Exhibit 10.2

THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS AND PROVISIONS

LIMITING LENDER’S LIABILITY FOR NEGLIGENCE

LOAN AGREEMENT

made between

CIO 190, LIMITED PARTNERSHIP,

as Borrower

and

CIBC INC.,

as Lender

DATED: as of September 3, 2015

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of September 3 2015 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between CIBC INC., a Delaware corporation, having an address at
425 Lexington Avenue, New York, New York 10017, Attn: Real Estate Group
(together with its successors and assigns, “Lender”) and CIO 190, LIMITED
PARTNERSHIP, a Delaware limited partnership, having its principal place of
business at c/o City Office REIT, Inc., 8150 North Central Expressway, Suite
1255, Dallas, Texas 75206 (“Borrower”).

W I T N E S S E T H:

WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).

NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1.1        Definitions.

For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent:

“Interest Rate” shall mean Four and 79/100 percent (4.79%) per annum.

“Loan” shall mean the loan in the principal amount of up to FORTY-ONE MILLION
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($41,250,000.00) made by Lender to
Borrower pursuant to this Agreement.

“Monthly Payment Amount” shall mean, for any Payment Date, (a) if such Payment
Date is for an Interest Accrual Period that commenced during the Interest-Only
Period, interest on the outstanding principal balance of the Loan at the
Interest Rate for the number of days during the Interest Accrual Period ending
on such Payment Date, and (b) if such Payment Date is for an Interest Accrual
Period that commenced after the end of the Interest-Only Period, the amount of
Two Hundred Sixteen Thousand One Hundred and Seventy-Five and 19/100 Dollars
($216,175.19).

“Accounts Receivable Instruction” shall have the meaning set forth in
Section 3.1 hereof.

“Accounts Receivable Payor” shall have the meaning set forth in Section 3.1
hereof.

“ACMs” shall have the meaning set forth in Section 4.25 hereof.

“Added Fee Collateral” shall have the meaning set forth in Section 4.31(f)(ii)
hereof.

 

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“Added Fee Acquisition” and “Added Fee Acquisition Date” shall have the meanings
set forth in Section 4.31(f)(ii)(B) hereof.

“Additional Taxes” shall have the meaning set forth in Section 2.3(b) hereof.

“Affiliate” shall mean any person or entity which directly or indirectly through
one or more intermediaries (i) controls, is controlled by or is under common
control with a specified person or entity, or (ii) at least twenty-five percent
(25%) of the ownership interests in which are owned by a specified person or
entity and/or entities described in clause (i) above with respect thereto, or
(iii) owns (individually or with other entities described in clause (i) above)
at least twenty-five percent (25%) of the ownership interests in a specified
person or entity. For purposes of the definition of “Affiliate”, the terms
“control”, “controlled”, or “controlling” with respect to a specified person or
entity shall include, without limitation, (A) the ownership, control or power to
vote ten percent (10%) or more of (1) the outstanding shares of any class of
voting securities or (2) beneficial interests, of any such person or entity, as
the case may be, directly or indirectly, or acting through one or more persons
or entities, (B) the control in any manner over the general partner(s) or the
election of more than one director or trustee (or persons exercising similar
functions) of such person or entity, or (C) the power to exercise, directly or
indirectly, control over the management or policies of such person or entity.

“Amortization Term” shall mean a period of thirty (30) years.

“Annual Budget” shall have the meaning set forth in Section 3.8 hereof.

“Applicable Laws” shall have the meaning set forth in Section 4.1(h) hereof.

“Approved Annual Budget” shall mean each Annual Budget approved by Lender in
accordance with the terms of Section 3.8 of this Agreement.

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

“Available Cash” shall have the meaning set forth in Section 3.3 hereof.

“Bankruptcy Action” shall mean, with respect to any Person, to (i) institute
proceedings to be adjudicated bankrupt or insolvent; (ii) consent to the
institution of bankruptcy or insolvency proceedings against it; (iii) file a
petition seeking, or consenting to, reorganization or relief under any
applicable federal or state law relating to bankruptcy; (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of an entity or a substantial part of its property; (v) make
any assignment for the benefit of creditors; (vi) admit in writing its inability
to pay its debts generally as they become due or declare or effect a moratorium
on its debts; or (vii) take any action in furtherance of any such action.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from
time to time and any successor statute thereto.

“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and permitted assigns.

 

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“Business Day” or “business day” shall mean any day other than (a) a Saturday or
Sunday, or (b) a day on which banking and savings and loan institutions in the
State of New York are authorized or obligated by law or executive order to be
closed.

“Buyer” shall have the meaning set forth in Section 4.11 hereof

“Calculation Date” shall mean the last day of each calendar quarter during the
Term.

“Capital Expenditures” shall mean for any period, the amount expended for items
capitalized under generally accepted accounting principles, including
expenditures for building improvements or major repairs, as set forth in an
Approved Annual Budget.

“Cash Collateral Reserve” shall have the meaning set forth in Section 4.28
hereof.

“Cash Expenses” shall mean, for any period, the operating expenses for the
operation and maintenance of the Property as set forth in an Approved Annual
Budget to the extent that such expenses are actually incurred by Borrower,
excluding payments into the Impound Account, the Leasing Reserve, Replacement
Reserve and expenses for which Borrower shall be reimbursed from, or which shall
be paid for out of any such account or reserve.

“Cash Management Account” shall have the meaning set forth in Section 3.2
hereof.

“Cash Management Bank” shall have the meaning set forth in Section 3.2 hereof.

“Cash Management Commencement Date” shall mean any date on which a Cash
Management Period commences.

“Cash Management Period” shall commence upon the occurrence of (i) an Event of
Default, (ii) the commencement of a Low Debt Service Period, (iii) the
commencement of a United Healthcare Trigger Period, or (iv) the commencement of
a Parsons Trigger Period; and shall end if, with respect to a Cash Management
Period continuing pursuant to clause (i), the Event of Default commencing the
Cash Management Period has been cured and such cure has been accepted by Lender
(and no other Event of Default is then continuing), or, with respect to a Cash
Management Period continuing due to clause (ii), the Low Debt Service Period has
ended pursuant to the terms hereof, or, with respect to a Cash Management Period
continuing due to clause (iii), the United Healthcare Trigger Period has ended
pursuant to the terms hereof, or, with respect to a Cash Management Period
continuing due to clause (iv), the Parsons Trigger Period has ended pursuant to
the terms hereof. A Cash Management Period shall also continue for so long as
any New Mezzanine Loan is outstanding.

“Certificates” shall mean the securities issued in connection with a
securitization of the Loan.

“City Office REIT” shall mean City Office REIT, Inc., a Maryland corporation.

“Clearing Account” shall have the meaning set forth in Section 3.1 hereof.

“Clearing Bank” shall mean KeyBank, National Association, or any successor
Eligible Bank approved or appointed by Lender.

“Clearing Bank Agreement” shall mean that certain Lockbox-Deposit Account
Control Agreement (Springing) by and among Borrower, Lender and Clearing Bank,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, relating to the operation and maintenance of the
Clearing Account.

 

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

“Closing Statement” shall mean the loan closing statement prepared by Lender and
executed by Borrower and delivered to Lender in connection with the closing of
the Loan.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time or any successor statute.

“Collateral” shall mean the Property, the UCC Collateral, and any and all other
properties, rights, estates and interests now or at any time hereafter securing
the payment of the Debt and/or the other obligations of Borrower under the Loan
Documents.

“Contracts” shall mean, collectively, all contracts and agreements now or
hereafter entered into relating to the ownership or operation or management of
the Real Estate or the Improvements or any portion of them.

“Constituent Entity” shall mean with respect to any entity, (A) with respect to
any limited partnership, (1) any general partner of such limited partnership and
(2) any limited partner of such partnership which owns (or is owned by any
person or entity owning, holding or controlling, directly or indirectly) the
right to receive 50% or more of the income, distributable funds or losses of
such partnership; (B) with respect to any general partnership or joint venture,
any partner or venturer in such general partnership or joint venture; (C) with
respect to any corporation, (1) any officer or director of such corporation, and
(2) any person or entity which owns or controls 50% or more of any class of
stock of such corporation; (D) with respect to any limited liability company,
(1) any manager of such limited liability company, (2) any managing member of
such limited liability company, or the sole member of any limited liability
company having only one (1) member, and (3) any non-managing member of such
limited liability company which owns (or is owned by any person or entity
owning, holding or controlling, directly or indirectly) the right to receive 50%
or more of the income, distributable funds or losses of such limited liability
company; (E) any person or entity which controls any entity described in any of
foregoing clauses (A) through (D) of this definition; and (F) any entity which
is a “Constituent Entity” with respect to an entity which is a “Constituent
Entity” of the subject entity. For the purposes of clause (F) of this
definition, if entity “B” is a Constituent Entity of entity “A”, then any
Constituent Entity of “B” shall be deemed to be a Constituent Entity of any
entity of which “A” is a Constituent Entity.

“Control” and “Controlled by” shall, unless expressly noted, have the meanings
assigned to such terms in Rule 405 under the Securities Act of 1933, as amended.

“Controlling Entity” shall mean any general partner, manager, managing member or
(if applicable) sole member, of Borrower, as the case may be.

“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, the Note and this Agreement together with all interest accrued and unpaid
thereon and all other sums (including, without limitation, any prepayment fees,
if applicable) due to Lender in respect of the Loan under the Note, this
Agreement, the Mortgage and the other Loan Documents.

“Debt Service Constant” shall mean the constant derived using an interest rate
equal to the Interest Rate and an amortization schedule equal to the
Amortization Term.

 

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“Debt Service Coverage Ratio” shall mean, for any period, the ratio of
(A) Underwritten Net Cash Flow, to (B) an amount equal to the maximum principal
amount of the Loan multiplied (unless otherwise specified) by the Debt Service
Constant.

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

“Default Rate” shall mean the rate equal to the lesser of (a) the Maximum Legal
Rate, or (b) four percent (4%) above the Interest Rate.

“Defeasance” shall mean a release of the Property from the lien of the Mortgage
and other Loan Documents, and a substitution of the collateral for the Loan, all
in accordance with the provisions of Section 2.5 of this Agreement.

“Defeasance Collateral” shall mean direct, non-callable and non-prepayable
obligations of the United States of America or, at the option of Lender (and, if
a Secondary Market Transaction has then occurred, only if permitted under the
applicable Securitization Documents (or, if such permission is conditioned on
satisfaction of any conditions, only upon the satisfaction of all such
conditions)), other securities considered “government securities” within the
meaning of the Investment Company Act of 1940, as amended.

“Defeasance Date” shall have the meaning set forth in Section 2.5(a) hereof.

“Defeasance Deposit” shall mean funds sufficient to purchase or cause to be
purchased Defeasance Collateral in an amount that provides for payments prior,
but as close as possible, to all successive Payment Dates occurring after the
Defeasance Date through and including the Maturity Date, with each such payment
being equal to or greater than (1) the Monthly Payment Amount, and (2) with
respect to the payment due on the Maturity Date, the entire outstanding
principal balance of the Loan together with any interest accrued as of such date
and all other amounts payable pursuant to the Loan Documents.

“Defeasance Period” shall mean the period of time commencing on the first
Payment Date to occur on or after the date which is the earlier to occur of
(i) two (2) years after the “startup day”, within the meaning of
Section 860G(a)(9) of the Code, of the Trust, and (ii) four (4) years after the
date of this Agreement, and ending on the Lockout Release Date.

“Defeasance Security Agreement” shall mean a pledge and security agreement, in
form and substance satisfactory to Lender in its sole discretion (or, if the
Loan shall then be held by a REMIC or similar entity, satisfactory to the
Servicer thereof and satisfying all requirements of the agreements establishing
and/or governing such REMIC or similar entity), creating a first priority
security interest in favor of Lender in the Defeasance Deposit and the
Defeasance Collateral; among other things, such Defeasance Security Agreement
shall provide that any excess received by Lender on any Payment Date from the
Defeasance Collateral over the amounts payable by Borrower hereunder on such
Payment Date shall be refunded to Borrower promptly after the related Payment
Date.

“Deferred Maintenance” shall have the meaning set forth in Section 4.28 hereof.

“Direction Letter” shall mean any Tenant Direction Letter.

“Disbursement Instructions” shall have the meaning set forth in Section 3.2
hereof.

 

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“Early Termination Payment” shall have the meaning set forth in Section 4.28
hereof.

“Early Termination Reserve” shall have the meaning set forth in Section 4.28
hereof.

“Eligible Account” shall mean either (i) an account or accounts maintained with
an Eligible Bank or (ii) a Trust Account. Eligible Accounts may bear interest.

“Eligible Bank” shall mean a bank that (i) satisfies the Rating Criteria and
(ii) insures the deposits hereunder through the Federal Deposit Insurance
Corporation.

“Environmental Laws” shall mean local, state or federal law, rule or regulation
pertaining to environmental regulation, contamination or clean-up, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. §9601 et seq. and 40 CFR §302.1 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. §1251 et seq. and 40 CFR § 116.1
et seq.), those relating to lead based paint, and the Hazardous Materials
Transportation Act (49 U.S.C. §1801 et seq.), and the regulations promulgated
pursuant to said laws, all as amended.

“Environmental Report” shall mean the environmental report(s) prepared for
Lender in connection with the Loan.

“Equity Holder” shall mean any holder of any Equity Interest.

“Equity Interest” shall mean any direct or indirect ownership interest in
Borrower.

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

“Event of Default” shall have the meaning set forth in Section 5.1 hereof.

“Exchange Act” shall mean the Securities and Exchange Act of 1934, and the
regulations promulgated thereunder, as amended from time to time.

“Extraordinary Expense” shall mean an extraordinary operating expense or capital
expense not set forth in the Approved Annual Budget or allotted for in the
Replacement Reserve and/or the Leasing Reserve.

“Fee Real Estate” shall have the meaning set forth in Mortgage.

“First Interest Accrual Period” shall mean the period commencing on the Closing
Date and ending on, but excluding, the Payment Date first occurring after the
Closing Date.

“Fitch” shall mean Fitch, Inc.

“General Intangibles” shall mean, collectively, all present and future funds,
accounts, instruments, accounts receivable, documents, causes of action, claims,
general intangibles (including without limitation, trademarks, trade names,
servicemarks and symbols now or hereafter used in connection with any part of
the Real Estate or the Improvements, all names by which the Real Estate or the
Improvements may be operated or known, all rights to carry on business under
such names, and all rights, interest and privileges which Borrower has or may
have as developer or declarant under any covenants, restrictions or declarations
now or hereafter relating to the Real Estate or the Improvements) and all notes
or chattel paper now or hereafter arising from or by virtue of any transactions
related to the Real Estate or the Improvements.

 

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“Governmental Authority” shall mean, with respect to any person, any federal or
state government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal in each case, having jurisdiction over such
applicable person or such person’s property and any stock exchange on which
shares of capital stock of such person are listed or admitted for trading.

“Ground Lease” shall mean the ground lease described on Exhibit G as attached
hereto and by this reference made part hereof.

“Ground Lessor” means Granite 190 Center, Ltd., a Texas limited partnership, and
its successors and assigns as landlord under the Ground Lease.

“Ground Lessor’s Recognition Agreement” shall mean that certain Recognition,
Non-Disturbance and Attornment Agreement dated on or about the date hereof by
Ground Lessor and Borrower for the benefit of Lender.

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

“Guarantor” shall mean City Office REIT Operating Partnership, L.P., a Maryland
limited partnership.

“Guarantor Financial Covenants” shall mean those covenants set forth in
Section 5 of the Indemnity and Guaranty.

“Hazardous Substances” shall mean, collectively, all hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including, without
limitation, ACMs, asbestos, lead based paint, polychlorinated biphenyls,
petroleum products, flammable explosives, radioactive materials, infectious
substances or raw materials which include hazardous constituents) or any other
substances or materials which are included under or regulated by Environmental
Laws, or any molds, spores or fungus or other harmful microbial matter.

“Hazardous Substances Indemnity Agreement” shall mean that certain Hazardous
Substances Indemnity Agreement, dated as of the date hereof, from Borrower and
Guarantor to Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Impound Account” shall have the meaning set forth in Section 4.6 hereof.

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

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

“Independent Director” shall mean an individual who has prior experience as an
independent director, independent manager or independent member with at least
three years of employment experience

 

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and who is provided by a Recognized Independent Director Provider, and which
individual is duly appointed as an Independent Director and is not, and has
never been, and will not while serving as Independent Director be, any of the
following:

    (i)        a member, partner, equityholder, manager, director, officer or
employee of the Borrower (or, if applicable, the SPE Component Entity) or any of
their respective equityholders or Affiliates (other than as an Independent
Director that does not own any Equity Interest in Borrower or any Affiliate and
that is required by a creditor to be a single purpose bankruptcy remote entity);

    (ii)       a creditor, supplier or service provider (including provider of
professional services) to the Borrower, or any of its equityholders or
Affiliates (other than in connection with such person’s employment by the
related Recognized Independent Director Provider) to Borrower (or, if
applicable, to the SPE Component Entity) or Affiliates, in each case in the
ordinary course of its business) , provided that the fees that such individual
earns in any given year from serving as Independent Director of Borrower and any
Affiliates (or, if applicable, the portion of the salary paid to such person by
the related Recognized Independent Director Provider from such service)
constitutes (in the aggregate) less than five percent (5%) of such individual’s
annual income for that year;

    (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)
or is controlled by any of (i), (ii) or (iii) above.

The same persons may not serve as Independent Directors of Borrower and SPE
Component Entity or of any Equity Holder of Borrower.

“Insurance Premiums” shall have the meaning set forth in Section 4.6 hereof.

“Insurance Rating Requirements” shall mean that the insurer maintains either
(a) a rating of “A” by S&P, (b) a rating of “A2” by Moody’s, or (c) if not rated
by either Moody’s or S&P, a rating of A X from A.M. Best company.

“Interest Accrual Period” shall mean the First Interest Accrual Period and,
thereafter, the period from the first (1st) day of each calendar month through
and including the last day of such calendar month. Each Interest Accrual Period
shall end one (1) day prior to the related Payment Date.

“Interest-Bearing Reserve” shall have the meaning set forth in Section 4.30
hereof.

“Interest-Only Period” shall mean the forty-two (42) calendar month period
beginning on the first day of the first calendar month following the Closing
Date.

“Investor” shall mean any actual or potential purchaser, transferee, assignee,
servicer, participant or investor in a Secondary Market Transaction.

“Late Payment Charge” shall have the meaning set forth in Section 2.3(c) hereof.

“Lease” shall mean any lease (including, without limitation, the Ground Lease,
any oil, gas and mineral lease), sublease or subsublease, letting, license,
concession, occupancy or other agreement (whether written or oral and whether
now or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property, and (a) every modification, amendment or other agreement relating to
such lease, sublease, subsublease, or

 

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other agreement entered into in connection with such lease, sublease,
subsublease, or other agreement and (b) every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.

“Lease Modification” shall have the meaning set forth in Section 4.10 hereof.

“Leasing Commissions” shall have the meaning set forth in Section 4.28 hereof.

“Leasing Costs” shall have the meaning set forth in Section 4.28 hereof.

“Leasing Reserve” shall have the meaning set forth in Section 4.28 hereof.

“Lender” shall have the meaning set forth in the introductory paragraph hereof.
Any action that may be taken by Lender pursuant to this Agreement or any other
Loan Document (other than the obligation to advance the Loan on the Closing
Date), and any right or remedy granted to Lender pursuant to this Agreement or
any other Loan Document, may be exercised by a Servicer on behalf of Lender.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Indemnity and Guaranty, the Hazardous
Substances Indemnity Agreement and all other documents executed and/or delivered
in connection with the Loan, together with any and all renewals, amendments,
extensions and modifications thereof.

“Lockbox Address” shall have the meaning set forth in Section 3.1 hereof.

“Lockout Release Date” shall mean the Payment Date occurring two (2) months
prior to the Scheduled Maturity Date.

“Low Debt Service Period” shall commence if, as of any Calculation Date, the
Debt Service Coverage Ratio is less than 1.15:1.00 and shall end if the Property
has achieved a Debt Service Coverage Ratio of at least 1.20:1.00 for two
(2) consecutive Calculation Dates, as determined by Lender.

“Major Income Lease” shall have the meaning set forth in Section 4.10 hereof.

“Major Lease” shall mean any Lease demising in the aggregate more than the
lesser of (i) 20,000 rentable square feet or (ii) ten percent (10%) of the total
rentable square feet at the Property, including, without limitation, the Ground
Lease.

“Maturity Date” shall mean the Scheduled Maturity Date, or such earlier date on
which the final payment of principal of the Note becomes due and payable as
provided in this Agreement or the Note, whether at the Scheduled Maturity Date,
by declaration of acceleration, or otherwise.

“Maximum Legal Rate” shall have the meaning set forth in Section 2.2(d) hereof.

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

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

“New Mezzanine Loan” shall have the meaning set forth in Section 8.24 hereof.

 

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“Net Capital Expenditures” shall mean for any period the amount by which Capital
Expenditures during such period exceeds reimbursements for such items during
such period from any fund (including, but not limited to, the Leasing Reserve
and the Replacement Reserve) established pursuant to the Loan Documents.

“Non-Consolidation Opinion” shall mean an opinion of outside counsel (which
counsel shall be reasonably acceptable to Lender) to Borrower, Guarantor and
such of their Affiliates and Equity Holders as Lender may require, addressed to
Lender and in form and substance satisfactory to Lender, analyzing the
likelihood of substantive consolidation of one or more such Persons upon a
Bankruptcy Action by other of such Persons.

“Note” shall mean that certain Promissory Note, dated as of the date hereof, in
the principal amount of the Loan, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented, severed or otherwise
modified from time to time.

“Occupancy Conditions” shall mean the delivery by Borrower to Lender of evidence
reasonably satisfactory to Lender (which shall include an estoppel certificate
executed by the relevant Tenant(s)) that (A) the entire United Healthcare
Premises or the entire Parsons Premises, as applicable, is tenanted under one or
more Qualified Replacement Leases, (B) each such Tenant has accepted possession
and taken physical occupancy of the entire space demised to such Tenant and each
such Tenant is open for business, not “dark” and conducting normal business
operations from the United Healthcare Premises or the Parsons Premises, as
applicable, (C) all contingencies under all such Lease(s) to the effectiveness
of the Lease(s) and the commencement of the payment of full, unabated rent
thereunder have been satisfied (and such Tenant has actually commenced paying
full, unabated rent thereunder), (D) no defaults exist under any such Leases and
no Tenant (or its guarantor) under any such Lease is subject to a Bankruptcy
Action, (E) all Leasing Commissions payable in connection with any such Lease
have been paid and all Tenant Improvement obligations or other landlord
obligations of an inducement nature have either been completed or paid in full,
and Borrower has complied with all requirements of Section 4.29 hereof with
respect to the payment, performance and completion, as applicable, of such
Leasing Commissions and Tenant Improvements, and (F) any period of free rent,
rent concessions and/or partial rent abatements has expired.

“OFAC List” shall mean 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 accessible through the internet
website http://www.treasury.gov/ofac/downloads/t11sdn.pdf.

“Operating Account” shall have the meaning set forth in Section 3.1 hereof.

“Organizational Documents” shall mean, with respect to any entity, the documents
customarily used to form an entity and provide for its governance, as the same
may be amended from time to time, including, without limitation, (A) with
respect to a corporation, the articles of incorporation or certificate of
incorporation or charter, and the by-laws; (B) with respect to a limited
liability company, the articles of organization and the operating agreement; and
(C) with respect to a limited partnership, the certificate of limited
partnership and the limited partnership agreement.

“Other Charges” shall have the meaning set forth in Section 4.5 hereof.

“PACE Loan” shall mean (x) any “Property-Assessed Clean Energy loan” or (y) any
other indebtedness, without regard to the name given to such indebtedness, which
is (i) incurred for improvements to the Property for the purpose of increasing
energy efficiency, increasing use of renewable energy sources, resource
conservation or a combination of the foregoing and (ii) repaid through
multi-year assessments against the Property.

 

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“Parent” shall mean, with respect to Lender, any person controlling Lender.

“Parsons” shall mean Parsons Service Corporation and Parsons Service Company,
together with their permitted successors and/or assigns under the Parsons Lease.

“Parsons Cash Collateral Reserve” shall have the meaning set forth in
Section 4.28 hereof.

“Parsons Lease” shall mean, collectively, (i) that certain office lease dated
August 28, 2007, between GPI-M 190A, LP, as successor-in-interest to Granite 190
Center, Ltd., and Parsons, as tenant, together with and as amended by that
certain First Amendment dated September 27, 2007, that certain Acceptance of
Premises Memorandum dated January 29, 2008, that certain Second Amendment dated
April 22, 2008, that certain Third Amendment dated February 15, 2012, that
certain Acceptance of Premises Memorandum dated June 6, 2012, that certain
Fourth Amendment dated July 19, 2012, that certain Fifth Amendment dated
October 2, 2013, that certain Acceptance of Premises Memorandum dated April 11,
2014 and that certain Sixth Amendment dated July 28, 2015, covering
approximately 44,346 square feet of space at the Property at the date of this
Agreement, and (ii) that certain office lease dated February 25, 2013, between
GPI-M 190A, LP, as successor-in-interest to Granite 190 Center, Ltd., and
Parsons, as tenant, together with and as amended by that certain Acceptance of
Premises Memorandum dated February 25, 2013, that certain Acceptance of Premises
Memorandum dated July 14, 2014, that certain First Amendment dated July 14, 2014
and that certain Second Amendment dated July 29, 2015, covering approximately
2,578 square feet of space at the Property at the date of this Agreement, which
covers an approximate aggregate space of 41,031 square feet at the Property at
the date of this Agreement.

“Parsons Premises” shall mean that certain premises demised under the Parsons
Lease.

“Parsons Rent Reserve” shall have the meaning set forth in Section 4.28(j)
hereof.

“Parsons Trigger Period” (i) shall commence upon the occurrence of each of the
following (each time any of the following may occur):

(a)  Tenant under the Parsons Lease failing to provide written notice to
Borrower of its election to extend or renew the Parsons Lease for at least five
(5) years on or before 12 months prior to lease expiration at a base rent that
is not less than $25 per square foot;

(b)  the receipt by Borrower or Property Manager of notice from the Tenant under
the Parsons Lease that it is exercising its right to terminate the Parsons Lease
pursuant to the Parsons Lease;

(c)  the date that the Parsons Lease (or any material portion of the premises
demised thereunder) is surrendered, cancelled or terminated prior to its then
current expiration date (including any rejection in a Bankruptcy Action) or the
receipt by Borrower or Property Manager of notice from the Tenant under the
Parsons Lease of its intent to surrender, cancel or terminate the Parsons Lease
(or any material portion of the premises demised thereunder) prior to its then
current expiration date;

(d)  Tenant under the Parsons Lease failing to be in actual, physical occupancy
of the Parsons Premises, ceases operations and the conduct of its business
and/or such Tenant “going dark” in or vacating the Parsons Premises;

 

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(e)  any Bankruptcy Action of the Tenant under the Parsons Lease or any
guarantor of such Lease; or

(f)  an event of default under the Parsons Lease beyond any applicable notice
and cure periods; and

(ii) shall end upon the first to occur of the following:

(A) in the case of clauses (i)(a), (i)(b), (i)(c), and (i)(d) above, each of the
Occupancy Conditions with respect to the entire Parsons Premises have been
satisfied;

(B) in the case of clauses (i)(a) and (i)(b) above, provided no other Parsons
Trigger Period has commenced, the date on which Tenant under the Parsons Lease
irrevocably (A) exercises its renewal or extension option (or otherwise enters
into an extension agreement with Borrower and acceptable to Lender) with respect
to all of the Parsons Premises for a term of at least five (5) years at a base
rent that is not less than $25 per square foot or (B) revokes or rescinds in
writing all termination or cancellation notices with respect to the Parsons
Lease and re-affirms such Lease as being in full force and effect without any
default thereunder, as applicable, and such Tenant is (w) conducting normal
business operations at the entire Parsons Premises, (x) is paying full, unabated
rent under the Parsons Lease, (y) is not in default (beyond any applicable
notice and cure period) in accordance with the terms and conditions of the
Parsons Lease and (z) has executed and delivered estoppel certificates
reasonably acceptable to Lender certifying the foregoing and confirming that all
Leasing Costs and other material costs and expenses associated with the Parsons
Lease have, to the extent then due and owing, been paid in accordance with the
terms of the Parsons Lease;

(C) in the case of clause (i)(c) above, provided no other Parsons Trigger Period
has commenced, if such termination option is not validly exercised by the Tenant
under the Parsons Lease by the latest exercise date specified in the Parsons
Lease or is otherwise validly and irrevocably waived in writing by the Tenant
under the Parsons Lease, and such Tenant has re-affirmed the Parsons Lease as
being in full force and effect without any default thereunder;

(D) in the case of clause (i)(d) above, provided no other Parsons Trigger Period
has commenced, Borrower has provided to Lender evidence reasonably satisfactory
to Lender (which shall include a duly executed estoppel certificate from such
Tenant) that such Tenant is in actual, physical possession and occupancy of (and
re-commenced its operations at) the Parsons Premises, such Tenant is open to the
public for business during customary hours, not “dark” in Parsons Premises and
paying full, unabated rent without offset, and that there are no Leasing Costs
due and payable (or to become due or payable) and/or Tenant Improvements to be
completed in connection with such re-occupancy or re-commencement of operations
at the Parsons Premises;

(E) in the case of clause (i)(e) above, provided no other Parsons Trigger Period
has commenced, such Tenant and/or the guarantor under the Parsons Lease, as
applicable, is no longer insolvent or subject to any Bankruptcy Action and has
affirmed the Parsons Lease pursuant to final, non-appealable order of a court of
competent jurisdiction;

(F) in the case of clause (i)(f) above, provided no other Parsons Trigger Period
has commenced, Borrower has provided Lender with evidence reasonably
satisfactory to Lender (which can include a duly-executed estoppel certificate
from such Tenant) that all defaults under the Parsons Lease have been cured.

“Payment” shall have the meaning set forth in Section 2.3(e) hereof.

 

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“Payment Date” shall mean the first (1st) day of each month beginning with the
second calendar month following the date hereof (or, if the date of this
Agreement is the first of a calendar month, beginning with the first calendar
month following the date hereof).

“Payment Differential” shall mean an amount equal to (i) the Interest Rate less
the Reinvestment Yield, divided by (ii) twelve (12), and multiplied by (iii) the
principal sum outstanding under the Note after application of the Monthly
Payment Amount due on the Prepayment Date (or, if notwithstanding the provisions
of Section 2.4 hereof the Prepayment Date is not a Payment Date, on the Payment
Date immediately prior to the Prepayment Date), provided that the Payment
Differential shall in no event be less than zero.

“Permitted Exceptions” shall have the meaning set forth in Section 4.1(k)
hereof.

“Permitted Transfers” shall have the meaning set forth in Section 4.11 hereof.

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

“Prepayment Date” shall have the meaning set forth in Section 2.4(c) hereof.

“Prohibited Person” shall mean any Person identified on the OFAC List or any
other Person with whom a U.S. Person may not conduct business or transactions by
prohibition of Federal law or Executive Order of the President of the United
States of America.

“Prohibited Use” shall mean (A) operation of a dry-cleaning business, except for
a dry-cleaning business at which no on-site cleaning operations of any sort are
undertaken (i.e., a so-called drop-off station); (B) operation of a gasoline
station or automobile service or maintenance facility; (C) operation of a car
wash; (D) operation of any other business that, in the ordinary course of
operation, would be likely to result in the release of Hazardous Substances;
(E) the sale or display of obscene or pornographic material, the conduct of
obscene, nude or semi-nude live performances, or similar purposes; and (F) the
operation of a cabaret, dance hall or similar venue.

“Property” shall mean each parcel of real property (including, without
limitation, the Fee Real Estate, and the Leasehold Real Estate (each as defined
in the Mortgage), the Improvements thereon and all personal property owned by
Borrower and encumbered by the Mortgage, together with all rights pertaining to
such real property, personal property and Improvements, as more particularly
described in granting clause of the Mortgage.

“Property Management Agreement” shall have the meaning set forth in
Section 4.24(a) hereof.

“Property Manager” shall mean Transwestern Commercial Services Central Region,
L.P. d/b/a Transwestern, as property manager and leasing broker, or any
successor manager of the Property approved by Lender.

“Property Reserve Accounts” shall have the meaning set forth in Section 4.29
hereof.

“Prudent Lender Standard” shall, with respect to any matter, be deemed to have
been met if the matter in question (i) prior to a Secondary Market Transaction,
is acceptable to Lender in Lender’s sole

 

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discretion, applying standards comparable to those used by Lender in similar
commercial mortgage loans, and (ii) after a Secondary Market Transaction, (A) if
permitted by REMIC requirements applicable to such matter, would be reasonably
acceptable to Lender or (B) if the Lender discretion in the foregoing subsection
(A) is not permitted under such applicable REMIC requirements, would be
acceptable to a prudent lender of securitized commercial mortgage loans.

“Qualified Replacement Lease” shall have the meaning set forth in Section 4.28
hereof.

“Qualified Transferee” shall mean a Person that (i) is a real estate investment
trust, a bank, saving and loan association, investment bank, insurance company,
trust company, commercial credit corporation, pension plan, pension fund or
pension advisory firm, government entity or plan, investment company registered
under the Investment Company Act of 1940, as amended, or exempt or excluded from
resignation or regulation thereunder pursuant to such Act and the rules
thereunder, money management firm or a “qualified institutional buyer” within
the meaning of Rule 144A under the Securities Act, as amended, or an
institutional “accredited investor” within the meaning of Regulation D under the
Securities Act, as amended, (ii) has total assets (in name or under management)
in excess of $400,000,000.00 and (except with respect to a pension advisory firm
or similar fiduciary) capital/statutory surplus or shareholder’s equity of
$200,000,000.00, (iii) is not the subject of, and has no subsidiary under its
Control that is the subject of, a proceeding involving bankruptcy, insolvency,
reorganization or relief of debtors, (iv) has not been convicted in a criminal
proceeding for a felony or a crime involving moral turpitude and is not reputed
to have substantial business or other affiliations with an organized crime
figure, (v) has no material outstanding litigation pending against such Person,
and has no material regulatory actions pending against such Person or any Person
under its Control, (vi) has not, and has no subsidiary under its Control that
has, defaulted under its obligations with respect to any other indebtedness in a
manner which is not reasonably acceptable to Lender and (vii) has passed all
OFAC, Patriot Act and similar compliance requirements (including, without
limitation, so as to cause the representations set forth in Section 4.1(nn)
hereof to be true, correct and complete as of the relevant date).

