected
by Lender to serve as replacement Approved Property Manager pursuant to an
Approved Management Agreement.

5.11.     Notice of Material Event.  Borrower shall give Lender prompt notice
(containing reasonable detail) of (i) any material change in the financial or
physical condition of any of the Properties taken as a whole, as reasonably
determined by Borrower, including the termination or cancellation of any Major
Lease, the termination or cancellation of terrorism or other insurance required
by this Agreement, the exercise of shedding, contraction or termination rights
under any Lease which Lease covers in excess of 125,000 rentable square feet or
the accrual of such rights by any Tenant under any Lease which Lease covers in
excess of 125,000 rentable square feet, (ii) any litigation or governmental
proceedings pending or threatened in writing against any Borrower which is
reasonably likely to have a Portfolio Material Adverse Effect, (iii) any notice
by a lender asserting an event of default by an Encumbered Property Owner or any
of its Affiliates under any Encumbered Property Debt Documents, (iv) any notice
by Junior Mezzanine Lender of a Junior Mezzanine Loan Event of Default and
(v) any correspondence with Tenants under Major Leases with respect to any
alleged defaults by either party thereunder.

5.12.     Annual Financial Statements.  As soon as available, and in any event
within 120 days after the close of each Fiscal Year, beginning with the 2008
Fiscal Year Borrower shall furnish to Lender, in an Excel spreadsheet file in
electronic format (which may be via an intralinks site at Borrower’s sole cost
and expense), or, in the case of predominantly text documents, in Adobe .pdf
format, a balance sheet of Borrower and (except to the extent stock in Sponsor
is publicly traded on a major stock exchange) Sponsor as of the end of such
year, which statements with respect to Borrower shall be on a consolidated basis
with respect to the Properties as a whole, together with related consolidated
statements of income for such Fiscal Year, which statements shall include an
attached schedule of Net Operating Income, gross carrying value and accumulated
depreciation, each on an individual property basis, audited by an Approved
Accounting Firm whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis and shall not be qualified as to the scope of the audit or as to the
status of Borrower as a going concern. Together

 

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with Borrower’s annual financial statements, Borrower shall furnish to Lender in
hard copy and electronic format:

(i)        then current rent roll and occupancy reports of the Properties;

(ii)       to the extent not otherwise described in this Section 5.12, copies of
all financial statements and similar reports delivered to Encumbered Property
Lenders; and

(iii)      such other information as Lender shall reasonably request, to the
extent readily available to Borrower or Sponsor without material cost or
expense.

Notwithstanding the foregoing, for so long as Lender is required on advice of
Lender’s counsel to include the same in Lender’s public filings with the
Securities and Exchange Commission, in addition to the foregoing, Borrower shall
furnish to Lender, within 75 days following the close of each Fiscal Year, an
unaudited balance sheet of Borrower for the Fiscal Year then ended, which
statement shall include a balance sheet of Borrower as of the end of such year,
which statement shall be on a consolidated basis with respect to Borrower and
the Properties as a whole, together with the related statement of income for
such Fiscal Year, which statements shall be accompanied by an Officer’s
Certificate certifying that the same are true and correct and were prepared in
accordance with GAAP and on a consistent basis, subject to changes resulting
from audit and normal year-end audit adjustments.

5.13.     Quarterly Financial Statements.  As soon as available, and in any
event within 60 days after the end of each Fiscal Quarter (including year-end),
Borrower shall furnish to Lender, in an Excel spreadsheet file in electronic
format (which may be via an intralinks site at Borrower’s sole cost and
expense), or, in the case of predominantly text documents, in Adobe .pdf format,
quarterly and year-to-date an unaudited balance sheet prepared for such Fiscal
Quarter with respect to Borrower and (except to the extent stock in Sponsor is
publicly traded on a major stock exchange) Sponsor, which statements with
respect to Borrower shall be on a consolidated basis with respect to the
Properties as a whole, together with related consolidated statements of income,
for such Fiscal Quarter and for the portion of the Fiscal Year ending with such
Fiscal Quarter, which statements shall include an attached schedule of Net
Operating Income, gross carrying value and accumulated depreciation, each on an
individual property basis, which statements shall be accompanied by an Officer’s
Certificate certifying that the same are true and correct and were prepared in
accordance with GAAP applied on a consistent basis, subject to changes resulting
from audit and normal year-end audit adjustments. Each such quarterly report
shall be accompanied by the following, in hard copy and electronic format:

(i)        a statement which calculates Net Operating Income for each of the
Fiscal Quarters in the Test Period ending in such Fiscal Quarter, in the case of
each such Fiscal Quarter, ending at the end thereof;

(ii)       copies of each of the Major Leases signed during such quarter and
each other Lease signed during such quarter that is requested by Lender, and a
summary of each material Lease (and, to the extent prepared by Borrower or
Approved Property Manager in the ordinary course of business, each other Lease)
signed during such quarter,

 

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which shall include the Tenant’s name, lease term, base rent, Tenant
Improvements, leasing commissions paid, free rent and other material tenant
concessions;

(iii)      then current rent roll and occupancy reports;

(iv)      to the extent not otherwise described in this Section 5.13, copies of
all financial statements and similar reports delivered to Encumbered Property
Lenders;

(v)        a copy of AFRT’s business plan, to the extent updated after the date
hereof; and

(vi)      such other information as Lender shall reasonably request, to the
extent readily available to Borrower or Sponsor without material cost or
expense.

Notwithstanding the foregoing, for so long as Lender is required on advice of
Lender’s counsel to include the same in Lender’s public filings with the
Securities and Exchange Commission, Borrower shall provide the financial
statements required pursuant to the immediately preceding paragraph within 43
days following the end of each Fiscal Quarter (excluding year-end).

5.14.     Monthly Financial Statements.  If requested by Lender or during an
Event of Default (or, in the case of item (iv) below, at all times), Borrower
shall furnish within 30 days after the end of each calendar month (other than
the calendar month immediately following the final calendar month of any Fiscal
Year or Fiscal Quarter, in which case Borrower shall furnish same within the
respective time period specified in Section 5.12 or 5.13, as applicable), in an
Excel spreadsheet file in electronic format (which may be via an intralinks site
at Borrower’s sole cost and expense) or, in the case of predominantly text
documents, in Adobe .pdf format, monthly and year-to-date unaudited financial
statements prepared for the applicable month with respect to Borrower, including
a balance sheet and operating statement as of the end of such month, together
with related statements of income, for such month and for the portion of the
Fiscal Year ending with such month, which statements shall be accompanied by an
Officer’s Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments. Each such
monthly report shall be accompanied by the following:

(i)        beginning with the calendar month ending June 30, 2008, a summary of
material Leases (and, to the extent prepared by Borrower or Approved Property
Manager in the ordinary course of business, each other Lease) signed during such
month, which summary shall include the Tenant’s name, lease term, base rent,
escalations, Tenant Improvements, leasing commissions paid, free rent and other
concessions;

(ii)       then current rent roll and occupancy reports;

(iii)      to the extent not otherwise described in this Section 5.14, copies of
all financial statements and similar reports delivered to Encumbered Property
Lenders; and

(iv)     such other information as Lender shall reasonably request, to the
extent readily available to Borrower or Sponsor without material cost or
expense.

 

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5.15.     Insurance.

(a)        Borrower shall obtain and maintain with respect to the Properties,
for the mutual benefit of Borrower and Lender at all times, the following
policies of insurance:

(i)        insurance against loss or damage by standard perils included within
the classification “All Risks Special Form Cause of Loss” (including coverage
for damage caused by windstorm and hail). Such insurance shall (A) be in an
aggregate amount equal to the full replacement cost of the Properties and
fixtures (without deduction for physical depreciation); (B) have deductibles
acceptable to Lender (but in any event not in excess of $50,000), with the
exception of flood coverage which may have a deductible no greater than $500,000
and with the exception of wind and earthquake coverage which may have a
deductible no greater than 5% of the total insurable value of the applicable
Property; (C) be paid annually in advance; (D) contain a “Replacement Cost
Endorsement” and an “Agreed Upon Amount Endorsement” with a waiver of
coinsurance; (E) include an ordinance or law coverage endorsement containing
Coverage A: “Loss to the Undamaged Portion”, Coverage B: “Demolition Cost” and
Coverage C: “Increased Cost of Construction” coverages in such amounts as Lender
may reasonably require but in no event less than a $50,000,000 blanket sublimit,
unless a Property is insured separately, in which case the sublimit applicable
thereto shall not exceed 10% of the replacement cost of such Property;
(F) permit that the improvements and other property covered by such insurance be
rebuilt at another location in the event that such improvements and other
property cannot be rebuilt at the location on which they are situated as of the
date hereof. If such insurance excludes mold, then the Borrowers shall implement
a mold prevention program satisfactory to Lender;

(ii)        Flood insurance if the Property is located in a “100 Year Flood
Plain” or “special hazard area” (including Zones A, B, C, V, X and Shaded X
Areas) in an amount equal to the maximum limit of coverage available from
FEMA/FIA, plus such excess limits requested by Lender to the extent available in
the conventional insurance marketplace, with a deductible not in excess of
$500,000;

(iii)       commercial general liability insurance, including broad form
coverage of property damage, blanket contractual liability and personal injury
(including death resulting therefrom), containing minimum limits per occurrence
of not less than $1,000,000 with not less than a $2,000,000 general aggregate
“per location” for any policy year. In addition, at least $100,000,000 excess or
umbrella liability insurance, unless a Property is insured separately, in which
case the limits applicable thereto shall not be less than $25,000,000, on terms
consistent with the commercial general liability insurance policy required under
this Section 5.15, shall be obtained and maintained for any and all claims,
including all legal liability imposed upon Borrower and all related court costs
and attorneys’ fees and disbursements, in accordance with the policy form
inclusive of contractual liability;

(iv)       rental loss and/or business interruption insurance covering the 18
month period commencing on the date of any Casualty or Condemnation, and
containing an extended period of indemnity endorsement covering the 12 month
period commencing on

 

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the date on which the applicable Property has been restored, as reasonably
determined by the applicable insurer. The amount of such insurance shall be
increased from time to time as and when the gross revenues from such Property
increase;

(v)        insurance against loss or damage from explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in any of the
Improvements (without exclusion for explosions) and insurance against loss of
occupancy or use arising from any breakdown, in such amounts as are generally
available and are generally required by institutional lenders for properties
comparable to the Properties;

(vi)       if applicable, worker’s compensation insurance with respect to all
employees of Borrower as and to the extent required by any Governmental
Authority or Legal Requirement and employer’s liability coverage of at least
$1,000,000;