“Rating Agency” shall mean Fitch, Moody’s, S&P and/or any other
nationally-recognized statistical rating organizations, as designated by Lender
from time to time, including, without limitation, to provide a rating on any
proposed Defeasance Collateral, Borrower, the Loan or any securities evidencing
an interest in, inter alia, a Trust or other entity which is the holder of the
Note.

“Rating Confirmation” shall mean, as to any proposed action, written
confirmation from each applicable Rating Agency that the proposed action will
not result in a downgrade, qualification or withdrawal of any rating issued on
securities evidencing an ownership interest in the Loan that was in effect
immediately prior to such proposed action.

“Rating Criteria” with respect to any Person shall mean that (i) the short-term
unsecured debt obligations or commercial paper of which are rated at least A-1
by S&P, P-1 by Moody’s and F-1+ by Fitch, if deposits are held in the account
for a period of less than 30 days or (ii) the long-term unsecured debt
obligations of which are rated at least “AA” by S&P and Fitch and Aa by Moody’s,
if deposits are held in the account for a period of 30 days or more.

“Real Estate” shall mean that certain real property (fee and leasehold) more
particularly described on Exhibit A attached hereto and incorporated herein by
this reference.

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

 

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“Recognized Independent Director Provider” shall mean one or more of CT
Corporation, Corporation Service Company, National Registered Agents, Inc.,
Wilmington Trust Company, Stewart Management Company, Lord Securities
Corporation or another nationally-recognized company approved by Lender (which
approval shall not unreasonably be withheld if such company is then generally
acceptable both to the Rating Agencies and in the market for Secondary Market
Transactions involving loans comparable to the Loan), in each case that is not
an Affiliate of Borrower or the related SPE Component Entity and that provides
professional independent directors and other corporate services in the ordinary
course of its business.

“Reinvestment Yield” shall mean an amount equal to the lesser of (i) the yield
on the U.S. Treasury issue (primary issue) with a maturity date closest to the
Maturity Date, or (ii) the yield on the U.S. Treasury issue (primary issue) with
a term equal to the remaining average life of the indebtedness evidenced by the
Note, as determined by Lender, with each such yield being based on the bid price
for such issue as published in the Wall Street Journal on the date that is
fourteen (14) days prior to the Prepayment Date (or, if such bid price is not
published on that date, the next preceding date on which such bid price is so
published) and converted to a monthly compounded nominal yield.

“REMIC” shall mean a “real estate mortgage investment conduit”, within the
meaning of Section 860D of the Internal Revenue Code of 1986, as amended from
time to time (or any successor statute), or any substantially similar vehicle
for the holding of real estate indebtedness without the incurrence of taxation.

“Renewal Lease” shall have the meaning set forth in Section 4.10 hereof.

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

“Rent Roll” shall mean a schedule of all Leases affecting the Property,
accurately and completely setting forth in all material respects for each Lease
the following: the name of the Tenant, the space demised to such Tenant, the
Lease expiration date, extension and renewal provisions, cancellation and
termination provisions, the base rent payable, the security deposit held
thereunder and any other material provisions of such Lease customarily included
in similar schedules.

“Replacement Ground Lease” shall have the meaning set forth in Section 4.1(rr)
hereof.

“Replacement Reserve” shall have the meaning set forth in Section 4.28 hereof.

“Reserves” shall mean, collectively, all cash funds, deposit accounts and other
rights and evidence of rights to cash, now or hereafter created or held by
Lender pursuant to this Agreement or any other of the Loan Documents, including,
without limitation, all funds now or hereafter on deposit in the Impound
Account, and in the reserves required pursuant to Section 4.28 hereof.

“Restoration” shall have the meaning set forth in Section 4.7 hereof.

 

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“Sale” shall have the meaning set forth in Section 4.11 hereof.

“S&P” shall mean Standard & Poor’s Ratings Group.

“Scheduled Maturity Date” shall mean October 1, 2025.

“Secondary Market Transaction” shall mean (1) any sale of this Agreement, the
Mortgage, Note and other Loan Documents to one or more Investors as a whole
loan, (2) a participation of the Debt to one or more Investors, (3) a
securitization of the Loan, (4) any other sale or transfer of the Debt or any
interest therein to one or more Investors.

“Securities Act” shall mean the Securities Act of 1933, and the regulations
promulgated thereunder, as amended from time to time.

“Securitization Closing Date” shall mean the date upon which a Secondary Market
Transaction closes, if any.

“Securitization Documents” shall mean the documents effecting any Secondary
Market Transaction in which the Loan (or any portion of, or interest in, the
Loan) may be included, and/or the documents creating and/or governing any Trust
created thereby, and/or any other document, instrument or agreement in
connection with the foregoing establishing conditions for the administration
and/or servicing of the Loan following any Secondary Market Transaction.

“Servicer” shall mean 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 shall be so appointed, the term “Servicer” shall be deemed to refer to
Lender.

“SPE Component Entity” shall mean a corporation or an SPE-Qualifying LLC that
satisfies all of the following at all times: (i) the sole asset of such entity
is its ownership interest in Borrower, and such ownership interest represents
not less than one-half of one percent (0.5%) direct ownership in Borrower;
(ii) such entity has, at all times, at least one (1) Independent Director;
(iii) includes, in its Organizational Documents, provisions substantially
similar to clauses (i) through (v), inclusive, of Section 4.27(c) of this
Agreement; (iv) includes, in its Organizational Documents, provisions
substantially similar to Section 4.27(d), (g), and (i) of this Agreement;
(v) such entity has no debt (whether secured or unsecured, direct or contingent,
including pursuant to any guaranty); and (vi) such entity agrees in writing with
Lender to comply with the relevant provisions of this Agreement.

“SPE-Qualifying LLC” shall mean a limited liability company formed under the
laws of the State of Delaware or the laws of the State of Maryland which (i) at
all times has at least one springing member that, upon the dissolution of all of
other members of (or the withdrawal or the disassociation of all other members
from) such limited liability company, shall immediately become the sole member
of such limited liability company, and (ii) otherwise meets the criteria then
applicable to such entities as established by the Rating Agencies and/or
generally applicable to Secondary Market Transactions, and (iii) generally meets
the requirements of Section 4.27 of this Agreement.

“Subaccounts” shall have the meaning set forth in Section 3.2 hereof.

“Successor Guarantor” shall have the meaning set forth in Section 4.11 hereof

“Taxes” shall have the meaning set forth in Section 4.5 hereof.

 

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“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any
portion of the Property under a Lease.

“Tenant Direction Letter” shall have the meaning set forth in Section 3.1
hereof.

“Tenant Financial Information” shall have the meaning set forth in Section 4.10
hereof.

“Tenant Improvements” shall have the meaning set forth in Section 4.28 hereof.

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

“Terminating Tenant” shall have the meaning set forth in Section 4.28 hereof.

“Title Insurance Policy” shall have the meaning set forth in Section 4.1(k)
hereof.

“Transfer” shall have the meaning set forth in Section 4.11 hereof.

“Trust” shall mean the REMIC (or other transferee pursuant to a Secondary Market
Transaction, as to which interests are conveyed to one or more Investors) that
holds the Loan.

“Trust Account” shall mean a segregated trust account maintained by a corporate
trust department of a federal depository institution or a state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulations §9.10(B) which
has corporate trust powers and is acting in its fiduciary capacity.

“UCC Collateral” shall have the meaning set forth in the Mortgage.

“Underwritten Net Cash Flow” shall mean, for any period, the underwritten net
cash flow for the Property (calculated in accordance with Lender’s underwriting
standards for financings similar to the Loan) for such period, annualized,
reflecting (i) an assumed vacancy rate equal to the greater of (1) the actual
vacancy rate at the Property, (2) the market vacancy in the Richardson/Plano
Class A office submarket, or (3) a five percent (5.0%) vacancy rate) and
(ii) operating expenses (including such reserves for tenant improvements,
leasing commissions, repairs and replacements, taxes and insurance premiums as
Lender requires), and (iii) management fees (equal to the greater of the actual
management fees paid by Borrower or a three percent (3.0%) management fee), and
(iv) an ongoing replacement reserve equal to $0.20 per square foot, and (v) a
rollover reserve equal to $230,601.00 per annum.

“United Healthcare” shall mean United HealthCare Services, Inc., together with
its permitted successors and/or assigns under the United Healthcare Lease.

“United Healthcare Cash Collateral Reserve” shall have the meaning set forth in
Section 4.28 hereof.

“United Healthcare Lease” shall mean, collectively, (i) that certain office
lease dated April 12, 2012, between GPI-M 190A, LP, as landlord, and United
Healthcare, as tenant, together with and as amended by that that certain
Acceptance of Premises Memorandum dated October 5, 2012, that certain First
Amendment dated March 1, 2013 and that certain Second Amendment dated
February 16, 2015, covering approximately 50,908 square feet of space at the
Property at the date of this Agreement, and (ii) that certain office lease dated
March 12, 2008, between GPI-M 190B, LP, as landlord, and United

 

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Healthcare, as tenant, together with and as amended by that certain Acceptance
of Premises Memorandum dated October 31, 2008, that certain notice letter dated
June 25, 2010, that certain Release and Indemnity Agreement dated March 2013 and
that certain First Amendment dated February 16, 2015, covering approximately
147,049 square feet of space at the property at the date of this Agreement,
which covers an approximate aggregate space of 197,957 square feet at the
Property at the date of this Agreement.

“United Healthcare Premises” shall mean that certain premises demised under the
United Healthcare Lease.

“United Healthcare Rent Reserve” shall have the meaning set forth in
Section 4.28(k) hereof

“United Healthcare Trigger Period” (i) shall commence upon the occurrence of
each of the following (each time any of the following may occur):

(a) Tenant under the United Healthcare Lease failing to provide written notice
to Borrower of its election to extend or renew the United Healthcare Lease for
at least five (5) years on or before 15 months prior to lease expiration at a
base rent that is not less than $24 per square foot;

(b) the receipt by Borrower or Property Manager of notice from the Tenant under
the United Healthcare Lease that it is exercising its right to terminate the
United Healthcare Lease pursuant to the United Healthcare Lease, excluding such
right to terminate with relation only to the termination option specifically
provided in that certain Second Amendment dated February 16, 2015 relating to
the 50,908 square feet in building one at the Property unless such termination
would result in a Low Debt Service Period;

(c) the date that the United Healthcare Lease (or any material portion of the
premises demised thereunder) is surrendered, cancelled or terminated prior to
its then current expiration date (including any rejection in a Bankruptcy
Action) or the receipt by Borrower or Property Manager of notice from the Tenant
under the United Healthcare Lease of its intent to surrender, cancel or
terminate the United Healthcare Lease (or any material portion of the premises
demised thereunder) prior to its then current expiration date;

(d) Tenant under the United Healthcare Lease failing to be in actual, physical
occupancy of the United Healthcare Premises, ceases operations and the conduct
of its business and/or such Tenant “going dark” in or vacating the United
Healthcare Premises;

(e) any Bankruptcy Action of the Tenant under the United Healthcare Lease or any
guarantor of such Lease; or

(f) an event of default under the United Healthcare Lease beyond any applicable
notice and cure periods; and

(ii) shall end upon the first to occur of the following:

(A) in the case of clauses (i)(a), (i)(b), (i)(c), and (i)(d) above, each of the
Occupancy Conditions with respect to the entire United Healthcare Premises have
been satisfied;

(B) in the case of clauses (i)(a) and (i)(b) above, provided no other United
Healthcare Trigger Period has commenced, the date on which Tenant under the
United Healthcare Lease irrevocably (A) exercises its renewal or extension
option (or otherwise enters into an extension

 

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agreement with Borrower and acceptable to Lender) with respect to all of the
United Healthcare Premises for a term of at least five (5) years at a base rent
that is not less than $24 per square foot or (B) revokes or rescinds in writing
all termination or cancellation notices with respect to the United Healthcare
Lease and re-affirms such Lease as being in full force and effect without any
default thereunder, as applicable, and such Tenant is (w) conducting normal
business operations at the entire United Healthcare Premises, (x) is paying
full, unabated rent under the United Healthcare Lease, (y) is not in default
(beyond any applicable notice and cure period) in accordance with the terms and
conditions of the United Healthcare Lease and (z) has executed and delivered
estoppel certificates reasonably acceptable to Lender certifying the foregoing
and confirming that all Leasing Costs and other material costs and expenses
associated with the United Healthcare Lease have, to the extent then due and
owing, been paid in accordance with the terms of the United Healthcare Lease;

(C) in the case of clause (i)(c) above, provided no other United Healthcare
Trigger Period has commenced, if such termination option is not validly
exercised by the Tenant under the United Healthcare Lease by the latest exercise
date specified in the United Healthcare Lease or is otherwise validly and
irrevocably waived in writing by the Tenant under the United Healthcare Lease,
and such Tenant has re-affirmed the United Healthcare Lease as being in full
force and effect without any default thereunder;

(D) in the case of clause (i)(d) above, provided no other United Healthcare
Trigger Period has commenced, Borrower has provided to Lender evidence
reasonably satisfactory to Lender (which shall include a duly executed estoppel
certificate from such Tenant) that such Tenant is in actual, physical possession
and occupancy of (and re-commenced its operations at) the United Healthcare
Premises, such Tenant is open to the public for business during customary hours,
not “dark” in United Healthcare Premises and paying full, unabated rent without
offset, and that there are no Leasing Costs due and payable (or to become due or
payable) and/or Tenant Improvements to be completed in connection with such
re-occupancy or re-commencement of operations at the United Healthcare Premises;

(E) in the case of clause (i)(e) above, provided no other United Healthcare
Trigger Period has commenced, such Tenant and/or the guarantor under the United
Healthcare Lease, as applicable, is no longer insolvent or subject to any
Bankruptcy Action and has affirmed the United Healthcare Lease pursuant to
final, non-appealable order of a court of competent jurisdiction; or

(F) in the case of clause (i)(f) above, provided no other United Healthcare
Trigger Period has commenced, Borrower has provided Lender with evidence
reasonably satisfactory to Lender (which can include a duly-executed estoppel
certificate from such Tenant) that all defaults under the United Healthcare
Lease have been cured.

“Vacated Space” shall have the meaning set forth in Section 4.28 hereof.

“Yield Maintenance Amount” shall mean the present value of a series of payments
each equal to the Payment Differential and payable on each Payment Date over the
remaining original term of the Loan and, with respect to the principal balance
of the Note due to be outstanding on such date, on the Maturity Date, discounted
at the Reinvestment Yield for the number of months remaining as of the date of
such prepayment to each such Payment Date and the Maturity Date, respectively.

 

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ARTICLE II

GENERAL TERMS

2.1         Loan Commitment; Disbursement to Borrower.

(a)        Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender hereby agrees to make and Borrower hereby
agrees to borrow the Loan.

(b)        Disbursement of Loan to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan.

(c)        Use of Proceeds. Borrower shall use the proceeds of the Loan as set
forth on Closing Statement.

(d)        No Reborrowing of Amounts Repaid. Any amount borrowed and repaid in
respect of the Loan may not be reborrowed.

(e)        The Note, this Agreement, the Mortgage and Loan Documents. The Loan
shall be evidenced by the Note and this Agreement and secured by the Mortgage,
the Assignment of Leases and the other Loan Documents.

2.2        Interest Rate.

(a)        Interest Generally. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date to the Maturity Date at the Interest
Rate. Borrower shall pay to Lender on each Payment Date the interest accrued on
the Loan for the preceding Interest Accrual Period.

(b)        Interest Calculation. Interest on the outstanding principal balance
of the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year by (c) the outstanding
principal balance of the Loan.

(c)        Default Rate. During the existence of an Event of Default, Borrower
shall pay interest on the entire unpaid principal sum and any other amounts due
under the Loan Documents at the Default Rate. The Default Rate shall be computed
from the occurrence of an Event of Default until the cure of all Event(s) of
Default then continuing. Amounts of interest accrued at the Default Rate shall
constitute a portion of the Debt, and shall be deemed secured by the Loan
Documents. This clause, however, shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default.

(d)        Usury Savings. This Agreement, the Note and the other Loan Documents
are subject to the express condition that at no time shall Borrower be obligated
or required to pay interest on the principal balance of the Loan at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the maximum interest rate which Borrower is permitted by applicable
law to contract or agree to pay (the “Maximum Legal Rate”). If, by the terms of
this Agreement or the other Loan Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder. All sums paid or agreed to be paid to Lender

 

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for the use, forbearance, or detention of the sums due under the Loan, shall, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Loan until payment in full so that
the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.

2.3         Loan Payment.

(a)         Payments Generally. If any payment hereunder or under any Loan
Document becomes due and payable on a day other than a Business Day, such
payment shall be payable on the next Business Day (but the passing of any grace
period shall be measured from the original date on which such payment was due
and payable). All amounts due pursuant to this Agreement and the other Loan
Documents shall be payable without setoff, counterclaim, defense or any other
deduction whatsoever.

(b)         Principal and Interest Payments. Payments of principal and interest
under the Loan, calculated in accordance with the terms hereof, shall be due and
payable (without notice or demand) as follows:

(i)        interest only at the Interest Rate in effect for the First Interest
Accrual Period shall be due and payable concurrently with the making of the
advance of the principal balance of the Loan, as shown on the Closing Statement;

(ii)       for each Interest Accrual Period following the First Interest Accrual
Period, Borrower shall pay to Lender the Monthly Payment Amount on the related
Payment Date, to be applied as set forth in Section 2.3(e) of this Agreement;
and

(iii)      the entire outstanding principal amount of the Loan, together with
all accrued and unpaid interest and any other charges due thereon and all other
sums due and payable pursuant to this Agreement and/or the other Loan Documents,
shall be due and payable on the Maturity Date.

Payments made by Borrower under this Agreement shall be made free and clear of,
and without reduction for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding income and franchise taxes of the
United States of America or any political subdivision or taxing authority
thereof or therein (such non-excluded taxes being called “Additional Taxes”). If
any Additional Taxes are required to be withheld from any amounts payable to
Lender hereunder or under any of the other Loan Documents, the amounts so
payable to Lender shall be increased to the extent necessary to yield to Lender
(after payment of all Additional Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement.

(c)         Late Payment Charge. If any Monthly Payment Amount or any other sums
due under the Loan Documents (excluding only the outstanding principal due on
the Maturity Date) is not paid by Borrower by the date on which it is due (after
giving effect to any applicable notice, cure and/or grace period set forth in
Section 5.1(a) below), Borrower shall pay to Lender upon demand an amount equal
to the lesser of five percent (5%) of such unpaid sum or the maximum amount
permitted by applicable law (the “Late Payment Charge”) in order to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment. Any
such amount shall be secured by the Mortgage and the other Loan Documents to the
extent permitted by applicable law.

 

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(d)         Method and Place of Payment. Payments shall be paid by Borrower,
without set-off or counterclaim, by wire transfer to Lender at 425 Lexington
Avenue, Attention: Agency Services, New York, New York 10017, or to such other
location or account as Lender may specify to Borrower from time to time, in
federal or other immediately available funds in lawful money of the United
States of America, not later than 12:00 noon, New York City time, on the date
due. If the date for any payments of principal is extended on account of the
foregoing or on account of operation of law or otherwise, interest thereon shall
be payable at the then applicable rate during such extension.

(e)         Application of Payments.

(i)        Except during the continuance of an Event of Default, all proceeds of
any repayment, including prepayments, of the Loan (a “Payment”) shall be applied
to pay: (1) first, any costs and expenses of Lender (and any Servicer) required
to be reimbursed under the terms of the Loan Documents; (2) second, to any Late
Payment Charges and accrued and unpaid interest payable at the Default Rate;
(3) third, accrued and unpaid interest payable at the Interest Rate; (4) fourth,
any other amounts then due and owing under the Loan Documents (including,
without limitation, payments to any Reserve required hereunder); and (5) fifth,
to the outstanding principal amount of the Loan. After the occurrence and during
the continuation of an Event of Default, all proceeds of repayment, including
any payment or recovery on the Collateral, shall be applied in such order and in
such manner as Lender shall elect in Lender’s sole and absolute discretion.

(ii)       To the extent that Borrower makes a Payment or Lender receives any
Payment or proceeds for Borrower’s benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
obligations of Borrower hereunder intended to be satisfied shall be revived and
continue as if such Payment or proceeds had not been received by Lender.

2.4         Prepayment Restrictions.

(a)         Restriction on Prepayment. The principal balance of the Loan may not
be prepaid in whole or in part (except with respect to the application of
casualty or condemnation proceeds, as to which the provisions of Section 2.4(e)
shall apply) prior to the Lockout Release Date. From and after the Lockout
Release Date, the Loan may be prepaid in whole only, and not in part, in
accordance with Section 2.4(c) of this Agreement. Notwithstanding the foregoing,
if an Event of Default is continuing at the time of prepayment of the Loan, then
the provisions of Section 2.4(d) of this Agreement shall apply.

(b)         Restriction on Defeasance. Borrower may effect a Defeasance only as
set forth in Section 2.5 below.

(c)         Conditions for Prepayment. On the Lockout Release Date, or at any
time thereafter, provided no Event of Default exists, the principal balance of
the Loan may be prepaid, in whole but not in part (except with respect to the
application of casualty or condemnation proceeds), on any Payment Date upon not
less than thirty (30) days nor more than ninety (90) days prior written notice
to Lender specifying the Payment Date on which prepayment is to be made (the
“Prepayment Date”), provided that such prepayment is accompanied by payment of
(i) any costs and expenses of Lender required to be reimbursed under the terms
of the Loan Documents, (ii) interest accrued and unpaid on the principal balance
of the Loan to and including the Prepayment Date, and (iii) all other sums then
due under this Agreement and the other Loan Documents. If any such notice of
prepayment is given, the principal balance of the Loan that is the subject of
such notice of prepayment and the other sums required under this paragraph shall
be due and payable on the Prepayment Date.

 

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(d)         Prepayment During the Continuation of an Event of Default. If
prepayment of the Loan, in whole or in part, occurs at any time when an Event of
Default shall be continuing (irrespective of whether foreclosure proceedings
have been commenced) prior to the Lockout Release Date, then in addition to the
payment of the amounts specified in clauses (i) through (iii) of Section 2.4(c)
above, Borrower shall also pay to Lender a prepayment fee equal to the greater
of (1) the Yield Maintenance Amount, and (2) an amount equal to two percent
(2%) of the principal amount of the Loan prepaid.

(e)         Prepayment from Casualty or Condemnation Proceeds. Prepayments of
principal (whether full or partial) resulting from the application of casualty
or condemnation proceeds to the Debt (whether such application is required by
Lender or requested by Borrower) shall be applied to the payments of principal
due under the Loan in inverse order of maturity. Any such repayment shall not
change the amounts of subsequent monthly installments of principal (if any are
required hereunder) nor change the dates on which such installments are due,
unless Lender shall otherwise agree in writing. In addition, except as
hereinafter provided in this subparagraph (e), prepayments of principal (whether
full or partial) resulting from the application of casualty or condemnation
proceeds to the Debt under this subparagraph (e) shall be made without the
imposition of the Yield Maintenance Amount or any other premium or penalty,
provided, however, if an Event of Default shall have occurred and be continuing
at the time of the related casualty or condemnation, in addition to applying
such proceeds as provided in this Agreement, Borrower shall pay the Yield
Maintenance Amount to Lender. Lender, at its option, may elect to use such
proceeds and Yield Maintenance Amount (if any) to defease an amount of the Loan
equal to the proceeds applied as a prepayment, in the manner provided in
Section 2.5 below.

2.5         Defeasance. At any time during the Defeasance Period, Borrower may
obtain a release of the Property from the lien of the Mortgage and other Loan
Documents upon the satisfaction of the following conditions:

(a)         Not less than thirty (30) days’ prior written notice shall be given
to Lender specifying a date (the “Defeasance Date”) on which the Defeasance
Deposit is to be delivered;

(b)         All accrued and unpaid interest on the Loan and all other sums due
hereunder and under the other Loan Documents up to the Defeasance Date,
including, without limitation, all amounts payable pursuant to Section 2.5(f)
hereof, shall be paid in full on or prior to the Defeasance Date;

(c)         No Event of Default, shall be continuing either at the time Borrower
gives notice of the Defeasance Date to Lender or on the Defeasance Date;

(d)         On or before the Defeasance Date, Borrower shall deliver (or cause
to be delivered) to Lender each of the following:

(i)        the Defeasance Deposit, together with the amount required by
Section 2.5(f) hereof;

(ii)       the Defeasance Security Agreement, duly executed by Borrower,
together with an endorsement of the Defeasance Collateral by the holder thereof
as directed by Lender (or a written instrument of transfer in form and substance
wholly satisfactory to Lender (including, without limitation, such instruments
as may be required by the depository institution holding such securities to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution)) sufficient so as to create a first priority security interest
therein in favor of Lender in conformity with any applicable state and federal
laws governing granting of such security interests;

 

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(iii)        an opinion of counsel for Borrower, in form and substance (and
delivered by counsel) satisfactory to Lender in its sole discretion stating,
among other things, (w) that Lender has a perfected first priority security
interest in the Defeasance Deposit and the Defeasance Collateral, (x) that the
Defeasance Security Agreement is enforceable against Borrower in accordance with
its terms, (y) that the Defeasance will not (1) cause the Trust to fail to
qualify as a REMIC within the meaning of Section 860D of the Code as a result of
such Defeasance, (2) constitute a “significant modification” of the Loan within
the meaning of Treasury Regulation Section 1.1001-3(b) or cause the Loan to fail
to be a “qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the
Code, (3) result in a deemed exchange for purposes of the Code and will not
adversely affect the status of the Note as indebtedness for federal income tax
purposes, and (4) constitute an avoidable preference under Section 547 of the
Bankruptcy Code, or similar provisions of any applicable state law, and (z) if a
Non-Consolidation Opinion was delivered in connection with the closing of the
Loan, setting forth such comparable opinions as to Successor Borrower as Lender
shall reasonably require (or as shall be required to satisfy the Securitization
Documents);

(iv)        a Rating Confirmation from each of the applicable Rating Agencies
for any securities issued in connection with a Secondary Market Transaction;

(v)         a certificate in form and substance acceptable to Lender, from a
nationally-recognized firm of independent certified public accountants
acceptable to Lender and satisfying the requirements of the Securitization
Documents, certifying that the Defeasance Collateral is sufficient to generate
monthly amounts equal to or greater than the payments due on all successive
Payment Dates occurring after the Defeasance Date through and including the
Maturity Date, with each such payment being equal to or greater than (1) the
Monthly Payment Amount due on such Payment Date, and (2) with respect to the
payment due on the Maturity Date, the entire outstanding principal balance of
the Loan together with any interest accrued as of such date and all other
amounts payable pursuant to the Loan Documents on such date;

(vi)        if required to comply with the requirements of any Securitization
Documents, a certification of Borrower and Guarantor that the purpose of the
defeasance is to facilitate the disposition of the Property, the refinancing of
the Property or any other customary commercial transaction, and is not part of
an arrangement to collateralize a REMIC offering with obligations that are not
real estate mortgages; and

(vii)       such other certificates, opinions, documents or instruments as
Lender may reasonably require to satisfy any conditions of the Securitization
Documents.

(e)         As part of the Defeasance, Borrower shall assign all its obligations
and rights in, to and under the Note, the Defeasance Collateral and the
Defeasance Security Agreement to a successor entity acceptable to Lender
(“Successor Borrower”). In connection therewith, the Successor Borrower shall
execute an assumption agreement in form and substance satisfactory to Lender in
its sole discretion pursuant to which it shall assume Borrower’s obligations
under the Note and the Defeasance Security Agreement and accept an assignment of
the Defeasance Collateral. In connection with such assignment and assumption,
Borrower and/or Successor Borrower shall deliver to Lender an opinion of counsel
in form and substance and delivered by counsel satisfactory to Lender in its
sole discretion stating, among other things, that such assumption agreement is
enforceable against Borrower and Successor Borrower, as applicable, in
accordance with its terms and that the Note, the Defeasance Security Agreement
and any other documents executed in connection with such defeasance are
enforceable against Borrower or Successor Borrower, as applicable, in accordance
with their respective terms.

 

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(f)        Borrower shall pay, simultaneously with the Defeasance of the Loan as
aforesaid, all reasonable costs and expenses incurred by Lender and Successor
Borrower and their respective agents and servicers in satisfying the foregoing
conditions and of the transactions contemplated by this Section 2.5, including,
without limitation, the reasonable and customary brokerage or other transaction
fees in purchasing the Defeasance Collateral, any reasonable legal fees and
expenses incurred in connection with obtaining and reviewing the Defeasance
Collateral and the preparation of the Defeasance Security Agreement and related
documentation and confirming the satisfaction of the other conditions to the
Defeasance, and the cost of any Rating Confirmation.

(g)        Upon compliance with all of the foregoing requirements of this
Section 2.5, (i) Borrower and Guarantor shall be relieved of their respective
obligations under the Note and the Defeasance Security Agreement and the other
Loan Documents (except to the extent such obligations survive any repayment or
defeasance of the Loan), and (ii) the Property shall be released from the lien
of the Mortgage and of the other Loan Documents, and (iii) the Defeasance
Collateral shall constitute the only collateral which shall secure the Note.
Lender will, at Borrower’s expense, execute and deliver any agreements
reasonably requested by Borrower to release the Property from such liens.

(h)        The entity initially named herein as “Lender” shall have the sole
right to (i) establish or designate the Successor Borrower and (ii) purchase or
cause the purchase of the Defeasance Collateral with the Defeasance Deposit,
which rights (collectively, the “Defeasance Rights”) may be exercised in
Lender’s sole discretion and shall be retained by such entity initially named
herein as “Lender” notwithstanding any transfer or securitization of the Loan
unless such Defeasance Rights are expressly conveyed together therewith; the
Defeasance Rights may be conveyed separately from the Loan.

ARTICLE III

CASH MANAGEMENT

3.1         Clearing Account; Deposit of Rents and Profits; Withdrawals from
Clearing Account.

(a)        Borrower confirms that upon the commencement of a Cash Management
Period and at all times thereafter, Borrower shall establish, and Borrower
covenants that it shall maintain, pursuant to the Clearing Bank Agreement, an
Eligible Account at the Clearing Bank (the “Clearing Account”). Borrower
irrevocably agrees that, upon the first occurrence of a Cash Management Period,
Lender may direct the Clearing Bank to open the Clearing Account in accordance
with the Clearing Bank Agreement. The Clearing Account shall be in the name of
the Borrower for the benefit of the Lender, provided that Borrower shall be the
owner of all funds on deposit in such accounts for federal and applicable state
and local tax purposes and the Clearing Account shall be assigned the tax
identification number of Borrower. Borrower acknowledges and agrees that, so
long as any portion of the Debt remains outstanding, neither Borrower, Property
Manager nor any other Person acting on behalf of, or claiming through, Borrower
or Property Manager, shall have any right or authority to change the identity,
name, location, account number, bank location or other feature or attribute of
the Clearing Account without the prior written consent of Lender, which consent
may be withheld by Lender in its sole and absolute discretion. In the event that
Clearing Bank requires a modification to the Clearing Bank Agreement, such
modification shall only be made following Lender’s written consent (which may be
granted or withheld in Lender’s sole and absolute discretion) and if Lender
refuses to agree to the requested change, then Borrower shall establish a new
Clearing Account at an Eligible Bank (and such Eligible Bank shall enter into a
new Clearing Bank Agreement in form and substance satisfactory to Lender). In
addition, at the

 

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election of Lender, exercised from time to time (i) after the occurrence and
during the existence of an Event of Default, (ii) at any time Lender reasonably
believes that the Clearing Bank is not adequately performing its duties under
the Clearing Bank Agreement, (iii) at any time after the credit rating of the
Clearing Bank falls below the requirements of an Eligible Bank (unless Lender
has waived the Eligible Bank requirements) or (iv) at any time after Lender has
waived the Eligible Bank requirements for the Clearing Bank, but Lender has
elected, in its sole and absolute discretion, to require that the Clearing
Account be located at an Eligible Bank, Borrower will establish a new Clearing
Account at an Eligible Bank (and such Eligible Bank shall enter into a new
Clearing Bank Agreement in form and substance satisfactory to Lender). Borrower
hereby irrevocably appoints Lender as its attorney-in-fact (coupled with an
interest) to execute a modification of the Clearing Bank Agreement approved by
Lender or establish a new Clearing Account at an Eligible Bank upon Lender’s
exercise of its rights under the preceding sentence, upon Borrower’s failure to
do so within ten (10) days following Lender’s written demand.

(b)         The Clearing Account shall be under the sole and exclusive dominion
and control of the Lender and neither Borrower, nor Property Manager, nor any
other party claiming on behalf of, or through, Borrower or Property Manager,
shall have any right to transfer, withdraw, access or otherwise direct the
disposition of funds on deposit or deposited into the Clearing Account or have
any other right or power with respect to the Clearing Account; provided,
however, that Borrower or Property Manager or their designee shall have the
right, if available through the Clearing Bank, to access information regarding
balances, deposits into and withdrawals from the Clearing Account, so long as
such information access right does not permit Borrower or Property Manager or
any party other than Lender or Servicer to transfer, withdraw, access or
otherwise direct the disposition of funds on deposit in the Clearing Account.

(c)         Borrower agrees to timely pay the customary fees and expenses of
Clearing Bank in connection with the Clearing Account and any Lockbox Address,
as such fees and expenses are established from time to time. In the event that
Clearing Bank seeks reimbursement of any item deposited into the Clearing
Account but returned or disallowed or reimbursement of any other monetary sum
pursuant to the Clearing Bank Agreement, Borrower shall promptly and timely pay
such sum. In the event Clearing Bank seeks reimbursement of sums from Lender
pursuant to the Clearing Bank Agreement, Borrower shall, upon demand by Lender,
pay Clearing Bank such sums. Failure of Borrower to pay any sum due and payable
(by Borrower or Lender) to the Clearing Bank in connection with the Clearing
Account within five (5) days after written demand by Lender shall constitute an
Event of Default under this Agreement.

(d)         The following provisions shall apply:

(i)        Upon the occurrence of a Cash Management Period and upon written
demand by Lender, Borrower shall establish with Clearing Bank a lock box address
at the Clearing Bank (the “Lockbox Address”).

(ii)       Upon the commencement of a Cash Management Period and upon written
demand by Lender and until the Debt is repaid in full, Borrower shall, or shall
cause Property Manager to, notify and advise each Tenant under each Lease
(whether such Lease is presently effective or executed after the date hereof)
pursuant to an instruction letter in the form of Exhibit E attached hereto (a
“Tenant Direction Letter”) to send directly to the Lockbox Address (or to the
Clearing Account via ACH transfer or wire transfer) all sums due and payable by
such Tenant under its Lease as and when due and payable under its Lease. At or
prior to the Closing Date, Borrower shall deliver to Lender partially-completed
original Tenant Direction Letters addressed to all Tenants listed on the Rent
Roll attached hereto as Exhibit B. Borrower hereby grants to Lender a power of
attorney (which power of attorney shall be coupled with an interest and
irrevocable so long as any portion of the Debt remains outstanding) to sign and

 

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deliver to any Tenant, (i) upon the occurrence of a Cash Management Period, or
(ii) upon failure of Borrower to do so within five (5) days following written
demand from Lender, such partially-completed or completed Tenant Direction
Letters, as applicable.

(iii)        During any Cash Management Period and until the Debt is repaid in
full, Borrower shall, or shall cause Property Manager to, instruct all Persons
that maintain open accounts with Borrower or Property Manager with respect to
the Property or with whom Borrower or Property Manager does business on an
“accounts receivable” basis with respect to the Property (any such Person, an
“Accounts Receivable Payor”), to deliver all payments due under such accounts
directly to the Lockbox Address (or to the Clearing Account via ACH transfer or
wire transfer) (such an instruction by Borrower, an “Accounts Receivable
Instruction”). Neither Borrower nor Property Manager shall direct any such
Person to make payments due under such accounts in any other manner.

(iv)        Intentionally omitted.

(v)         If Lender requires Borrower to deliver any Direction Letters or
Accounts Receivable Instructions, then if notwithstanding the foregoing,
Borrower or Property Manager should receive any Rents and Profits, the recipient
of such Rents and Profits shall deposit same with the Clearing Bank within one
(1) Business Day after receipt.

(vi)        Without the prior written consent of Lender, so long as any portion
of the Debt remains outstanding, neither Borrower nor Property Manager shall
terminate, amend, revoke or modify any Direction Letter or any Accounts
Receivable Instruction in any manner whatsoever or direct or cause any Tenant or
any Accounts Receivable Payor to pay any amount in any manner other than as
provided in the related Direction Letter or Accounts Receivable Instruction.

(vii)       So long as any portion of the Debt remains outstanding, neither
Borrower, Property Manager nor any other Person shall open or maintain any
accounts into which Rents and Profits are deposited other than the Clearing
Account. The foregoing shall not prohibit Borrower or Property Manager from
utilizing one or more separate accounts for the disbursement or retention of
funds that have been transferred to Borrower or the Property Manager pursuant to
the express terms of this Agreement.

(e)         Absent the existence of a Cash Management Period, on each Business
Day on which available funds are on deposit in the Clearing Account, Clearing
Bank shall transfer all such available funds to an operating account
established, maintained by and under the exclusive dominion and control of
Borrower (the “Operating Account”). Commencing with a Cash Management
Commencement Date and continuing during the existence of a Cash Management
Period, without limiting the foregoing provisions, all transfers from the
Clearing Account to the Operating Account shall immediately cease and Lender
shall have the right, at its sole option, to instruct the Clearing Bank, from
time to time, to administer available sums on deposit in or deposited into the
Clearing Account in the manner set forth in Section 3.3 below or to transfer
available sums on deposit in the Clearing Account, from time to time, to a Cash
Management Account (as defined below). The initial Operating Account is set
forth in the Clearing Bank Agreement.

3.2         Cash Management Account; Processing of Rents and Profits.

(a) At Lender’s option, Lender may establish an Eligible Account (the “Cash
Management Account”) at an Eligible Bank (the “Cash Management Bank”) selected
by Lender in its sole discretion. The Cash Management Account shall be in the
name of the Borrower for the benefit of

 

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the Lender, provided that Borrower shall be the owner of all funds on deposit in
such accounts for federal and applicable state and local tax purposes and the
Cash Management Account shall be assigned the tax identification number of
Borrower.

(b)         The Cash Management Account shall be under the sole and exclusive
dominion and control of the Lender and neither Borrower, Property Manager nor
any other party claiming on behalf of, or through, Borrower or Property Manager,
shall have any right to transfer, withdraw, access or otherwise direct the
disposition of funds on deposit in the Cash Management Account or have any other
right or power with respect to the Cash Management Account.

(c)         Borrower agrees to timely pay the customary fees and expenses of
Cash Management Bank in connection with the Cash Management Account, as such
fees and expenses are established from time to time. Failure of Borrower to pay
any sum due and payable (by Borrower or Lender) to the Cash Management Bank in
connection with the Cash Management Account within five (5) days after written
demand by Lender shall constitute an Event of Default under this Agreement.

(d)         At Lender’s option, the Cash Management Bank (or, if the Lender
elects to utilize the Clearing Account as the Cash Management Account, the
Clearing Bank (which shall in such context also be referred to herein as the
Cash Management Bank)) shall transfer sums on deposit in the Cash Management
Account to any number of subaccounts (collectively, the “Subaccounts”) which
subaccounts shall be maintained on a ledger-entry basis and which Subaccounts
may include, without limitation, one or more of the Impound Account and the
Reserves.

(e)         Upon a Cash Management Commencement Date and during the existence of
a Cash Management Period, Lender or Servicer shall (so long as no Event of
Default has occurred and is continuing) direct the Cash Management Bank to
allocate and disburse amounts on deposit in and deposited into the Cash
Management Account in accordance with the provisions of Section 3.3 below (the
“Disbursement Instructions”); provided, however, that if no Disbursement
Instructions are received by the Cash Management Bank with respect to a monthly
period, the Cash Management Bank may allocate and disburse amounts in the Cash
Management Account pursuant to the most recent Disbursement Instructions
received from Lender or Servicer prior thereto.

3.3         Application and Disbursement of Funds.

(a)         During any Cash Management Period, except as set forth is
Section 3.3(c) hereof, on each Payment Date Lender shall disburse and/or
allocate to Subaccounts, as applicable, amounts deposited into the Cash
Management Account in the following order of priority:

(i)        First, payments to the Impound Account in accordance with the terms
and conditions of Section 4.6 hereof;

(ii)       Next, to the payment of all amounts due under the Note on such
Payment Date (including, without limitation, interest and, if applicable,
principal) (which, following an Event of Default shall include, without
limitation, interest at the Default Rate);

(iii)      Next, payments of any other amounts due under the Loan Documents not
otherwise addressed by this Section 3.3 (a) (including, without limitation,
payments to any Reserves not otherwise addressed by this Section 3.3(a));

(iv)      Next, payments to the Replacement Reserve, in accordance with the
terms and conditions of Section 4.28 hereof;

 

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(v)        Next, payments to the Leasing Reserve, in accordance with the terms
and conditions of Section 4.28 hereof;

(vi)       Next, payments for monthly Cash Expenses, less amounts payable to
affiliates of Borrower, incurred in accordance with the terms and conditions of
the related Approved Annual Budget pursuant to a written request for payment
submitted by Borrower to Lender specifying the individual Cash Expenses in a
form acceptable to Lender;

(vii)      Next, payments for monthly Cash Expenses payable to Affiliates of
Borrower, incurred in accordance with the terms and conditions of the related
Approved Annual Budget pursuant to a written request for payment submitted by
Borrower to Lender specifying the individual Cash Expenses in a form acceptable
to Lender;

(viii)     Next, payment for monthly Net Capital Expenditures, incurred in
accordance with the terms and conditions of the related Approved Annual Budget
pursuant to a written request for payment submitted by Borrower to Lender
specifying the individual Net Capital Expenditures in a form acceptable to
Lender;

(ix)       Next, payment for Extraordinary Expenses approved by Lender, if any;
and

(x)        Lastly, all amounts remaining after payment of the amounts set forth
in clauses (i) through (ix) above (“Available Cash”):

(A)       During a Cash Management Period continuing due to a United Healthcare
Trigger Period, to the United Healthcare Cash Collateral Reserve to be held and
disbursed in accordance with Section 4.28(g); or

(B)       During a Cash Management Period continuing due to a Parsons Trigger
Period, to the Parsons Cash Collateral Reserve to be held and disbursed in
accordance with Section 4.28(i); or

(C)       Provided that no United Healthcare Trigger Period or Parsons Trigger
Period is continuing, to the Cash Collateral Reserve to be held or disbursed in
accordance with Section 4.28(h).

(D)       In the event that a United Healthcare Trigger Period and a Parsons
Trigger Period exist simultaneously, then Lender shall, in its reasonable
discretion, allocate funds under clause (x) to such Reserves and Leases as
Lender determines.

(b)         During any Cash Management Period, in the event that the Borrower
must incur an Extraordinary Expense, then Borrower shall promptly deliver to
Lender a reasonably detailed explanation of such proposed Extraordinary Expense
for the Lender’s prior written approval.

(c)         Notwithstanding any other provision of this Agreement or of the
other Loan Documents, during the continuance of an Event of Default, Lender
reserves the right, exercisable at its sole option, to (x) take such enforcement
actions (including, but not limited to, acceleration and foreclosure of the
Property) as it deems appropriate under the Loan Documents or otherwise under
law or in equity and/or (y) apply Rents and Profits and other sums on deposit in
or deposited into the Clearing Account, the Cash Management Account, the Impound
Account, the Reserves and any other sums deposited by Borrower with Lender to
the payment of the Debt, in such order, manner, amounts and times as Lender in
its sole discretion determines, and such reserved rights shall be in addition to
all other rights and remedies provided to Lender under this Agreement and the
other Loan Documents.

(d)         Nothing in this Section 3.3 shall limit, reduce or otherwise affect
Borrower’s obligations to make payments of the Monthly Payment Amount and, if
applicable, payments to the Impound Account and/or any other Reserves, due under
this Agreement and under the other Loan Documents, whether or not Rents and
Profits are available to make such payments.

 

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3.4        Security Interest. Borrower acknowledges and agrees that it has
granted to Lender a first-priority security interest in the Clearing Account and
Cash Management Account and the sums on deposit therein, among other things,
pursuant to this Agreement. Borrower acknowledges and agrees that, without
limitation of any other provisions of this Agreement, the Mortgage or the other
Loan Documents, upon the occurrence and during the existence of an Event of
Default, Lender may use the Clearing Account, the Cash Management Account and/or
any sums on deposit in either of them for any or all of the following purposes:
(i) repayment of the Debt, including, but not limited to, interest, principal
and any prepayment premium or fee applicable to any such full or partial
prepayment, (ii) reimbursement of Lender for all losses, fees, costs and
expenses (including, without limitation, reasonable legal fees and
disbursements) suffered or incurred by Lender as a result of such Event of
Default, (iii) payment of any amount expended in exercising any or all rights
and remedies available to Lender at law or in equity or under this Agreement or
any of the other Loan Documents, (iv) payment of any item as required or
permitted by this Agreement or any of the other Loan Documents or (v) any other
purpose permitted by applicable law, provided, however, that any such
application of funds shall not cure or be deemed to cure any Event of Default.
Without limiting any other provisions hereof, each of the remedial actions
described in the immediately preceding sentence shall be deemed to be a
commercially reasonable exercise of Lender’s rights and remedies as a secured
party with respect to the Clearing Account, the Cash Management Account and any
sums on deposit in either of them and shall not in any event be deemed to
constitute a setoff or a foreclosure of a statutory banker’s lien. Nothing in
this Agreement shall obligate Lender to apply all or any portion of the Clearing
Account or Cash Management Account to effect a cure of any Event of Default, or
to pay the Debt, or, during an Event of Default, in any specific order of
priority. The exercise of any or all of Lender’s rights and remedies under this
Agreement with respect to the Clearing Account, Cash Management Account and/or
the sums on deposit therein shall not in any way prejudice or affect Lender’s
right to initiate and complete a foreclosure under the Mortgage.

3.5        Indemnification by Borrower. Lender shall be responsible for the
performance only of such duties with respect to the Clearing Account and Cash
Management Account as are specifically set forth herein, and no duty shall be
implied from any provision hereof. Lender shall not be under any obligation or
duty to perform any act which would involve it in expense or liability or to
institute or defend any suit in respect hereof, or to advance any of its own
monies. Lender shall not be liable for any acts, omissions, errors in judgment
or mistakes of fact or law, including, without limitation, with respect to
proceeds on deposit in the Clearing Account or Cash Management Account. Borrower
shall indemnify and hold the Lender, its successors, assigns, shareholders,
directors, officers, employees, and agents (including, without limitation, any
Servicers) harmless from and against any loss, cost or damage (including,
without limitation, reasonable attorneys’ fees and disbursements) incurred by
such parties in connection with the Clearing Account, Lockbox Address, Cash
Management Account or the investment by Lender of amounts in the Cash Management
Account or the Subaccounts, other than such as result from the gross negligence
or willful misconduct of Lender or intentional nonperformance by Lender of its
obligations under this Agreement.

3.6        Acknowledgment and Agreement by Property Manager. Borrower hereby
covenants and agrees that it shall cause the Property Manager and any successor
Property Manager to acknowledge, agree to and assume in writing, the duties and
obligations of the Property Manager under this Article III.

 

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3.7         Miscellaneous.

(a)        Borrower agrees that the Cash Management Bank shall pay over to
Lender all amounts deposited in the Cash Management Account on demand (to be
applied by Lender in accordance with this Article III), without notice to the
Borrower.

(b)        Borrower confirms and agrees that, notwithstanding the provisions of
this Agreement, Borrower retains sole control over the operation and maintenance
of the Property, subject to the obligations of Borrower under this Agreement and
the other Loan Documents, and Lender is not and shall not be deemed to be a
mortgagee in possession.

(c)        The Lender shall from time to time direct the Cash Management Bank
(which direction shall not be required to be given more often than one time per
month), to invest amounts allocated to the Subaccounts in investments selected
by the Lender. All funds in the Subaccounts that are so invested are deemed to
be held in the Subaccounts for all purposes of this Agreement, the Mortgage and
the other Loan Documents. Except as otherwise provided in Section 4.30 hereof,
all earnings on investments from the Subaccounts shall be for the benefit of the
Lender. Borrower hereby assumes all risk of loss with respect to funds on
deposit in the Subaccounts.

3.8         Annual Budgets.

For each fiscal year during the term of the Loan, Borrower shall submit to
Lender for Lender’s written approval an Annual Budget not later than sixty
(60) days prior to the commencement of such fiscal year (provided that the
Annual Budget for the fiscal year in which the date hereof occurs shall be
submitted to Lender for its approval prior to the date hereof, in form
satisfactory to Lender setting forth in reasonable detail budgeted monthly
operating income and monthly operating capital and other expenses for the
Property. Each Annual Budget shall contain, among other things, limitations on
management fees, third party service fees, and other expenses as Borrower may
reasonably determine. Lender shall have the right to approve such Annual Budget,
and in the event that Lender objects to the proposed Annual Budget submitted by
Borrower, Lender shall advise Borrower of such objections within fifteen
(15) days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall within three (3) days after
receipt of notice of any such objections revise such Annual Budget and resubmit
the same to Lender. Lender shall advise Borrower of any objections to such
revised Annual Budget within ten (10) days after receipt thereof (and deliver to
Borrower a reasonably detailed description of such objections) and Borrower
shall revise the same in accordance with the process described in this
subparagraph until the Lender approves an Annual Budget. Until such time as
Lender approves a proposed Annual Budget, the most recently Approved Annual
Budget shall apply; provided that such Approved Annual Budget shall be adjusted
to reflect actual increases in real estate taxes, insurance premiums and
utilities expenses. Failure of the Borrower to submit, in a timely fashion,
Annual Budgets in accordance with the provisions of this Section 3.8, shall
constitute, at Lender’s option, an Event of Default. In addition, and without
limiting any of the foregoing, the receipt and approval by Lender of an Annual
Budget as required hereunder shall be a condition precedent to any obligation
hereunder of Lender to release any funds from the Cash Management Account for
the payment of Cash Expenses, Net Capital Expenditures and/or Extraordinary
Expenses, and Borrower expressly acknowledges that it shall be responsible for
the current and timely payment of such expenses notwithstanding that Lender’s
shall not be required to release such funds.

 

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ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

For the purpose of inducing Lender to make the Loan and for the protection of
the security of the Loan Documents, for so long as the Debt or any part thereof
remains unpaid, Borrower makes the representations and warranties as set forth
in Section 4.1 below and covenants and agrees as set forth elsewhere in this
Article IV as follows:

4.1         Representations and Warranties of Borrower. Borrower, for itself and
its successors and assigns, does hereby represent and warrant to Lender that:

(a)        Organization and Existence; Organizational Chart. Borrower is duly
organized and validly existing as a limited partnership in good standing under
the laws of the Delaware and is qualified to do business in the state of Texas
and in all other jurisdictions in which Borrower is transacting business.
Attached as Exhibit C to this Agreement is a true, correct and complete
organizational chart of Borrower. Borrower has delivered to Lender a true,
correct and complete copy of the Organizational Documents for each Person (other
than a natural person) shown thereon.

(b)        Authorization. Borrower has the power and authority to execute,
deliver and perform the obligations imposed on it under the Loan Documents and
to consummate the transactions contemplated by the Loan Documents and has taken
all necessary actions in furtherance thereof including, without limitation, that
those partners or members of Borrower whose approval is required by the terms of
Borrower’s organizational documents have duly approved the transactions
contemplated by the Loan Documents and have authorized execution and delivery
thereof by the respective signatories. To the best of Borrower’s knowledge, no
other consent by any local, state or federal agency is required in connection
with the execution and delivery of the Loan Documents.

(c)        Valid Execution and Delivery. All of the Loan Documents requiring
execution by Borrower have been duly and validly executed and delivered by
Borrower.

(d)        Enforceability. All of the Loan Documents constitute valid, legal and
binding obligations of Borrower and are fully enforceable against Borrower in
accordance with their terms, subject only to bankruptcy laws and general
principles of equity.

(e)        No Defenses. This Agreement, the Note, the Mortgage and the other
Loan Documents are not subject to any right of rescission, set-off, counterclaim
or defense, nor would the operation of any of the terms of this Agreement, the
Note, the Mortgage or any of the other Loan Documents, or the exercise of any
right thereunder, render this Agreement, the Note, the Mortgage or any of the
other Loan Documents unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury.

(f)        Defense of Usury. Borrower knows of no facts that would support a
claim of usury to defeat or avoid its obligation to repay the principal of,
interest on, and other sums or amounts due and payable under, the Loan
Documents.

(g)        No Conflict/Violation of Law. The execution, delivery and performance
of the Loan Documents by Borrower will not cause or constitute a default under
or conflict with the organizational documents of Borrower, any Guarantor or any
Constituent Entity of either of them. The execution, delivery and performance of
the obligations imposed on Borrower under the Loan Documents will not cause
Borrower or any Guarantor or any Constituent Entity of either of them to be in
default, including after due notice or lapse of time or both, under the
provisions of any agreement, judgment or order to which Borrower or any
Guarantor or any Constituent Entity of either of them is a party or by which
Borrower or any Guarantor or any Constituent Entity of either of them is bound.

 

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(h)        Compliance with Applicable Laws and Regulations. All of the
Improvements and the use of the Property by Borrower comply with, and shall
remain in compliance with, all applicable statutes, rules, regulations and
private covenants now or hereafter relating to the ownership, construction, use
or operation of the Property, including all applicable health, fire and building
codes, and all applicable statutes, rules and regulations pertaining to
requirements for equal opportunity, anti-discrimination, fair housing,
environmental protection, zoning and land use (collectively, “Applicable Laws”).
There is no evidence of any illegal activities relating to controlled substances
on the Property. All licenses, permits, franchises, certificates of occupancy,
consents and other approvals necessary for the operation of the Property for the
use currently being made thereof have been obtained and are in full force and
effect. All of the Improvements comply with all requirements of any applicable
zoning and subdivision laws and ordinances.

(i)         Consents Obtained. All consents, approvals, authorizations, orders
or filings with any court or governmental agency or body, if any, required for
the execution, delivery and performance of the Loan Documents by Borrower have
been obtained or made.

(j)         No Litigation. There are no pending actions, suits or proceedings,
arbitrations or governmental investigations against the Property, Borrower, any
Guarantor or any Constituent Entity of Borrower or any Guarantor, whether
pursuant to the Loan Documents or otherwise, an adverse outcome of which would
materially affect Borrower’s performance under this Agreement, the Note, the
Mortgage or any of the other Loan Documents.

(k)        Title. Borrower has good and marketable fee simple title to the
Property, subject only to those matters expressly listed as exceptions to title
or subordinate matters in the title insurance policy accepted by Lender in
connection with this Agreement (the “Title Insurance Policy”), excepting
therefrom all preprinted and/or standard exceptions (the “Permitted
Exceptions”). Borrower has good and marketable leasehold title to the Leasehold
Real Estate, pursuant to the Ground Lease for the terms described in the Ground
Lease and subject only to the Permitted Exceptions. The possession of the
Property has been peaceful and undisturbed and title thereto has not been
disputed or questioned. Further, Borrower and has full power and lawful
authority to grant, bargain, sell, convey, assign, transfer and mortgage its
interest in the Property in the manner and form done or intended under the Loan
Documents. Borrower will preserve its interest in and title to the Property and
will forever warrant and defend the same to Lender against any and all claims
whatsoever and will forever warrant and defend the validity and priority of the
lien and security interest created under the Loan Documents against the claims
of all persons and parties whomsoever, subject to the Permitted Exceptions. The
foregoing warranty of title shall survive the foreclosure of the Mortgage and
shall inure to the benefit of and be enforceable by Lender in the event Lender
acquires title to the Property pursuant to any foreclosure.

(l)         Permitted Exceptions. The Permitted Exceptions do not and will not
materially and adversely affect (1) the ability of Borrower to pay in full the
principal and interest on the Note in a timely manner or (2) the use of the
Property for the use currently being made thereof, the operation of the Property
as currently being operated or the value of the Property.

(m)       First Lien. Upon the execution by Borrower and the recording of the
Mortgage, and upon the filing of UCC-1 financing statements or amendments
thereto, Lender will have a valid first lien on the Property and a valid
security interest in all personal property encumbered thereby, subject to no
liens, charges or encumbrances (which prohibition shall include any lien, charge
or encumbrance securing a PACE Loan) other than the Permitted Exceptions.

 

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(n)        ERISA. Borrower has made and shall continue to make all required
contributions to all employee benefit plans and multi-employer plans, if any,
and Borrower has no knowledge of any material liability which has been incurred
by Borrower which remains unsatisfied for any taxes or penalties with respect to
any employee benefit plan or any multi-employer plan, and each such plan has
been administered in compliance with its terms and the applicable provisions of
ERISA and any other federal or state law and shall continue to be qualified and
tax-exempt to the greatest extent permitted thereunder. Other than with respect
to any such plans, Borrower is not an entity subject to regulation or
restriction under ERISA, and no assets of Borrower are “plan assets” (as defined
in ERISA).

(o)        Financial Statements. The financial statements of Borrower (or any
predecessor-in-interest to Borrower as owner of the Property, if applicable,
that is an Affiliate of Borrower), any general partner, managing member or sole
member of Borrower, and Guarantor that were furnished to Lender (whether in
connection with Lender’s consideration to make the Loan, pursuant to the Loan
Documents, or otherwise) are (in each case) complete and correct and fairly
present the financial condition of the subject thereof (including, without
limitation, assets, liabilities and liquidity) as of the date set forth thereon,
and the results of operations of such party for the periods covered by such
statements (if applicable). No material adverse change in the financial
condition of any such party has occurred between the respective dates of the
most recent financial statements that were furnished to Lender (whether in
connection with Lender’s consideration to make the Loan, pursuant to the Loan
Documents, or otherwise) relating to such entities or persons, and the date on
which this representation is made (or deemed restated). After giving effect to
the Loan, each of Borrower, any general partner, managing member or sole member
of Borrower, and Guarantor each has a positive net worth. After the Loan is
made, and giving effect to the payment obligations with respect to the Loan,
Borrower will have sufficient working capital (including, if applicable,
projected cash flow from the Property) not only to adequately maintain the
Property as required by the Loan Documents but also to pay all of Borrower’s
outstanding debts as they come due. Each of the representations in this
paragraph shall be deemed restated as part of each request for any disbursement
from any Reserve.

(p)        No Other Obligations or Contingent Liabilities. Borrower has no
material financial obligation under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Borrower is a party or by
which Borrower or the Property is otherwise bound, other than (i) obligations
incurred in the ordinary course of the operation of the Property that do not
violate Section 4.27, and (ii) the Debt. Neither Borrower nor any Guarantor has
any known material contingent liabilities, except for contingent liabilities of
any Guarantor explicitly set forth on the most recent financial statements of
such Guarantor that were delivered to Lender in connection with the Loan.

(q)        Fraudulent Conveyance. Borrower (1) has not entered into the Loan or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (2) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan contemplated by
the Loan Documents, the fair saleable value of Borrower’s assets exceed and
will, immediately following the execution and delivery of the Loan Documents,
exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed or contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
execution and delivery of the Loan Documents, be greater than Borrower’s
probable liabilities, including the maximum amount of its contingent liabilities
or its debts as such debts become absolute and matured. Borrower’s assets do not
and, immediately following the execution and delivery of the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including, without
limitation, contingent liabilities 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 Borrower). Neither Borrower, nor any
member, partner or shareholder of Borrower, has made or received,

 

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or is making or receiving in connection with the Loan, (1) a transfer of an
interest of its property to or for the benefit of a creditor of such party that
is or could constitute a voidable preference under federal bankruptcy, state
insolvency, or similar applicable creditors’ rights laws, or (2) a transfer
(including any transfer to or for the benefit of an insider under an employment
contract) within two years of the date hereof that is or could constitute a
fraudulent transfer under federal bankruptcy, state insolvency, or similar
applicable creditors’ rights laws.

(r)        Investment Company Act. Neither Borrower nor any Guarantor is (1) an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (2) a
“holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or
(3) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

(s)        Access/Utilities. The Property has adequate rights of access to
public ways and is served by adequate water, sewer, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of the Property as presently used and enjoyed are located in the
public right-of-way abutting the Property, or enter the Property via permanent
easements not subject to termination except with the consent of Borrower, and
all such utilities are connected so as to serve the Property without passing
over other property. All roads, and access to such roads, necessary for the full
utilization of the Property for its current purpose have been completed and
dedicated to public use and accepted by all governmental authorities or are the
subject of access easements for the benefit of the Property without any further
condition or cost to Borrower.

(t)        Taxes Paid. Borrower has filed all federal, state, county and
municipal tax returns required to have been filed by Borrower, and has paid all
taxes which have become due pursuant to such returns or to any notice of
assessment received by Borrower, and Borrower has no knowledge of any basis for
additional assessment with respect to such taxes. Further, the Property is free
from delinquent Taxes and Other Charges.

(u)        Single Tax Lot. The Real Estate consists of a single lot or multiple
tax lots; no portion of said tax lot(s) covers property other than the Real
Estate or a portion of the Real Estate and no portion of the Real Estate lies in
any other tax lot.

(v)        Special Assessments. Except as disclosed in the Title Insurance
Policy, there are no pending or, to the knowledge of Borrower, proposed special
or other assessments for public improvements or otherwise affecting the
Property, nor, to the knowledge of Borrower, are there any contemplated
improvements to the Property that may result in such special or other
assessments.

(w)       Flood Zone. The Property is not located in an area as identified by
the Federal Emergency Management Agency as an area having special flood hazards
or, if so located, the flood insurance required pursuant to Section 4.4 is in
full force and effect with respect to the Property.

(x)        Seismic Exposure. The Real Estate is not located in Zone 3 or Zone 4
of the “Seismic Zone Map of the U.S.”

(y)        Misstatements of Fact. No certification, representation or statement
of fact made in the Loan Documents contains any untrue statement of a material
fact or omits to state any material fact necessary to make statements contained
herein or therein not misleading. There is no fact presently known to Borrower,
any Guarantor or any Constituent Entity of Borrower or any Guarantor which has
not been disclosed which adversely affects, or in the judgment of a reasonable
person might adversely affect,

 

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the business, operations or condition (financial or otherwise) of the
representing party. Further, and in clarification of the foregoing, all reports,
certificates, affidavits, representations, statements and other data furnished
by or on behalf of Borrower, Guarantor and each Constituent Entity of each of
them to Lender, or their respective agents, in connection with the Loan are true
and correct in all material respects and do not omit to state any fact or
circumstance necessary to make the statements contained therein not misleading.

(z)        Condition of Improvements. The Property has not been damaged by fire,
water, wind or other cause of loss since the earlier to occur of the initial
visit to or inspection of the Property by Lender or its agents in connection
with the Loan. The Improvements are structurally sound, in good repair and free
of defects in materials and workmanship and have been constructed and installed
in substantial compliance with the plans and specifications relating thereto.
All major building systems located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems, are in good working order and condition.

(aa)      No Insolvency or Judgment. Neither Borrower, nor any Guarantor, nor
any Constituent Entity of Borrower or any Guarantor, (i) has been or is
currently the subject of or a party to any completed or pending bankruptcy,
reorganization or insolvency proceeding; or (ii) is currently the subject of any
judgment unsatisfied of record or docketed in any court of the state in which
the Property is located or in any other court located in the United States. The
proposed Loan will not render Borrower or any general partner or member of
Borrower insolvent. As used in this Agreement, the term “insolvent” means that
the sum total of all of an entity’s liabilities (whether secured or unsecured,
contingent or fixed, or liquidated or unliquidated) is in excess of the value of
all such entity’s non-exempt assets, i.e., all of the assets of the entity that
are available to satisfy claims of creditors.

(bb)      No Condemnation. No part of the Property has been taken in
condemnation or other like proceeding to an extent which would impair the value
of the Property, this Agreement, the Mortgage or the Loan or the usefulness of
such property for the purposes contemplated by the Loan Documents, nor is any
proceeding pending, threatened or known to be contemplated for the partial or
total condemnation or taking of the Property.

(cc)      No Labor or Materialmen Claims. All parties furnishing labor and
materials to Borrower (or any predecessor-in-title) or the Property have been
paid in full and, except for such liens or claims expressly disclosed in, and
insured against by the Title Insurance Policy, there are no mechanics’,
laborers’ or materialmen’s liens or claims outstanding for work, labor or
materials affecting the Property, whether prior to, equal with or subordinate to
the lien of the Mortgage.

(dd)      No Purchase Options. No tenant, party, firm, corporation or other
Person has an option, right of first offer, or right of first refusal, to
purchase the Property, any portion thereof or any interest therein.

(ee)      Leases. Attached hereto as Exhibit B is a true, correct and complete
Rent Roll as of the date hereof. The Property is not subject to any Leases or
other agreements related to the leasing or renting of the Property or any
portion thereof, except as set forth on the Rent Roll. No person has any
possessory interest in the Property or right to occupy the same, except pursuant
to the Leases. Borrower hereby represents that: (i) Borrower has delivered a
Rent Roll that is true, correct and complete as of the date hereof; and
(ii) Borrower is the owner and holder of the landlord’s interest under the
Leases, and there are no prior assignments of all or any portion of the Leases
or any portion of the Rents and Profits which are presently outstanding and have
priority over the assignment of leases and rents given by Borrower to Lender in
the Mortgage or the Assignment of Leases; and (iii) each Lease constitutes the
legal, valid and binding obligation of Borrower and, to the best of Borrower’s
knowledge and belief, is

 

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enforceable against the Tenant thereunder; and (iv) no default exists, or with
the passing of time or the giving of notice or both would exist, under any Lease
which would, in the aggregate, have a material adverse effect on Borrower or the
Property; and (v) except as disclosed in writing in an estoppel certificate by
such Tenant that has been delivered to and accepted by Lender in connection with
the Loan, no Tenant has any offset or defense to the payment of rent under its
Lease; and (vi) except as disclosed in writing in an estoppel certificate by
such Tenant that has been delivered to and accepted by Lender in connection with
the Loan, no Tenant has, as of the date hereof, paid rent under its Lease more
than one (1) month in advance, and the rents under such Lease have not been
waived, released, or otherwise discharged or compromised; and (vii) all work to
be performed by Borrower under each Lease has been substantially performed, all
contributions to be made by Borrower to the Tenant thereunder have been made and
all other conditions precedent to each Tenant’s obligations thereunder have been
satisfied; and (viii) except as disclosed in writing in an estoppel certificate
by such Tenant that has been delivered to and accepted by Lender in connection
with the Loan, each Tenant under a Lease has entered into occupancy of the
premises demised thereunder; and (ix) Borrower has delivered to Lender true,
correct and complete copies of all Leases described in the Rent Roll; and (x) to
the best of Borrower’s knowledge and belief, each Tenant is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment
for the benefit of creditors; and (xi) no Lease provides any party with the
right to obtain a lien or encumbrance upon the Property superior to the lien of
the Mortgage.

(ff)        Appraisal. All information provided by or on behalf of Borrower to
the appraiser in connection with the appraisal of the property prepared in
connection with the closing of the Loan was true, correct and complete in all
material respects.

(gg)      Boundary Lines. All of the Improvements which were included in
determining the appraised value of the Property lie wholly within the boundaries
and building restriction lines of the Property, and except as specifically
described in the Title Insurance Policy, no improvements on adjoining properties
encroach upon the Property, and no easements or other encumbrances upon the Real
Estate encroach upon any of the Improvements, in each case so as to affect the
value or marketability of the Property except those which are insured against by
title insurance.