(vii)      during any period of repair, alteration or restoration, and only if
and to the extent the property and liability policies acquired by Borrower
pursuant hereto do not contain such coverage, (A) owner’s contingent or
protective liability insurance; and (B) the insurance required pursuant to
Section 5.15(i) and (iv) written on a so-called builder’s risk completed value
form, which coverage shall (1) be on a non-reporting form, (2) cover any
improvements under construction, being renovated or otherwise being altered,
including coverage for 100% of the total hard and reoccurring soft construction
costs following a casualty, (3) include permission to occupy the applicable
Property and (4) be in an amount equal to not less than the full insurable value
of each of the Properties against such risks (including fire and extended
coverage and collapse of the Improvements to agreed limits) as Lender may
request, all of which shall be in form and substance acceptable to Lender;

(viii)      [Intentionally Deleted]

(ix)        if required by Lender, earthquake insurance (A) with minimum
coverage equivalent to the greater of 1.0x SUL (scenario upper loss) and 1.5x
SEL (scenario expected loss), (B) having a deductible approved by Lender (but in
any event not be in excess of 5% of the total insurable value of such Property,
unless such limit is not commercially available in the insurance marketplace),
and (C) if the Property is legally nonconforming under applicable zoning
ordinances and codes, containing ordinance of law coverage in amounts reasonably
acceptable to Lender;

(x)        so long as the Terrorism Risk Insurance Program Reauthorization Act
of 2007 (“TRIPRA”) or a similar or subsequent statute is in effect, terrorism
insurance for Certified and Non-Certified acts (as such terms are defined in
TRIPRA or similar or subsequent statute) in an amount equal to the full
replacement cost of the Properties (plus twelve months of business interruption
coverage). If TRIPRA or a similar or subsequent statute is not in effect, then
provided that terrorism insurance is commercially available, Borrower shall be
required to carry terrorism insurance throughout the term of the Loan as
required by the preceding sentence, but in such event Borrower shall not be
required to spend on terrorism insurance coverage more than 150% of the amount
of the insurance

 

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premium that is payable at such time in respect of the casualty and business
interruption/rental loss insurance required hereunder (without giving effect to
the cost of terrorism and earthquake components of such casualty and business
interruption/rental loss insurance); and

(xi)       such other insurance as may from time to time be reasonably requested
by Lender.

(b)        All policies of insurance (the “Policies”) required pursuant to this
Section 5.15 shall be issued by one or more primary insurers having a
claims-paying ability of at least “A” or “A2” by each of the Rating Agencies, or
by a syndicate of insurers through which at least 75% of the coverage (if there
are 4 or fewer members of the syndicate) or at least 60% of the coverage (if
there are 5 or more members of the syndicate) is with carriers having such
claims-paying ability ratings (provided that the first layers of coverage are
from carriers rated at least “A” or “A2” and all such carriers shall have
claims-paying ability ratings of not less than “BBB+” or “Baa1”); provided,
however, that FM Global and Affiliated FM are hereby approved as providers of
the all-risk coverage required hereunder in amounts not exceeding the respective
amounts provided as of the date hereof, to the extent that each maintains an AM
Best and Fitch rating no lower than that in effect as of the Closing Date.
Notwithstanding anything to the contrary herein, except in connection with FM
Global and Affiliated FM, for purposes of determining whether the insurer
ratings requirements set forth above have been satisfied, (1) any insurer that
is not rated by Fitch will be regarded as having a Fitch rating that is the
equivalent of the rating given to such insurer by any of Moody’s and S&P that
does rate such insurer (or, if both such rating agencies rate such insurer, the
lower of the two ratings), and (2) any insurer that is not rated by Moody’s will
be regarded as having a Moody’s rating of “Baa1” or better if it is rated “A-”
or better by S&P and will be regarded as having a Moody’s rating of “A2” or
better if it is rated “A+” or better by S&P.

(c)       All Policies required pursuant to this Section 5.15:

(i)        shall be maintained throughout the term of the Loan without cost to
Lender;

(ii)       with respect to casualty policies, shall contain a standard
noncontributory mortgagee clause naming Lender and its successors and assigns as
first mortgagee and loss payee;

(iii)      with respect to liability policies, shall name Lender and its
successors and assigns as additional insureds;

(iv)      with respect to rental or business interruption insurance policies,
shall name Lender and its successors and/or assigns as loss payee;

(v)       shall contain an endorsement providing that neither Borrower nor
Lender nor any other party shall be a coinsurer under said Policies;

(vi)      shall contain an endorsement providing that Lender shall receive at
least 30 days’ prior written notice of any modification, reduction or
cancellation thereof;

 

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(vii)      shall contain an endorsement providing that no act or negligence of
Borrower or of a Tenant or other occupant shall affect the validity or
enforceability of the insurance insofar as a mortgagee is concerned;

(viii)    shall contain a waiver of subrogation against Lender;

(ix)       shall contain an endorsement providing that Lender shall not be
liable for any insurance premiums thereon or subject to any assessments
thereunder;

(x)        shall contain deductibles which, in addition to complying with any
other requirements expressly set forth in Section 5.15(a), are acceptable to
Lender and are no larger than is customary for similar policies covering similar
properties in the geographic market in which the applicable Property is located;

(xi)       may be in the form of a blanket policy, provided that Borrower shall
provide evidence satisfactory to Lender that the insurance premiums for the
Properties are separately allocated under such Policy to the Properties and that
(i) payment of such allocated amount shall maintain the effectiveness of such
Policy as to the Properties notwithstanding the failure of payment of any other
portion of premiums, and (ii) overall insurance limits will under no
circumstance limit the amount that will be paid in respect of the Properties,
and provided further that any such blanket policy shall contain an amendment
setting forth that (A) the aggregate limit under such policy shall apply
separately to each property covered thereunder, and (B) unless otherwise agreed
to by Lender, the limit of such policy shall be a “true blanket limit” and not
limited by a schedule of values for the Properties covered thereby.

(d)        Borrower shall pay the premiums for all Policies as the same become
due and payable. Copies of such Policies shall be delivered to Lender promptly
upon request. Not later than 30 days prior to the expiration date of each
Policy, Borrower shall deliver to Lender evidence, reasonably satisfactory to
Lender, of its renewal.

(e)        Borrower shall not procure any other insurance coverage which would
be on the same level of payment as the Policies or would adversely impact in any
way the ability of Lender or Borrower to collect any proceeds under any of the
Policies. If at any time Lender is not in receipt of written evidence that all
Policies are in full force and effect when and as required hereunder, Lender
shall have the right to take such action as Lender deems necessary to protect
its interest in the Properties, including, without limitation, the obtaining of
such insurance coverage as Lender in its sole discretion deems appropriate (but
limited to the coverages and amounts required hereunder). All premiums incurred
by Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and, until
paid, and shall bear interest at the Default Rate.

(f)        Notwithstanding anything to the contrary contained in this
Section 5.15, (i) Lender hereby approves the insurance program described on
Exhibit E hereto and any renewal thereof upon the same terms (subject to any
increases in such coverage required to reflect increased revenues and values),
provided the insurers maintain their current ratings as in effect on the Closing
Date or otherwise satisfy the requirements herein, (ii) with respect to the

 

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Encumbered Properties, the provisions of this Section 5.15 shall be subject to
the applicable provisions of the Encumbered Debt Documents and (iii) with
respect to the Properties subject to a Net Lease, to the extent Lender has
received reasonably satisfactory evidence of the insurance maintained by a
Tenant under a Net Lease, Borrower shall be deemed to have complied with the
requirements of this Section 5.15 with respect to the Property subject to such
Net Lease). Promptly after the date hereof, Borrower shall request and use
commercially reasonable efforts to cause the Tenant under each Net Lease to add
Lender as an additional insured or loss payee (as applicable) under such
insurance, in each case if and to the extent permitted thereunder.

5.16.     Casualty and Condemnation.

(a)        Borrower shall give prompt notice to Lender of any Casualty or
Condemnation in excess of $250,000. Subject to the Encumbered Property Debt
Documents, Leases and each Qualified Joint Venture Agreement, Lender may
(x) jointly with Borrower settle and adjust any claims, (y) during the
continuance of an Event of Default, settle and adjust any claims without the
consent or cooperation of Borrower, or (z) allow Borrower to settle and adjust
any claims; except that if no Event of Default has occurred and is continuing,
Borrower may settle and adjust any claim not in excess of $2,500,000 if such
settlement or adjustment is carried out in a competent and timely manner, but
Lender shall be entitled to collect and receive (as set forth below) any and all
Loss Proceeds. The reasonable expenses incurred by Lender in the adjustment and
collection of Loss Proceeds shall become part of the Indebtedness and shall be
reimbursed by Borrower to Lender within 10 Business Days of demand therefor.

(b)        Subject, where applicable, to the Encumbered Property Debt Documents,
Qualified Joint Venture Agreements, and any Leases, all Loss Proceeds shall be
immediately deposited into the Loss Proceeds Account (monthly rental
loss/business interruption proceeds to be initially deposited into the Loss
Proceeds Account and subsequently deposited into the Cash Management Account in
installments as and when the lost rental income covered by such proceeds would
have been payable). Following the occurrence of a Casualty, Borrower, regardless
of whether proceeds are available, shall in a reasonably prompt manner proceed
to restore, repair, replace or rebuild the applicable Property to be of at least
equal value and of substantially the same character as prior to the Casualty,
all in accordance with the terms hereof applicable to Alterations (unless such
Property has been released in accordance herewith). If, at any Property, a
Condemnation or Casualty occurs as to which, in the reasonable judgment of
Lender:

(i)        in the case of a Casualty, the cost of restoration would not exceed
25% of the applicable Allocated Loan Amount and the Casualty does not render
untenantable, or result in the cancellation of Leases covering, more than 25% of
the gross rentable area of such Property, or result in cancellation of Leases
covering more than 25% of the base contractual rental revenue of such Property;

(ii)       in the case of a Condemnation, the Condemnation does not render
untenantable, or result in the cancellation of Leases covering, more than 15% of
the gross rentable area of such Property;

 

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(iii)      restoration of such Property is reasonably expected to be completed
prior to the expiration of rental interruption insurance and at least six months
prior to the Maturity Date; and