(hh)      Survey. The survey of the Property delivered to Lender in connection
with this Agreement does not fail to reflect any material matter affecting the
Property or the title thereto. To the best of Borrower’s knowledge, such survey
has been prepared by a duly licensed surveyor in the State in which the Real
Estate is located.

(ii)        Forfeiture. There has not been and shall never be committed by
Borrower or any other person in occupancy of or involved with the operation or
use of the Property any act or omission affording the federal government or any
state or local government the right of forfeiture as against the Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents.

(jj)        No Broker. No financial advisors, brokers, underwriters, placement
agents, agents or finders have been dealt with by Borrower in connection with
the Loan, except for any broker whose full commission was paid out of the
proceeds of the Loan and is set forth on the Closing Statement.

(kk)      Conviction of Criminal Acts. Each of Borrower, any Guarantor, and any
Constituent Entity of Borrower or any Guarantor, has never been convicted of a
crime (which shall not include traffic violations) and is not currently the
subject of any pending or threatened criminal investigation or proceeding.
Borrower has disclosed to Lender in writing any civil action (whether or not
such action resulted in a judgment) and regulatory or enforcement proceeding to
which Borrower and any

 

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Guarantor was a defendant or respondent within the 20-year period prior to the
date of this Agreement that (i) was a Bankruptcy Action, or (ii) in which it was
alleged that Borrower or such Guarantor engaged in fraud, deception or
misrepresentation, or with respect to which Borrower or any Guarantor was
ordered or agreed not to engage in the banking or securities industry.

(ll)        Security Agreements. There are no security agreements or financing
statements affecting or encumbering any of the Property other than the security
agreements and financing statements created in favor of Lender.

(mm)    Homestead. The Property forms no part of any property owned, used or
claimed by Borrower as a residence or business homestead and is not exempt from
forced sale under the laws of the State in which the Real Estate is located.
Borrower hereby disclaims and renounces each and every claim to all or any
portion of the Property as a homestead.

(nn)      Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering
Laws. None of Borrower, Guarantor, any Controlling Entity, or any Person who
owns any direct equity interest in or controls any of the foregoing, is or has
previously been (i) identified on the OFAC List or otherwise qualified as a
Prohibited Person, or (ii) in violation of any applicable laws relating to
anti-money laundering or anti-terrorism, including, without limitation, any
applicable laws related to transacting business with Prohibited Persons or the
requirements of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law
107-56, and the related regulations issued thereunder, including temporary
regulations, all as amended from time to time, or (iii) in violation of other
requirements of Governmental Authority (including, without limitation,
requirements applicable to Lender of which Borrower has notice) with respect to
anti-money laundering, “know your customer” regulations, and similar matters.
Borrower will implement procedures, approved by Borrower’s Controlling Entity,
to ensure that no Equity Holder (and no Person who, after the date hereof,
becomes an Equity Holder) causes the foregoing representations not to be true,
correct and complete.

(oo)      Personal Property. Borrower is the owner, free and clear of all liens
and encumbrances, of all personal property that is used in, and is reasonably
necessary to, the operation of the Property.

(pp)      Use of Proceeds. No part of the proceeds of the Loan will be used for
the purpose of purchasing or acquiring any “margin stock” within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System,
or to reduce ore retire any obligation originally incurred to purchase any
margin stock, or for any other purpose which would be inconsistent with such
Regulations T, U or X or any other Regulations of such Board of Governors, or
for any purposes prohibited by any Applicable Laws or by the terms and
conditions of this Agreement or any other Loan Document. Borrower does not own
any margin stock (as so defined).

(qq)      Intentionally Omitted.

(rr)       Ground Lease.

(1)        The Ground Lease or a memorandum regarding such Ground Lease has been
duly recorded or submitted for recordation in a form that is acceptable for
recording in the applicable jurisdiction. The Ground Lease (either by itself or
together with the Ground Lessor’s Recognition Agreement) permits the interest of
Borrower to be encumbered, including, without limitation, by the Mortgage. The
Ground Lease does not restrict the use of the Property in a manner that would
materially adversely affect the security provided by the Mortgage and other Loan
Documents;

 

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(2)        The Ground Lease (either itself or together with the Ground Lessor’s
Recognition Agreement) provides that the Ground Lease may not be amended or
modified, or canceled or terminated by agreement of Ground Lessor and Borrower,
or surrendered by Borrower, in each case without the prior written consent of
Lender;

(3)        The term of the Ground Lease as currently in effect expires on
June 9, 2023. The Ground Lease provides for renewal term that is automatically
coterminous without further requirements with any extensions and/or renewals of
the United Healthcare Lease.

(4)        The priority of the Ground Lease with respect to fee title to the
Real Estate is not subject to any liens or encumbrances superior to, or of equal
priority with, the Mortgage, except for the related fee interest of the Ground
Lessor and the Permitted Encumbrances. The lien of any mortgage hereafter placed
on the fee title to the Real Estate is and will be subject and subordinate to
the Ground Lease and to any Replacement Ground Lease;

(5)        [Intentionally Omitted];

(6)        The Ground Lease is in full force and effect. There is no default
under the Ground Lease and no condition that, but for the passage of time or
giving of notice, would result in a default under the Ground Lease. The Ground
Lease represents the entire agreement between the parties thereto and their
respective Affiliates with respect to the Real Estate and the Improvements;

(7)        The Ground Lease (either by themselves or together with the Ground
Lessor’s Recognition Agreement) requires the Ground Lessor to give to Lender
written notice of any default under the Ground Lease, and provides that no
notice of default or termination is effective against Lender unless such notice
is given to Lender;

(8)        Pursuant to the Ground Lessor’s Recognition Agreement, Lender is
permitted a reasonable opportunity (including, where necessary, sufficient time
to gain possession of the interest of Borrower under the Ground Lease through
legal proceedings) to cure any default under the Ground Lease which is curable
after Lender’s receipt of notice of any such default, before Ground Lessor may
terminate the Ground Lease. Provided that no monetary default remains uncured
beyond any applicable notice and grace periods to which Borrower and Lender are
entitled, the Ground Lease may not be terminated by Ground Lessor by reason of
any default by Borrower which is not susceptible of cure by Lender without
Ground Lessor being obligated to offer a Replacement Ground Lease to Lender;

(9)        The Ground Lease does not impose any restrictions on subletting of
the Property that are commercially unreasonable;

(10)      [Intentionally Omitted];

(11)      In the event of a casualty, the terms and conditions of the Loan
Documents shall prevail. The foregoing shall not apply with respect to any
condemnation, it being understood and agreed that per the terms of the Ground
Lease, Ground Landlord shall be entitled to all proceeds from any condemnation;

 

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(12)      Provided that Lender cures any defaults under the Ground Lease that
are susceptible of being cured, Ground Lessor has agreed to enter into a new
lease(s) (such new lease, a “Replacement Ground Lease”) with Lender (or Lender’s
designee), for the remainder of the term of such Ground Lease upon the same base
rent and additional rent and other terms, covenants, conditions and agreements
as are contained in the Ground Lease, upon termination of the Ground Lease for
any reason, including rejection of the Ground Lease in a bankruptcy proceeding
involving Borrower;

(13)  Borrower does not make any type of escrow deposits with Ground Lessor and
Ground Lessor does not hold any type of deposit from Borrower (security or
otherwise).

4.2        Defense of Title. If the title to the Property or the interest of
Lender therein shall be the subject, directly or indirectly, of any action at
law or in equity, or be attached directly or indirectly, or endangered, clouded
or adversely affected in any manner, Borrower, at Borrower’s expense, shall take
all necessary and proper steps for the defense of said title or interest,
including the employment of counsel approved by Lender (it being agreed that
Lender shall not unreasonably withhold its consent to counsel appointed pursuant
to the Title Insurance Policy for such purposes), the prosecution or defense of
litigation, and the compromise or discharge of claims made against said title or
interest. Notwithstanding the foregoing, in the event that Lender determines
that Borrower is not adequately performing its obligations under this
Section 4.2, Lender may, without limiting or waiving any other rights or
remedies of Lender hereunder, take such steps with respect thereto as Lender
shall deem necessary or proper; any and all costs and expenses incurred by
Lender in connection therewith, together with interest thereon at the Default
Rate, shall be immediately paid by Borrower on demand.

4.3        Performance of Obligations. Borrower shall pay when due the principal
of and the interest on and other amounts evidenced by the Note. Borrower shall
also pay and perform all of the Debt as and when due. Further, Borrower shall
promptly and strictly perform and comply with all covenants, conditions,
obligations and prohibitions required of Borrower in connection with any other
document or instrument affecting title to the Property, or any part thereof,
regardless of whether such document or instrument is superior or subordinate to
the Mortgage, except as expressly prohibited by the Loan Documents.

4.4        Insurance. Borrower shall, at Borrower’s expense, maintain in force
and effect on the Property at all times the following insurance (or such greater
insurance as may be required under the Ground Lease):

(a)        Insurance against loss or damage to the Property by fire, windstorm,
tornado and hail and against loss and damage by such other, further and
additional risks as may be now or hereafter embraced by an “all-risk/special”
form of insurance policy. The amount of such insurance shall be not less than
one hundred percent (100%) of the full replacement (insurable) cost of the
Improvements from time to time, without reduction for depreciation. The
determination of the replacement cost amount shall be adjusted annually to
comply with the requirements of the insurer issuing such coverage or, at
Lender’s election, by reference to such indices, appraisals or information as
Lender determines in its reasonable discretion. Full replacement cost, as used
herein, means, with respect to the Improvements, the cost of replacing the
Improvements without regard to deduction for depreciation, exclusive of the cost
of excavations, foundations and footings below the lowest basement floor, and
means, with respect to such furniture, furnishings, fixtures, equipment and
other items, the cost of replacing the same, in each case, with inflation guard
coverage to reflect the effect of inflation, or annual valuation. Each policy or
policies shall contain a replacement cost endorsement and either an agreed
amount endorsement (to avoid the operation of any co-insurance provisions) or a
waiver of any co-insurance provisions, all subject to Lender’s approval. In the
event that the Real Estate or the Improvements constitutes a legal

 

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non-conforming use under applicable building, zoning or land use laws or
ordinances, shall include ordinance or law coverage which will contain Coverage
A: “Loss to Operation of Law” (with a minimum liability limit approved by
Lender), Coverage B: “Demolition Cost” and Coverage C: “Increased Cost of
Construction” coverages (each with sublimits reasonably approved by Lender). The
deductible with respect to such insurance shall not exceed $25,000.00 per
occurrence, except for wind/hail coverage which is permitted to have up to a
$100,000 deductible.

(b)        Comprehensive Commercial General Liability Insurance written on an
occurrence basis for personal injury, bodily injury, death and property damage
liability in amounts not less than $1,000,000.00 per occurrence and
$2,000,000.00 in the aggregate, with no deductible or self insured retention
together with umbrella coverage in amounts not less than $50,000,000.00. If the
aggregate limit applying to the Premises is reduced by the payment of a claim or
establishment of a reserve equal to or greater than fifty percent (50%) of the
annual aggregate, Borrower shall immediately arrange to have the aggregate limit
restored by endorsement to the existing policy or the purchase of an additional
insurance policy unless, in Lender’s reasonable judgment, Borrower maintains
sufficient concurrent excess liability insurance to satisfy the liability
requirements of this Loan Document without the reinstatement of the aggregate
limit. This insurance shall be primary and non-contributory and the additional
insureds required will be added to both the CGL and Umbrella policies. During
any construction on the Property, Borrower’s general contractor for such
construction shall also provide the insurance required in this Subsection (b).
Lender hereby retains the right to periodically review the amount of said
liability insurance being maintained by Borrower and to require an increase in
the amount of said liability insurance should Lender deem an increase to be
reasonably prudent under then existing circumstances.

(c)        General boiler and machinery insurance coverage is required if the
property contains centralized equipment, steam boilers or other pressure-fired
vessels in operation at the Property. Minimum liability amount per accident must
equal the lesser of the replacement (insurable) value of the Improvements
housing such equipment, boiler or pressure-fired machinery or such lesser amount
as approved by Lender in their discretion. The deductible with respect to such
insurance shall not exceed $10,000.00 per claim.

(d)       If the Improvements on the Property or any part thereof is identified
by the Secretary of Housing and Urban Development as being situated in an area
now or subsequently designated as having special flood hazards (including,
without limitation, those areas designated as Zone A or Zone V), flood insurance
in an amount equal to the lesser of: (i) the minimum amount required, under the
terms of coverage, to compensate for any damage or loss on a replacement basis
(or the unpaid balance of the Debt if replacement cost coverage is not available
for the type of building insured); or (ii) such lesser amount as may be required
by Lender. The deductible with respect to such insurance shall not exceed
$5,000.00 per occurrence for residential properties and $10,000 for commercial
properties.

(e)        During the period of any construction on the Property or renovation
or alteration of the Improvements, a so-called “Builder’s All-Risk Completed
Value” insurance policy for any Improvements under construction, renovation or
alteration in an amount approved by Lender consistent with Section 4.1(a) above
and Worker’s Compensation Insurance covering all persons engaged in such
construction, renovation or alteration. The deductible for such insurance, if
any, shall be satisfactory to Lender.

(f)        Loss of rents or loss of business income insurance which covers a
period of not less than eighteen (18) months), together with an extended period
of indemnity of not less than 180 days, and covers the actual loss sustained
during restoration. The amount of such rental loss and/or business interruption
insurance shall be increased from time to time while the Loan remains
outstanding as and

 

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when new Leases and renewal Leases are entered into and the Rents and Profits
increase or the estimate of (or the actual) operating expenses for the Property,
as may be applicable, increases. The deductible for such insurance, if any,
shall be satisfactory to Lender.

(g)        Any other insurance coverage (or higher coverages) running to the
benefit of, or required by, Lender in connection with the making of the Loan and
as set forth on the insurance certificates or policies delivered to and accepted
by Lender in connection with the closing of the Loan.

(h)        The property insurance, public liability insurance and rental loss
and/or business interruption insurance required under Sections 4.4(a), (b) and
(f) above shall cover perils of terrorism and acts of terrorism and Borrower
shall maintain property insurance, public liability insurance and rental loss
and/or business interruption insurance for loss resulting from perils and acts
of terrorism on terms (including amounts) consistent with those required under
Sections 4.4(a), (b) and (f) above at all times during the term of the Loan, and
such other insurance (see section (i)).

(i)        Such other insurance on the Property or on any replacements or
substitutions thereof or additions thereto as may from time to time be required
by Lender against other insurable hazards or casualties which at the time are
commonly insured against in the case of property similarly situated to the
Property including, without limitation, Sinkhole, Mine Subsidence, Earthquake
and Environmental insurance, due regard being given to the height and type of
buildings, their construction, location, use and occupancy.

Unless otherwise approved by lender in writing in advance of placement, all such
insurance shall (i) be with insurers authorized to do business in the State
within which the Real Estate is located and who have and maintain a rating
satisfying the Insurance Ratings Requirement (or, alternatively, if the insurers
maintain re-insurance with re-insurers maintaining such rating, Lender will not
unreasonably withhold its consent to satisfying the Insurance Ratings
Requirement by means of a “cut-through” endorsement allowing recourse directly
against a reinsurer that meets the Insurance Rating Requirement), (ii) contain
the complete address of the Property (or a complete legal description), (iii) be
for terms of at least one year, and (iv) be subject to the approval of Lender as
to insurance companies, amounts, content, forms of policies, method by which
premiums are paid and expiration dates.

Borrower shall as of the date hereof deliver to Lender evidence that said
insurance policies have been paid current as of the date hereof and certified
copies of such insurance policies and original certificates of insurance signed
by an authorized agent of the applicable insurance companies evidencing such
insurance, all of which shall be satisfactory to Lender. Without limiting the
foregoing, all certificates of insurance for the liability insurance referenced
in (b) above shall be on the ACORD 25 Form, and all certificates of insurance
for other coverages shall be on either the ACORD 27 form or the March, 1993
edition of the ACORD 28 form (unless Lender expressly approves another form).
Borrower shall renew all such insurance and deliver to Lender certificates
evidencing such renewals at least fifteen (15) days before any such insurance
shall expire. Without limiting the required endorsements to the insurance
policies, Borrower further agrees that all such policies shall include a
standard, non-contributory, mortgagee clause naming:

CIBC INC.,

its successors and/or assigns, as their interests may appear

Attn: Real Estate Group, Mr. Karin O’Callahan

425 Lexington Avenue, 4th Floor

New York, New York 10017

 

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(x) as an additional insured under all liability insurance policies, (y) as the
first mortgagee on all property insurance policies and (z) as the loss
payee/lender’s loss payable on all business personal property, loss of rents
and/or loss of business income insurance policies as applicable. Borrower
further agrees that all such insurance policies: (1) shall provide for at least
thirty (30) days’ prior written notice to Lender prior to any cancellation or
termination thereof (10 days for nonpayment of premium as statutorily required)
on the property insurance and when available, on the liability insurance
policies (provided, however, that if such notice provisions are not available in
any of the Policies, Borrower shall provide the required notice to Lender);
(2) shall contain an endorsement or agreement by the insurer that any loss shall
be payable to Lender in accordance with the terms of such policy notwithstanding
any act or negligence of Borrower which might otherwise result in forfeiture of
such insurance; (3) shall waive all rights of subrogation against Lender; and
(4) may be in the form of a blanket policy provided that, in the event that any
such coverage is provided in the form of a blanket policy, Borrower hereby
acknowledges and agrees that failure to pay any portion of the premium therefor
which is not allocable to the Property or by any other action not relating to
the Property which would otherwise permit the issuer thereof to cancel the
coverage thereof, will result in Lender requiring the Property to be insured by
a separate, single-property policy. The blanket policy must properly identify
and fully protect the Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Lender’s
applicable insurance requirements set forth in this Section 4.4. Lender will be
provided a complete schedule of locations and values for all properties
associated with a blanket policy. The delivery to Lender of the insurance
policies or the certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance policies relating to the
Property by Borrower to Lender as further security for the Debt. In the event of
foreclosure of the Mortgage, or other transfer of title to the Property in
extinguishment in whole or in part of the Debt, all right, title and interest of
Borrower in and to all unearned insurance premiums and proceeds payable under
such policies then in force concerning the Property shall thereupon vest in the
purchaser at such foreclosure, or in Lender or other transferee in the event of
such other transfer of title whether or not the damage to the Property occurred
prior to such transfer of title. Approval of any insurance by Lender shall not
be a representation of the solvency of any insurer or the sufficiency of any
amount of insurance. In the event Borrower fails to provide, maintain, keep in
force or deliver and furnish to Lender the policies of insurance required by
this Agreement or evidence of their renewal as required herein, Lender may, but
shall not be obligated to, procure such insurance and Borrower shall pay all
amounts advanced by Lender therefor, together with interest thereon at the
Default Rate from and after the date advanced by Lender until actually repaid by
Borrower, promptly upon demand by Lender. Lender shall not be responsible for
nor incur any liability for the insolvency of the insurer or other failure of
the insurer to perform, even though Lender has caused the insurance to be placed
with the insurer after failure of Borrower to furnish such insurance. Borrower
shall not obtain insurance for the Property in addition to that required by
Lender without the prior written consent of Lender, which consent will not be
unreasonably withheld provided that (i) Lender is mortgagee, loss payee/lender’s
loss payable and/or additional insured (as applicable) on such insurance,
(ii) Lender receives complete copies of all policies evidencing such insurance,
and (iii) such insurance complies with all of the applicable requirements set
forth herein. To the extent that at any time Lender agrees to accept insurance
from an insurer that is rated less than the foregoing, Lender may terminate its
waiver and reassert the aforesaid minimum rating requirements upon any renewal
of any insurance coverage, or at any time if the rating of any insurer is
reduced or Lender determines that any other material adverse event has occurred
with respect to the financial condition of such insurer.

4.5        Payment of Taxes. Except to the extent funds are held in the Impound
Account therefor pursuant to Section 4.6 of this Agreement when the same become
due and payable, (a) Borrower shall pay or cause to be paid all taxes,
assessments, water rents, sewer rents, governmental impositions and other
charges, including, without limitation, vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Real Estate, now or
hereafter levied or assessed or imposed against, or which are or may become a
lien upon, the Property (“Taxes”), and all ground rents, maintenance charges and

 

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similar charges, now or hereafter levied or assessed or imposed against the
Property or any part thereof (the “Other Charges”), and (b) Borrower shall
furnish Lender with receipts (or if receipts are not immediately available, with
copies of canceled checks evidencing payment with receipts to follow promptly
after they become available) showing payment of such Taxes and Other Charges at
least fifteen (15) days prior to the applicable delinquency date therefor. In no
event shall any PACE Loan be considered a Tax or Other Charge for purposes of
this Agreement. Notwithstanding the foregoing, Borrower may in good faith, by
appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted Taxes or Other Charges so long as
(x) such contest is diligently pursued, (y) Lender determines, in its subjective
opinion, that such contest suspends the obligation to pay the Taxes or Other
Charges and that nonpayment of such Taxes or Other Charges will not result in
the sale, loss, forfeiture or diminution of the Property or any part thereof or
any interest of Lender therein, and (z) prior to the earlier of the commencement
of such contest or the delinquency date of the asserted Taxes or Other Charges,
Borrower deposits in the Impound Account an amount determined by Lender to be
adequate to cover the payment of such Taxes or Other Charges and a reasonable
additional sum to cover possible interest, costs and penalties; provided,
however, that Borrower shall promptly cause to be paid any amount adjudged by a
court of competent jurisdiction to be due, with all interest, costs and
penalties thereon, promptly after such judgment becomes final; and provided,
further, that in any event each such contest shall be concluded, the Taxes or
Other Charges, as the case may be, together with any applicable interest, costs
and penalties, shall be paid prior to the date any writ or order is issued under
which the Property may be sold, lost or forfeited.

4.6        Tax and Insurance Impound Account. Borrower shall establish and
maintain in effect with Lender at all times while the Loan is outstanding an
impound account (the “Impound Account”) for payment of Taxes and Other Charges
and for the premiums on the insurance required to be maintained with respect to
Borrower and the Property (“Insurance Premiums”) and as additional security for
the Debt. In addition to the initial deposit to the Impound Account required
simultaneously with the execution hereof, commencing on the first Payment Date
and continuing thereafter on each Payment Date until the Note and all other Debt
are fully paid and performed, Borrower shall pay to Lender, for deposit to the
Impound Account, an amount equal to one-twelfth (1/12th) of the amount of the
annual Taxes and Other Charges that will next become due and payable on the
Property, plus one-twelfth (1/12th) of the amount of the annual Insurance
Premiums that will next become due and payable, each as estimated and determined
by Lender. So long as no Default has occurred and is continuing, all sums in the
Impound Account shall be held by Lender in the Impound Account to pay said Taxes
and Other Charges, in periodic installments, and Insurance Premiums in one
annual installment, in each case, before the same become delinquent. Borrower
shall be responsible for ensuring the receipt by Lender, at least thirty
(30) days prior to the respective due date for payment thereof, of all bills,
invoices and statements for all Taxes and Other Charges, and all Insurance
Premiums, and so long as no Event of Default has occurred and is continuing,
Lender shall pay the Governmental Authority or other party entitled thereto
directly to the extent funds are available for such purpose in the Impound
Account. In making any payment from the Impound Account, Lender shall be
entitled to rely on any bill, statement or estimate procured from the
appropriate public office or insurance company or agent without any inquiry into
the accuracy of such bill, statement or estimate and without any inquiry into
the accuracy, validity, enforceability or contestability of any tax, assessment,
valuation, sale, forfeiture, tax lien or title or claim thereof. The Impound
Account shall not, unless otherwise explicitly required by applicable law, be or
be deemed to be escrow or trust funds, but, at Lender’s option and in Lender’s
discretion, may either be held in a separate account or be commingled by Lender
with the general funds of Lender. No interest on the funds contained in the
Impound Account shall be paid by Lender to Borrower. The Impound Account is
solely for the protection of Lender and entails no responsibility on Lender’s
part beyond the payment of Taxes and Other Charges, and of Insurance Premiums,
following receipt of bills, invoices or statements therefor in accordance with
the terms hereof and beyond the allowing of due credit for the sums actually
received. Upon assignment of this Agreement by Lender, any funds in the Impound
Account shall be turned over to

 

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the assignee and any responsibility of Lender, as assignor, with respect thereto
shall terminate. If the total funds in the Impound Account are reasonably
determined by Lender to be in excess of the amount of payments required by
Lender for the purposes of the Impound Account, such excess may be credited by
Lender on subsequent payments to be made hereunder or, if such excess is greater
than the amounts due from Borrower to Lender in the month following such
determination (and if no Default or Event of Default is then continuing),
refunded to Borrower. If at any time Lender determines that, with the making of
all monthly deposits to the Impound Account when due, the Impound Account
nonetheless would not contain sufficient funds to pay the next due periodic
installments of all Taxes and Other Charges at least 30 days prior to the
delinquency date thereof, or to pay the next due annual Insurance Premiums at
least 30 days prior to the due date thereof, Borrower shall, within ten
(10) days after receipt of written notice thereof, deposit with Lender the full
amount of any such deficiency. If Borrower shall fail to deposit with Lender the
full amount of such deficiency as provided above, Lender shall have the option,
but not the obligation, to make such deposit and all amounts so deposited by
Lender, together with interest thereon at the Default Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand. At any time during the continuance of an Event of Default,
Lender may, but shall not be obligated to, apply at any time the balance then
remaining in the Impound Account against the Debt in whatever order Lender shall
subjectively determine. No such application of the Impound Account shall be
deemed to cure any Default or Event of Default hereunder, and any such
application shall not limit Borrower’s obligation to deposit any deficiency of
which Lender gives notice. Upon full payment of the Debt in accordance with its
terms or at such earlier time as Lender may elect, the balance of the Impound
Account then in Lender’s possession shall be paid over to Borrower and no other
party shall have any right or claim thereto.

4.7        Condemnation and Casualty. Borrower shall give Lender prompt written
notice of the occurrence of any casualty affecting, or the institution of any
proceedings for eminent domain or for the condemnation of, the Property or any
portion thereof. All insurance proceeds on the Property, and all causes of
action, claims, compensation, awards and recoveries for any damage, condemnation
or taking of all or any part of the Property or for any damage or injury to it
for any loss or diminution in value of the Property, are hereby assigned to and
shall be paid to Lender. Lender may participate in any suits or proceedings
relating to any such proceeds, causes of action, claims, compensation, awards or
recoveries and Lender is hereby authorized, in its own name or in Borrower’s
name, to adjust any loss covered by insurance or any condemnation claim or cause
of action, and to settle or compromise any claim or cause of action in
connection therewith, and Borrower shall from time to time deliver to Lender any
instruments required to permit such participation; provided, however, that so
long as no Default or Event of Default is continuing, Lender shall not
participate in the adjustment of any loss which is less than the lesser of
(a) ten percent (10%) of the then outstanding principal balance of the Note and
(b) $500,000.00. Lender may, at Lender’s option, (i) hold the balance of any of
such proceeds to be used to reimburse Borrower for the cost of restoring and
repairing the Property to the equivalent of its original condition or to such
other condition as may be approved by Lender (the “Restoration”), and require
Borrower to restore the Property to the equivalent of its original condition or
to such other condition as may be approved by Lender, or (ii) apply the balance
of such proceeds to the payment of the Debt, whether or not then due. To the
extent Lender, in accordance with the terms hereof, determines to apply
insurance or condemnation proceeds to Restoration, Lender shall do so in
accordance with Lender’s then-current policies relating to the, as applicable,
restoration of casualty damage on similar properties or restoration or
rebuilding of properties that have been the subject of a partial condemnation.
Lender shall not exercise its option to apply insurance proceeds or condemnation
proceeds to the payment of the Debt if all of the following conditions are met:
(A) no Default or Event of Default has occurred and is continuing; (B) in the
case of casualty, less than forty percent (40%) of the Improvements has been
damaged, or in the case of a taking, less than twenty-five percent (25%) of the
Improvements has been taken; (C) Lender determines, in its discretion, that
there will be sufficient funds to complete the Restoration (including, without
limitation, by means of a deposit of any shortfall by Borrower with Lender prior
to the commencement of the

 

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Restoration or promptly upon Lender’s determination that such a shortfall
exists); (D) Lender determines, in its discretion, that the rental income from
the Property after completion of the Restoration will be sufficient to meet all
operating costs and other expenses, deposits to the Impound Account, deposits to
Reserves and loan repayment obligations relating to the Property and that the
debt service coverage ratio after Restoration will be the same as on the Closing
Date and the ratio of the amount of the Loan to the value of the Property after
Restoration will be the same as on the Closing Date; (E) Lender determines, in
its discretion, that (1) the Restoration will be completed before the earlier of
(a) one year before the Scheduled Maturity Date or (b) one year after the date
of the loss or casualty, and (2) the rent loss insurance or business
interruption insurance referenced in Section 4.4(f) will cover all payments due
under the Loan during the completion of the Restoration; (F) the Ground Lease
shall remain in full force and effect during the completion of the Restoration;
(G) upon Lender’s request, Borrower provides Lender evidence of the availability
during and after the Restoration of the insurance required to be maintained by
Borrower pursuant to Section 4.4; and (H) Borrower provides Lender with written
notice within five (5) days after settlement of the aforesaid insurance or
condemnation claim of its request to undertake a Restoration.

Unless Lender otherwise agrees in writing, any application of any insurance or
condemnation awards or proceeds to the Debt shall not extend or postpone the due
date of any monthly installments referred to in the Note or the Loan Documents
or change the amount of such installments. Borrower agrees to execute such
further evidence of assignment of any insurance or condemnation awards or
proceeds as Lender may require. Any reduction in the Debt resulting from
Lender’s application of any sums received by it hereunder shall take effect only
when Lender actually receives such sums and elects to apply such sums to the
Debt and, in any event, the unpaid portion of the Debt shall remain in full
force and effect and Borrower shall not be excused in the payment thereof.
Partial payments received by Lender, as described in the preceding sentence,
shall be applied first to the final principal payment due under the Note and
thereafter to other principal installments due under the Note in the inverse
order of their due date. If Borrower elects to effect or is otherwise required
to effect a Restoration, Borrower shall promptly and diligently, at Borrower’s
sole cost and expense and regardless of whether the insurance proceeds or
condemnation award, as appropriate, shall be sufficient for the purpose,
restore, repair, replace and rebuild the Property as nearly as possible to its
value, condition and character immediately prior to such casualty or partial
taking in accordance with the foregoing provisions and Borrower shall pay to
Lender all costs and expenses of Lender incurred in administering said
rebuilding, restoration or repair, provided that Lender makes such proceeds or
award available for such purpose. Borrower agrees to execute and deliver from
time to time such further instruments as may be requested by Lender to confirm
the foregoing assignment to Lender of any award, damage, insurance proceeds,
payment or other compensation. Lender is hereby irrevocably constituted and
appointed the attorney-in-fact of Borrower (which power of attorney shall be
irrevocable so long as any Debt is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Borrower and
shall not be affected by any disability or incapacity suffered by Borrower
subsequent to the date hereof), with full power of substitution, subject to the
terms of this Section 4.7, to settle for, collect and receive any such awards,
damages, insurance proceeds, payments or other compensation from the parties or
authorities making the same, to appear in and prosecute any proceedings therefor
and to give receipts and acquittances therefor.

Notwithstanding the foregoing provisions of this Section 4.7, if (I) Lender is a
REMIC at the time when any portion of the Property is the subject of a taking,
condemnation, eminent domain or similar proceeding, and (II) immediately after
giving effect to the related release (and taking into account any proposed
Restoration), the loan-to-value ratio (based solely on the value of real
property, and excluding any personal property and/or going concern value, if
any) shall be greater than one hundred twenty-five percent (125%), then an
amount equal to the entire net proceeds (as defined in Revenue Procedure
2010-30) of the taking, condemnation, eminent domain or similar proceeding must
be applied

 

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to the principal amount of the Debt (rather than to any other portion of the
Debt) if and to the extent necessary for the Loan to remain a “qualified
mortgage” in accordance with the requirements applicable to a REMIC under
Revenue Procedure 2010-30.

4.8         Mechanics’ Liens. Borrower shall pay when due all claims and demands
of mechanics, materialmen, laborers and others for any work performed or
materials delivered for the Real Estate or Improvements; provided, however,
that, Borrower shall have the right to contest in good faith any such claim or
demand, so long as it does so diligently, by appropriate proceedings and without
prejudice to Lender, and provided that neither the Property nor any interest
therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or
demand, Borrower shall promptly notify Lender of such contest and thereafter
shall, upon Lender’s request, promptly provide a bond, cash deposit or other
security satisfactory to Lender to protect Lender’s interest and security should
the contest be unsuccessful. If Borrower shall fail to immediately discharge or
provide security against any such claim or demand as aforesaid, Lender may do so
and any and all expenses incurred by Lender, together with interest thereon at
the Default Rate from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand.

4.9         Assignment of Leases and Rents and Profits. As additional and
collateral security for the payment of the Debt and cumulative of any and all
rights and remedies herein provided for, pursuant to the Mortgage and the
Assignment of Leases the Borrower has assigned to Lender all existing and future
Leases, and all existing and future Rents and Profits.

4.10       Leases.

(a)        Entering Into Leases. Borrower may enter into a proposed Lease (which
includes the renewal or extension of an existing Lease (a “Renewal Lease”))
without the prior written consent of Lender (except if required pursuant to
Section 4.10(d) hereof) if such proposed Lease (i) provides for rental rates and
terms comparable to existing local market rates and terms (taking into account
the type and quality of the tenant) as of the date such Lease is executed by
Borrower (unless, in the case of a Renewal Lease, the rent payable during such
renewal, or a formula or other method to compute such rent, is provided for in
the original Lease), (ii) is an arms-length transaction with a bona fide,
independent third party tenant for occupancy by the lessee under such Lease,
(iii) does not have a materially adverse effect on the value of the Property
taken as a whole, (iv) is subject and subordinate to the Mortgage, and obligates
the lessee thereunder to attorn to Lender, or any designee, upon transfer of
title to the Property thereto, (v) does not contain any option or right of first
refusal to purchase all or any portion of the Property, (vi) expressly provides
that the portion of the Property demised thereby shall not be used for a
Prohibited Use, and (vii) is written on the standard form of lease which was
either delivered to Lender simultaneously herewith or was subsequently approved
by Lender, in either case with only immaterial variations from such standard
form. All proposed Leases which do not satisfy the requirements set forth in
this Section 4.10(a) shall be subject to the prior approval of Lender and its
counsel, at Borrower’s expense (and, in conjunction therewith, Borrower shall
provide Lender with such information as Lender shall reasonably request with
respect to such proposed Lease and the Tenant thereunder). Promptly upon
entering into any Lease without Lender’s approval pursuant to this
Section 4.10(a), Borrower shall promptly deliver to Lender a copy of such Lease,
together with Borrower’s certification that such Lease satisfies all of the
conditions of this Section 4.10. Upon Lender’s request, Borrower shall deliver
to Lender a true, correct and complete copy of each Lease then in effect.

(b)        Covenants Regarding Leases. Borrower (i) shall observe and perform
all the obligations imposed upon the lessor under each Lease, and shall not do
or permit to be done anything to impair the value of any Lease as security for
the Debt; (ii) upon request (which request is hereby deemed given with respect
to any Major Lease), shall promptly send copies to Lender of all notices of
default

 

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which Borrower shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in each Lease upon the part
of the Tenant thereunder to be observed or performed; (iv) shall not collect any
of the Rents and Profits more than one (1) month in advance (it being
acknowledged that security deposits shall not be deemed Rents and Profits
collected in advance); and (v) shall not execute any other assignment of the
lessor’s interest in any of the Leases or the Rents and Profits (other than to
Lender as security for the Debt), in each case without the prior written consent
of Lender. Within 30 days after Lender’s request therefor (which request, other
than a request for a Tenant estoppel certificate pursuant to Section 4.29
hereof, shall not be made more than twice in any calendar year absent an Event
of Default), Borrower shall deliver to Lender an estoppel certificate from each
Tenant.

(c)        Amendments to Leases. Provided no Default exists hereunder, Borrower
may, without the prior written consent of Lender (except if required pursuant to
Section 4.10(d) hereof), amend, modify or waive the provisions of any Lease or
terminate, reduce rents under, accept a surrender of space under, shorten the
term of, consent to any assignment of, or consent to the subletting of any
portion of the premises demised pursuant to any Lease (including any guaranty,
letter of credit or other credit support with respect thereto) (any of the
foregoing, a “Lease Modification”), provided that (i) such Lease Modification
(taking into account, in the case of a termination, reduction in rent, surrender
of space or shortening of term, the planned alternative use of the affected
space) does not have a materially adverse effect on the value of the Property
taken as a whole, (ii) such Lease Modification is in the normal course of
business and is consistent with sound and customary leasing and management
practices for similar properties in the community in which the Property is
located, and (iii) such Lease, as amended, modified or waived, is otherwise in
compliance with the requirements of this Agreement and any subordination
agreement binding upon Lender with respect to such Lease. A termination of a
Lease with a Tenant who is in default beyond applicable notice and grace periods
shall not be considered an action which has a materially adverse effect on the
value of the Property taken as a whole. Any Lease Modification which does not
satisfy the requirements set forth in this Section 4.10(c) shall be subject to
the prior approval of Lender and its counsel, at Borrower’s expense (and, in
conjunction therewith, Borrower shall provide Lender with such information as
Lender shall reasonably request with respect to such proposed Lease Modification
and the Tenant under the Lease affected thereby). Promptly upon entering into
any Lease Modification without Lender’s approval pursuant to this
Section 4.10(c), Borrower shall deliver to Lender a copy of such instrument,
together with Borrower’s certification that such instrument satisfies all of the
conditions of this Section 4.10.

(d)        Major Leases. Notwithstanding anything contained herein to the
contrary, Borrower shall not, without the prior written consent of Lender, enter
into, renew, extend, amend, modify, waive any provisions of, terminate, reduce
rents under, accept a surrender of space under, shorten the term of, consent to
any assignment of, or consent to the subletting of any portion of the premises
demised pursuant to any Major Lease.

(e)        Security Deposits. All security deposits of Tenants, whether held in
cash or in any other form, shall be held in compliance with applicable law. All
such security deposits shall not be commingled with any other funds of Borrower
or any other Person. Any bond or other instrument which Borrower is permitted to
hold in lieu of cash security deposits under any applicable legal requirements
(i) shall be maintained in full force and effect in the full amount of such
deposits unless replaced by cash deposits as hereinabove described; (ii) shall
be issued by an institution reasonably satisfactory to Lender; (iii) shall, if
permitted pursuant to any applicable legal requirements, name Lender as payee or
mortgagee thereunder or, at Lender’s option, be assigned or fully assignable to
Lender; and (iv) shall, in all respects, comply with any applicable legal
requirements and otherwise be reasonably satisfactory to Lender. Borrower shall,
upon request, provide Lender with evidence reasonably satisfactory to Lender of
Borrower’s compliance with the foregoing. Upon an Event of Default, Borrower
shall, immediately upon Lender’s request (if permitted by applicable law),
deliver to Lender the security deposits (and any interest previously earned
thereon and not disbursed to the person(s) lawfully entitled to receive same)
with respect to all or any portion of the Property, to be held by Lender subject
to the terms of the Leases.

 

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(f)        Tenant Financial Information. Borrower shall cause each Lease entered
into on or after the date hereof which, if all Tenants paid all rents as and
when due under their respective Leases, would yield one-quarter or more of the
aggregate rental income of the Property (a “Major Income Lease”) to require the
Tenant under such Lease to deliver to Borrower periodic operating statements
with respect to (i) such Tenant’s operations at the Property, and (ii) the
operations of such Tenant and, if applicable, any parent or affiliated entity of
such Tenant which operates, or has subsidiaries that operate, comparable
businesses (collectively, “Tenant Financial Information”). Notwithstanding the
provisions of Section 4.10(a) above, any Major Income Lease entered into after
the date hereof which does not require the Tenant to provide Tenant Financial
Information upon request shall require the prior written approval of Lender.
Borrower shall, from time to time promptly upon request of Lender, request
Tenant Financial Information from the Tenant under each Major Income Lease (and
use all commercially reasonable efforts to obtain such Tenant Financial
Information), and promptly upon receipt thereof, deliver such Tenant Financial
Information to Lender; provided, however, that (1) prior to a Secondary Market
Transaction consisting of a securitization, Lender shall not require Borrower to
request Tenant Financial Information more than three (3) times, and
(2) following a Secondary Market Transaction consisting of a securitization,
provided that no Event of Default is continuing, Lender shall not request such
information without reasonable cause (which reasonable cause shall include,
without limitation, the occurrence of any default by the Tenant under a Major
Income Lease or if such Tenant ceases to conduct its business in the premises
demised by such Major Income Lease).

4.11       Restrictions on Alienation and Further Encumbrances.

(a)        Borrower acknowledges that Lender has relied upon the principals of
Borrower and their experience in owning and operating properties similar to the
Property in connection with the closing of the Loan. Accordingly,
notwithstanding anything to the contrary contained in Section 8.6 hereof,
neither the Property, nor any part thereof or interest therein, shall be sold,
conveyed, disposed of, alienated, hypothecated, leased (except to Tenants under
Leases which are not in violation of Section 4.10), assigned, pledged,
mortgaged, further encumbered or otherwise transferred, nor shall Borrower be
divested of its title to the Property or any interest therein, in any manner or
way, whether voluntarily or involuntarily, nor shall Borrower enter into or
subject the Property to any PACE Loan (any of the foregoing, a “Transfer”), in
each case without the prior written consent of Lender being first obtained,
which consent may be withheld in Lender’s sole discretion. For the avoidance of
doubt and without limiting the generality of the foregoing, Borrower
acknowledges and agrees that the forgoing sentence is intended by the parties to
prevent Borrower from encumbering (other than in favor of lender pursuant to
Section 4.31(f) hereof) any fee interest in any portion of the premises subject
to the Ground Lease that may hereafter be acquired by Borrower without Lender’s
prior written consent, which consent may be withheld in Lender’s sole
discretion. For the purposes of this Agreement and the other Loan Documents, a
Transfer shall also include (and each of the following shall also be prohibited
without the prior written consent of Lender being first obtained in each case,
which consent may be withheld in Lender’s sole discretion): (i) transfers of
direct or indirect ownership interests in Borrower, and the creation of new or
additional ownership interests in Borrower, or in any Constituent Entity of
Borrower, (ii) an installment sales agreement with respect to the Property or
any portion thereof, (iii) a Lease of all or substantially all of the Property
other than for actual occupancy by a space tenant thereunder, (iv) any sale or
assignment of any of Borrower’s right, title and interest in, to and under any
Leases or Rents and Profits, other than to Lender, (v) if Borrower or any
Constituent Entity of Borrower is a partnership or joint venture, the addition,
change, removal or resignation of any general partner, or the transfer or pledge
of any interest (whether as a general partner or limited partner) of any general
partner in such partnership, and (vi) if Borrower or any Constituent Entity of
Borrower is a limited liability company, the addition, change,

 

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removal or resignation of any manager or managing member, or the transfer or
pledge of any interest (whether as a managing member or otherwise) of such
manager or managing member in such limited liability company, or the transfer of
control (as defined in Section 4.27) of such manager or managing member.

(b)         Notwithstanding the foregoing provisions of this Section, Lender
shall not unreasonably withhold its consent to the sale of the Property in its
entirety (hereinafter, “Sale”) to a single-purpose entity that complies with the
requirements of Section 4.27 of this Agreement and is otherwise reasonably
acceptable to Lender (such transferee, hereinafter, a “Buyer”) provided that
such Sale occurs after the earlier to occur of a Secondary Market Transaction
and the date that is two (2) years after the date of this Agreement, and each of
the following terms and conditions are satisfied in connection with such Sale:

(1)        No Event of Default is then continuing;

(2)        Borrower gives Lender written notice of the terms of such prospective
Sale not less than thirty (30) days before the date on which such Sale is
scheduled to close, accompanied by all information concerning the proposed Buyer
as Lender would require in evaluating an initial extension of credit to a
borrower and a non-refundable application fee in the amount of $2,500.00. Lender
shall have the right to approve or disapprove the proposed Buyer in its
reasonable discretion (it being acknowledged that Lender may, as a condition to
approving any proposed Buyer, require a Rating Confirmation with respect to such
Sale and satisfaction of any conditions applicable thereto pursuant to the
Securitization Documents), and such approval, if given, may be given subject to
such conditions as Lender may deem appropriate;

(3)        Borrower pays Lender, concurrently with the closing of such Sale, a
non-refundable assumption fee in an amount equal to all out-of-pocket costs and
expenses, including, without limitation, attorneys’ fees, incurred by Lender in
connection with the Sale plus an amount equal to one half of one percent (0.5%)
of the outstanding principal balance of the Note for the first Sale and
thereafter an amount equal to one percent (1.0%) of the then outstanding
principal balance of the Note;

(4)        Buyer assumes and agrees to pay the Debt (subject to the provisions
of Section 8.16 hereof) and, prior to or concurrently with the closing of such
Sale, the Buyer executes, without any cost or expense to Lender, such documents
and agreements as Lender shall reasonably require to evidence and effectuate
said assumption (together with causing to be filed such new financing statements
and/or financing statement amendments as Lender may require) and delivers such
legal opinions as Lender may require, all in such reasonable and customary form
as Lender may require;

(5)        Borrower causes to be delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender’s title insurance policy, hazard
insurance endorsements or certificates and other similar materials as are
generally required for comparable transactions, all in form and substance
satisfactory to Lender, including, without limitation, an endorsement or
endorsements to Lender’s title insurance policy insuring the lien of the
Mortgage, extending the effective date of such policy to the date of execution
and delivery (or, if later, of recording) of the assumption agreement referenced
above in subparagraph (4) of this Section, with no additional exceptions added
to such policy and insuring that title to the Property is vested in the Buyer
with no exceptions not included in the Title Insurance Policy or approved by
Lender in accordance with this Agreement;

(6)        Borrower and Guarantor each executes and delivers to Lender, without
any cost or expense to Lender, a release of Lender, its officers, directors,
employees and agents, from all claims and liability relating to the transactions
evidenced by the Loan Documents through and including the date of the closing of
the Sale, which agreement shall be in form and substance satisfactory to Lender
and shall be binding upon the Buyer;

 

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(7)        Subject to the provisions of Section 8.16 hereof, such Sale is not
construed so as to relieve Borrower of any personal liability under the Note or
any of the other Loan Documents for any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Sale and Borrower
executes, without any cost or expense to Lender, such documents and agreements
as Lender shall reasonably require to evidence and effectuate the ratification
of said personal liability. Borrower shall be released from and relieved of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring or obligations arising after the closing of such Sale
which are not caused by or arising out of any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such Sale;

(8)        Such Sale is not construed so as to relieve any Guarantor of its
obligations under any Loan Document, and a Constituent Entity of the Buyer
approved by Lender in its sole discretion (a “Successor Guarantor”) assumes the
obligations of such Guarantor and executes such documents as may be required by
Lender to evidence such assumption. Each Guarantor shall be released from and
relieved of any of its obligations under any Loan Document for any acts or
events occurring or obligations arising after the closing of such Sale which are
not caused by or arising out of any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Sale;

(9)        Buyer has furnished to Lender all appropriate instruments evidencing
the Buyer’s capacity and good standing, and the authority of the signers to
execute the assumption of the Loan Documents and the Debt, which papers shall
include certified copies of all documents relating to the organization and
formation of the Buyer and of the entities, if any, which are Constituent
Entities of the Buyer, all of which shall be satisfactory to Lender and which,
inter alia, shall satisfy the requirements of Section 4.27 hereof;

(10)      Buyer shall assume the obligations of Borrower under any management
agreements pertaining to the Property, or shall cause the new manager and
management agreement to satisfy the requirements of Section 4.24 hereof;

(11)      The Ground Lease shall have been assigned to and assumed by the Buyer,
and the Ground Lessor has consented in writing thereto pursuant to the terms of
the Ground Lease; and

(12)      Buyer shall furnish an opinion of counsel satisfactory to Lender that
the acquisition of the Property and the assumption of the Loan Documents and
Debt by Buyer and, to the extent applicable, Successor Guarantor, was validly
authorized, and duly executed and delivered, and constitutes the legal, valid
and binding obligations of Buyer and Successor Guarantor, enforceable against
each of them in accordance with their respective terms, and with respect to such
other matters as Lender may reasonably require.

Upon the delivery of such assumption agreement by the Buyer, and the assumption
by the Successor Guarantor of the obligations of the Guarantor, “Loan Documents”
as used herein and in each Loan Document shall include such Loan Document as
assumed by Buyer and/or Successor Guarantor, as applicable (together with such
assumption agreements and any other instruments delivered to or for the benefit
of Lender in connection with such Sale).

 

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(c)         The following Transfers shall be permitted upon satisfaction of the
conditions noted in Section 4.11(d) below (such Transfers being referred to
herein as “Permitted Transfers”):

(i)        A Transfer which, when taken in the aggregate with all prior
Transfers effected pursuant to this Section 4.11(c)(i), results in the Transfer
of not more than forty-nine percent of the beneficial ownership interests in
Borrower; provided that (A) no Event of Default shall then be existing and
(B) Borrower continues (after such Transfer) to be Controlled by City Office
REIT; or

(ii)       A Transfer for estate planning purposes by any natural person who is
a holder of beneficial ownership interests in Borrower, provided that such
Transfer does not result in any change of Control of the interests Transferred;
or

(iii)      Any involuntary transfer caused by the death of a holder of any
natural person who is a direct or indirect ownership interests in Borrower or in
any Controlling Entity, in each case so long as (y) Borrower is reconstituted,
if required, following any such death and (z) either (i) the Person in Control
of Borrower and responsible for the management of the Property remains
unchanged, or (ii) any substitute for such Person is approved by Lender; or

(iv)      For so long as Borrower and Guarantor each is under the Control of
City Office REIT, a Transfer (directly or indirectly) of limited partnership
interests in Guarantor; and

(v)       Transfers of ownership interests in City Office REIT resulting solely
from the sale, transfer or issuance of shares of publicly traded common stock
listed on the New York Stock Exchange or another nationally recognized stock
exchange or marketplace in the United States of America and subject to the
federal laws thereof.

(d)         Each Permitted Transfer shall be subject to satisfaction of the
following conditions precedent if applicable thereto:

(i)        Other than with respect to Transfers as set forth in subsection
(v) of Section 4.11(c) above, evidence reasonably satisfactory to Lender that,
after giving effect to such Transfer, the representations set forth in
Section 4.1(nn) shall continue to be true, correct and complete as to each
Person that holds, in the aggregate, ten percent (10%) or more of the beneficial
ownership interests of Borrower or Controls Borrower; and

(ii)       If, as a result of any Permitted Transfer of the type described in
subsection (i)-(iv) of Section 4.11(c) above, any Person owns, in the aggregate,
twenty percent (20%) or more of the direct or indirect beneficial ownership
interests of Borrower (and such Person owned less than twenty percent (20%) of
such interests prior to such Transfer):

 

  A.

such Person shall have delivered a certification (in Lender’s then-current
standard form) as to its prior history (for a period of not less than ten
(10) years prior to such Transfer) regarding any Bankruptcy Action by such
Person (or an entity Controlled by such Person) and as to whether such Person
has any felony convictions during such period, which certification shall not
include any matters that a prudent commercial mortgage lender would generally
deem unacceptable;

 

  B.

Lender shall have received (at Borrower’s cost and expense) results of searches
of such public records as Lender may require, verifying and confirming the
information set forth in such certification; and

 

  C.

Borrower shall cause to be delivered to Lender an updated organizational chart
for Borrower (reflecting such Transfer, on a pro forma basis) together with any
Organizational Documents revised in connection with such Transfer.

(iii)      Ground Lessor shall have consented in writing to such Permitted
Transfer if required pursuant to the terms of the Ground Lease.

 

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Borrower shall deliver the foregoing to Lender not less than ten (10) days prior
to any such Transfer of the type described in subsection (i)-(iv) of
Section 4.11(c) above, except in the case of a Transfer pursuant to
Section 4.11(c)(iii) above, in which case such delivery shall be given
reasonably promptly thereafter. Upon Lender’s verification that such Transfer
satisfies the requirements of this Section 4.11(d), the revised organizational
chart delivered in accordance with Section 4.11(d)(ii)(C) shall be deemed
substituted for that attached as Exhibit C attached hereto.

In addition to the foregoing provisions of this Section 4.11, Guarantor may
Transfer any of its beneficial ownership interests in Borrower and the SPE
Component Entity, collectively, to a Qualified Transferee, provided each of the
following conditions is satisfied:

(1)        Borrower shall pay Lender a non-refundable application fee of
$5,000.00 and, upon completion of such Transfer, a transfer fee equal to one
percent (1%) of the then-current outstanding principal balance of the Loan;

(2)        Borrower shall pay any and all reasonable and documented
out-of-pocket costs incurred in connection with such Transfer (including
Lender’s counsel fees and disbursements for outside counsel and all recording
fees, title insurance premiums and mortgage and intangible taxes, and the fees
and expenses of the Rating Agencies pursuant to clause (5) below);

(3)        The proposed Qualified Transferee or its principals must have
demonstrated experience in owning and operating properties similar in location,
size, class and operation to the Property, which experience shall be reasonably
acceptable to Lender;

(4)        The proposed Qualified Transferee must not cause any representation
or covenant set forth in this Agreement or in any other Loan Document
(including, without limitation, those set forth in Section 4.27 of this
Agreement) to become not true, correct and complete in any material respects or
to be breached, and shall deliver (a) all organizational documentation
reasonably requested by Lender, which shall be reasonably satisfactory to
Lender, and (b) all certificates, agreements, covenants and legal opinions
reasonably required by Lender, and (c) a revised organizational chart reflecting
the proposed ownership of Borrower after giving effect to such proposed
Transfer;

(5)        If required by Lender, the proposed Qualified Transferee shall obtain
a Rating Confirmation with respect to such Transfer from each applicable Rating
Agency;

(6)        Such Qualified Transferee, or an Affiliate thereof under common
Control therewith approved by Lender in its sole discretion, shall assume the
obligations of the then-current Guarantor (including, without limitation,
pursuant to the Hazardous Substances Indemnity Agreement and the Indemnity and
Guaranty Agreement) and executes such documents as may be required by Lender to
evidence such assumption, and deliver such organization documents and
enforceability or other opinions as may be required by Lender; upon the delivery
of such assumptions, the previously existing Guarantor shall be released from
and relieved of any of its obligations under any Loan Document for any acts or
events occurring or obligations arising after the closing of such Transfer which
are not caused by or arising out of any acts or events occurring or obligations
arising prior to or simultaneously with the closing of such Transfer;

 

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(7)        The Property shall be managed in a manner that satisfies the
requirements of Section 4.24 of this Agreement; and

(8)        Borrower or the proposed Qualified Transferee shall deliver to Lender
a Non-Consolidation Opinion reflecting such Transfer in form and substance
reasonably satisfactory to Lender.

(e)        Notwithstanding (and without limiting) the foregoing provisions of
this Section 4.11, no transfer of any direct or indirect ownership interests in
Borrower may be made (other than with respect to Transfers as set forth in
subsection (v) of Section 4.11(c) above) such that the transferee owns, in the
aggregate with the ownership interests in Borrower of transferee’s Affiliates,
more than a forty-nine percent (49%) interest in Borrower unless such transfer
is conditioned upon the delivery of a nonconsolidation opinion acceptable to the
Lender and any applicable Rating Agency.

4.12      Use of Rents and Profits. Except to the extent provided to the
contrary in the Loan Documents, all Rents and Profits generated by or derived
from the Property shall first be utilized solely for current expenses directly
attributable to the ownership and operation of the Property, including, without
limitation, current expenses relating to Borrower’s liabilities and obligations
with respect to this Agreement and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be diverted by
Borrower, distributed to the Equity Holders or utilized for any other purposes,
in each case unless all expenses attributable to the ownership and operation of
the Property then due and payable have been fully paid and satisfied. Without
limiting the foregoing, Borrower shall pay when due all utility charges (e.g.,
for gas, electricity, water and sewer services and similar charges) which are
incurred by Borrower or its agents, and all other assessments or charges of a
similar nature, or assessments payable pursuant to any restrictive covenants,
whether public or private, affecting the Real Estate and/or the Improvements or
any portion thereof, whether or not such assessments or charges are or may
become liens thereon.

4.13      Access Privileges and Inspections. Lender and the agents,
representatives and employees of Lender shall, subject to the rights of Tenants,
have full and free access to the Real Estate and the Improvements and any other
location where books and records concerning the Property are kept at all
reasonable times for the purposes of inspecting the Property and of examining,
copying and making extracts from the books and records of Borrower relating to
the Property. Borrower shall lend assistance to all such agents, representatives
and employees of Lender. Upon reasonable notice to Borrower, Borrower shall make
principals and executives of Borrower available at reasonable times to meet with
Lender to review and discuss the status of the Loan and the Property.

4.14      Waste; Alteration of Improvements. Borrower shall not commit, suffer
or permit any waste on the Property nor take any actions that might invalidate
any insurance carried on the Property. Borrower shall maintain the Property in
good condition and repair. No part of the Improvements may be removed,
demolished or materially altered, in each case, without the prior written
consent of Lender, except as required pursuant to Applicable Laws or to cause
the Property not to be in violation of any Lease approved or deemed approved
pursuant to Section 4.10. Without the prior written consent of Lender in each
case, Borrower shall not commence construction of any improvements on the Real
Estate other than improvements required for the maintenance or repair of the
Property.

4.15      Zoning. Without the prior written consent of Lender in each case,
Borrower shall not (a) change the use of the Property or (b) seek, make, suffer,
consent to or acquiesce in any change in the

 

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zoning or conditions of use of the Real Estate or the Improvements. If, under
applicable zoning provisions, the use of all or any part of the Real Estate or
the Improvements is or becomes a nonconforming use, Borrower shall not cause or
permit such use to be discontinued or abandoned without the prior written
consent of Lender. Without Lender’s prior written consent, Borrower shall not
file or subject any part of the Real Estate or the Improvements to any
declaration of condominium or co-operative or convert any part of the Real
Estate or the Improvements to a condominium, co-operative or other form of
multiple ownership and governance.

4.16       Financial Statements; Books and Records; Informational Reporting.
Borrower shall keep accurate books and records of account of the Property and
its own financial affairs sufficient to permit the preparation of financial
statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right
to examine, copy and audit Borrower’s records and books of account at all
reasonable times. So long as all or any portion of the Loan is outstanding,
Borrower shall provide to Lender, in addition to any other financial statements
required hereunder or under any of the other Loan Documents, the following
financial statements and information, all of which must be certified to Lender
as being true and correct by Borrower or the person or entity to which they
pertain, as applicable, be prepared in accordance with generally accepted
accounting principles consistently applied, and be in form and substance
acceptable to Lender:

(a)        copies of all tax returns filed by Borrower, within thirty (30) days
after the date of filing;

(b)        monthly operating statements for the Property (including a current
Rent Roll), within thirty (30) days after the end of each month, provided,
however, that after a Secondary Market Transaction, monthly operating statements
shall only be required if (i) a Cash Management Period is continuing, or (ii) if
the amount of any payment under the Loan Documents (including, without
limitation, any deposit to any Reserve) is determined based in whole or in part
on the revenue, expenses or net cash flow (or comparable concepts) of Borrower
or the Property;

(c)        quarterly operating statements for the Property, accompanied by a
current Rent Roll certified by Borrower as being true, correct and complete,
within thirty (30) days after the end of each calendar quarter;

(d)        annual financial statements for Borrower (setting forth Borrower’s
balance sheet and operating statements for the Property) and each Guarantor in
connection with the Loan including an annual balance sheet for the Property,
within ninety (90) days after the end of each calendar year; and

(e)        such other information with respect to the Property, Borrower, the
principals in Borrower, and each Guarantor which may reasonably be requested
from time to time by Lender, within a reasonable time after the applicable
request.

If any of the aforementioned materials are not furnished to Lender within the
applicable time periods, in addition to any other rights and remedies of Lender
contained herein, Lender shall have the right, but not the obligation, to obtain
the same by means of an audit by an independent certified public accountant
selected by Lender, in which event Borrower agrees to pay, or to reimburse
Lender for, any expense of such audit and further agrees to provide all
necessary information to said accountant and to otherwise cooperate in the
making of such audit.

4.17       Further Documentation. Borrower shall, on the request of Lender and
at the expense of Borrower, promptly: (a) correct any defect, error or omission
which may be discovered in the contents of this Agreement or in the contents of
any of the other Loan Documents; (b) execute, acknowledge, deliver

 

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and record or file such further instruments (including, without limitation,
further mortgages, deeds of trust, security deeds, security agreements,
financing statements, continuation statements and assignments of rents or
leases) and promptly do such further acts as may be necessary, desirable or
proper to carry out more effectively the purposes of this Agreement and the
other Loan Documents and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the
Property; (c) execute, acknowledge, deliver, procure and record or file any
document or instrument (including specifically any financing statement) deemed
advisable by Lender to protect, continue or perfect the liens or the security
interests hereunder against the rights or interests of third persons; and
(d) furnish to Lender, upon Lender’s request, a duly acknowledged written
statement and estoppel certificate addressed to such party or parties as
directed by Lender and in form and substance supplied by Lender, setting forth
all amounts due under the Note, stating whether any Default or Event of Default
exists, stating whether any offsets or defenses exist against the Debt,
affirming that the Loan Documents are the legal, valid and binding obligations
of Borrower, and containing such other matters as Lender may reasonably require.

4.18      Payment of Costs; Reimbursement to Lender. Borrower shall pay all
costs and expenses of every character incurred in connection with the closing of
the Loan or otherwise attributable or chargeable to Borrower as the owner of the
Property, including, without limitation, appraisal fees, recording fees,
documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, public records search
fees, escrow fees and attorneys’ fees (including, without limitation, Lender’s
attorneys’ fees and expenses). Borrower shall pay to Lender any and all
reasonable costs and expenses (including, without limitation, reasonable
attorneys’ fees) in connection with any matter for which the consent or approval
of Lender is required (or which is required to be delivered to Lender for review
and/or approval) pursuant to the Loan Documents. If Borrower defaults in any
such payment, which default is not cured within any applicable grace or cure
period, Lender may pay the same and Borrower shall reimburse Lender on demand
for all such costs and expenses incurred or paid by Lender, together with such
interest thereon at the Default Rate from and after the date of Lender’s making
such payment until reimbursement thereof by Borrower. Further, Borrower shall
promptly notify Lender in writing of any litigation or threatened litigation
affecting the Property, or any other demand or claim which, if enforced, could
impair or threaten to impair Lender’s security hereunder. Without limiting or
waiving any other rights and remedies of Lender hereunder, if any action or
proceeding of any kind (including, but not limited to, any bankruptcy,
insolvency, arrangement, reorganization or other debtor relief proceeding) is
commenced which might affect Lender’s interest in the Property or Lender’s right
to enforce its security, or upon the occurrence of any other Event of Default,
then Lender may, at its option, with or without notice to Borrower, make any
appearances, disburse any sums and take any actions as may be necessary or
desirable to protect or enforce the security of this Agreement, the Mortgage and
the other Loan Documents or to remedy such Event of Default (without, however,
waiving any Default). Borrower agrees to pay on demand all expenses of Lender
incurred with respect to the foregoing (including, but not limited to,
reasonable fees and disbursements of counsel), together with interest thereon at
the Default Rate from and after the date on which Lender incurs such expenses
until reimbursement thereof by Borrower. The necessity for any such actions and
of the amounts to be paid shall be determined by Lender in its discretion.
Lender is hereby empowered to enter and to authorize others to enter upon the
Property or any part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without thereby becoming liable to
Borrower or any person in possession holding under Borrower. Borrower hereby
acknowledges and agrees that the remedies set forth in this Section 4.18 shall
be exercisable by Lender, and any and all payments made or costs or expenses
incurred by Lender in connection therewith shall, without demand, immediately be
repaid by Borrower with interest thereon at the Default Rate, notwithstanding
the fact that such remedies were exercised and such payments made and costs
incurred by Lender after the filing by Borrower of a voluntary case or the
filing against Borrower of an involuntary case pursuant to or within the meaning
of

 

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the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any
similar action pursuant to any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter, in effect, which may be or become applicable to Borrower, Lender, any
Guarantor, the Debt or any of the Loan Documents. Borrower hereby indemnifies
and holds Lender harmless from and against all loss, cost and expenses with
respect to any Default hereof, any liens (i.e., judgments, mechanics’ and
materialmen’s liens, or otherwise), charges and encumbrances filed against the
Property, and from any claims and demands for damages or injury, including
claims for property damage, personal injury or wrongful death, arising out of or
in connection with any accident or fire or other casualty on the Real Estate or
the Improvements or any nuisance made or suffered thereon, including, in any
case, attorneys’ fees, costs and expenses as aforesaid, whether at pretrial,
trial or appellate level, and such indemnity shall survive payment in full of
the Debt. This Section 4.18 shall not be construed to require Lender to incur
any expenses, make any appearances or take any actions.

4.19      Security Interest and Security Agreement. Borrower acknowledges and
agrees that the Mortgage is also a security agreement under the Uniform
Commercial Code for the UCC Collateral.

4.20      Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Real Estate or the
Improvements without the prior written consent of Lender. The purchaser at any
foreclosure sale under the Mortgage may, at its discretion, disaffirm any
easement or right-of-way granted in violation of any of the provisions of this
Agreement and may take immediate possession of the Property free from, and
despite the terms of, such grant of easement or right-of-way. If Lender consents
to the grant of an easement or right-of-way, Lender agrees to grant such consent
provided that Lender is paid a standard review fee together with all other
expenses, including, without limitation, attorneys’ fees, incurred by Lender in
the review of Borrower’s request and in the preparation of documents effecting
the subordination. Borrower shall at all times comply with all easement
agreements, reciprocal easement agreements, declarations, restrictive covenants
and any other similar types of agreements now or hereafter affecting the
Property, and Borrower shall not amend, modify or terminate any such easement
agreements, reciprocal easement agreements, declarations, restrictive covenants
or any other similar types of agreements without Lender’s prior written consent.

4.21      Compliance with Laws. Borrower shall at all times comply with all
Applicable Laws, even if such compliance shall require structural changes to the
Property. Borrower may, upon providing Lender with security satisfactory to
Lender, proceed diligently and in good faith to contest the validity or
applicability of any Applicable Law so long as the Property shall not be subject
to any lien, charge, fine or other liability, and shall not be in danger of
being forfeited, lost or closed, during or as a result of such contest. Borrower
shall not alter the Property in any manner that would materially increase
Borrower’s responsibilities for compliance with Applicable Laws without the
prior approval of Lender. Borrower shall not use or occupy, or allow the use or
occupancy of, the Property in any manner which violates any Lease or any
Applicable Law or which constitutes a public or private nuisance or which makes
void, voidable or cancelable, or increases the premium of, any insurance then in
force with respect thereto. Borrower shall, from time to time, upon Lender’s
request, provide Lender with evidence reasonably satisfactory to Lender that the
Property complies with all Applicable Laws. Borrower shall keep all material
licenses, permits, franchises, certificates of occupancy, consents and other
approvals necessary for the operation of the Property in full force and effect.

4.22      Additional Taxes. In the event of the enactment after this date of any
law of the State where the Real Estate is located or of any other governmental
entity deducting from the value of the Property for the purpose of taxation any
lien or security interest thereon, or imposing upon Lender the payment of the
whole or any part of the taxes required to be paid by Borrower, or changing in
any way the laws relating to the taxation of mortgages or security agreements or
debts secured by mortgages or security agreements or the interest of lenders or
secured parties in the property covered thereby, or the

 

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manner of collection of such taxes, so as to adversely affect this Agreement,
the Mortgage or the Debt or Lender, then, and in any such event, Borrower, upon
demand by Lender, shall pay such Taxes or Other Charges, or reimburse Lender
therefor; provided, however, that if in the opinion of counsel for Lender (a) it
might be unlawful to require Borrower to make such payment, or (b) the making of
such payment might result in the imposition of interest beyond the maximum
amount permitted by law, then and in either such event, Lender may elect, by
notice in writing given to Borrower, to declare all of the Debt to be and become
due and payable in full thirty (30) days from the giving of such notice.