(iv)      after such restoration, the fair market value of the restored Property
is reasonably expected to equal at least the fair market value of such Property
immediately prior to such Condemnation or Casualty (assuming the affected
portion of such Property is relet);

or if Lender otherwise elects to allow Borrower to restore such Property or if
restoration of such Property is required under a Major Lease or a Ground Lease,
then, provided no Event of Default shall have occurred and is continuing, the
Loss Proceeds after receipt thereof by Lender and reimbursement of any
reasonable expenses incurred by Lender in connection therewith shall be applied
to the cost of restoring, repairing, replacing or rebuilding such Property or
part thereof subject to the Casualty or Condemnation, in the manner set forth
below (and Borrower shall commence as promptly and diligently as reasonably
practicable to prosecute such restoring, repairing, replacing or rebuilding of
such Properties in a workmanlike fashion and in accordance with applicable law
to a status at least equivalent to the quality and character of such Properties
immediately prior to the Condemnation or Casualty or such other character and
with such other alterations as is reasonably consented to by Lender). Provided
that no Event of Default shall have occurred and be then continuing, Lender
shall disburse such Loss Proceeds to Borrower upon Lender’s being furnished with
(i) evidence reasonably satisfactory to it of the estimated cost of completion
of the restoration, (ii) funds, or assurances reasonably satisfactory to Lender
that such funds are available and sufficient in addition to any remaining Loss
Proceeds, to complete the proposed restoration, and (iii) such architect’s
certificates, waivers of lien, contractor’s sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of cost, payment
and performance as Lender may reasonably request; and Lender may, in any event,
require that all plans and specifications for restoration reasonably estimated
by Lender to exceed $2,000,000 be submitted to and approved by Lender prior to
commencement of work (which approval shall not be unreasonably withheld). If
Lender reasonably estimates that the cost to restore will exceed $2,000,000,
Lender may retain a local construction consultant to inspect such work and
review Borrower’s request for payments and Borrower shall, on demand by Lender,
reimburse Lender for the reasonable fees and expenses of such consultant (which
fees and expenses shall constitute Indebtedness). No payment shall exceed 90% of
the value of the work performed from time to time until such time as 50% of the
restoration (calculated based on the anticipated aggregate cost of the work) has
been completed, and amounts retained prior to completion of 50% of the
restoration shall not be paid prior to the final completion of the restoration.
Funds other than Loss Proceeds shall be disbursed prior to disbursement of such
Loss Proceeds, and at all times the undisbursed balance of such proceeds
remaining in the Loss Proceeds Account, together with any additional funds
irrevocably and unconditionally deposited therein or irrevocably and
unconditionally committed for that purpose, shall be at least sufficient in the
reasonable judgment of Lender to pay for the cost of completion of the
restoration free and clear of all Liens or claims for Lien.

(c)        Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Loss Proceeds lawfully or equitably payable to Lender in
connection with the Properties. Lender shall be reimbursed for any expenses
reasonably incurred in connection therewith

 

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(including reasonable attorneys’ fees and disbursements, and, if reasonably
necessary to collect such proceeds, the expense of an Appraisal on behalf of
Lender) out of such Loss Proceeds or, if insufficient for such purpose, by
Borrower.

(d)        If Borrower is not entitled to apply Loss Proceeds toward the
restoration of a Property pursuant to Section 5.16(b) and Lender elects not to
permit such Loss Proceeds to be so applied, such Loss Proceeds shall be applied
on the first Payment Date following such election to the prepayment of the Loan
(without the payment of any Prepayment Fee) and shall be accompanied by interest
through the end of the applicable Interest Accrual Period (calculated as if the
amount prepaid were outstanding for the entire Interest Accrual Period). If the
Note has been bifurcated into multiple Note Components pursuant to
Section 1.3(c), all prepayments of the Loan made by Borrower in accordance with
this Section 5.16(d) shall be applied to the Note Components in ascending order
of interest rate (i.e., first to the Note Component with the lowest Component
Spread until its outstanding principal balance has been reduced to zero, then to
the Note Component with the second lowest Component Spread until its outstanding
principal balance has been reduced to zero, and so on) or in such other order as
Lender shall determine. The Release Price for any Property for which Loss
Proceeds are applied to repayment of the Loan pursuant to this Section 5.16(d)
shall be reduced by the amount of such repayment. If Loss Proceeds are not made
available to restore any Property and are applied to the prepayment of any
Encumbered Property Debt or the Loan, Borrower shall be entitled to obtain the
release of the applicable Property pursuant to Section 2.2, provided that
(i) Borrower shall not be obligated to satisfy the requirements of clauses
(2) or (3) of Section 2.2(a) in connection with such release, and (ii) the
appropriate Release Price shall be the Unaffiliated Release Price with respect
thereto.

(e)        Notwithstanding anything in this Section 5.16 to the contrary, with
respect to Encumbered Properties, Loss Proceeds shall be applied in accordance
with the Encumbered Property Debt Documents, and after such application, any
excess Loss Proceeds shall be applied in accordance with this Section 5.16.

5.17.     Annual Budget.  At least 30 days prior to the commencement of each
Fiscal Year during the term of the Loan beginning with the 2008 Fiscal Year, and
at least 30 days after the commencement of any Event of Default, Borrower shall
deliver to Lender an Annual Budget for the Properties for the ensuing Fiscal
Year and, promptly after preparation thereof, any subsequent revisions to the
Annual Budget. During the continuance of any Event of Default, such Annual
Budget and any such revisions shall be subject to Lender’s approval (the Annual
Budget, as so approved, or if no Event of Default exists, the Annual Budget, the
“Approved Annual Budget”); provided, however, that Borrower shall not amend any
Annual Budget more than once in any 60-day period. If Borrower submits an Annual
Budget for approval in good faith and such Annual Budget is not approved within
30 days, then the prior year’s Approved Annual Budget will remain in effect,
subject to increases for non-discretionary items such as insurance premiums and
Taxes and increases in the Consumer Price Index for the applicable calendar year
over the previous calendar year for discretionary items.

5.18.     General Indemnity.  (a) Borrower shall indemnify, reimburse, defend
and hold harmless Lender and its officers, directors, employees and agents
(collectively, the “Indemnified Parties”) for, from and against any and all
Damages of any kind or nature whatsoever which may be imposed on, incurred by,
or asserted against the Indemnified Parties,

 

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in any way relating to or arising out of the making or holding or enforcement of
the Loan by Lender or the administration of the Transaction to the extent
resulting, directly or indirectly, from any claim (including any Environmental
Claim) made (whether or not in connection with any legal action, suit, or
proceeding) by or on behalf of any Person; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for its own
fraud, bad faith, gross negligence or willful misconduct. The provisions of and
undertakings and indemnification set forth in this Section 5.18 shall survive
the satisfaction and payment in full of the Indebtedness and termination of this
Agreement.

(b)        The applicable Indemnified Party shall promptly notify Borrower in
writing of any action, judgment, suit, claim or demand with respect to which
such Indemnified Party seeks the benefit of Section 5.18(a) and provide Borrower
the opportunity to defend same, and if such Indemnified Party fails to do so it
shall lose the benefit of Section 5.18(a) if and to the extent Borrower is
prejudiced thereby. So long as Borrower is resisting and defending in a prudent
and commercially reasonable manner any action, judgment, suit, claim or demand
that gives rise to Damages (or same is being defended by Borrower’s insurer and
insurance is adequate for the reimbursement of such Damages), the Indemnified
Parties shall not be entitled to defend or settle same and claim the benefit of
Section 5.18(a) with respect thereto without the consent of Borrower.
Notwithstanding the foregoing, if the conditions set forth in the preceding
sentence are not being satisfied and Lender has provided Borrower with 30 days’
prior written notice, or shorter period if mandated by the requirements of
applicable law, and opportunity to correct such determination, Lender may in
good faith settle such action, suit or proceeding and claim the benefit of this
Section 5.18 with respect thereto.

5.19.     Nonbinding Consultation.  Lender shall have the right to consult with
and advise Borrower regarding significant business activities and business and
financial developments of Borrower, provided that any such advice or
consultation or the result thereof shall be completely nonbinding on Borrower.

5.20      Compliance with Encumbrances.  Each Borrower covenants and agrees as
follows:

(i)         Borrower shall comply with all material terms, conditions and
covenants of each material Permitted Encumbrance, including any material
reciprocal easement agreement, any declaration of covenants, conditions and
restrictions, and any condominium arrangements.

(ii)        Borrower shall promptly deliver to Lender a true and complete copy
of each and every notice of default received by Borrower with respect to any
obligation of such Borrower under the provisions of any such Permitted
Encumbrance, in each case if the same would reasonably be expected to have a
Material Adverse Effect.

(iii)       Borrower shall deliver to Lender copies of any written notices of
event of default relating to any such Permitted Encumbrance served by such
Borrower, if the same would reasonably be expected to have a Material Adverse
Effect.

 

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(iv)       After the occurrence of an Event of Default, so long as the Loan is
outstanding, Borrower shall not grant or withhold any material consent, approval
or waiver under any such Permitted Encumbrance without the prior written consent
of Lender.

(v)        Borrower shall deliver to each other party to any such Permitted
Encumbrance notice of the identity of Lender and each assignee of Lender of
which such Borrower has been notified in writing if such notice is required in
order to protect Lender’s interest thereunder.

5.21      Encumbered Property Indebtedness.  Borrower shall cause each
Encumbered Property Owner to comply in all material respects with all of their
respective obligations and liabilities under the Encumbered Property Debt
Documents to which each is a party, in each case except to the extent that any
failure to so comply would not have a Material Adverse Effect on the value of
any of the Encumbered Properties or the Collateral. Borrower shall cause each
Encumbered Property Owner, promptly upon receipt of any notice of breach or
default under any Encumbered Property Debt Documents, to deliver a copy of the
same to Lender and to grant access to, and otherwise cooperate with, Lender to
permit Lender, subject to the Encumbered Property Debt Documents, to cure such
default to the same extent as the right granted to Lender under Section 7.2(c)
to cure an Event of Default with respect to any Mortgage Loan Collateral
Property. The actual costs and expenses incurred by Lender in exercising rights
under this paragraph (including reasonable attorneys’ fees), with interest at
the Default Rate for the period after notice from Lender that such costs or
expenses were incurred to the date of payment to Lender, shall constitute a
portion of the Indebtedness, shall be secured by the Loan Documents and shall be
due and payable to Lender within 5 Business Days of demand therefor. Within 30
days of the Closing Date, Borrower shall take all steps necessary to cause
Lender to be a notice party under the Encumbered Property Debt Documents.

5.22      Disposition Assets.  Upon the sale or other transfer or disposition of
any Disposition Asset, Borrower shall promptly deliver to Lender written notice
thereof in the form of an Officer’s Certificate identifying the relevant
Disposition Asset, the price for which it was sold and the transferee thereof
and certifying that the transferee thereof is unaffiliated with any Borrower.

5.23      Distributions.  Borrower shall cause each Property Owner and each
Joint Venture Owner to promptly make Distributions of all available cash flow,
after payment of Operating Expenses at the applicable Property and other sums
then required to be paid to the Encumbered Property Lenders or otherwise
required to be paid, in each case, to the extent expressly set forth in the
Encumbered Party Debt Documents or the Joint Venture Documents, directly into
the Cash Management Account or the Blocked Account on the earliest date
practicable in the maximum amount not prohibited by the Encumbered Property
Documents or the Qualified Joint Venture Agreements. Borrower shall cause TRS
Owner to promptly make Distributions of all available cash flow, after payment
of Operating Expenses at the applicable TRS Property and other sums then
required or otherwise advisable to be paid by TRS Owner in order to ensure that
TRS Owner maintains its status as a taxable REIT subsidiary under applicable
Legal Requirements, directly into the Cash Management Account or the Blocked
Account on the earliest date practicable in the maximum amount then permissible

 

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5.24      Encumbered Property Defaults.  Upon the occurrence of an event of
default under any one or more Encumbered Property Loans due to a claim that the
Transaction was prohibited thereunder, (x) AFRT shall repay or defease, or cause
to be repaid or defeased, such Encumbered Property Loan, as applicable, prior to
the earlier of (1) the date that is 10 days after the declaration of the event
of default under the applicable Encumbered Property Debt Documents and (2) the
acceleration of such Encumbered Property Loan; or (y) AFRT shall cause the
release of the Encumbered Property or Encumbered Properties securing such
Encumbered Property Loan from the Lien of the Loan Documents in accordance with
Section 2.2(a), prior to the earlier of (1) the date that is 10 days after the
declaration of the event of default under the applicable Encumbered Property
Loan and (2) the acceleration of such Encumbered Property Loan; provided,
however, that (i) in connection with any such release, notwithstanding anything
to the contrary contained in this Agreement, such Encumbered Property may be
Transferred to an Affiliate, and (ii) if the Transfer related to the release of
such Encumbered Property would result in a further default under the applicable
Encumbered Property Debt Documents, then Borrower shall be required to pay the
applicable Release Price for such Encumbered Property, but shall not be required
to Transfer such Property to actually effectuate such release. The foregoing
10-day period may be extended to up to 60 days, provided (x) prior to the
expiration of such 10-day period, AFRT shall deliver to Lender a Letter of
Credit in the amount, if any, by which the aggregate cost to repay or defease
such Encumbered Property Loan (e.g., transaction costs, defeasance costs and
prepayment fees) exceeds the outstanding principal balance thereof, (y) the
aggregate outstanding principal amount of Encumbered Property Loans for which an
event of default thereunder is continuing does not exceed $350,000,000 at such
time, and (z) AFRT shall deliver to Lender an Officer’s Certificate of Sponsor
certifying that such event of default under such Encumbered Property Loan does
not trigger an event of default under any other Debt of Sponsor, any Permitted
Debt of Borrower or any Debt of any of their respective Affiliates.

ARTICLE VI

NEGATIVE COVENANTS

6.1.       Liens on the Properties.  No Borrower, no Property Owner, and, if
applicable, no Single-Purpose Equityholder shall permit or suffer the existence
of any Lien on any of its assets, other than Permitted Encumbrances.

6.2.       Ownership.  No Borrower shall own any assets other than its
Properties and related personal property and fixtures located therein or used in
connection therewith or its Required Equity, as applicable. Except to the extent
required under the Encumbered Property Debt Documents, no Property Owner shall
own any assets other than its Encumbered Property and related personal property
and fixtures located therein or used in connection therewith. Except as
otherwise shown on Exhibit A, neither AFRT nor AFRT Owner has any direct or
indirect subsidiary that is not a Borrower or a Property Owner, and no new
direct or indirect subsidiary shall be formed, unless such subsidiary shall be a
New Borrower Entity that becomes a “Borrower” or “Property Owner” hereunder or a
Permitted TRS Entity (unless Lender shall otherwise consent thereto) and, if it
is a Borrower, pledge all of its assets to Lender, in each case pursuant to
documentation reasonably acceptable to Lender.

 

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6.3.      Transfer.

(a)        No Borrower shall Transfer any Collateral, and no Property Owner
shall Transfer any Property, other than in compliance with Article II and other
than the replacement or other disposition of obsolete or non-useful personal
property and fixtures in the ordinary course of business, and Borrower shall not
hereafter file a declaration of condominium with respect to any of the
Properties.

(b)        Notwithstanding the foregoing:

(i)         one or more Borrowers, may, at their sole cost and expense, Transfer
all or a portion of the Required Equity to another Borrower or a New Borrower
Entity and/or enter into a Permitted TRS Contribution Agreement, provided that
the nature, extent and value of Lender’s collateral is not thereby impaired and
(1) after giving effect to any such Transfer or Permitted TRS Contribution
Agreement, no Change of Control shall have occurred, (2) Lender shall have
received ten days’ advance written notice of any such Transfer or Permitted TRS
Contribution Agreement together with a revised organizational chart reflecting
such Transfer, (3) such Required Equity shall remain or become (as the case may
be) subject to a first priority perfected Lien in favor of Lender, as evidenced
by a legal opinion and updated UCC title insurance policy, in each case
reasonably satisfactory to Lender and consistent with Rating Agency
requirements, (4) if reasonably requested by Lender, Borrower shall deliver to
Lender an updated nonconsolidation opinion satisfactory to Lender and such other
updated legal opinions, certifications and evidence of compliance with this
Agreement as Lender shall reasonably require, (5) such Transfer shall have no
adverse effect on Lender, (6) with respect to a Permitted TRS Contribution
Agreement, to the extent not already covered by the Loan Documents, Borrower
shall have caused the rights of both parties under such agreement to be pledged
to Lender as additional collateral for the Loan in a manner reasonably
satisfactory to Lender and (7) Borrower shall pay all reasonable costs and
expenses of Lender in connection with the foregoing;

(ii)        so long as no Event of Default is then continuing, Borrower may
obtain the release of up to and including 80% of the indirect equity interests
in any Property Owner in the aggregate from the Liens of the Loan Documents in
connection with the sale of such equity interests to an unaffiliated third party
that enters into a Qualified Joint Venture Agreement with Borrower, provided
that (1) at the time of each such release, Borrower shall prepay the Loan, in
accordance with Section 2.1, in an amount equal to the applicable Unaffiliated
Release Price for such Joint Venture Property, provided that, solely for these
purposes, (i) the amount specified in clause (x) of the definition of
“Unaffiliated Release Price” shall be multiplied by the percentage of the joint
venture interest being Transferred, and (ii) the percentage specified in clause
(y) of the definition of Unaffiliated Release Price shall be replaced with
“100%”, which prepayment shall be accompanied by the other amounts specified in
Section 2.1, (2) DSCR for the Test Period most recently ended, recalculated to
include only Borrower’s share of income and expense attributable to the
Properties remaining after the contemplated sale and to exclude the interest
expense and principal payments on the aggregate amount to be prepaid, shall be
equal to or greater than DSCR immediately prior to such sale (as

 

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reasonably determined by Lender), (3) after giving effect to such release, the
aggregate Senior Collateral Value shall not be less than 120% of the sum of the
Principal Indebtedness and the Junior Mezzanine Loan Principal Indebtedness (as
reasonably determined by Lender), (4) Borrower shall reimburse Lender for any
actual reasonable out-of-pocket costs and expenses incurred by Lender in
connection with this Section (including the reasonable fees and expenses of
legal counsel and the Servicer), (5) Lender shall retain a first-priority
perfected pledge of the remaining equity interests in such Property Owner, which
shall not be less than 20% of the equity therein; and (6) any subsequent sale of
a Joint Venture Property shall be subject to the requirements of Section 2.2,
except that, for purposes of this subsection (6) only, the Release Price payable
in connection therewith shall be the Unaffiliated Release Price (taking into
account 100% of the Aggregate Allocated Loan Amounts of the respective
Properties, without reduction for prior equity sales) reduced by multiplying the
amount specified in clause (x) of the definition of Unaffiliated Release Price
by the percentage of the applicable joint venture not theretofore released;

(iii)        one or more Encumbered Property Owners may transfer one or more
Encumbered Properties to one or more newly formed Single-Purpose Entities
Controlled by Sponsor, in connection with the incurrence of Permitted Debt
pursuant to clause (iv) of the definition of “Permitted Debt”;

(iv)        Borrower shall be permitted to Transfer Value Add Pool Equity
pursuant to Section 2.3; and

(v)         a transfer of direct and/or indirect equity interests in connection
with a foreclosure of the Junior Mezzanine Loan (or similar “in lieu”
transaction) shall be permitted, subject to the intercreditor agreement between
Lender and Junior Mezzanine Lender.

6.4.        Debt.  Neither Borrower nor any Property Owner shall have any Debt,
other than Permitted Debt. No direct or indirect equityholder of Borrower or any
Property Owner, other than Sponsor and any direct or indirect equityholder of
Sponsor, shall have any debt, other than Permitted Debt.

6.5.        Dissolution; Merger or Consolidation.  No Borrower, Property Owner
that owns any assets nor, if applicable, any Single-Purpose Equityholder shall
dissolve, terminate, liquidate, merge with or consolidate into another Person.

6.6.        Change in Business.  No Borrower nor any Property Owner shall make
any material change in the scope or nature of its business objectives, purposes
or operations or undertake or participate in activities other than the
continuance of its present business.

6.7.        Debt Cancellation.  No Borrower nor any Property Owner shall cancel
or otherwise forgive or release any material claim or Debt owed to it by any
Person, except for adequate consideration or in the ordinary course of its
business.

 

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6.8.      Affiliate Transactions.  No Borrower nor any Property Owner shall
enter into, or be a party to, any transaction with any Affiliate of Borrower,
except on terms which are no less favorable to such Borrower or Property Owner
than would be obtained in a comparable arm’s length transaction with an
unrelated third party.

6.9.      Misapplication of Funds.  No Borrower shall (a) distribute any Revenue
or Loss Proceeds in violation of the provisions of this Agreement (and shall
promptly cause the reversal of any such distributions made in error of which
Borrower becomes aware), (b) fail to remit or cause to be remitted amounts to
the Cash Management Account as required by Section 3.1 (including, without
limitation, all Distributions), or (c) misappropriate any security deposit or
portion thereof.

6.10.     Jurisdiction of Formation.  No Borrower or Property Owner shall change
its jurisdiction of formation without receiving Lender’s prior written consent
and promptly providing Lender such information and replacement Uniform
Commercial Code financing statements and legal opinions as Lender may reasonably
request in connection therewith.

6.11.     Modifications and Waivers.  Unless otherwise consented to in writing
by Lender:

(i)         No Borrower or Property Owner shall amend, modify, terminate, renew,
or surrender any rights or remedies under any Major Lease, or enter into any
Major Lease, except in compliance with Section 5.7;

(ii)        Except for changing its registered agent and principal place of
business (in each case, upon advance written notice to Lender), no Borrower or
Property Owner nor, if applicable, any Single-Purpose Equityholder shall
terminate, amend or modify its organizational documents (including, without
limitation, any operating agreement, limited partnership agreement, by-laws,
certificate of formation, certificate of limited partnership or certificate of
incorporation) in a manner which (x) could reasonably be expected to affect its
qualification as a Single-Purpose Entity, with respect to entities required to
be Single-Purpose entities hereunder or (y) could reasonably be expected to
result in a Material Adverse Effect; and

(iii)       No Borrower or Property Owner shall terminate, materially amend or
materially modify the Approved Management Agreement without the consent of
Lender not to be unreasonably withheld, conditioned or delayed.