4.23       Borrower’s Waivers.

(a)        To the full extent permitted by applicable law, Borrower shall not at
any time insist upon, plead, claim or take the benefit or advantage of any law
now or hereafter in force providing for any appraisement, valuation, stay,
moratorium or extension, or any law now or hereafter in force providing for the
reinstatement of the Debt prior to any sale of the Property to be made pursuant
to any provisions contained herein or prior to the entering of any decree,
judgment or order of any court of competent jurisdiction, or any right under any
statute to redeem all or any part of the Property so sold. Borrower, for
Borrower and Borrower’s successors and assigns, and for any and all Persons ever
claiming any interest in the Property, to the full extent permitted by law,
hereby knowingly, intentionally and voluntarily with and upon the advice of
competent counsel: (i) waives, releases, relinquishes and forever forgoes all
rights of valuation, appraisement, stay of execution, reinstatement and notice
of election or intention to mature or declare due the Debt (except such notices
as are specifically provided for herein); (ii) waives, releases, relinquishes
and forever forgoes all right to a marshalling of the assets of Borrower,
including the Property, to a sale in the inverse order of alienation, or to
direct the order in which any of the Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees that
any court having jurisdiction to foreclose such liens and security interests may
order the Property sold as an entirety; and (iii) waives, releases, relinquishes
and forever forgoes all rights and periods of redemption provided under
applicable law. To the full extent permitted by law, Borrower shall not have or
assert any right under any statute or rule of law pertaining to the exemption of
homestead or other exemption under any federal, state or local law now or
hereafter in effect, the administration of estates of decedents or other matters
whatever to defeat, reduce or affect the right of Lender under the terms of this
Agreement, the Mortgage or any of the other Loan Documents to a sale of the
Property, for the collection of the Debt without any prior or different resort
for collection, or the right of Lender under the terms of this Agreement, the
Mortgage or any of the other Loan Documents to the payment of the Debt out of
the proceeds of sale of the Property in preference to every other claimant
whatever. Further, Borrower hereby knowingly, intentionally and voluntarily,
with and upon the advice of competent counsel, waives, releases, relinquishes
and forever forgoes all present and future statutes of limitations as a defense
to any action to enforce the provisions of this Agreement, the Mortgage or any
of the other Loan Documents or to collect any of the Debt the fullest extent
permitted by law. Borrower covenants and agrees that upon the commencement of a
voluntary or involuntary bankruptcy proceeding by or against Borrower, Borrower
shall not seek a supplemental stay or otherwise shall not seek pursuant to 11
U.S.C. §105 or any other provision of the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case
law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or
inhibit the ability of Lender to enforce any rights of Lender against any
Guarantor of the secured obligations or any other party liable with respect
thereto by virtue of any indemnity, guaranty or otherwise.

(b)        Except as may be specifically provided in the Loan Documents,
Borrower waives presentment and demand for payment, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest and notice of
protest and non-payment, all applicable exemption rights, valuation and
appraisement, notice of demand, and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of the
Note and this Agreement and the bringing of

 

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suit and diligence in taking any action to collect any sums owing under the Note
or hereunder or in proceeding against any of the rights and collateral securing
payment hereof. Borrower agrees (i) that the time for any payments under the
Note or hereunder may be extended from time to time without notice and consent,
(ii) to the acceptance by Lender of further collateral, (iii) the release by
Lender of any existing collateral for the payment of the Note or the payments
due under this Agreement or any of the other Loan Documents, (iv) to any and all
renewals, waivers or modifications that may be granted by Lender with respect to
the payment or other provisions of the Note, this Agreement or any of the other
Loan Documents, and/or (v) that additional Persons may become parties hereto or
the other Loan Documents all without notice to Borrower and without in any
manner affecting Borrower’s obligations or liabilities under or with respect to
the Note, this Agreement or any of the other Loan Documents. No extension of
time for the payment of the Note or the payments due under this Agreement or any
of the other Loan Documents or any installment thereof or hereof shall affect
the obligations or liabilities of Borrower under the Note, this Agreement or any
of the other Loan Documents even if Borrower is not a party to such agreement.

(c)        Failure of Lender to exercise any of the options or remedies granted
herein to Lender upon the happening of one or more of the events giving rise to
such options or remedies shall not constitute a waiver of the right to exercise
the same or any other option or remedy at any subsequent time in respect to the
same or any other event. The acceptance by Lender of any payment hereunder or
under any of the other Loan Documents that is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any of the options or remedies granted herein or
under any of the other Loan Documents to Lender at that time or at any
subsequent time or nullify any prior exercise of any such option or remedy
without the express written acknowledgment of the Lender.

4.24       Management.

(a)        The management of the Property (including, without limitation,
property management, leasing brokerage and/or asset management services) shall
be performed by one or more of the following: (i) an entity affiliated with
Borrower approved by Lender for so long as Borrower or said affiliated entity is
managing the Property in a first class manner; and/or (ii) a professional
property management company approved by Lender, and in either case pursuant to a
written agreement (a “Property Management Agreement”) approved by Lender. As of
the date hereof, the entity named in this Agreement as “Property Manager” is the
only entity responsible for management of the Property as aforesaid. In no event
shall any Property Manager be removed, replaced or retained, or any Property
Management Agreement entered into, modified or amended, in each case without the
prior written consent of Lender, which shall not unreasonably be withheld. After
an Event of Default hereunder or a default under any Property Management
Agreement then in effect, which default is not cured within any applicable grace
or cure period, Lender shall have the right to terminate, or to direct Borrower
to terminate, such Property Management Agreement upon thirty (30) days’ notice
and to retain, or to direct Borrower to retain, a new Property Manager approved
by Lender. It shall be a condition of Lender’s consent to any Property
Management Agreement, whether with an affiliate of Borrower or a professional
property management company, that such Property Manager enter into an agreement
with Lender whereby the manager acknowledges and agrees to the aforesaid rights
of Lender, and as to such other matters as Lender may require.

(b)        Borrower has delivered to Lender a true, correct and complete copy of
each Contract now in effect. Borrower will comply with all of its obligations
under all Contracts which are material to the operation of the Property in
accordance with Borrower’s current practice, and with all material obligations
under all other Contracts. Without limiting the restrictions set forth in
Section 4.24(a) pertaining to the Property Management Agreement, Borrower may
not terminate any other Contract that

 

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is material to the operation of the Property, or enter into any amendment
thereto that makes the terms thereof less favorable to Borrower, in each case
without the prior written consent of Lender, which shall not unreasonably be
withheld; provided, however, that if the other party to such Contract is in
default thereunder, and Borrower can replace the goods or services provided on
terms not materially disadvantageous to Borrower, then the prior written consent
of Lender shall not be required to terminate such Contract. Borrower shall
perform its obligations under each Contract and each of the General Intangibles,
except where Borrower’s failure to do so would not have a material adverse
effect on Borrower or the Property. Borrower represents that its interest under
each Contract, and each General Intangible, is not subject to any claim, setoff,
lien, deduction or encumbrance of any nature, other than that created by the
Loan Documents. At any time during the continuance of an Event of Default,
Lender may (but shall not be obligated to) take such action as Lender may
determine to be reasonably necessary to protect the rights of Borrower under any
or all of the Contracts and/or the General Intangibles. Should Lender, or
Lender’s designee, acquire the Property (whether pursuant to exercise of
Lender’s remedies hereunder or by transfer in lieu thereof), Lender may elect to
assume Borrower’s interests under any or all of the Contracts or General
Intangibles as Lender shall determine, and Borrower shall cause to be
terminated, without obligation to Lender or the successor owner of the Property,
such other Contracts and/or General Intangibles as Lender may direct.

4.25       Hazardous Waste and Other Substances.

(a)        Borrower hereby represents and warrants to Lender that, as of the
date hereof, except as disclosed in writing to Lender: (i) to the best of
Borrower’s knowledge, information and belief, except as expressly set forth in
the Environmental Report, the Property is not in direct or indirect violation of
any Environmental Laws; (ii) to the best of Borrower’s knowledge, information
and belief, except as expressly set forth in the Environmental Report, no
Hazardous Substances are located on or have been handled, generated, stored,
processed or disposed of on or released or discharged from the Property
(including underground contamination) except for those substances used by
Borrower or Tenants in the ordinary course of their respective business and in
compliance with all Environmental Laws; (iii) the Property is not subject to any
private or governmental lien or judicial or administrative notice or action
relating to Hazardous Substances; (iv) to the best of Borrower’s knowledge,
information and belief, except as expressly set forth in the Environmental
Report, there are no existing or closed underground storage tanks or other
underground storage receptacles for Hazardous Substances on the Property;
(v) Borrower has received no notice of, and to the best of Borrower’s knowledge
and belief, there exists no investigation, action, proceeding or claim by any
agency, authority or unit of government or by any third party which could result
in any liability, penalty, sanction or judgment under any Environmental Laws
with respect to any condition, use or operation of the Property nor does
Borrower know of any basis for such a claim; and (vi) Borrower has received no
notice of and, to the best of Borrower’s knowledge and belief, there has been no
claim by any party that any use, operation or condition of the Property has
caused any nuisance or any other liability or adverse condition on any other
property nor does Borrower know of any basis for such a claim.

(b)        Borrower shall keep or cause the Property to be kept free from
Hazardous Substances (except those substances used by Borrower and Tenants in
the ordinary course of their respective business and, in each case, in
compliance with all Environmental Laws and in a manner that does not result in
contamination of the Property) and in compliance with all Environmental Laws,
shall not install or use any underground storage tanks, shall expressly prohibit
the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants (except in the ordinary course of a business
that is not a Prohibited Use and in each case in compliance with all
Environmental Laws and in a manner that does not result in contamination of the
Property) and, without limiting the generality of the foregoing, shall not
install in the Improvements or permit to be installed in the Improvements
asbestos-containing materials (“ACMs”) or any substance containing ACMs.
Borrower

 

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shall, if required under applicable Environmental Laws, maintain all applicable
Material Safety Data Sheets with respect to the Property, and make same
available to Lender or Lender’s consultants upon reasonable notice.

(c)        Borrower shall promptly notify Lender if Borrower shall become aware
of the possible existence of any Hazardous Substances on the Property (except to
the extent used in the ordinary course of a business that is not a Prohibited
Use and in each case in compliance with all Environmental Laws and in a manner
that does not result in contamination of the Property) or if Borrower shall
become aware that the Property is or may be in direct or indirect violation of
any Environmental Laws. Further, immediately upon receipt of the same, Borrower
shall deliver to Lender copies of any and all orders, notices, permits,
applications, reports, and other communications, documents and instruments
pertaining to the actual, alleged or potential presence or existence of any
Hazardous Substances at, on, about, under, within, near or in connection with
the Property. Borrower shall, promptly and when and as required by Lender, at
Borrower’s sole cost and expense, take all actions as shall be necessary or
advisable for the clean-up of any and all portions of the Property or other
affected property, including, without limitation, all investigative, monitoring,
removal, containment and remedial actions in accordance with all applicable
Environmental Laws (and in all events in a manner satisfactory to Lender), and
shall further pay or cause to be paid, at no expense to Lender, all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Property; in the event Borrower fails to take such
actions, (i) Lender may, but shall not be obligated to, cause the Property or
other affected property to be freed from any Hazardous Substances or otherwise
brought into conformance with Environmental Laws and any and all costs and
expenses incurred by Lender in connection therewith, together with interest
thereon at the Default Rate from the date incurred by Lender until actually paid
by Borrower, shall be immediately paid by Borrower on demand, and (ii) Borrower
hereby grants to Lender and its agents and employees access to the Property and
a license to remove any items deemed by Lender to be Hazardous Substances and to
do all things Lender shall deem necessary to bring the Property in conformance
with Environmental Laws. Borrower covenants and agrees, at Borrower’s sole cost
and expense, to indemnify, defend (at trial and appellate levels, and with
attorneys, consultants and experts acceptable to Lender), and hold Lender
harmless from and against any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations, directives,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys’, consultants’ and experts’ fees and
disbursements actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against Lender or the Property,
and arising directly or indirectly from or out of: (A) the presence, release or
threat of release of any Hazardous Substances on, in, under or affecting all or
any portion of the Property or (to the extent such Hazardous Substances were
released from, or migrated from, the Property) any surrounding areas, regardless
of whether or not caused by or within the control of Borrower; (B) the violation
of any Environmental Laws relating to or affecting the Property, whether or not
caused by or within the control of Borrower; (C) the failure by Borrower to
comply fully with the terms and conditions of this Section 4.25; (D) the breach
of any representation or warranty contained in this Section 4.25; or (E) the
enforcement of this Section 4.25, including, without limitation, the cost of
assessment, containment and/or removal of any and all Hazardous Substances from
all or any portion of the Property or (to the extent such Hazardous Substances
were released from, or migrated from, the Property) any surrounding areas, the
cost of any actions taken in response to the presence, release or threat of
release of any Hazardous Substances on, in, under or affecting any portion of
the Property or (to the extent such Hazardous Substances were released from, or
migrated from, the Property) any surrounding areas to prevent or minimize such
release or threat of release so that it does not migrate or otherwise cause or
threaten danger to present or future public health, safety, welfare or the
environment, and costs incurred to comply with the Environmental Laws in
connection with all or any portion of the Property or any surrounding areas. The
indemnity set forth in this Section 4.25(c) shall also include any diminution in
the

 

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value of the security afforded by the Property or any future reduction in the
sales price of the Property by reason of any matter set forth in this
Section 4.25(c). Lender’s rights under this Section 4.25(c) shall survive
payment in full of the Debt and shall be in addition to all other rights of
Lender under this Agreement, the Mortgage, the Note and the other Loan
Documents.

(d)        Upon Lender’s request, at any time during the continuance of an Event
of Default or at such other time as Lender has reasonable grounds to believe
that Hazardous Substances are or have been released, stored or disposed of on or
around the Property or that the Property may be in violation of the
Environmental Laws, Borrower shall provide, at Borrower’s sole cost and expense,
an inspection or audit of the Property prepared by a hydrogeologist or
environmental engineer or other appropriate consultant approved by Lender
indicating the presence or absence of Hazardous Substances on the Property or an
inspection or audit of the Improvements prepared by an engineering or consulting
firm approved by Lender indicating the presence or absence of friable asbestos
or substances containing asbestos on the Property. If Borrower fails to provide
such inspection or audit within thirty (30) days after such request, Lender may
order the same, and Borrower hereby grants to Lender and its employees and
agents access to the Property and a license to undertake such inspection or
audit. The cost of such inspection or audit, together with interest thereon at
the Default Rate from the date incurred by Lender until actually paid by
Borrower, shall be immediately due and payable to Lender by Borrower on demand.

(e)        The obligations of Borrower under this Agreement (including, without
limitation, this Section 4.25) with respect to Hazardous Substances shall not in
any way limit the obligations of any party under the Hazardous Substances
Indemnity.

4.26       Indemnification; Subrogation.

(a)        Borrower shall indemnify, defend and hold Lender harmless against:
(i) any and all claims for brokerage, leasing, finders or similar fees which may
be made relating to the Property or the Debt, and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses (including Lender’s reasonable attorneys’ fees, together with
reasonable appellate counsel fees, if any) of whatever kind or nature which may
be asserted against, imposed on or incurred by Lender in connection with the
Debt, this Agreement, the other Loan Documents, the Property, or any part
thereof, or the exercise by Lender of any rights or remedies granted to it under
this Agreement; provided, however, that nothing herein shall be construed to
obligate Borrower to indemnify, defend and hold harmless Lender from and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses enacted against, imposed on or incurred by
Lender by reason of Lender’s willful misconduct or gross negligence.

(b)        If Lender is made a party defendant to any litigation or any claim is
threatened or brought against Lender concerning the Debt, this Agreement, the
other Loan Documents, the Property, or any part thereof, or any interest
therein, or the construction, maintenance, operation or occupancy or use
thereof, then Borrower shall indemnify, defend and hold Lender harmless from and
against all liability by reason of said litigation or claims, including
reasonable attorneys’ fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Lender in any such litigation or claim, whether or
not any such litigation or claim is prosecuted to judgment. If Lender commences
an action against Borrower to enforce any of the terms hereof or to prosecute
any breach by Borrower of any of the terms hereof or of any of the other Loan
Documents, Borrower shall pay to Lender its reasonable attorneys’ fees (together
with reasonable appellate counsel fees, if any) and expenses. The right to such
attorneys’ fees (together with reasonable appellate counsel fees, if any) and
expenses shall be deemed to have accrued on the commencement of such action, and
shall be enforceable whether or not such action is prosecuted to judgment. If
Borrower breaches any term of this Agreement, Lender may engage the services of
an attorney or attorneys to protect its rights hereunder, and in the event of
such engagement following any

 

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breach by Borrower, Borrower shall pay Lender reasonable attorneys’ fees
(together with reasonable appellate counsel fees, if any) and expenses incurred
by Lender, whether or not an action is actually commenced against Borrower by
reason of such breach. All references to “attorneys” in this Section 4.26 and
elsewhere in this Agreement shall include without limitation any attorney or law
firm engaged by Lender and Lender’s in-house counsel, and all references to
“fees and expenses” in this Section 4.26 and elsewhere in this Agreement shall
include without limitation any fees of such attorney or law firm and any
allocation charges and allocation costs of Lender’s in-house counsel. The rights
of Lender and obligations of Borrower under this section shall survive the
foreclosure of the Mortgage and/or the repayment of the Debt. The rights of
Lender under this section shall inure to the benefit of all current and future
holders of all or any portion of the Loan from time to time, and shall continue
to inure to the benefit of any such holder even after any such holder transfers
its interest in the Loan (it being acknowledged, for purposes of clarification,
that in connection with any transfer of a holder’s interest in the Loan, that
such rights shall continue to inure to the benefit of both the transferor and
transferee of such interest in the Loan).

(c)         A waiver of subrogation shall be obtained by Borrower from its
insurance carrier and, consequently, Borrower waives any and all right to claim
or recover against Lender, its officers, employees, agents and representatives,
for loss of or damage to Borrower, the Property, Borrower’s property or the
property of others under Borrower’s control from any cause insured against or
required to be insured against by the provisions of this Agreement.

4.27       Single-Purpose Entity Covenants. Borrower hereby represents, warrants
and covenants, as of the date hereof and until such time as the Debt is paid in
full, that without, in each case, the prior written consent of Lender (which may
be withheld or conditioned by Lender in its sole and absolute discretion for any
reason or for no reason):

(a)         The sole purpose of Borrower has been, is and will be, to acquire,
own, hold, maintain, and operate the Property, together with such other
activities as may be necessary or advisable in connection with the ownership and
operation of the Property. Borrower has not engaged, and does not and shall not
engage, in any business, and it has and shall have no purpose, unrelated to the
Property. Borrower has not owned, does not own and shall not acquire, any real
property or own assets other than those related to the Property and/or otherwise
in furtherance of the limited purposes of Borrower.

(b)         Borrower shall at all times satisfy one of the following
requirements:

(i)        Borrower shall be a corporation that, at all times, has an
Independent Director;

(ii)       Borrower shall be an SPE-Qualifying LLC that at all times has an
Independent Director;

(iii)      Borrower shall be a limited partnership as to which, at all times,
each general partner is an SPE Component Entity; or

(iv)      Borrower shall be a limited liability company (other than an
SPE-Qualifying LLC) as to which, at all times, at least one member shall be an
SPE Component Entity.

(c)         Borrower shall not:

(i)        make any loans to any Affiliate, any Equity Holder or any Affiliate
of any Equity Holder;

 

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(ii)       except as expressly permitted by Lender in writing (including,
without limitation, as contemplated by Section 4.11 of this Agreement), sell,
encumber (except with respect to Lender) or otherwise transfer or dispose of all
or substantially all of its properties (a sale or disposition will be deemed to
be “all or substantially all of its properties” if the sale or disposition
includes the Property or if the total value of the properties sold or disposed
of in such transaction and during the twelve months preceding such transaction
is sixty six and two thirds percent (66-2/3%) or more in value of its total
assets as of the end of the most recently completed fiscal year);

(iii)      to the fullest extent permitted by law, dissolve, wind-up, or
liquidate, or merge or consolidate with, or acquire all or substantially all of
the assets of, any other person or entity (whether or not an Affiliate);

(iv)      change the nature of the business conducted by it;

(v)       act in a manner not consistent with the assumptions of any
Non-Consolidation Opinion delivered to Lender in connection with the closing of
the Loan, or in connection with any Transfer;

(vi)      perform, nor shall any Controlling Entity of Borrower have the
authority to cause Borrower to perform, any act in respect of Borrower in
violation of any (a) applicable laws or regulations or (b) any agreement between
Borrower and Lender (including, without limitation, this Agreement and the other
Loan Documents); or

(vii)     except as permitted by Lender in writing, amend, modify or otherwise
change its Organizational Documents (which approval, after a Secondary Market
Transaction with respect to the Loan, may be conditioned upon Lender’s receipt
of a Rating Confirmation).

(d)         Without the prior written affirmative vote of both (1) one hundred
percent (100%) of the members, partners or stockholders of Borrower, and (2) the
Independent Directors of Borrower and/or (if applicable) of any SPE Component
Entity of Borrower, Borrower shall not undertake a Bankruptcy Action.

(e)         Borrower shall have no indebtedness (including any PACE Loan) or
incur any liability other than (i) unsecured debts and liabilities for trade
payables and accrued expenses incurred in the ordinary course of its business of
operating the Property; provided, however, that such unsecured indebtedness or
liabilities (A) are in amounts that are normal and reasonable under the
circumstances, but in no event to exceed two percent (2%) of the original
principal amount of the Loan, and (B) are not evidenced by a note and are paid
when due, but in no event for more than sixty (60) days from the date that such
indebtedness or liabilities are incurred, and (ii) the Debt. No indebtedness
(including any PACE Loan) other than the Loan shall be secured (senior,
subordinated or pari passu) by the Property.

(f)         The provisions of this Section 4.27(f) shall apply at all times when
Borrower is a limited liability company or a partnership. A Bankruptcy Action by
or against any partner or member of Borrower, as applicable, shall not cause
such partner or member of Borrower, as applicable, to cease to be a partner or
member of Borrower and upon the occurrence of a Bankruptcy Action, Borrower
shall continue without dissolution. Additionally, to the fullest extent
permitted by law, if any partner or member of Borrower, as applicable, ceases to
be a partner or member of Borrower, as applicable, such event shall not
terminate Borrower and Borrower shall continue without dissolution.

(g)         Borrower shall at all times observe the applicable legal
requirements for the recognition of Borrower as a legal entity separate from any
Equity Holder or Affiliates of Borrower or of any Equity Holder, including,
without limitation, as follows:

(i)        It shall either (A) maintain its principal executive office and
telephone and facsimile numbers separate from that of any Affiliate or of any
Equity Holder and shall conspicuously identify such office and numbers as its
own, or (B) shall allocate by written agreement fairly and reasonably any rent,
overhead and expenses for shared office space. Additionally, it shall use its
own separate stationery, invoices and checks which reflects its name, address,
telephone number and facsimile number.

 

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(ii)       It shall maintain correct and complete financial statements,
accounts, books and records and other entity documents separate from those of
any Affiliate or any Equity Holder or any other person or entity. It shall
prepare unaudited quarterly and annual financial statements, and its financial
statements shall substantially comply with generally accepted accounting
principles.

(iii)      It shall maintain its own separate bank accounts, payroll and
correct, complete and separate books of account.

(iv)      It shall file or cause to be filed its own separate tax returns, if
required to file tax returns.

(v)       It shall hold itself out to the public (including any of its
Affiliates’ creditors) under its own name and as a separate and distinct entity
and not as a department, division or otherwise of any Affiliate or any Equity
Holder.

(vi)      It shall observe all customary formalities regarding its existence,
including holding meetings and maintaining current and accurate entity record
books separate from those of any Affiliate or any Equity Holder.

(vii)     It shall hold title to its assets in its own name and act solely in
its own name and through its own duly authorized officers and agents. No
Affiliate or Equity Holder shall be appointed or act as its agent (except that,
with respect to Borrower, an Affiliate or Equity Holder may serve as Property
Manager with respect to the Property if in accordance with Section 4.24 hereof).

(viii)    Investments shall be made in its name directly by it or on its behalf
by brokers engaged and paid by it.

(ix)      Except as required by Lender, it shall not guarantee, pledge or assume
or hold itself out or permit itself to be held out as having guaranteed, pledged
or assumed any liabilities or obligations of any Equity Holder or any Affiliate,
nor shall it make any loan, except as permitted in the Loan Documents.

(x)       It was solvent as of the date of its formation and remains solvent as
of the date hereof, and will not make any distribution or dividend if doing so
would cause it not to be solvent.

(xi)      Its assets shall be separately identified, maintained and segregated.
Its assets shall at all times be held by or on behalf of it and, if held on its
behalf by another entity, shall at all times be kept identifiable (in accordance
with customary usages) as assets owned by it. This restriction requires, among
other things, that (A) funds shall be deposited or invested in its name,
(B) funds shall not be commingled with the funds of any Affiliate or any Equity
Holder, (C) it shall maintain all accounts in its own name and with its own tax
identification number, separate from those of any Affiliate or any Equity
Holder, and (D) its funds shall be used only for its business.

(xii)     It shall maintain its assets in such a manner that it is not costly or
difficult to segregate, ascertain or identify its individual assets from those
of any Affiliate or any Equity Holder.

 

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(xiii)     It shall pay or cause to be paid its own liabilities and expenses of
any kind, including but not limited to salaries of its employees, only out of
its own separate funds and assets.

(xiv)     It shall at all times be adequately capitalized to engage in the
transactions contemplated at its formation, and will not make any distribution
or dividend if doing so would cause it not to be adequately capitalized.

(xv)      It shall not do any act which would make it impossible to carry on its
ordinary business.

(xvi)     All data and records (including computer records) used by it or any
Affiliate in the collection and administration of any loan shall reflect its
ownership interest therein.

(xvii)    None of its funds shall be invested in securities issued by, nor shall
it acquire the indebtedness or obligation of, any Affiliate or any Equity
Holder.

(xviii)   It shall maintain an arm’s length relationship with each of its
Affiliates and Equity Holders, and may enter into contracts or transact business
with its Affiliates or Equity Holders only on commercially reasonable terms that
are no less favorable to it than is obtainable in the market from a person or
entity that is not an Affiliate or Equity Holder.

(xix)     It shall correct any misunderstanding that is known to it regarding
its name or separate identity.

(h)         Any indemnification obligation of Borrower to any Equity Holder
shall (i) be fully subordinated to the Loan, and (ii) not constitute a claim
against Borrower or its assets until such time as the Loan has been indefeasibly
paid in accordance with its terms and otherwise has been fully discharged (or,
if applicable, defeased as contemplated by this Agreement).

(i)          As to Borrower, or any SPE Component Entity with an Independent
Director, the Organizational Documents shall also include provisions
substantially comparable to the following (together with such modifications as
may be approved (or, in the case of any Buyer or other Transfer, required) by
Lender based on changes in relevant law or market standards after the date of
this Agreement):

(i)         To the fullest extent permitted by law, and notwithstanding any duty
otherwise existing at law or in equity, the Independent Director shall consider
only the interests of this entity (and, in the case of an SPE Component Entity,
of Borrower), including its creditors, in exercising such person’s authority as
an Independent Director. Except for duties to the entity in which it is an
Independent Director (and, in the case of an SPE Component Entity, duties to
Borrower) as set forth in the immediately preceding sentence (including duties
to creditors solely to the extent of their respective economic interests in
Borrower or such SPE Component Entity, but excluding (i) all other interests of
such entity, (ii) the interests of other Affiliates of such entity, and
(iii) the interests of any group of Affiliates of which the entity is a part),
the Independent Directors shall not have any fiduciary duties to the entity, any
other member or director of such entity, or to Borrower or Lender); provided,
however, the foregoing shall not eliminate the implied contractual covenant of
good faith and fair dealing.

(ii)        To the fullest extent permitted by law, an Independent Director
shall not be liable to the entity in which it serves for breach of contract or
breach of duties (including fiduciary duties), unless the Independent Director
acted in bad faith or engaged in willful misconduct.

 

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(iii)      No Independent Director shall resign or be removed or replaced, in
each case unless Lender receives not less than five (5) business days’ prior
written notice of (a) any proposed resignation or removal or replacement of such
Independent Director, and (b) the identity of the proposed replacement
Independent Director, together with evidence satisfactory to Lender that such
replacement satisfies the applicable requirements to be an Independent Director,
in each case except for removal of an Independent Director by reason of (y) acts
or omissions by such Independent Director that constitute willful disregard of
such Independent Director’s duties, in accordance with the standards set forth
herein, or (z) such Independent Director having engaged in or having been
charged with, or having been convicted of, fraud or other acts constituting a
crime under any law applicable to such Independent Director, in which case a
replacement Independent Director shall be identified and elected or appointed
within five (5) business days after Borrower (or, if applicable, such SPE
Component Entity) knew or was deemed to have known thereof.

(j)         Borrower shall cause the Organizational Documents of Borrower to
include, at all times, substantially all of the requirements of this
Section 4.27, in a manner satisfactory to Lender.

4.28       Reserve Accounts and Disbursement Requests. At Lender’s option, as
additional security for the Debt, Borrower shall establish and maintain the
reserve accounts required by this Section 4.28, subject to the security interest
therein as more fully set forth in Section 4.19.

(a)         Intentionally Omitted.

(b)         Replacement Reserve. Borrower agrees that it will perform all
repairs and replacements necessary to maintain the Property in good working
order, in accordance with its condition as of the date hereof. On each Payment
Date until the Note is paid in full, Borrower shall pay to Lender the sum of
$5,124.50 to be held in a reserve fund (the “Replacement Reserve”) subject to
this Agreement, for payment of certain repairs and replacements at the Property
which, under generally accepted accounting principles, are categorized as
capital expenses and not as operating expenses (the “Repairs”). Borrower shall
perform all Repairs in a good and workmanlike manner, in accordance with all
applicable codes and regulations, and in each case in a manner satisfactory to
Lender and as necessary to maintain the Property in good condition and in
compliance with all Applicable Laws. So long as no Default shall exist and be
continuing, Lender shall, to the extent funds are available for such purpose in
the Replacement Reserve, disburse to Borrower the amount paid or incurred by
Borrower in performing the Repairs as required above upon satisfaction of the
requirements set forth in Section 4.29 of this Agreement. Lender may, at
Borrower’s expense, make or cause to be made an inspection of the Property to
determine the need, as determined by Lender in its reasonable judgment, for
further Repairs of the Property. In the event that such inspection reveals that
further Repairs are required, Lender shall provide Borrower with a written
description of the required Repairs, and Borrower shall complete such Repairs to
Lender’s reasonable satisfaction within ninety (90) days after Lender’s notice,
or such later date as may be approved by Lender in its discretion.

(c)         Intentionally Omitted.

(d)         Leasing Reserve. Borrower agrees that, upon the execution of any
Lease approved or deemed approved in accordance with Section 4.10 of this
Agreement, Borrower shall timely perform all build-out, construction, tenant
improvement work and other obligations required to be performed by Borrower
under such Lease (the foregoing, “Tenant Improvements”) and timely pay as and
when due any and all commissions to brokers in connection with such Lease
(“Leasing Commissions”). Simultaneously herewith, Borrower shall deposit with
Lender the sum of $2,253,651 for outstanding Leasing Commissions and Tenant
Improvements as shown on Exhibit F attached hereto and

 

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made a part hereof, and on each Payment Date until the Note is paid in full,
Borrower shall pay to Lender the sum of $19,216.75 to be held in a reserve fund
(the “Leasing Reserve”) subject to this Agreement, for payment of the costs of
Leasing Commissions and Tenant Improvements (collectively, “Leasing Costs”).
Borrower shall make additional deposits to the Leasing Reserve from time to time
as required by Section 4.28(f) below. Borrower shall perform all Tenant
Improvements in a good and workmanlike manner, in accordance with all applicable
codes and regulations, and each case in a manner satisfactory to Lender and as
necessary to maintain the Property in good condition and in compliance with all
Applicable Laws. So long as no Default shall exist and be continuing, Lender
shall, to the extent funds are available for such purpose in the Leasing Reserve
(including, without limitation, in any Early Termination Reserve established
pursuant to Section 4.28(f) hereof), disburse to Borrower the amount paid or
incurred by Borrower as Leasing Costs upon satisfaction of the requirements set
forth in Section 4.29 of this Agreement.

(e)         Intentionally Omitted.

(f)         Early Termination Reserve. If any Tenant (a “Terminating Tenant”)
gives notice to Borrower that it is exercising an early termination option set
forth in its Lease with Borrower, or if Borrower agrees to allow any Tenant to
reduce or terminate its obligations under its Lease (subject, in each case, to
the restrictions of Section 4.10(c) hereof), Borrower shall direct such Tenant
that the payment or other consideration in connection therewith (the “Early
Termination Payment”) is to be remitted to Lender (or, if a Cash Management
Period shall then be in effect, such Early Termination Payment shall be
deposited in the Clearing Account), for application as set forth below. If such
Tenant remits the Early Termination Payment directly to Borrower, Borrower shall
remit the Early Termination Payment to Lender, for application as set forth
below. Any Early Termination Payment shall be deposited in a segregated
sub-account of the Leasing Reserve (the “Early Termination Reserve”) to be held
as additional security for the Debt; a separate Early Termination Reserve shall
be maintained with respect to each Lease so terminated. Funds deposited in an
Early Termination Reserve shall be disbursed as follows:

(i)        If Borrower enters into a Lease for the entire premises previously
demised under the Lease so terminated (the “Vacated Space”) with a Tenant
reasonably acceptable to Lender and such Lease satisfies all applicable
requirements of Section 4.10 hereof, and the Tenant under such Lease accepts
such demised premises, takes occupancy thereof and commences the payment of base
rent under its Lease (any such Lease, a “Qualified Replacement Lease”), then all
funds in the Early Termination Reserve shall be used first to pay Leasing Costs
with respect to such Qualified Replacement Lease upon satisfaction of the
conditions set forth in Section 4.29 hereof; any funds remaining in the Early
Termination Reserve after payment of all Leasing Costs with respect thereto
shall be disbursed to Borrower as follows: (x) if the monthly net rent payable
under the Qualified Replacement Lease is greater than or equal to the monthly
net rent payable by the Terminating Tenant under its Lease as of the date of
such termination, then provided no Default is then continuing, such funds
remaining in the Early Termination Reserve shall be disbursed to Borrower; and
(y) if the monthly net rent payable under the Qualified Replacement Lease is
less than the monthly net rent payable by the Terminating Tenant under its Lease
as of the date of such termination, then provided no Default is then continuing
all funds remaining in the Early Termination Reserve shall be disbursed to
Borrower in equal monthly installments over the remaining term of the Qualified
Replacement Lease, until such time as all funds have been disbursed from the
Early Termination Reserve.