6.12.     ERISA.

(a)        No Borrower shall maintain or contribute to, or agree to maintain or
contribute to, or permit any ERISA Affiliate of Borrower (except for Sponsor and
any ERISA Affiliate that is an equityholder in Sponsor) to maintain or
contribute to or agree to maintain or contribute to, any employee benefit plan
(as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of
ERISA or Section 412 of the Code.

(b)        No Borrower shall engage in a non-exempt prohibited transaction under
Section 406 of ERISA, Section 4975 of the Code, or substantially similar
provisions under

 

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federal, state or local laws, rules or regulations or in any transaction that
would cause any obligation or action taken or to be taken hereunder (or the
exercise by Lender of any of its rights under the Notes, this Agreement, the
Mortgages or any other Loan Document) to be a non-exempt prohibited transaction
under such provisions.

6.13.    Alterations and Expansions.  During the continuance of any Event of
Default, no Borrower or Property Owner shall perform or contract to perform any
Capital Expenditures that are not consistent with the Approved Annual Budget. No
Borrower or Property Owner shall perform or contract to perform any Material
Alteration without the prior written consent of Lender, which consent (in the
absence of an Event of Default) shall not be unreasonably withheld, conditioned
or delayed. If Lender’s consent is requested hereunder with respect to a
Material Alteration, Lender may retain a construction consultant to review such
request and, if such request is granted, Lender may retain a construction
consultant to inspect the work from time to time. Borrower shall, within 30 days
of demand by Lender, reimburse Lender for the reasonable fees and disbursements
of such consultant.

6.14.    Advances and Investments.  No Borrower or Property Owner shall lend
money or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, any Person, except for
Permitted Investments, or issue any additional equity interests. No Borrower or
Property Owner shall make any capital contribution to any Person that is not a
Borrower or a Property Owner .

6.15.    Single-Purpose Entity.  No Borrower shall cease to be a Single-Purpose
Entity.

6.16.    Zoning and Uses.  No Borrower or Property Owner shall do any of the
following with respect to any of the Properties without the prior written
consent of Lender (such consent not to be unreasonably withheld, delayed or
conditioned), except, as to clause (ii) below, to the extent the same is
commercially reasonable and not reasonably expected to have a Material Adverse
Effect:

(i)         initiate or support any limiting change in the permitted uses of any
of the Properties (or to the extent applicable, zoning reclassification of any
of the Properties) or any portion thereof, seek any material variance under
existing land use restrictions, laws, rules or regulations (or, to the extent
applicable, zoning ordinances) applicable to a Property, or use or permit the
use of a Property in a manner that would result in the use of such Property
becoming a nonconforming use (other than a legal nonconforming use) in any
material respect under applicable land-use restrictions or zoning ordinances or
that would violate the terms of any Lease, Material Agreement or Legal
Requirement in any material respect;

(ii)        consent to any modification, amendment or supplement to any of the
terms of, or materially default in its obligations under, any Permitted
Encumbrance, to the extent the same would result in a Material Adverse Effect;

(iii)       impose or consent to the imposition of any restrictive covenants,
easements or encumbrances upon a Property in any manner that adversely affects
in any material respect its value, utility or transferability;

 

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(iv)       execute or file any subdivision plat affecting any of the Properties,
or institute, or permit the institution of, proceedings to alter any tax lot
comprising any of the Properties;

(v)       amend, modify, surrender, terminate or waive any material rights or
remedies under, or enter into, or default (beyond applicable grace, cure or
notice periods) in its material obligations under, any Material Agreement in any
manner that might diminish (x) the value of the applicable Property or
Properties or (y) the rights of any Borrower or Property Owner or Lender
thereunder;

(vi)       amend, modify, surrender, terminate or waive any material rights or
remedies under, or enter into, or default (beyond applicable grace, cure or
notice periods) in its material obligations under, any Ground Lease in any
manner that might diminish (x) the value of the applicable Property or
Properties or (y) the rights of any Borrower or Property Owner or Lender
thereunder; or

(vii)      permit or consent to any of the Properties being used by the public
or any Person in such manner as might make possible a claim of adverse usage or
possession or of any implied dedication or easement.

6.17.   Waste.  No Borrower or Property Owner shall commit or permit any Waste
on any of the Properties, nor take any actions that might invalidate any
insurance carried on any of the Properties (and Borrower or Property Owner shall
promptly correct any such actions of which Borrower or Property Owner becomes
aware).

ARTICLE VII

DEFAULTS

7.1.      Event of Default.  The occurrence of any one or more of the following
events shall be, and shall constitute the commencement of, an “Event of Default”
hereunder:

(a)        Payment.

(i)         Borrower shall default in the payment when due of any principal or
interest owing hereunder or under the Notes (including any mandatory prepayment
required hereunder); or

(ii)        Borrower shall default, and such default shall continue for at least
five Business Days after written notice to Borrower that such amounts are owing,
in the payment when due of fees, expenses or other amounts owing hereunder,
under the Notes or under any of the other Loan Documents (other than principal
and interest owing hereunder or under the Note).

(b)        Representations.  Any representation made by Borrower or Sponsor in
any of the Loan Documents, or in any report, certificate, financial statement or
other instrument, agreement or document furnished to Lender shall have been
false or misleading in any material respect (or, with respect to any
representation which itself contains a materiality qualifier, in any

 

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respect) as of the date such representation was made, which failure, if capable
of being cured or remedied, has not been cured or remedied within 15 days after
written notice to Borrower of such failure.

(c)        Other Loan Documents.  Any Loan Document shall fail to be in full
force and effect or to convey the material Liens, rights, powers and privileges
purported to be created thereby; or a default shall occur under any of the other
Loan Documents, any of the Ground Leases (to the extent such default would
entitle the lessor thereunder to terminate the Ground Lease) or under any
Qualified Joint Venture Agreement, in each case beyond the expiration of any
applicable cure period (provided that if a default occurs under a Loan Document
and no cure period is provided therein, and such Loan Document does not
characterize such default as an “Event of Default”, then clause (k) hereof shall
apply).

(d)        Bankruptcy, etc.

(i)         Any Borrower, any Property Owner, any Joint Venture Owner or, if
applicable, any Single-Purpose Equityholder shall commence a voluntary case
concerning itself under Title 11 of the United States Code (as amended,
modified, succeeded or replaced, from time to time, the “Bankruptcy Code”);

(ii)        Any Borrower, any Property Owner, any Joint Venture Owner or, if
applicable, any Single-Purpose Equityholder shall commence any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to such Borrower, Property Owner, Joint Venture
Owner or Single-Purpose Equityholder, or shall dissolve or otherwise cease to
exist;

(iii)       there is commenced against any Borrower, any Property Owner, any
Joint Venture Owner or, if applicable, any Single-Purpose Equityholder an
involuntary case under the Bankruptcy Code, or any such other proceeding, which
remains undismissed for a period of 60 days after commencement;

(iv)       Any Borrower, any Property Owner, any Joint Venture Owner or, if
applicable, any Single-Purpose Equityholder is adjudicated insolvent or
bankrupt;

(v)        Any Borrower, any Property Owner, any Joint Venture Owner or, if
applicable, any Single-Purpose Equityholder suffers appointment of any custodian
or the like for it or for any substantial portion of its property and such
appointment continues unchanged or unstayed for a period of 60 days after
commencement of such appointment;

(vi)       Any Borrower, any Property Owner, any Joint Venture Owner or, if
applicable, any Single-Purpose Equityholder makes a general assignment for the
benefit of creditors; or

(vii)      any action is taken by any Borrower, Property Owner, Joint Venture
Owner or, if applicable, any Single-Purpose Equityholder for the purpose of
effecting any of the foregoing.

 

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(e)        Change of Control.

(i)         A Change of Control shall occur; or

(ii)        except as expressly permitted hereunder, any party shall acquire any
direct or indirect equity interest in any Borrower, Property Owner or
Single-Purpose Equityholder (even if not constituting a Change of Control),
other than a direct or indirect equity interest in Sponsor; or

(iii)       any party shall acquire more than 49% of the direct or indirect
equity interest in Borrower or a Single-Purpose Equityholder (even if not
constituting a Change of Control), other than a direct or indirect equity
interest in Sponsor, and Borrower shall fail to deliver to Lender with respect
to such new equityholder a new non-consolidation opinion satisfactory to
(A) prior to the occurrence of any Securitization of the Loan, Lender in its
reasonable discretion, and (B) at any time following any Securitization or
series of Securitizations of the Loan, each of the Rating Agencies rating such
Securitization or Securitizations.

(f)         Equity Pledge; Preferred Equity.  Any direct or indirect equity
interest in or right to distributions from any Borrower, Property Owner or Joint
Venture Owner shall be subject to a Lien in favor of any Person, or any such
party or any holder of a direct or indirect interest in any such party shall
issue preferred equity (or debt granting the holder thereof rights substantially
similar to those generally associated with preferred equity); except that the
following shall be permitted:

(i)         any pledge of direct and indirect equity interests in and rights to
distributions from Sponsor;

(ii)        the issuance of preferred equity interests in Sponsor;

(iii)       the pledges in favor of Lender created by the Loan Documents; and

(iv)       the pledge to Junior Mezzanine Lender of 100% of the equity interests
in GKK Stars Acquisition LLC as security for the Junior Mezzanine Loan.

(g)        Insurance.  Borrower shall fail to maintain in full force and effect
or cause to be maintained in full force and effect all Policies required
hereunder.

(h)        ERISA; Negative Covenants.  A default shall occur in the due
performance or observance by any Borrower of any term, covenant or agreement
contained in Section 5.8 or in Article VI; provided that if such default is
susceptible of being cured, such default shall not constitute an Event of
Default unless and until it shall remain uncured for 10 days after Borrower
receives written notice thereof, for a default which can be cured by the payment
of money, or for 30 days after Borrower receives written notice thereof, for a
default which cannot be cured by the payment of money; or any ERISA Event with
respect to a Plan shall have occurred and the same shall have a Material Adverse
Effect.

 

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(i)        Cross-Default.  An event of default shall occur and be continuing
under any one or more Encumbered Property Loans, provided that (a) such event of
default shall not constitute an Event of Default unless the aggregate
outstanding principal amount of the applicable Encumbered Property Loans exceeds
$30 million at the time such event of default is declared and such default is a
monetary or material non-monetary event of default; and (b) if an event of
default is declared under any Encumbered Property Loan solely due to a claim
that the Transaction was prohibited thereunder, then same shall not constitute
an Event of Default if Borrower complies with Section 5.24 within the time
periods specified therein.

(j)        Certificates of Required Equity.  If any additional direct or
indirect equity interests in any Property Owner or Borrower shall be issued and
not pledged to Lender in a manner reasonably satisfactory to Lender.

(k)       Other Covenants.  A default shall occur in the due performance or
observance by any Borrower of any term, covenant or agreement (other than those
referred to in subsections (a) through (j), inclusive, of this Section 7.1)
contained in this Agreement or in any of the other Loan Documents, except that
if such default referred to in this subsection (k) is susceptible of being
cured, such default shall not constitute an Event of Default unless and until it
shall remain uncured for 10 days after Borrower receives written notice thereof,
for a default which can be cured by the payment of money, or for 30 days after
Borrower receives written notice thereof, for a default which cannot be cured by
the payment of money; and if a default cannot be cured by the payment of money
but is susceptible of being cured and cannot reasonably be cured within such
30-day period, and Borrower commences to cure such default within such 30-day
period and thereafter diligently and expeditiously proceeds to cure the same,
Borrower shall have such additional time as is reasonably necessary to effect
such cure, but in no event in excess of 120 days from the original notice.

7.2.      Remedies.

(a)       During the continuance of an Event of Default, Lender may by written
notice to Borrower, in addition to any other rights or remedies available
pursuant to this Agreement, the Notes, and the other Loan Documents, at law or
in equity, declare by written notice to Borrower all or any portion of the
Indebtedness to be immediately due and payable, whereupon all or such portion of
the Indebtedness shall so become due and payable, and Lender may enforce or
avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower and the Collateral (including all rights or remedies available
at law or in equity); provided, however, that, notwithstanding the foregoing, if
an Event of Default specified in paragraph 7.1(d) shall occur, then the
Indebtedness shall immediately become due and payable without the giving of any
notice or other action by Lender. Any actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth in this Agreement or in the
other Loan Documents.

(b)       If Lender forecloses on any of the Collateral, Lender shall apply all
net proceeds of such foreclosure to repay the Indebtedness, the Indebtedness
shall be reduced to the

 

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extent of such net proceeds and the remaining portion of the Indebtedness shall
remain outstanding and secured by the Collateral and the other Loan Documents,
it being understood and agreed by Borrower that Borrower is liable for the
repayment of all the Indebtedness; provided, however, that at the election of
Lender, the Notes shall be deemed to have been accelerated only to the extent of
the net proceeds actually received by Lender with respect to the Collateral and
applied in reduction of the Indebtedness.

(c)        During the continuance of any Event of Default (including an Event of
Default resulting from a failure to satisfy the insurance requirements specified
herein), Lender may, subject to the terms of the Encumbered Property Debt
Documents, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder, take
any action to cure such Event of Default. Subject to the Encumbered Property
Debt Documents, Lender may enter upon any or all of the Properties upon
reasonable notice to Borrower for such purposes or appear in, defend, or bring
any action or proceeding to protect its interest in the Collateral or to
foreclose on the Collateral or collect the Indebtedness. The costs and expenses
incurred by Lender in exercising rights under this paragraph (including
reasonable attorneys’ fees), with interest at the Default Rate for the period
after notice from Lender that such costs or expenses were incurred to the date
of payment to Lender, shall constitute a portion of the Indebtedness, shall be
secured by the Loan Documents and shall be due and payable to Lender upon demand
therefor.

(d)        Interest shall accrue on any judgment obtained by Lender in
connection with its enforcement of the Loan at a rate of interest equal to the
Default Rate.

7.3.       No Waiver.  No delay or omission to exercise any remedy, right or
power accruing upon an Event of Default shall impair any such remedy, right or
power or shall be construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be deemed by Lender
to be expedient. A waiver of any Default or Event of Default shall not be
construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon.

7.4.       Application of Payments after an Event of Default.  Notwithstanding
anything to the contrary contained herein, during the continuance of an Event of
Default, all amounts received by Lender in respect of the Loan shall be applied
at Lender’s sole discretion either toward the components of the Indebtedness
(e.g., Lender’s expenses in enforcing the Loan, interest, principal and other
amounts payable hereunder), and the Note Components in such sequence as Lender
shall elect in its sole discretion, or toward the payment of Property expenses.

ARTICLE VIII

CONDITIONS PRECEDENT

8.1.       Conditions Precedent to Closing.  This Agreement shall become
effective on the date that all of the following conditions shall have been
satisfied (or waived by Lender), it being agreed that Lender’s funding of the
Loan shall constitute Lender’s agreement that such conditions have been
satisfied or waived unless the parties shall otherwise have agreed in writing:

 

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(a)        Loan Documents.  Lender shall have received a duly executed copy of
each Loan Document. Each Loan Document which is to be recorded in the public
records shall be in form suitable for recording.

(b)        Collateral Accounts.  Each of the Collateral Accounts shall have been
established with the Cash Management Bank and funded to the extent required
under Article III.

(c)        Opinions of Counsel.  Lender shall have received legal opinions
reasonably satisfactory to Lender.

(d)        Organizational Documents.  Lender shall have received all documents
reasonably requested by Lender relating to the existence of each Borrower, the
validity of the Loan Documents and other matters relating thereto, in form and
substance satisfactory to Lender, including:

(i)         Authorizing Resolutions.  A certified copy of the resolutions
approving and adopting the Loan Documents to be executed by Borrower and
authorizing the execution and delivery thereof.

(ii)        Organizational Documents.  Certified copies of the organizational
documents of each Borrower and, if applicable, any Single-Purpose Equityholder
(including any certificate of formation, certificate of limited partnership,
certificate of incorporation, operating agreement, limited partnership agreement
or by-laws), in each case together with all amendments thereto.

(iii)       Certificates of Good Standing or Existence.  Certificates of good
standing or existence for each Borrower and, if applicable, any Single-Purpose
Equityholder issued as of a recent date by its state of organization and by each
state in which one of the Properties is located.

(iv)       Certificates.  Original limited liability company or partnership
interest certificates, as the case may be, executed in blank for AFRT and
American Financial TRS, Inc.

(e)        Lease; Material Agreements.  Lender shall have received, with respect
to each Property (i) true and complete copies of all Material Agreements,
Leases, Ground Leases, recorded reciprocal easement agreements (and similar
documents) and (ii) all rent rolls and material contracts to the extent
available to Borrower without material cost or expense.

(f)         Lien Search Reports.  Lender shall have received satisfactory
reports of Uniform Commercial Code, tax lien, bankruptcy and judgment searches
conducted by a search firm acceptable to Lender with respect to the Properties
and each Borrower (including each Borrower’s immediate predecessor, if any, and
to the extent reasonably required, subsidiaries of each Borrower), such searches
to be conducted in such locations as Lender shall have requested.

(g)        Material Litigation.  Lender shall have received a schedule of all
material outstanding litigation that is not fully covered by insurance.

 

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(h)        No Default or Event of Default.  No Default or Event of Default shall
have occurred and be continuing on such date either before or after the
execution and delivery of this Agreement.

(i)         No Injunction.  No Legal Requirement shall exist, and no litigation
shall be pending or threatened, which in the good faith judgment of Lender would
enjoin, prohibit or restrain, or impose or result in the imposition of any
material adverse condition upon, the making or repayment of the Loan or the
consummation of the Transaction.

(j)         Representations.  The representations in this Agreement and in the
other Loan Documents shall be true and correct in all respects on and as of the
Closing Date with the same effect as if made on such date.

(k)        Estoppel Letters.  To the extent obtained by Borrower through the
exercise of reasonably diligent efforts, Borrower shall have delivered to Lender
estoppel certificates from each Tenant under a Lease and each lessor under a
Ground Lease, in each case, which has been identified by Lender prior to the
date hereof, each of which shall specify that Lender and its successors and
assigns may rely thereon and otherwise be in such form and substance as shall be
satisfactory to Lender.

(l)         Merger Agreement.  Lender shall have received a complete copy of the
executed Merger Agreement (including all exhibits thereto) and each amendment
thereto and all other related agreements.

(m)       No Material Adverse Effect.  No event or series of events shall have
occurred which Lender reasonably believes has had or is reasonably likely to
have a Portfolio Material Adverse Effect.

(n)        Transaction Costs.  Borrower shall have paid all transaction costs
(or provided for the direct payment of such transaction costs by Lender from the
proceeds of the Loan).

(o)        Insurance.  Lender shall have received certificates of insurance on
ACORD Form 28, demonstrating insurance coverage in respect of the Properties of
types, in amounts, with insurers and otherwise in compliance with the terms,
provisions and conditions set forth in this Agreement. Such certificates shall
indicate that Lender and its successors and assigns are named as additional
insured on each liability policy, and that each casualty policy and rental
interruption policy contains a loss payee and mortgagee endorsement in favor of
Lender, its successors and assigns.

(p)        Title.  Lender shall have received a marked, signed commitment to
issue, or a pro-forma version of, a Qualified Title Insurance Policy in respect
of each Mortgage Loan Property, listing only usual and customary permitted
exceptions and such other exceptions reasonably approved by Lender.

(q)        UCC Insurance.  Lender shall have received one or more UCC “Eagle-9”
title insurance policies insuring the equity pledges of the Loan Documents,
subject only to usual and customary permitted exceptions and other exceptions
reasonably approved by Lender, and a

 

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copy of the owner’s title insurance policy for each non-mortgaged Property, with
a mezzanine endorsement or the equivalent in favor of Lender if available
(except that Borrower shall not be required to purchase new or updated owners’
policies).

(r)        Zoning.  Lender shall have received zoning reports with respect to
(x) each Mortgage Loan Property, and (y) each other Property that Lender
reasonably determines necessary in order to syndicate the Loan, satisfy
regulatory requirements, resolve any material issues arising from Lender’s due
diligence, and/or pledge the Loan in connection with a repurchase or similar
facility.

(s)       Permits; Certificate of Occupancy.  Lender shall have received a copy
of all Permits necessary for the use and operation of each Property and the
certificate(s) of occupancy, if required, for each Property, all of which shall
be in form and substance reasonably satisfactory to Lender.

(t)        Engineering Report, Environmental Report and Appraisals.  Lender
shall have received existing appraisals, Environmental Reports and
engineering/seismic reports for each of the Properties, and shall have received
updates thereof with respect to (x) each Mortgage Loan Property, and (y) each
other Property that Lender reasonably determines necessary in order to syndicate
the Loan, satisfy regulatory requirements, resolve any material issues arising
from Lender’s due diligence, and/or pledge the Loan in connection with a
repurchase or similar facility. Providers of such reports shall be reasonably
approved by Lender. Each new appraisal shall conform to USPAP and FIRREA
guidelines.

(u)       Qualified Survey.  Lender shall have received a Qualified Survey with
respect to (x) each Mortgage Loan Property, and (y) each other Property that
Lender reasonably determines necessary in order to syndicate the Loan, satisfy
regulatory requirements, resolve any material issues arising from Lender’s due
diligence, and/or pledge the Loan in connection with a repurchase or similar
facility, which includes, without limitation, all such items as may be
reasonably required by Lender, together with a certification from a surveyor and
legal description for each Property reasonably acceptable to Lender.