 

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(ii)       If Borrower enters into one or more Leases each for less than the
entire Vacated Space, no disbursements shall be permitted from the Early
Termination Reserve except as follows:

 

  A.

Until such time as the entire Vacated Space has been re-leased pursuant to one
or more Qualified Replacement Leases, and the Tenant under each such Qualified
Replacement Lease accepts such demised premises, takes occupancy thereof and
commences the payment of base rent under its Lease, Lender shall from time to
time make disbursements on account of Leasing Costs with respect to the Vacated
Space, provided, however, that the disbursements with respect to any portion of
the Vacated Space on a per-square foot basis shall not exceed the amount of the
Early Termination Payment on a per-square-foot basis; and

 

  B.

At such time as the entire Vacated Space has been re-leased pursuant to one or
more Qualified Replacement Leases and the Tenant under each such Qualified
Replacement Lease accepts such demised premises, takes occupancy thereof and
commences the payment of base rent under its Lease, then after payment of all
Leasing Costs with respect to the re-leasing of such Vacated Space, the funds
remaining in the Early Termination Reserve shall be disbursed as follows:
(i) first, to the extent that any disbursements were made from the Leasing
Reserve with respect to such Vacated Space, an amount equal to the sum of all
such disbursements will be transferred to the Leasing Reserve (notwithstanding
any limit to the required deposits thereto); (ii) next, any funds remaining in
the Early Termination Reserve shall be disbursed to Borrower as follows: (x) if
the monthly aggregate net rents payable under all such Qualified Replacement
Leases is greater than or equal to the monthly net rent payable by the
Terminating Tenant, and the term of all such Qualified Replacement Leases
extends to or beyond the scheduled expiration date of the Lease with the
Terminating Tenant, then provided no Default is then continuing such funds
remaining in the Early Termination Reserve shall be disbursed to Borrower; and
(y) if the conditions of clause (x) are not satisfied, then provided no Default
is then continuing such funds remaining in the Early Termination Reserve shall
be disbursed to Borrower in equal monthly installments over the period that
would have remained in the term of the Lease with the Terminating Tenant.

Leasing Costs with respect to any Qualified Replacement Lease shall be disbursed
first out of the related Early Termination Reserve, if applicable, prior to
using any funds in the Leasing Reserve with respect thereto.

(g)         Cash Collateral Reserve. If a Cash Management Period shall be
continuing (other than a Cash Management Period continuing due to a United
Healthcare Trigger Period or a Parsons Trigger Period), Borrower shall make
deposits to a reserve fund (the “Cash Collateral Reserve”) in accordance with
Section 3.3(a) hereof. All funds on deposit in the Cash Collateral Reserve not
previously disbursed or applied shall be disbursed to Borrower upon the
termination of such Cash Management Period and so long as no other Cash
Management Period then exists. Lender shall have the right, but not the
obligation, at any time during the continuance of an Event of Default, in its
sole and absolute discretion, to apply any and all funds on deposit in the Cash
Collateral Reserve to the Debt, in such order and in such manner as Lender shall
elect in its sole and absolute discretion, including to make a prepayment of
Debt (together with the applicable Yield Maintenance Amount, if any, applicable
thereto) or any other amounts due hereunder.

(h)         United Healthcare Cash Collateral Reserve.

(i)        During the continuance of a United Healthcare Trigger Period,
Borrower shall make deposits to a reserve fund (the “United Healthcare Cash
Collateral Reserve”) in

 

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accordance with Section 3.3(a) hereof for the payment of Leasing Costs
associated with the United Healthcare Premises and as additional collateral for
the Loan. So long as no Event of Default shall exist and be continuing, Lender
shall, to the extent funds are available for such purpose in the United
Healthcare Cash Collateral Reserve, disburse to Borrower the amount paid or
incurred by Borrower as Leasing Costs with respect to the United Healthcare
Premises upon satisfaction of the requirements set forth in Section 4.29 of this
Agreement.

(ii)       Following the termination of a United Healthcare Trigger Period,
provided no Event of Default is continuing, funds on deposit in the United
Healthcare Cash Collateral Reserve not previously disbursed or applied shall be
disbursed as follows: (x) provided no other Cash Management Period is
continuing, to Borrower once all Occupancy Conditions are satisfied, or (y) if a
Cash Management Period is continuing, but all Occupancy Conditions have been
satisfied, on the next occurring Payment Date in accordance Section 3.3 hereof

(i)          Parsons Cash Collateral Reserve.

(i)        During the continuance of a Parsons Trigger Period, Borrower shall
make deposits to a reserve fund (the “Parsons Cash Collateral Reserve”) in
accordance with Section 3.3(a) hereof for the payment of Leasing Costs
associated with the Parsons Premises and as additional collateral for the Loan.
So long as no Event of Default shall exist and be continuing, Lender shall, to
the extent funds are available for such purpose in the Parsons Cash Collateral
Reserve, disburse to Borrower the amount paid or incurred by Borrower as Leasing
Costs with respect to the Parsons Premises upon satisfaction of the requirements
set forth in Section 4.29 of this Agreement.

(ii)       Following the termination of a Parsons Trigger Period, provided no
Event of Default is continuing, funds on deposit in the Parsons Cash Collateral
Reserve not previously disbursed or applied shall be disbursed as follows:
(x) provided no other Cash Management Period is continuing, to Borrower once all
Occupancy Conditions are satisfied, or (y) if a Cash Management Period is
continuing but all Occupancy Conditions have been satisfied, on the next
occurring Payment Date in accordance Section 3.3 hereof

(j)         Parsons Rent Reserve.  Simultaneously herewith, Borrower shall pay
to Lender the sum of $83,646.64 to be held in a reserve fund (the “Parsons Rent
Reserve”) as additional collateral for the Debt, subject to this Agreement. So
long as no Event of Default exists, Lender shall disburse to Borrower the amount
in the Parsons Rent Reserve provided that all of the following conditions have
been satisfied, as determined by Lender: (i) the Parsons Lease is in full force
and effect and there are not defaults by Borrower thereunder; (ii) Parsons has
taken actual possession and occupancy of the space demised to Parsons under the
Parsons Lease, and is conducting business with the public therefrom;
(iii) Parsons is paying full, unabated rent pursuant to the Parsons Lease;
(iv) all work to be performed and paid for by Borrower, as landlord, under such
Lease has been fully performed and paid for; and (v) Tenant delivers to Lender a
tenant estoppel certificate in form and substance acceptable to Lender in its
discretion confirming each of the foregoing subsections (i)-(iv).

(k)        United Healthcare Rent Reserve.  Simultaneously herewith, Borrower
shall pay to Lender the sum of $1,781,613 to be held in a reserve fund (the
“United Healthcare Rent Reserve”) as additional collateral for the Debt, subject
to this Agreement. So long as no Event of Default or other Cash Management
Period exists, Lender shall disburse to Borrower the amount of $593,871 from the
United Healthcare Rent Reserve within ten (10) following Borrower’s written
request on each of April 1, 2016, May 1, 2016 and June 1, 2016, provided that
all of the following conditions have been satisfied as of the date of the
request, as determined by Lender: (i) the United Healthcare Lease is in full
force and effect

 

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and there are not defaults by Borrower thereunder; (ii) United Healthcare has
taken actual possession and occupancy of the space demised to United Healthcare
under the United Healthcare Lease, and is conducting business with the public
therefrom; (iii) United Healthcare is paying full, unabated rent pursuant to the
United Healthcare Lease; (iv) all work to be performed and paid for by Borrower,
as landlord, under such Lease has been fully performed and paid for; and
(v) Tenant delivers to Lender a tenant estoppel certificate in form and
substance acceptable to Lender in its discretion confirming each of the
foregoing subsections (i)-(iv)

4.29       Disbursements from the Property Reserve Accounts. So long as no Event
of Default shall have occurred and be continuing under this Agreement, all sums
in each of the Leasing Reserve, the United Healthcare Cash Collateral Reserve,
the Parsons Cash Collateral Reserve, the Parsons Rent Reserve, the United
Healthcare Rent Reserve and the Replacement Reserve (the foregoing,
collectively, the “Property Reserve Accounts”) shall be held by Lender in the
respective Property Reserve Account as set forth above for the purposes set
forth in Section 4.28. So long as no Default has occurred and is continuing,
Lender shall disburse to Borrower, from the appropriate Property Reserve Account
for the purposes set forth in Section 4.28, an amount equal to the actual
expenses incurred to date by Borrower, less any prior disbursements to Borrower
from any of the Property Reserve Account for such expenditure, but only to the
extent that such expense is one for which, pursuant to Section 4.28, the
proceeds of a Property Reserve Account may be disbursed. Disbursements shall be
made to Borrower within ten (10) days following Lender’s receipt of each of the
following:

(a)        a written request from Borrower for such disbursement, accompanied by
a certification by Borrower, in the form therefor then utilized by Lender or
Lender’s servicing agent;

(b)        copies of invoices, receipts or other evidence satisfactory to Lender
verifying the costs and expenses for which Borrower is requesting such
disbursement;

(c)        for disbursement requests in connection with a single project, or
group of related projects, for which Borrower is seeking disbursement of $10,000
or more, affidavits, lien waivers or other evidence reasonably satisfactory to
Lender showing that all materialmen, laborers, contractors, suppliers and other
parties who have or might claim statutory or common law liens, or who have
furnished labor, materials or supplies to or in connection with the Property,
have been paid (or are being paid out of the proceeds of such disbursement) all
amounts due;

(d)        for disbursement requests in connection with a single project, or
group of related projects, for which Borrower is seeking disbursement of $20,000
or more, excluding, however, Leasing Commissions, a certification from an
inspecting architect or other third party acceptable to Lender, verifying that
the any work for which Borrower is requesting a disbursement has been properly
completed and that the cost of such work bears a reasonable relationship to the
costs incurred therefor;

(e)        if requested by Lender, for disbursement requests in connection with
Leasing Costs, a current estoppel certificate (in form and substance acceptable
to Lender) from the tenant under the applicable Lease pursuant to which such
Leasing Costs were incurred;

(f)         a copy of the certificate of occupancy for the Improvements if, as a
result of any work undertaken by Borrower, it was necessary to receive an
amendment to the existing certificate of occupancy (or similar instrument)
issued with respect to the Improvements, or to obtain a new certificate of
occupancy for the Improvements, or a certification of Borrower that no such
amended or new certificate of occupancy is required; and

(g)        payment of an administrative fee of $150.00 per request.

 

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Lender shall not be required to make an advance from each Property Reserve
Account more frequently than once in any thirty (30) day period. In making any
disbursement from a Property Reserve Account, Lender shall be entitled to rely
on the disbursement request from Borrower without any inquiry into the accuracy,
validity or contestability of any amount set forth therein. All costs and
expenses required to be incurred in connection with the review and approval of
each request for a disbursement from a Property Reserve Account shall be paid by
Borrower not later than concurrently with such disbursement; Lender shall have
the right to make disbursement of any costs and expenses not paid as of the
request for such disbursement directly to the contractor, vendor or other
provider (or by two-party check jointly to Borrower and such contractor, vendor
or other provider). The Reserves shall not, unless otherwise explicitly required
by applicable law, be or be deemed to be escrow or trust funds. Lender may, at
its discretion, hold the Reserves either in a separate account or commingled by
Lender with any other funds in the possession or control of Lender. The Reserves
are solely for the protection of Lender, and entail no responsibility on
Lender’s part beyond making disbursements upon strict satisfaction of the
requirements of Section 4.28 and this Section 4.29 and beyond the allowing of
due credit for the sums actually received. To the extent that any funds in any
of the Reserves are invested by Lender, Borrower shall bear the risk of loss of
such investments. In the event that the amounts on deposit in any of the
Property Reserve Account are insufficient to reimburse Borrower for amounts
otherwise properly requested, Lender shall not be obligated or authorized to
transfer funds from other Reserves, and Borrower shall pay the amount of such
deficiency. Upon assignment of this Agreement by Lender, any funds in the
Reserves shall be turned over to the assignee, and any responsibility of the
assignor with respect thereto shall terminate.

4.30       Interest-Bearing Reserves. Lender shall cause funds in the Leasing
Reserve and the Replacement Reserve (referred to in this Section 4.30 as the
“Interest-Bearing Reserve”) to be deposited into an interest bearing account of
the type customarily maintained by Lender or its Servicer for the investment of
similar reserves, which account may not yield the highest interest rate then
available. Interest payable on such amounts shall be computed based on the daily
outstanding balance in the Interest-Bearing Reserve. Such interest shall be
calculated on a simple, non-compounded interest basis based solely on
contributions made to the Interest-Bearing Reserve by Borrower. All interest
earned on amounts contributed to the Interest-Bearing Reserve shall be retained
by Lender and added to the balance in such Interest-Bearing Reserve and shall be
disbursed for payment of the items for which other funds in such
Interest-Bearing Reserve are to be disbursed. Borrower acknowledges that all
Reserves other than the Interest-Bearing Reserves shall not accrue or bear
interest for the benefit of Borrower, and no interest shall be payable thereon
by Lender.

4.31       Ground Lease Covenants.  Borrower hereby covenants and agrees with
Lender with respect to the Ground Lease:

(a)        Borrower will comply in all material respects with the terms and
conditions of the Ground Lease. Borrower will not do or permit anything to be
done, the doing of which, or refrain from doing anything, the omission of which,
will impair or tend to impair the security of the Leasehold Real Estate under
the Ground Lease or will be grounds for declaring a default under, or forfeiture
of, the Ground Lease.

(b)        Borrower shall enforce the Ground Lease and will not terminate,
modify, cancel, change, supplement, alter or amend the Ground Lease, or waive,
excuse, condone or in any way release or discharge the Ground Lessor of or from
any of the material covenants and conditions to be performed or observed by the
Ground Lessor under the Ground Lease. Borrower hereby expressly covenants with
Lender not to cancel, surrender, amend, modify or alter in any way the terms of
the Ground Lease. Borrower hereby assigns to Lender, as further security for the
payment of the Obligations and for the performance and observance of the terms,
covenants and conditions of the Loan Documents, all of the

 

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rights, privileges and prerogatives of Borrower, as tenant under the Ground
Lease, to surrender the leasehold estate created by the Ground Lease or to
terminate, cancel, modify, change, supplement, alter or amend the Ground Lease,
and any such surrender of the leasehold estate created by the Ground Lease or
termination, cancellation, modification, change, supplement, alteration or
amendment of the Ground Lease without the prior consent of Lender shall be void
and of no force and effect. Notwithstanding the foregoing, if the United
Healthcare Lease is amended pursuant to the terms and conditions hereof during
the Loan Term so that the parking obligations required therein no longer require
the Ground Lease be utilized to meet their permitted parking spaces, and the
parking at the Property otherwise complies with all zoning requirements for
parking and no other tenants at the Property require the use of such parking
spaces and/or the Leasehold Real Estate pursuant to the Ground Lease, Borrower
may, with Lender’s reasonable prior written consent, terminate the Ground Lease.

(c)         Borrower will give Lender prompt (and in all events within five
(5) days) notice of any default under the Ground Lease or of the receipt by
Borrower of any notice of default from Ground Lessor. Borrower will promptly
(and in all events within (5) days) furnish to Lender copies of all information
furnished to Ground Lessor by the terms of the Ground Lease or the provisions of
this Section. Borrower will deposit with Lender an exact copy of any notice,
communication, plan, specification or other instrument or document received or
given by Borrower in any way relating to or affecting the Ground Lease which may
concern or affect the estate of Ground Lessor or Borrower thereunder in or under
the Ground Lease or in the Leasehold Real Estate thereby demised.

(d)         Lender shall have the right, but not the obligation, to perform any
obligations of Borrower under the terms of the Ground Lease during the
continuance of a default. All costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) so incurred, shall be treated as an
advance secured by the Loan Documents, shall bear interest thereon at the
Default Rate from the date of payment by Lender until paid in full and shall be
paid by Borrower to Lender during the continuance of an Event of Default within
five (5) days after demand. No performance by Lender of any obligations of
Borrower shall constitute a waiver of any default arising by reason of
Borrower’s failure to perform the same. Subject to the rights of lessees,
sublessees and other occupants under the Leases, Lender and any person
designated by Lender shall have, and are hereby granted, the right to enter upon
the Property at any time and from time to time for the purpose of taking any
such action.

(e)         To the extent permitted by law, the amounts payable by Borrower or
any other Person in the exercise of any right of redemption following
foreclosure of the Property shall include all Ground Lease Rents paid and other
sums advanced by Lender, together with interest thereon at the Default Rate, on
behalf of Borrower and/or any successor to Borrower as lessee under the Ground
Lease or any Replacement Ground Lease, on account of the Property.

(f)         Unless Lender shall otherwise consent, the fee title and the
leasehold estate in the Leasehold Real Estate shall not merge but shall always
be kept separate and distinct, notwithstanding the union of said estates either
in Ground Lessor or in Borrower, or in a third party, by purchase or otherwise.

(i)        Without limiting the generality of the foregoing, Borrower expressly
agrees to promptly execute, acknowledge and deliver to Lender such instruments
as may be required to create, perfect, and preserve (i) a valid first lien,
subject to no liens, charges or encumbrances other than the Permitted
Exceptions, in favor of Lender, on the fee interest in any portion of the
premises subject to the Ground Lease that may hereafter be acquired by Borrower
(the “Added Fee Real Estate”), and (ii) a valid security interest in all
personal property associated therewith.

 

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(ii)         Notwithstanding the foregoing, any other provision of this
Agreement, or any requirement of the Ground Lease, Borrower shall not acquire a
fee interest in any part of the Leasehold Real Estate (any such interest, along
with all other interests in real or personal property acquired in conjunction
therewith, “Added Fee Collateral,” provided, for avoidance of doubt, that Added
Fee Real Estate shall not include any leasehold or other interest in real or
personal property that is, immediately prior to an acquisition, both (1) held by
Borrower, and (2) subject to the lien of the Mortgage), unless and until
Borrower has caused each of the following conditions to be satisfied:

A.        Lender shall have received a copy of a deed (and, as to any associated
personal property, a bill of sale) conveying such Added Fee Collateral to
Borrower, and a letter from the Borrower (countersigned by a title insurance
company reasonably acceptable to Lender) acknowledging receipt of such deed and
bill of sale, and agreeing to record such deed in the appropriate real estate
records for the county in which the Fee Real Estate is located.

B.        If the Loan (or any interest therein) is held by a REMIC, Lender shall
have received an appraisal of the Property, including therein the proposed Added
Fee Collateral, prepared by an appraiser acceptable to the Lender and the Rating
Agencies (or such other evidence of valuation of the Fee Collateral as may be
acceptable to a REMIC), dated no more than sixty (60) days prior to the date
upon which such an acquisition (a “Fee Acquisition”) is to be consummated (the
“Fee Acquisition Date”), indicating that as of the Fee Acquisition Date, the
value of the Property including the proposed Added Fee Collateral and accounting
for any merger of fee and leasehold interests that may occur as a result of such
Fee Acquisition below, will be greater than the value of the Property, excluding
the Fee Collateral, immediately prior to the Fee Acquisition.

C.        After giving effect to such Fee Acquisition and any reduction in
Borrower’s obligation to pay Ground Rent, the Debt Service Coverage Ratio for
the Loan is not less than the Debt Service Coverage Ratio immediately preceding
the Fee Acquisition.

D.        If the Loan (or any interest therein) is held by a REMIC, Lender shall
have received a Rating Confirmation with respect to the contemplated Fee
Acquisition.

E.        If the Loan (or any interest therein) is held by a REMIC, Borrower
shall include in the certificate required pursuant to clause (E) above such
additional representations and warranties with respect to Borrower, the
Property, the Added Fee Collateral or the Loan as the Lender or the Rating
Agencies may require (in accordance with the Prudent Lender Standard), and shall
deliver such certificate in form and substance satisfactory to the Lender and
the Rating Agencies.

F.        Borrower shall have executed, acknowledged and delivered to Lender
(A) a first priority deed of trust, an assignment of leases, a security
agreement, and applicable financing statements with respect to the Added Fee
Collateral (or, if determined by Lender in accordance with the Prudent Lender
Standard, a modification and spreader of the lien of the Mortgage and the
Assignment of Leases, together with an amendment to any previously filed
financing statements), together with a letter from Borrower countersigned by a
title insurance company reasonably acceptable to Lender

 

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acknowledging receipt of such deed of trust, assignment of leases, security
agreement, and financing statements and agreeing to record or file, as
applicable, such instruments in the real estate records for the county in which
the Added Fee Collateral is located and to file one of the financing statements
in the office of the Secretary of State of the state in which Borrower is
organized, so as to effectively create upon such recording and filing a valid
and enforceable first priority lien upon the Added Fee Collateral in favor of
Lender (or such other trustee as may be desired under local law), subject only
to the Permitted Exceptions and such other liens as are permitted pursuant to
the Loan Documents, and (B) modifications of all other Loan Documents necessary
to include the Added Fee Collateral within the scope thereof (including to
acknowledge any merger of fee and leasehold interests that may occur as a result
of the Fee Acquisition). All such instruments shall be substantially the same in
form and substance as the counterparts of such documents executed and delivered
with respect to the Property as a whole, subject to modifications reflecting
that the Added Fee Collateral is only a portion of the Property as a whole, and
as otherwise might be appropriate under the Prudent Lender Standard based on
changes in Applicable Laws as of the Fee Acquisition Date in order for counsel
admitted to practice in the state of Texas to deliver the opinion as to the
enforceability of such documents required pursuant to clause (L) below. Such
Mortgage, as modified to encumber the Added Fee Collateral (including by the
addition of any separate deed of trust or other security instrument), shall
continue to secure all amounts evidenced by the Note, and any instruments
delivered pursuant to this clause (F) shall thereafter be included within the
term Loan Documents.

G.        Lender shall have received an endorsement to the Title Insurance
Policy, dated as of the Fee Acquisition Date, insuring that the Mortgage,
modified or spread as contemplated by this Section 4.31(f), encumbers all of the
Property including the Added Fee Collateral. The amount of coverage under the
Title Insurance Policy shall not be reduced in connection with such endorsement,
nor shall any exceptions to coverage be added thereby. Lender also shall have
received copies of paid receipts showing that all premiums in respect of such
endorsements and Title Insurance Policies have been paid.

H.        If the Loan (or any interest therein) is held by a REMIC, Lender shall
have received an opinion of counsel acceptable to Lender and the Rating Agencies
(together with such other evidence as Lender may request in accordance with the
Prudent Lender Standard) that (a) the Fee Acquisition as contemplated hereby
will not cause a “significant modification” of the Loan within the meaning of
U.S. Treasury Regulation Section 1.860G-2(b)(2); (b) the substitution as
contemplated hereby will not cause the Loan to fail to be a “qualified mortgage”
within the meaning of Section 860G(a)(3)(A) of the Code; and (c) the aggregate
fair market value of the Property including therein the proposed Added Fee
Collateral, as determined immediately after such Fee Acquisition, either (1) is
equal to at least 80% of the adjusted issue price of the Loan that is
outstanding immediately after such Fee Acquisition, or (2) equals or exceeds the
aggregate fair market value of the borrower’s interest in the Ground Lease (to
the extent not extinguished by any prior merger) and any previously acquired Fee
Collateral that secures the Loan immediately before such Fee Acquisition. For
purposes of the preceding clause (c), fair market value shall be determined by
any commercially reasonable valuation method permitted under the REMIC
Provisions and by excluding any personal property or going concern value
attributable to the Property, the Added Fee Collateral, or the borrower’s
interest therein.

 

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I.         Lender shall have received valid certificates of insurance indicating
that the requirements for the policies of insurance required for the Property
include the Added Fee Collateral, and evidencing the payment of all premiums
payable for the existing policy period.

J.         Intentionally Omitted.

K.        Borrower shall deliver or cause to be delivered to Lender (1) updates,
certified by Borrower, of all organizational documentation related to Borrower
and/or the formation, structure, existence, good standing and/or qualification
to do business delivered to Lender in connection with the origination of the
Loan; (2) good standing certificates, certificates of qualification to do
business in the State of Texas and (3) resolutions of the manager or managing
member of Borrower authorizing the Fee Acquisition and any actions taken in
connection with such substitution.

L.        Lender shall have received the following opinions of Borrower’s
counsel: (1) an opinion or opinions of counsel admitted to practice under the
laws of the state Texas stating that the Loan Documents delivered with respect
to the Added Fee Collateral pursuant to clause (F) above are valid and
enforceable in accordance with their terms, subject to the laws applicable to
creditors’ rights and equitable principles, and that Borrower is qualified to do
business and in good standing under the laws of the state in which the Added Fee
Collateral is located; (2) an opinion of counsel acceptable to the Lender and
the Rating Agencies stating that the Loan Documents delivered with respect to
the Added Fee Collateral pursuant to clause (G) above were duly authorized,
executed and delivered by Borrower and that the execution and delivery of such
Loan Documents and the performance by Borrower of its obligations thereunder
will not cause a breach of, or a default under, any agreement, document or
instrument to which Borrower is a party or to which it or its properties are
bound; (3) an opinion of counsel acceptable to the Lender and the Rating
Agencies stating that subjecting the Added Fee Collateral to the Lien of the
Mortgage (or such spreader agreement, as applicable) and the execution and
delivery of the related Loan Documents does not and will not affect or impair
the ability of Lender to enforce its remedies under all of the Loan Documents;
(4) an update of the Non-Consolidation Opinion indicating that such Fee
Acquisition does not affect the opinions set forth therein; and (5), if the Loan
(or any interest therein) is held by a REMIC, an opinion of counsel acceptable
to the Lender and the Rating Agencies stating that such Fee Acquisition and the
related transactions do not constitute a fraudulent conveyance under applicable
bankruptcy and insolvency laws.

M.       Borrower shall have paid all costs relating to the ownership of the
Property, including the Added Fee Collateral, including without limitation,
(1) accrued but unpaid insurance premiums relating to the Property as modified
to include the Added Fee Collateral, (2) currently due Taxes and Other Charges
(including any in arrears) relating to the Property, including the Added Fee
Collateral, and (3) amounts then due under the Ground Lease (including without
limitation in respect of any leasehold estate that may be extinguished by merger
as a result of such Fee Acquisition notwithstanding Borrower’s compliance with
the requirements of clause (Q) below).

N.        Borrower shall have paid or reimbursed Lender for all costs and
expenses incurred by Lender (including, without limitation, reasonable attorneys
fees and disbursements) in connection with the Fee Acquisition and Borrower
shall have paid all recording charges, filing fees, taxes or other expenses
(including, without limitation,

 

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mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. Borrower shall have paid all costs and
expenses of the Lender and the Rating Agencies incurred in connection with the
Fee Acquisition.

O.         Lender shall have received (1) an endorsement to the Title Insurance
Policy insuring the first priority Lien of the Mortgage, modified or spread as
contemplated by this Section 4.31(f), insuring that the Added Fee Collateral
constitutes a separate tax lot or, if such an endorsement is not available in
the state in which the Fee Collateral is located, other evidence meeting the
Prudent Lender Standard, that the Fee Collateral constitutes a separate tax lot
or (2) evidence meeting the Prudent Lender Standard that the Fee Collateral
constitutes a separate tax lot.

P.         If any rating on any security evidencing an ownership interest in the
Loan has been issued and is then in effect, Lender shall have received such
other and further approvals, opinions, documents and information in connection
with the substitution as the Lender or the Rating Agencies may have requested.

Q.         No Event of Default shall have occurred and be continuing as of the
Fee Acquisition Date.

R.         Lender shall have received from Borrower and Guarantor a certificate,
in form and substance reasonably satisfactory to Lender:

(1)        accompanying debt service coverage ratio calculation confirming
satisfaction of the requirements of clause (C) above;

(2)        attesting that such calculation is accurate, complete, and not
misleading;

(3)        stating that the representations and warranties of Borrower contained
in this Agreement and the other Loan Documents are true and correct in all
material respects on and as of the Fee Acquisition Date with respect to
Borrower, Guarantor and the Property (including the Added Fee Collateral),
unless such certificate would be inaccurate (in which case such certificate
shall recite any exceptions to such representations and warranties); and

(4)        certifying that all of the requirements set forth in this
Section 4.31(f) have been satisfied.

Upon the satisfaction of the foregoing conditions precedent, the Fee Acquisition
may be consummated and the Added Fee Collateral shall be deemed to be part of
the Property for purposes of this Agreement. Should such a Fee Acquisition occur
without the conditions set forth above having been satisfied or waived (which
waiver may be withheld by Lender in accordance with the Prudent Lender
Standard), the same shall constitute an Event of Default.

(g)        The actions or payments of Lender to cure any default by Borrower
under the Ground Lease shall not cure or waive, as between Borrower and Lender,
the default that occurred under this Agreement by virtue of Borrower’s default
under the Ground Lease. All reasonable out-of-pocket

 

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costs and expenses incurred by Lender to cure or attempt to cure any such
default shall be paid by Borrower to Lender, upon demand, with interest at the
Default Rate from the date such costs and expenses were incurred to and
including the date the reimbursement payment is received by Lender. All such
indebtedness shall be secured by the Mortgage.

(h)        Borrower shall not, without prior consent of Lender, subordinate or
consent to the subordination of the Ground Lease to any mortgage, security deed,
lease or other interest on or in Ground Lessor’s interest in all or any part of
the Property.

(i)         Within fifteen (15) days after receipt of Lender’s request, Borrower
shall use reasonable efforts to obtain from Ground Lessor and furnish to Lender
an estoppel certificate of Ground Lessor stating the date through which Ground
Rent has been paid, whether or not there are any defaults under the Ground Lease
and specifying the nature of such claimed defaults, if any, and such other
matters as Lender may reasonably request.

(j)         Upon acquisition of the fee title in the Real Estate, the Mortgage
shall, automatically and without the necessity of execution of any other
documents, attach to and cover and be a lien upon such other estate so acquired,
and such other estate shall be considered as mortgaged, assigned and conveyed to
Lender and the lien hereof spread to cover such estate with the same force and
effect as though specifically herein mortgaged, assigned and conveyed. The
provisions of this subsection (g) shall not apply if Lender acquires title to
the Property unless Lender shall so elect.

(k)        If the Ground Lessor shall deliver to Lender a copy of any notice of
default sent by the Ground Lessor to Borrower, as tenant under the Ground Lease,
such notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender in reliance thereon.

(l)         Borrower shall exercise each individual option, if any, to extend or
renew the term of the Ground Lease promptly (and in all events within five
(5) days) after demand by Lender made at any time within one (1) year of the
last day upon which any such option may be exercised, and Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to exercise any
such option in the name of and upon behalf of Borrower to so exercise such
option if Borrower fails to exercise as herein required, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest.

(m)       Each Lease hereafter made, and each renewal of any existing Lease,
shall provide that, (i) in the event of the termination of the Ground Lease, the
Lease shall not terminate or be terminable by the lessee; (ii) in the event of
any action for the foreclosure of the Mortgage, the Lease shall not terminate or
be terminable by the subtenant by reason of the termination of the Ground Lease
unless the lessee is specifically named and joined in any such action and unless
a judgment is obtained therein against the lessee; and (iii) in the event that
the Ground Lease is terminated as aforesaid, the lessee under the Lease shall
attorn to the lessee under the Ground Lease (or any Replacement Ground Lease) or
to the purchaser at the sale of the Property on such foreclosure, as the case
may be.

(n)        Borrower hereby assigns, transfers and sets over to Lender all of
Borrower’s claims and rights to the payment of damages arising from any
rejection by the Ground Lessor of the Ground Lease under the Bankruptcy Code.
Borrower shall notify Lender promptly (and in any event within ten (10) days) of
any claim, suit action or proceeding relating to the rejection of the Ground
Lease. Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact,
coupled with an interest, with exclusive power to file and prosecute, to the
exclusion of Borrower, any proofs of claim, complaints, motions, applications,
notices and other documents, in any case in respect of the Ground Lessor under
the Bankruptcy Code during the continuance of any Event of Default. Borrower may
make any compromise

 

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or settlement in connection with such proceedings (subject to Lender’s
reasonable approval); provided, however, that Lender shall be authorized and
entitled to compromise or settle any such proceeding if such compromise or
settlement is made after the occurrence and during the continuance of any Event
of Default. Borrower shall promptly execute and deliver to Lender any and all
instruments reasonably required in connection with any such proceeding after
request therefor by Lender. Except as set forth above, Borrower shall not
adjust, compromise, settle or enter into any agreement with respect to such
proceedings without the prior written consent of Lender.

(o)        Borrower shall not, without Lender’s prior written consent, elect to
treat the Ground Lease as terminated under Section 365(h)(l) of the Bankruptcy
Code. Any such election made without Lender’s prior written consent shall be
void.