(v)       Consents, Licenses, Approvals, etc.  Lender shall have received copies
of all consents, licenses and approvals, if any, required in connection with the
execution, delivery and performance by Borrower, and the validity and
enforceability, of the Loan Documents, and such consents, licenses and approvals
shall be in full force and effect.

(w)      Financial Information.  Lender shall have received (i) financial
information relating to the Sponsor, Borrower and the Properties which is
satisfactory to Lender, including current operating statements and historical
operating statements for the past three years, to the extent available to
Borrower without material cost or expense and (ii) a certified closing date
balance sheet for Borrower and Sponsor.

(x)       Annual Budget.  Lender shall have received the 2008 Annual Budget with
respect to the Properties.

 

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(y)      Closing Statement.  Lender shall have received a reasonably detailed
closing statement indicating all sources and uses of funds.

(z)       Additional Matters.  Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender. All corporate and other proceedings,
all other documents (including all documents referred to in this Agreement and
not appearing as exhibits to this Agreement) and all legal matters in connection
with the Loan shall be reasonably satisfactory in form and substance to Lender.

ARTICLE IX

MISCELLANEOUS

9.1.      Successors.  Except as otherwise provided in this Agreement, whenever
in this Agreement any of the parties to this Agreement is referred to, such
reference shall be deemed to include the successors and permitted assigns of
such party. All covenants, promises and agreements in this Agreement contained,
by or on behalf of Borrower, shall inure to the benefit of Lender and its
successors and assigns.

9.2.      GOVERNING LAW.

(A)      THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

(B)       ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER OR THE
SPONSOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION, PERFECTION OR
ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY LOAN
DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF NEW YORK) MAY BE INSTITUTED
IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. LENDER, BORROWER AND THE
SPONSOR HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND (iii) IRREVOCABLY CONSENT TO
SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE OR IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW, AT THE ADDRESS SPECIFIED IN SECTION 9.4.

9.3.      Modification, Waiver in Writing.  Neither this Agreement nor any other
Loan Document may be amended, changed, waived, discharged or terminated, nor
shall any consent or approval of Lender be granted hereunder, unless such
amendment, change, waiver, discharge, termination, consent or approval is in
writing signed by Lender.

 

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9.4.    Notices.  All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
by expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of delivery or attempted delivery, addressed as follows (or
at such other address and person as shall be designated from time to time by any
party to this Agreement, as the case may be, in a written notice to the other
parties to this Agreement in the manner provided for in this Section). ANY
NOTICE OF DEFAULT UNDER ARTICLE VII OR ANY SIMILAR PROVISION OF ANY OF THE OTHER
LOAN DOCUMENTS MUST PROVIDE, IN ORDER TO BE EFFECTIVE AS A NOTICE THEREUNDER,
THAT IT IS BEING GIVEN AS A NOTICE OF DEFAULT WHICH IF NOT CURED WITHIN THE
GRACE PERIOD CONTAINED IN THE LOAN DOCUMENTS WILL RESULT IN AN EVENT OF DEFAULT.
A notice shall be deemed to have been given when delivered or upon refusal to
accept delivery.

If to Lender:

Goldman Sachs Commercial Mortgage Capital, L.P.

6011 Connection Drive, Suite 550

Irving, Texas 75039

Attention: Michael Forbes

with copy to:

Goldman Sachs Mortgage Company

85 Broad Street, 11th Floor

New York, New York 10004

Attention: Daniel Ottensoser and Rene Theriault

with copy to

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York 10006

Attention: Michael Weinberger, Esq.

and

Citicorp North America, Inc.

388 Greenwich Street

New York, New York 10013

Attention: Mr. David Bouton

with copy to

Weil, Gotshal & Manges LLP

767 Fifth Avenue

 

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New York, New York 10153

Attention: Samuel M. Zylberberg, Esq. (EG)

If to Borrower:

c/o Gramercy Capital Corp.

420 Lexington Avenue, 19 th Floor

New York, New York 10170

Attention: Robert R. Foley, Chief Operating Officer

with copies to:

c/o Gramercy Capital Corp.

420 Lexington Avenue, 19th Floor

New York, New York 10170

Attention: Office of the General Counsel

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004-1980

Attention: Jonathan L. Mechanic, Esq.

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

9.6.        Headings.  The Article and Section headings in this Agreement are
included in this Agreement for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

9.7.        Assignment and Participation.

(a)         Except as explicitly set forth in Sections 2.1 and 2.2, Borrower may
not sell, assign or transfer any interest in the Loan Documents or any portion
thereof (including Borrower’s rights, title, interests, remedies, powers and
duties hereunder and thereunder).

 

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(b)        Lender and each assignee of all or a portion of the Loan shall have
the right from time to time in its discretion to sell one or more of the Notes
or any interest therein (an “Assignment”) and/or sell a participation interest
in one or more of the Notes (a “Participation”). Borrower agrees reasonably to
cooperate with Lender, at Lender’s request, in order to effectuate any such
Assignment or Participation. In the case of an Assignment, (i) each assignee
shall have, to the extent of such Assignment, the rights, benefits and
obligations of the assigning Lender as a “Lender” hereunder and under the other
Loan Documents, (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to an Assignment,
relinquish its rights and be released from its obligations under this Agreement,
and (iii) one Lender shall at all times serve as agent for all Lenders and shall
be the sole Lender to whom notices, requests and other communications shall be
addressed and the sole party authorized to grant or withhold consents hereunder
on behalf of the Lenders (subject, in each case, to appointment of a Servicer,
pursuant to Section 9.22, to receive such notices, requests and other
communications and/or to grant or withhold consents or waivers or give notices,
as the case may be) and to be the sole Lender to designate the account to which
payments shall be made by Borrower to the Lenders hereunder (and Borrower may
fully rely thereon, notwithstanding any contrary notice from any other Lender),
and (iv) any assigning Lender that no longer holds any portion of the Loan shall
deliver any Collateral held by it as Lender to the other Lenders or their
custodian and, if reasonably requested by Borrower, shall deliver notices
(prepared by Borrower and reasonably satisfactory to such assigning Lender) to
Tenants and/or the Cash Management Bank confirming such assignment. Goldman
Sachs Mortgage Company or, upon the appointment of a Servicer, such Servicer,
shall maintain, or cause to be maintained, as agent for Borrower, a register on
which it shall enter the name or names of the registered owner or owners from
time to time of the Notes. Borrower agrees that upon effectiveness of any
Assignment of any Note in part, Borrower will promptly provide to the assignor
and the assignee separate promissory notes in the amount of their respective
interests (but, if applicable, with a notation thereon that it is given in
substitution for and replacement of an original Note or any replacement
thereof), and otherwise in the form of such Note (and with such other changes as
may be reasonably required to reflect that such Note evidences only a portion of
the Loan and the provisions of clause (iii) above), upon return of the Note then
being replaced. The assigning Lender shall notify in writing each of the other
Lenders of any Assignment. Each potential or actual assignee, participant or
investor in a Securitization, and each Rating Agency, shall be entitled to
receive all information received by Lender under this Agreement. After the
effectiveness of any Assignment, the party conveying the Assignment shall
provide notice to Borrower and each Lender of the identity and address of the
assignee and the amount so assigned. Notwithstanding anything in this Agreement
to the contrary, after an Assignment, the assigning Lender (in addition to the
assignee) shall continue to have the benefits of any indemnifications contained
in this Agreement which such assigning Lender had prior to such assignment with
respect to matters occurring prior to the date of such assignment.

(c)        If, pursuant to this Section 9.7, any interest in this Agreement or
any Note is transferred to any transferee that is not a U.S. Person, the
transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to furnish to the transferor Lender either
Form W-8BEN or Form W-8ECI or any other form in order to establish an exemption
from, or reduction in the rate of, U.S. withholding tax on all interest payments
hereunder, and (ii) to agree (for the benefit of Lender and Borrower) to provide
the transferor Lender a new Form W-8BEN or Form W-8ECI or any forms reasonably
requested in order to

 

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establish an exemption from, or reduction in the rate of, U.S. withholding tax
upon the expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.

(d)        Borrower shall bear its own costs and expenses incurred in connection
with their compliance with any request by Lender under this Section 9.7.

(e)        Each Lender hereunder shall be individually and severally (and not
jointly) liable for the satisfaction of its obligations hereunder and under the
other Loan Documents.

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

9.9.       Preferences.  Lender shall have no obligation to marshal any assets
in favor of Borrower or any other party or against or in payment of any or all
of the obligations of Borrower pursuant to this Agreement, the Notes or any
other Loan Document. During the continuance of an Event of Default, Lender shall
have the continuing and exclusive right to apply or reverse and reapply any and
all payments by Borrower to any portion of the obligations of Borrower hereunder
and under the Loan Documents. To the extent Borrower makes a payment or payments
to Lender, which payment or proceeds or any portion thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the obligations hereunder or portion thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender.

9.10.     Remedies of Borrower.  If a claim or adjudication is made that Lender
or its agents have unreasonably delayed acting or acted unreasonably in any case
where by law or under this Agreement, the Notes, or the other Loan Documents,
any of such Persons has an obligation to act promptly or reasonably, Borrower
agrees that no such Person shall be liable for any monetary damages, and
Borrower’s sole remedy shall be limited to commencing an action seeking specific
performance, injunctive relief and/or declaratory judgment, except in any
instance in which it has been finally determined by a court of competent
jurisdiction that Lender’s action, delay or inaction has constituted gross
negligence, willful misconduct or an illegal act.

9.11.     Offsets, Counterclaims and Defenses.  All payments made by Borrower
hereunder or under the other Loan Documents shall be made irrespective of, and
without any deduction for, any setoffs or counterclaims. Borrower waives the
right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with the Notes, this Agreement, the other

 

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Loan Documents or the Indebtedness. Any assignee of Lender’s interest in the
Loan shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to the Loan.

9.12.     No Joint Venture.  Nothing in this Agreement is intended to create a
joint venture, partnership, tenancy-in-common, or joint tenancy relationship
between Borrower and Lender, nor to grant Lender any interest in any Mortgage
Loan Property other than that of mortgagee or lender.

9.13.     Conflict; Construction of Documents.  In the event of any conflict
between the provisions of this Agreement and the provisions of the Notes, the
Mortgages or any of the other Loan Documents, the provisions of this Agreement
shall prevail.

9.14.     Brokers and Financial Advisors.  Borrower represents that neither
Borrower nor Sponsor have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower agrees to indemnify and
hold Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind in any way relating to or arising from a claim by any
Person that such Person acted on behalf of Borrower in connection with the
transactions contemplated in this Agreement. The provisions of this Section 9.14
shall survive the expiration and termination of this Agreement and the repayment
of the Indebtedness.

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

9.16.     Estoppel Certificates.  Borrower and Lender each agrees at any time
and from time to time, to execute, acknowledge and deliver to the other, within
five Business Days after receipt of Lender’s or Borrower’s, as the case may be,
written request therefor, a statement in writing setting forth (A) the Principal
Indebtedness, (B) the date on which installments of interest and/or principal
were last paid, (C) in the case of Borrower’s estoppel, any offsets or defenses
to the payment of the Indebtedness, (D) in the case of Borrower’s estoppel, that
the Notes, this Agreement, and the other Loan Documents are valid, legal and
binding obligations, (E) that the Loan Documents have not been modified or if
modified, giving particulars of such modification, (F) in the case of Borrower’s
estoppel, that to Borrower’s knowledge, Borrower is not in default under the
Loan Documents (or specifying any such default), and in the case of Lender’s
estoppel, that Lender has not delivered a written notice of default (or
describing any such notice), and (G) such other matters as Lender or Borrower
may reasonably request. Any prospective purchaser of any interest in a Loan or
any actual or prospective purchaser or holder of any direct or indirect interest
in the Borrowers (to the extent permitted hereunder) shall be permitted to rely
on such certificate.

9.17.     Payment of Expenses.  Borrower shall reimburse Lender upon receipt of
written notice from Lender for (i) all reasonable out-of-pocket costs and
expenses incurred by Lender (or any of its Affiliates) in connection with the
origination and any post-closing restructuring of the Loan, including legal fees
and disbursements, accounting fees, the Intercreditor Reallocation Expenses and
the costs of the Appraisal, the Engineering Report, the Qualified Title
Insurance Policy, the Qualified Survey, the Environmental Report and any other

 

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third-party diligence materials; (ii) all reasonable out-of-pocket costs and
expenses incurred by Lender (or any of its Affiliates) in connection with
(A) monitoring Borrower’s ongoing performance of and compliance with Borrower’s
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including confirming compliance with environmental and insurance requirements,
in each case if and to the extent Lender has reasonable cause to suspect
noncompliance, (B) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement, the other Loan Documents and any other documents or matters
requested by Borrower or by Lender (C) filing and recording fees and expenses
and other similar expenses incurred in creating and perfecting the Liens in
favor of Lender pursuant to this Agreement and the other Loan Documents,
(D) enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, this Agreement, the other Loan
Documents or any Collateral, and (E) obtaining any Rating Confirmation required
or requested by Borrower hereunder; and (iii) all actual out-of-pocket costs and
expenses (including, if the Loan has been securitized and an Event of Default
has occurred, customary special servicing fees resulting therefrom) incurred by
Lender (or any of its Affiliates) in connection with the enforcement of any
obligations of Borrower, or a Default by Borrower, under the Loan Documents,
including any actual or attempted foreclosure, deed-in-lieu of foreclosure,
refinancing, restructuring or workout and any insolvency or bankruptcy
proceedings (including any applicable transfer taxes).

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

9.19.     Recourse.

(a)        The Loan shall be fully recourse to Borrower. No recourse shall be
had for the Loan against any other Person, including any Affiliate of Borrower
or any officer, director, partner or equityholder of Borrower or any such
Affiliate, except for (i) claims against Sponsor under the Guaranty and
(ii) claims against Borrower and Sponsor under the Environmental Indemnity.

(b)        Borrower shall indemnify Lender and hold Lender harmless from and
against any and all Damages to Lender (plus the legal and other expenses of
enforcing the obligations of Borrower under this Section 9.19) resulting from or
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following (the “Indemnified Liabilities”), which Indemnified Liabilities shall
be guaranteed by Sponsor, jointly and severally, pursuant to the Guaranty:

(i)        any intentional material physical Waste with respect to any Property
committed or permitted by any Borrower, the Sponsor or any of their respective
Affiliates;

(ii)       any fraud, willful misconduct or intentional material
misrepresentation committed by any Borrower, the Sponsor or any of their
respective Affiliates;

(iii)      the misappropriation by any Borrower, the Sponsor or any of their
respective Affiliates of any funds in violation of the Loan Documents (including
misappropriation of Revenues, Distributions, security deposits and/or Loss
Proceeds and the violation of the last sentence of Section 5.7(d));

(iv)      any breach by any Borrower or the Sponsor of any material
representation or covenant regarding environmental matters contained in this
Agreement or in the Environmental Indemnity;

(v)       the failure of any Borrower, at any time, to comply with
Single-Purpose Entity requirements hereunder, in any material respect;

(vi)      any failure to pay income tax liabilities of non pass-through entities
comprising any Borrower or its Affiliates;

(vii)     the failure of any Borrower to fully discharge prior to the Closing
Date any liabilities, contingent or otherwise, associated with assets that were
owned by Borrower or any of its Affiliates prior to the Closing Date (including
all employee liabilities), other than the Properties and direct or indirect
equity interests therein;

(viii)    failure to structure and consummate the Merger in a manner that does
not give rise to a shareholder lawsuit;

(ix)      any liability of AFRT or its subsidiaries under any recourse carveout
under any Encumbered Property Debt, guaranty or similar obligations, in each
case in respect of Borrower, AFRT, Operating Partnership or any holding company;

(x)       any failure by Borrower to cause each holder of Encumbered Property
Debt to add Lender as a party to whom all notices of default must be given under
the Encumbered Debt Documents; and any failure by Borrower to instruct each
holder of Encumbered Property Debt to accept any payment from or action taken by
Lender during the continuance of a default thereunder as if it were received
from or performed by the applicable Property Owner; and any failure by Borrower
to remit to any holder of Encumbered Property Debt any amount proffered by
Lender in order to cure a default thereunder pursuant to Section 5.21;

(xi)      any assumption fee, foreclosure fee or similar amount (and related
expense reimbursements) owed by Lender to any holder of Encumbered Property Debt
or

 

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related loan servicer as a result of, or in order to permit, a foreclosure or
transfer in lieu of foreclosure of Collateral; and

(xii)    any failure of the representation made in Section 9.14 to be true and
correct.

In addition to the foregoing (x) the Loan shall be fully recourse to Borrower
and Sponsor, jointly and severally, upon (i) any Transfer of Collateral or any
Property, voluntary or collusive Lien on Collateral or any Property, or Change
of Control which is prohibited hereunder or (ii) the occurrence of any filing by
any Borrower, Junior Mezzanine Borrower or Property Owner under the Bankruptcy
Code or any joining or colluding by any Borrower or any of their respective
Affiliates (including Sponsor) in the filing of an involuntary case in respect
of any Borrower, Junior Mezzanine Borrower or Property Owner under the
Bankruptcy Code; and (y) in the event AFRT shall fail to comply with
Section 5.24, the Loan shall be recourse to AFRT and Sponsor, jointly and
severally, in an amount equal to the Release Price of the applicable Property,
plus all related enforcement costs and any Damages resulting from a failure to
release such Property pursuant hereto.

9.20.  Right of Set-Off.  In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
each Lender may from time to time, without presentment, demand, protest or other
notice of any kind (all of such rights being hereby expressly waived), set-off
and appropriate and apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by any Lender (including branches,
agencies or Affiliates of Lender wherever located) to or for the credit or the
account of Borrower against the obligations and liabilities of Borrower to any
Lender hereunder, under the Notes, the other Loan Documents or otherwise,
irrespective of whether such Lender shall have made any demand hereunder and
although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of Lender subsequent thereto.

9.21.  Exculpation of Lender.  Lender neither undertakes nor assumes any
responsibility or duty to Borrower or any other party to select, review,
inspect, examine, supervise, pass judgment upon or inform Borrower or any third
party of (a) the existence, quality, adequacy or suitability of Appraisals of
the Properties or other Collateral, (b) any environmental report, or (c) any
other matters or items, including engineering, soils and seismic reports which
are contemplated in the Loan Documents. Any such selection, review, inspection,
examination and the like, and any other due diligence conducted by Lender, is
solely for the purpose of protecting Lender’s rights under the Loan Documents,
and shall not render Lender liable to Borrower or any third party for the
existence, sufficiency, accuracy, completeness or legality thereof.

9.22.    Servicer.  Lender may delegate any and all rights and obligations of
Lender hereunder and under the other Loan Documents to the Servicer upon notice
by Lender to Borrower, whereupon any notice or consent from the Servicer to
Borrower, and any action by Servicer on Lender’s behalf, shall have the same
force and effect as if Servicer were Lender.

 

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Lender shall bear the cost of all servicing fees, costs and expenses other than
those to which Lender is expressly entitled to reimbursement hereunder and under
the other Loan Documents, including without limitation, the Cooperation
Agreement.

9.23     Prior Agreements.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONTAIN
THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND THERETO IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND ALL PRIOR AGREEMENTS AMONG OR
BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN, INCLUDING ANY TERM SHEETS,
CONFIDENTIALITY AGREEMENTS AND COMMITMENT LETTERS, ARE SUPERSEDED BY THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT THAT ANY ORIGINATION FEE
SPECIFIED IN ANY TERM SHEET, COMMITMENT LETTER OR FEE LETTER SHALL BE AN
OBLIGATION OF BORROWER AND SHALL BE PAID AT CLOSING, AND ANY INDEMNIFICATIONS,
FLEX PROVISION, EXIT FEES AND THE LIKE PROVIDED FOR THEREIN SHALL SURVIVE THE
CLOSING).

 

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Lender and Borrower are executing this Agreement as of the date first above
written.

 

LENDER:

GOLDMAN SACHS MORTGAGE COMPANY, a

New York limited partnership

By:   

Goldman Sachs Real Estate Funding

Corp., its general partner

  By:    /s/ Authorized Signatory     Name:     Title:

CITICORP NORTH AMERICA, INC., a New York

corporation

By:    /s/ Authorized Signatory   Name:    Title:

 

 

[Signatures continue on following page]

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BORROWERS:

The entities listed on Schedule A to this

signature page

By:    /s/ Authorized Signatory   Name:   Title:

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

Schedule A to Signature Page

GKK Stars Acquisition LLC (DE)

American Financial Realty Trust (MD)

First States Group, L.P. (DE)

American Financial TRS, Inc. (DE)

First States Group, LLC (DE)

First States Investors 104 Holdings, L.P.

(DE)

First States Investors 240 Holdings, LLC

(DE)

First States Investors 241 Holdings, LLC

(DE)

First States Investors 3300 Holdings, LLC

(DE)

First States Investors 4000A, L.P. (DE)

First States Investors 4100, LLC (DE)

First States Investors 4600 Holdings, LLC

(DE)

First States Investors 5000, LLC (DE)

First States Investors 6000, LLC

First States Investors 801, L.P. (PA)

First States Investors 923 Holdings, L.P.

First States Investors 927 Holdings, LLC

First States Investors Asset Group A, L.P.

First States Investors GS Pool A Holdings,

LLC (DE)

First States Investors GS Pool B Holdings,

LLC (DE)

First States Investors, L.P. (DE)

First States Partners III, L.P. (DE)

First States Partners, L.P.

First States Properties, L.P. (PA)

First States Wilmington JV, L.P.