(p)        If pursuant to Section 365(h)(2) of the Bankruptcy Code, Borrower
seeks to offset against the rent reserved in the Ground Lease the amount of any
damages caused by the non-performance by the Ground Lessor of any of the Ground
Lessor’s obligations under the Ground Lease after the rejection by the Ground
Lessor of the Ground Lease under the Bankruptcy Code, Borrower shall, prior to
effecting such offset, notify Lender of its intention to do so, setting forth
the amounts proposed to be so offset and the basis therefor. If Lender has
failed to object as aforesaid within ten (10) days after notice from Borrower in
accordance with the first sentence of this subsection (m), Borrower may proceed
to effect such offset in the amounts set forth in Borrower’s notice. Neither
Lender’s failure to object as aforesaid nor any objection or other communication
between Lender and Borrower relating to such offset shall constitute an approval
of any such offset by Lender. Borrower shall indemnify and save Lender harmless
from and against any and all claims, demands, actions, suits, proceedings,
damages, losses, costs and expenses of every nature whatsoever (including,
without limitation, reasonable attorneys’ fees and disbursements) arising from
or relating to any such offset by Borrower against the rent reserved in the
Ground Lease.

(q)        If any action, proceeding, motion or notice shall be commenced or
filed in respect of Borrower or, during the continuance of any Event of Default,
the Property in connection with any case under the Bankruptcy Code, Lender shall
have the option, to the exclusion of Borrower, exercisable upon notice from
Lender to Borrower, to conduct and control any such litigation with counsel of
Lender’s choice. Lender may proceed in its own name or in the name of Borrower
in connection with any such litigation, and Borrower agrees to execute any and
all powers, authorizations, consents and other documents required by Lender in
connection therewith. Borrower shall pay to Lender all costs and expenses
(including, without limitation, reasonable attorneys’ fees and disbursements)
paid or incurred by Lender in connection with the prosecution or conduct of any
such proceedings within five (5) days after notice from Lender setting forth
such costs and expenses in reasonable detail. Any such costs or expenses not
paid by Borrower as aforesaid shall be secured by the Mortgage, shall be added
to the Debt and shall bear interest at the Default Rate. Borrower shall not
commence any action, suit, proceeding or case, or file any application or make
any motion, in respect of the Ground Lease in any such case under the Bankruptcy
Code without the prior written consent of Lender.

(r)        Borrower shall immediately, after obtaining knowledge thereof, notify
Lender of any filing by or against the Ground Lessor of a petition under the
Bankruptcy Code. Borrower shall thereafter forthwith give written notice of such
filing to Lender, setting forth any information available to Borrower as to the
date of such filing, the court in which such petition was filed, and the relief
sought therein. Borrower shall promptly deliver to Lender following receipt any
and all notices, summonses, pleadings, applications and other documents received
by Borrower in connection with any such petition and any proceedings relating
thereto.

 

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(s)        If there shall be filed by or against Borrower a petition under the
Bankruptcy Code, and Borrower, as the tenant under the Ground Lease, shall
determine to reject the Ground Lease pursuant to Section 365(a) of the
Bankruptcy Code, then Borrower shall give Lender not less than ten (10) days’
prior notice of the date on which Borrower shall apply to the bankruptcy court
for authority to reject the Ground Lease. Lender shall have the right, but not
the obligation, to serve upon Borrower within such 10-day period a notice
stating that (i) Lender demands that Borrower assume and assign the Ground Lease
to Lender pursuant to Section 365 of the Bankruptcy Code and (ii) Lender
covenants to cure or provide adequate assurance of prompt cure of all defaults
and provide adequate assurance of future performance under the Ground Lease. If
Lender serves upon Borrower the notice described in the preceding sentence,
Borrower shall not seek to reject the Ground Lease and shall comply with the
demand provided for in clause (i) of the preceding sentence within thirty
(30) days after the notice shall have been given, subject to the performance by
Lender of the covenant provided for in clause (ii) of the preceding sentence.

(t)        effective upon the entry of an order for relief in respect of
Borrower under the Bankruptcy Code, Borrower hereby assigns and transfers to
Lender a non-exclusive right to apply to the Bankruptcy Code under
Section 365(d)(4) of the Bankruptcy Code for an order extending the period
during which the Ground Lease may be rejected or assumed.

ARTICLE V

EVENTS OF DEFAULT

5.1         Events of Default. The occurrence of any of the following shall be
an “Event of Default” hereunder:

(a)        Borrower fails to punctually perform any covenant, agreement,
obligation, term or condition of the Note, this Agreement, the Mortgage or any
other Loan Document which requires payment of any money to Lender (including,
without limitation, the failure of Borrower to repay the entire outstanding
principal balance of the Note in full on the Maturity Date), and such failure
continues (i) in the case of payment of the Monthly Payment Amount and the
related payments to Reserves due from Borrower to Lender on a Payment Date, for
a period of seven (7) days after any such Payment Date, and (ii) for all other
payments (other than the payment of the entire outstanding principal balance of
the Note due on the Maturity Date), for a period of ten (10) days after such
payment becomes due (giving effect to any grace period set forth in the Loan
Documents therefor) or, if due on demand, is demanded.

(b)        Borrower fails (i) to maintain in effect at all times insurance as
required by Section 4.4 hereof, or (ii) to perform any covenant, agreement,
obligation, term or condition set forth in Section 4.5 hereof, or (iii) to
comply with Section 4.27(b) hereof.

(c)        If, after the occurrence of a Cash Management Period, Borrower gives
any Tenant or other party directions that contradict any Tenant Direction Letter
then required to be in effect, or deposits Rents and Profits (or otherwise
causes Rents and Profits to be deposited) into any bank account other than the
Clearing Account.

(d)        Borrower fails to perform any other covenant, agreement, obligation,
term or condition set forth herein other than those otherwise described in this
Section 5.1 and, to the extent such failure or default is susceptible of being
cured, the continuance of such failure or default for thirty (30) days after
written notice thereof from Lender to Borrower; provided, however, that if such
default is susceptible of cure but such cure cannot be accomplished with
reasonable diligence within said period of time, and if Borrower commences to
cure such default promptly after receipt of notice thereof from Lender (but in
any event within thirty (30) days of such notice), and thereafter continuously
and diligently prosecutes the curing of such default, such period of time shall
be extended for such period of time as may be necessary to cure such default
with reasonable diligence, but not to exceed an additional sixty (60) days.

 

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(e)        Any representation or warranty made herein, in or in connection with
materials delivered to Lender regarding the Property or the Loan or any loan
commitment issued by Lender relating to the Loan, or in any of the other Loan
Documents to Lender, by Borrower, by any Guarantor or by any Constituent Entity
of Borrower or any Guarantor, is determined by Lender to have been false or
misleading in any material respect at the time made.

(f)        A Transfer, except as expressly permitted by Section 4.11.

(g)        A default occurs under any of the other Loan Documents which has not
been cured within any applicable grace or cure period therein provided.

(h)        Borrower, any Guarantor, any Constituent Entity of Borrower or any
Guarantor becomes insolvent, or shall make a transfer in fraud of creditors, or
shall make an assignment for the benefit of creditors, shall file a petition in
bankruptcy, shall voluntarily be adjudicated insolvent or bankrupt or shall
admit in writing the inability to pay debts as they mature, shall petition or
apply to any tribunal for or shall consent to or shall not contest the
appointment of a receiver, trustee, custodian or similar officer for Borrower,
any Guarantor, any such Constituent Entity, or for a substantial part of the
assets of Borrower, any such Guarantor, any such Constituent Entity, or shall
commence any case, proceeding or other action under any bankruptcy,
reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect.

(i)         A petition is filed or any case, proceeding or other action is
commenced against Borrower, against any Guarantor, against any Constituent
Entity of Borrower or any Guarantor, seeking to have an order for relief entered
against it as debtor or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or other relief under
any law relating to bankruptcy, insolvency, arrangement, reorganization,
receivership or other debtor relief under any law or statute of any jurisdiction
whether now or hereafter in effect or a court of competent jurisdiction enters
an order for relief against Borrower, against any Guarantor, against any
Constituent Entity of Borrower or any Guarantor, as debtor, or an order,
judgment or decree is entered appointing, with or without the consent of
Borrower, of any Guarantor, of any Constituent Entity of Borrower or any
Guarantor, a receiver, trustee, custodian or similar officer for Borrower, for
any such Guarantor, for any such Constituent Entity, or for any substantial part
of any of the properties of Borrower, any such Guarantor, any such Constituent
Entity, and if any such event shall occur, such petition, case, proceeding,
action, order, judgment or decree shall not be dismissed within sixty (60) days
after being commenced.

(j)        The Property or any part thereof shall be taken on execution or other
process of law (other than by eminent domain) in any action against Borrower.

(k)       Borrower abandons all or a portion (other than a de minimis portion)
of the Property.

(l)        The holder of any lien or security interest on the Property (without
implying the consent of Lender to the existence or creation of any such lien or
security interest), whether superior or subordinate to the Mortgage or any of
the other Loan Documents, declares a default and such default is not cured
within any applicable grace or cure period set forth in the applicable document
or such holder institutes foreclosure or other proceedings for the enforcement
of its remedies thereunder.

 

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(m)       The Property, or any part thereof, is subjected to actual or
threatened waste or to removal, demolition or material alteration so that the
value of the Property is materially diminished thereby, and Lender determines
that it is not adequately protected from any loss, damage or risk associated
therewith.

(n)        Any dissolution, termination, partial or complete liquidation, merger
or consolidation of Borrower, any Guarantor or any Constituent Entity of
Borrower or any Guarantor, without the prior written consent of Lender.

(o)        Borrower shall fail in the payment of any rent, additional rent or
other charge mentioned in or made payable by the Ground Lease when said rent or
other charge is due and payable.

(p)        There shall occur any default by Borrower, as lessee under the Ground
Lease, in the observance or performance of any term, covenant or condition of
the Ground Lease on the part of Borrower, to be observed or performed, and said
default is not cured within five (5) Business Days prior to the expiration of
any applicable grace period therein provided, or any one or more of the events
referred to in the Ground Lease shall occur which would cause the Ground Lease
to terminate without notice or action by the Ground Lessor or which would
entitle the Ground Lessor to terminate the Ground Lease and the term thereof by
giving notice to Borrower, as tenant thereunder, of if the leasehold estate
created by the Ground Lease shall be surrendered or the Ground Lease shall be
terminated or cancelled for any reason or under any circumstances whatsoever, or
any of the terms, covenants or conditions of the Ground Lease shall in any
manner be modified, changed, supplemented, altered or amended without the
consent of Lender , or Borrower shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to the terms of the
Ground Lease.

(q)        Guarantor breaches any of the Guarantor Financial Covenants.

(r)        Borrower shall effect a Fee Acquisition other than pursuant to
Section 4.31(f).

ARTICLE VI

REMEDIES

6.1         Remedies.

(a)        Acceleration. At any time during the continuance of an Event of
Default (other than an Event of Default described in paragraph (h) or (i) of
Section 5.1), in addition to any other rights or remedies available to it
pursuant to the Loan Documents or at law or in equity, Lender may take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in and to the Property; including
declaring the Debt to be immediately due and payable (including unpaid
interest), Default Rate interest, Late Payment Charges and any other amounts
owing by Borrower), without notice or demand; and upon any Event of Default
described in paragraph (h) or (i) of Section 5.1, the Debt (including unpaid
interest, Default Rate interest, Late Payment Charges and any other amounts
owing by Borrower) shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained in any Loan Document to the contrary
notwithstanding.

(b)        Remedies Cumulative. During the continuance of an Event of Default,
all or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under the Loan Documents or at law or in
equity may be exercised by Lender at any time and from time to time, whether or
not all or any of the Debt shall be declared, or be automatically, due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the

 

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enforcement of its rights and remedies under any of the Loan Documents. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth in the
Loan Documents. Without limiting the generality of the foregoing, Borrower
agrees that if an Event of Default is continuing, (i) to the extent permitted by
applicable law, Lender is not subject to any “one action or “election of
remedies law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Property, the Mortgage has been
foreclosed, the Property has been sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt have been paid in full. To the extent
permitted by applicable law, nothing contained in any Loan Document shall be
construed as requiring Lender to resort to any portion of the Property for the
satisfaction of any of the Debt in preference or priority to any other portion,
and Lender may seek satisfaction out of the entire Property or any part thereof,
in its discretion.

(c)          Severance.  Lender shall have the right from time to time to sever
the Note and the other Loan Documents into one or more separate notes, mortgages
and other security documents (and, in connection therewith, to bifurcate or
otherwise modify the nature of the collateral that secures such notes) in such
denominations and priorities of payment and liens as Lender shall determine in
its discretion for purposes of evidencing and enforcing its rights and remedies.
Borrower shall execute and deliver to Lender from time to time, promptly after
the request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect such severance, Borrower
ratifying all that such attorney shall do by virtue thereof. The rights under
this Section 6.1(c) are in addition to, and shall not limit or be deemed to
limit, the rights of Lender under Sections 8.24 and 8.25 hereof.

(d)        Delay.  No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default 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. Lender shall not be required to accept the tendered cure of
any Event of Default, except to the extent Lender is required to do so pursuant
to Applicable Laws or to the extent Lender agrees to the contrary pursuant to a
written instrument executed and delivered by Lender. Notwithstanding any other
provision of this Agreement, Lender reserves the right to seek a deficiency
judgment or preserve a deficiency claim in connection with the foreclosure of
the Mortgage to the extent necessary to foreclose on all or any portion of the
Property, the Rents and Profits, the Cash Management Account or any other
collateral.

(e)        Lender’s Right to Perform.   If Borrower fails to perform any
covenant or obligation contained herein and such failure shall continue for a
period of five Business Days after Borrower’s receipt of written notice thereof
from Lender, without in any way limiting Lender’s right to exercise any of its
rights, powers or remedies as provided hereunder, or under any of the other Loan
Documents, Lender may, but shall have no obligation to, perform, or cause
performance of, such covenant or obligation, and all costs, expenses,
liabilities, penalties and fines of Lender incurred or paid in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Debt (and to the extent permitted under applicable laws,
secured by the Mortgage and other Loan Documents) and shall bear interest
thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have
no obligation to send notice to Borrower of any such failure.

 

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6.2         Payment of Expenses. Borrower shall pay on demand all of Lender’s
expenses incurred in any efforts to enforce any terms of this Agreement, the
Mortgage or any of the other Loan Documents, whether or not any lawsuit is filed
and whether or not foreclosure is commenced but not completed, including, but
not limited to, legal fees and disbursements, foreclosure costs and title
charges, together with interest thereon from and after the date incurred by
Lender until actually paid by Borrower at the Default Rate. Furthermore,
Borrower shall, and does hereby, indemnify Lender for, and hold Lender harmless
from, any and all losses, costs, expenses, claims, actions, demands liabilities,
loss or damage which may or might be incurred by Lender under this Agreement,
the Mortgage or any of the other Loan Documents or by the exercise of rights or
remedies hereunder, and from any and all claims and demands whatsoever which may
be asserted against Lender by reason of any alleged obligations or undertakings
on Lender’s part with respect to the Property except as expressly set forth in
the Loan Documents, other than those finally determined to have resulted solely
from the gross negligence or willful misconduct of Lender. Borrower’s obligation
pursuant to the previous sentence shall include, without limitation, payment to
(or reimbursement of) any compensation payable by the holder of the Loan to any
servicing agent under a Secondary Market Transaction pursuant to the
Securitization Documents if such payment becomes due solely by reason of the
existence and/or continuance of any Event of Default. Should Lender incur any
such liability, the amount thereof, including, without limitation, costs,
expenses and attorneys’ fees, together with interest thereon at the Default Rate
from the date incurred by Lender until actually paid by Borrower, shall be
immediately due and payable to Lender from Borrower on demand.

ARTICLE VII

RESERVED

ARTICLE VIII

MISCELLANEOUS TERMS AND CONDITIONS

8.1         Time of Essence. Time is of the essence with respect to all
provisions of the Loan Documents.

8.2         Release of Mortgage. If all of the Debt be paid and all other
obligations under the Loan Documents be performed (in accordance and in
compliance with the terms and provisions of the Loan Documents), then and in
that event only, upon delivery and recordation of a written satisfaction or
reconveyance of the Mortgage (in form acceptable to Lender), all rights under
the Mortgage shall terminate except for those provisions thereof which by their
terms survive, and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced thereby, which shall be
released by Lender in due form at Borrower’s cost. No release of the Mortgage or
the lien of any Loan Document shall be valid unless executed by Lender.

8.3         Certain Rights of Lender. Without affecting Borrower’s liability for
the payment of any of the Debt, Lender may from time to time and without notice
to Borrower: (a) release any person liable for the payment of the Debt;
(b) extend or modify the terms of payment of the Debt; (c) accept additional
real or personal property of any kind as security or alter, substitute or
release any property securing the Debt; (d) consent in writing to the making of
any subdivision map or plat thereof; (e) join in granting any easement therein;
or (f) join in any extension agreement of the Mortgage or any agreement
subordinating the lien hereof.

8.4         Waiver of Certain Defenses. No action for the enforcement of the
lien of the Mortgage or of any provision thereof shall be subject to any defense
which would not be good and available to the party interposing the same in an
action at law upon the Note or any of the other Loan Documents.

 

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8.5         Notices. All notices, demands, requests or other communications to
be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery of
the same in person to the intended addressee, or by depositing the same with
Federal Express or another reputable private courier service for next business
day delivery, with all charges prepaid, or by depositing the same in the United
States mail, postage prepaid, certified mail, return receipt requested, in any
event addressed to the intended addressee at its address set forth below or at
such other address as may be designated by such party as herein provided. All
notices, demands and requests shall be effective upon such personal delivery, or
one (1) business day after being deposited with the private courier service, or
three (3) business days after being deposited in the United States mail as
required above. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall
be deemed to be receipt of the notice, demand or request sent. By giving to the
other party hereto at least fifteen (15) days’ prior written notice thereof in
accordance with the provisions hereof, the parties hereto shall have the right
from time to time to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of
America. All notices, demands, requests or other communications shall be
addressed as follows:

If to Lender:

CIBC INC.

425 Lexington Avenue

4th Floor

New York, New York 10017

Attn: Real Estate Group, Mr. Todd Roth

and to:

Cassin & Cassin LLP

711 Third Avenue, 20th Floor

New York, New York 10017

Attention: Michael J. Hurley, Jr., Esq.

If to Borrower:

CIO 190, Limited Partnership

c/o City Office REIT, Inc.

8150 North Central Expressway, Suite 1255

Dallas, TX 75206

Attention: Merrick Egin

and to:

CIO 190, Limited Partnership

c/o City Office REIT, Inc.

Suite 2600 – 1075 West Georgia Street

Vancouver, BC V6E 3C9

8.6         Successors and Assigns. The terms, provisions, indemnities,
covenants and conditions hereof shall be binding upon Borrower and the
successors and assigns of Borrower, including all successors in interest of
Borrower in and to all or any part of the Property, and shall inure to the
benefit of Lender, its successors and assigns, and shall constitute covenants
running with the land. All indemnities

 

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in this Agreement for the benefit of Lender shall inure to the benefit of Lender
and each of its directors, officers, shareholders, partners, members, managers,
employees and agents (including, without limitation, any Servicers), and
pledgees and participants of the Debt, and their respective successors and
assigns. All references in this Agreement to Borrower or Lender shall be deemed
to include each such party’s successors and assigns. If Borrower consists of
more than one person or entity, each will be jointly and severally liable to
perform the obligations of Borrower.

8.7         Severability. A determination that any provision of this Agreement
is unenforceable or invalid shall not affect the enforceability or validity of
any other provision, and any determination that the application of any provision
of this Agreement to any person or circumstance is illegal or unenforceable
shall not affect the enforceability or validity of such provision as it may
apply to any other persons or circumstances.

8.8         Interpretation. Within this Agreement, words of any gender shall be
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless the context
otherwise requires. The headings of the sections and paragraphs of this
Agreement are for convenience of reference only, are not to be considered a part
hereof and shall not limit or otherwise affect any of the terms hereof. In the
event of any inconsistency between the provisions hereof and the provisions in
any of the other Loan Documents, it is intended that the provisions of this
Agreement shall be controlling.

8.9         Waiver: Discontinuance of Proceedings. Lender may waive any single
Event of Default by Borrower hereunder without waiving any other prior or
subsequent Event of Default. Lender may remedy any Event of Default by Borrower
hereunder without waiving the Event of Default remedied. Neither the failure by
Lender to exercise, nor the delay by Lender in exercising, any right, power or
remedy upon any Event of Default by Borrower hereunder shall be construed as a
waiver of such Event of Default or as a waiver of the right to exercise any such
right, power or remedy at a later date. No single or partial exercise by Lender
of any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification or
waiver of any provision hereof nor consent to any departure by Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose given. No notice to nor
demand on Borrower in any case shall of itself entitle Borrower to any other or
further notice or demand in similar or other circumstances. Acceptance by Lender
of any payment in an amount less than the amount then due on any of the Debt
shall be deemed an acceptance on account only and shall not in any way affect
the existence of a Default or an Event of Default hereunder. In case Lender
shall have proceeded to invoke any right, remedy or recourse permitted hereunder
or under the other Loan Documents and shall thereafter elect to discontinue or
abandon the same for any reason, Lender shall have the unqualified right to do
so and, in such an event, Borrower and Lender shall be restored to their former
positions with respect to the Debt, the Loan Documents, the Property and
otherwise, and the rights, remedies, recourses and powers of Lender shall
continue as if the same had never been invoked.

8.10        Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State in which the Real Estate is located,
provided that to the extent any of such laws may now or hereafter be preempted
by Federal law, in which case such Federal law shall so govern and be
controlling.

8.11        Counting of Days. The term “days” when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Real Estate is located, the
period shall be deemed to end on the next succeeding Business Day.

 

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8.12      Relationship of the Parties. The relationship between Borrower and
Lender is that of a borrower and a lender only and neither of those parties is,
nor shall it hold itself out to be, the agent, employee, joint venturer or
partner of the other party.

8.13      Application of the Proceeds of the Note. To the extent that proceeds
of the Note are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced by Lender at Borrower’s request and Lender shall be
subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released.

8.14      Unsecured Portion of Indebtedness. If any part of the Debt cannot be
lawfully secured by the Mortgage or if any part of the Property cannot be
lawfully subject to the lien and security interest thereof to the full extent of
such indebtedness, then all payments made shall be applied on said indebtedness
first in discharge of that portion thereof which is unsecured by the Mortgage.

8.15      Cross Default. An Event of Default shall be a default (without further
rights to cure) under each of the other Loan Documents.

8.16      Exculpation. Notwithstanding anything in the Loan Documents to the
contrary, but subject to the qualifications set forth in this Section 8.16,
Lender agrees that (i) Borrower shall be liable upon the Debt and for the other
obligations arising under the Loan Documents to the full extent (but only to the
extent) of the Collateral, (ii) during the continuance of any Event of Default,
any judicial or other proceedings brought by Lender against Borrower shall be
limited to the preservation, enforcement and foreclosure, or any thereof, of the
liens, security titles, estates, assignments, rights and security interests now
or at any time hereafter securing the Debt, and no attachment, execution or
other writ of process shall be sought, issued or levied upon any assets,
properties or funds of Borrower other than the Collateral, except with respect
to the liability described below in this Section 8.16, and (iii) in the event of
a foreclosure of such liens, security titles, estates, assignments, rights or
security interests securing the Debt and/or the other obligations of Borrower
under the Loan Documents, no judgment for any deficiency upon the Debt shall be
sought or obtained by Lender against Borrower, except with respect to the
liability described below in this Section 8.16; provided, however, that,
notwithstanding the foregoing provisions of this Section 8.16, Borrower shall be
fully liable, and subject to legal action, for all losses, costs and expenses
incurred by Lender (including, without limitation, the fees and expenses of
Lender’s counsel) by reason of:

(a)        Misappropriation or misapplication or conversion of any Rents and
Profits, or other funds constituting proceeds of the Property (which
misappropriation may include, without limitation, (i) rent and other payments
received from Tenants paid more than one month in advance, and not applied in
accordance with the Loan Documents or paid to Lender upon an Event of Default;
and/or (ii) failure to apply Rents and Profits in accordance with the terms of
this Agreement and the other Loan Documents), in each case to the full extent of
the funds misappropriated or misapplied;

(b)        Any security deposits not delivered to Lender upon foreclosure of the
Mortgage (or similar sale pursuant to the terms thereof) or an action or
conveyance in lieu thereof, except to the extent previously applied in
accordance with the terms of the related Lease;

(c)        Proceeds (i) paid under any insurance policies (or paid as a result
of any other claim or cause of action against any person or entity) by reason of
damage, loss or destruction to all or any portion of the Property, or
(ii) resulting from the condemnation or other taking in lieu of condemnation of
all or any portion of the Property, or any of them, in each case to the full
extent of such proceeds not previously delivered to Lender, but which, under the
terms of the Loan Documents, should have been delivered to Lender;

 

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(d)         Any willful misconduct by the Borrower or Guarantor, or any Person
acting at the direction of either of them (including, without limitation,
removal of any portion of the Property in violation of the terms of the Loan
Documents);

(e)         Material physical waste committed on the Property by the Borrower or
Guarantor, or any Person acting at the direction of either of them;

(f)         Failure to pay, or make deposits to the Impound Account on account
of, any (i) Taxes or Other Charges, or other amounts which (if unpaid) could
create liens on any portion of the Property which would be superior to the lien
or security title granted to Lender pursuant to the Loan Documents and which
accrue prior to the Lender taking title to the Property, or (ii) premiums on
insurance policies required under the Loan Documents to be maintained by
Borrower or with respect to the Property and which accrue prior to Lender taking
title to the Property and, in each case to the extent not previously escrowed
with Lender, with respect to Taxes and Insurance Premiums and then, only to the
extent the Property generated, and the Borrower received sufficient revenue to
escrow and/or pay, such Taxes or Insurance Premiums;

(g)         Intentionally omitted;

(h)         Fraud or material misrepresentation or failure to disclose a
material fact by Borrower or Guarantor, or any person acting on behalf of, or at
the direction of, Borrower or Guarantor;

(i)          If the Ground Lease is amended, modified, or terminated without
Lender’s prior written consent, or if Borrower surrenders any or all of its
interest under the Ground Lease; or

(j)         If the representation and warranty given under Section 4.1(rr)(6) of
the Loan Agreement is determined to have been materially false, incomplete, or
misleading when given.

Furthermore, notwithstanding the foregoing provisions of this Section 8.16 or
anything to the contrary in the Loan Documents, the Loan shall be fully recourse
to Borrower (and the exculpatory provisions above shall be of no force or
effect) upon the occurrence of any of the following: (A) Borrower fails to
obtain Lender’s prior written consent to any subordinate financing or other
voluntary lien encumbering the Property or the ownership interests in Borrower
(including with respect to a PACE Loan), if such consent is required by the Loan
Documents; (B) Borrower fails to obtain Lender’s prior written consent to any
Transfer, if such consent is required by Loan Documents; (C) the first Monthly
Payment Amount (together with all required payments for Reserves due
concurrently therewith) is not paid in full when due; (D) a bankruptcy petition
is filed by, consented to, or acquiesced in by Borrower (or Borrower takes
similar voluntary action under any comparable state or federal law); or
(E) Borrower or Guarantor (or any Equity Holder or Affiliate of either of the
foregoing) shall have made or colluded with creditors of Borrower (other than
Lender) to cause an involuntary bankruptcy filing with respect to Borrower (or
similar action under any comparable state or federal law).

Nothing contained in this Section 8.16 shall (1) be deemed to be a release or
impairment of the Debt or the other obligations of Borrower under the Loan
Documents or the lien of the Loan Documents upon the Property, or (2) preclude
Lender from foreclosing the Loan Documents during the continuance of any Event
of Default or from enforcing any of the other rights of Lender except as stated
in this section, or (3) reduce, release, relieve, waive, limit or impair in any
way whatsoever the liability of Guarantor pursuant to any guaranty or indemnity
executed and delivered in connection with the Loan, or

 

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release, relieve, reduce, waive or impair in any way whatsoever, any obligation
of any party to such instrument, or (4) waive any right that Lender may have
under Section 506 (a), 506 (b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount of the Loan or to require
that all Collateral shall continue to secure all of the Debt in accordance with
the Loan Documents.

8.17       No Merger. It is the desire and intention of the parties hereto that
the Mortgage and the lien thereof do not merge in fee simple title to the
Property. It is hereby understood and agreed that should Lender acquire any
additional or other interests in or to the Property or the ownership thereof,
then, unless a contrary intent is manifested by Lender as evidenced by an
appropriate document duly recorded, the Mortgage and the lien thereof shall not
merge in such other or additional interests in or to the Property, toward the
end that the Mortgage may be foreclosed as if owned by a stranger to said other
or additional interests.

8.18       Lender May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Borrower or the principals or general partners or
members in Borrower, or their respective creditors or property, Lender, to the
extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Lender allowed in such proceedings for the entire Debt at the date of the
institution of such proceedings and for any additional amount which may become
due and payable by Borrower hereunder after such date.

8.19       No Representation. By accepting delivery of any item required to be
observed, performed or fulfilled or to be given to Lender pursuant to the Loan
Documents, including, but not limited to, any officer’s certificates, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal or insurance policy, and/or by conducting its own underwriting, due
diligence and investigations into Borrower, Guarantor, the Property and related
matters, Lender shall not be deemed to have warranted, consented to, or affirmed
the sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with respect
thereto by Lender.

8.20       Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages. Each Loan Document other than this Agreement may be executed in
any number of counterparts, each of which shall be effective only upon delivery
and thereafter shall be deemed an original, and all of which shall be taken to
be one and the same instrument, for the same effect as if all parties thereto
had signed the same signature page. Any signature page of any such Loan Document
may be detached from any counterpart of such Loan Document without impairing the
legal effect of any signatures thereon and may be attached to another
counterpart of such Loan Document identical in form thereto but having attached
to it one or more additional signature pages.

8.21       Recording and Filing. Borrower will cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded,
filed, re-recorded and re-filed in such manner and in such places as Lender
shall reasonably request, and will pay on demand all such recording, filing,
re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its Servicer, for the costs incurred in obtaining a tax
service company to verify the status of payment of Taxes and Other Charges on
the Property.

 

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8.22      Entire Agreement and Modification. This Agreement and the other Loan
Documents contain the entire agreements between the parties relating to the
subject matter hereof and thereof and all prior agreements relative hereto and
thereto which are not contained herein or therein are terminated. This Agreement
and the other Loan Documents may not be amended, revised, waived, discharged,
released or terminated orally but only by a written instrument or instruments
executed by the party against which enforcement of the amendment, revision,
waiver, discharge, release or termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or termination which is not so documented
shall not be effective as to any party.

8.23      Secondary Market Transaction.

(a)          Cooperation. Borrower acknowledges that Lender may effectuate a
Secondary Market Transaction. Borrower shall cooperate in good faith with Lender
in effecting any such Secondary Market Transaction and shall cooperate in good
faith to implement all requirements imposed by any Investor or Rating Agency
involved therein or as may be necessary for Lender to comply with or applicable
law (including, without limitation, Regulation AB), including, without
limitation, all structural or other changes to Borrower and/or the Debt, and
modifications to any Loan Documents and/or Organizational Documents; provided,
however, that Borrower shall not be required to modify any Loan Documents if
such modification would (A) increase the interest rate payable under the Note,
(B) shorten the period until the stated maturity of the Note, (C) modify the
amortization of principal of the Note, or (D) modify any other material term of
the Debt. Borrower shall provide such information and documents relating to
Borrower, any Guarantor, the Property and any Tenants as Lender may reasonably
request in connection with such Secondary Market Transaction. Borrower shall
make available to Lender all information concerning its business and operations
that Lender may reasonably request. Upon request, Borrower shall furnish to
Lender from time to time such financial data and financial statements as Lender
determines to be necessary, advisable or appropriate for complying with any
applicable legal requirements (including those applicable to Lender or any
Servicer (including, without limitation and to the extent applicable, Regulation
AB)) within the timeframes necessary, advisable or appropriate in order to
comply with such legal requirements.

(b)         Rating Confirmation. Borrower acknowledges that, as part of the
Securitization Documents, the parties to such Secondary Market Transaction may,
in their sole discretion, elect to impose certain requirements as conditions
precedent to certain actions by one or more of the Servicers (including, without
limitation, that such Servicer obtain either or both of the approval of one or
more Investors (or representatives of one or more Investors) as to certain
proposed actions, and/or a Rating Confirmation). No requirement or condition
imposed upon such Servicer pursuant to such Securitization Documents as a
condition precedent to the granting or denying of any consent or approval, or
the taking or refusal to take of any action, pursuant to this Agreement (except
only for any action required of Lender hereunder) shall give rise to any claim
or cause of action by Borrower against Lender, or give Borrower any defense for
failure to perform its obligations under the Loan Documents. Borrower further
acknowledges that the cost of any Rating Confirmation required by the
Securitization Documents in connection with any matter requiring the approval or
consent of Lender shall be payable by Borrower.

(c)         Disclosure; Indemnification. Lender shall be permitted to share all
information provided in connection with the Loan with the Investors, Rating
Agencies, investment banking firms, accounting firms, law firms and other
third-party advisory firms involved with the Loan Documents or the applicable
Secondary Market Transaction. It is understood that the information provided to
Lender in connection with the Loan may ultimately be incorporated into the
offering documents for the Secondary Market Transaction and thus potential
Investors may also see some or all of the information with respect to the Loan,
the Property, Borrower and the Equity Holders. Borrower irrevocably waives any
and all rights it may have under any applicable laws (including, without
limitation, any right of privacy) to

 

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prohibit such disclosure. Lender and all of the aforesaid third-party advisors
and professional firms shall be entitled to rely on the information supplied by,
or on behalf of, Borrower. Borrower hereby indemnifies Lender as to any losses,
claims, damages or liabilities that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
information provided by or on behalf of Borrower, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in such information, or necessary in order to make the statements
in such information, or in light of the circumstances under which they were
made, not misleading. Lender may publicize the existence of the Loan in
connection with its marketing for a Secondary Market Transaction or otherwise as
part of its business development.

8.24      New Mezzanine Loan. Lender, without in any way limiting Lender’s other
rights hereunder, in its sole and absolute discretion, shall have the right at
any time to require Borrower to restructure a portion of the Loan into a
mezzanine loan (the “New Mezzanine Loan”) to the owners of the direct equity
interests in Borrower, secured by a pledge of such direct equity interests, the
establishment of different interest rates and debt service payments for the Loan
and the New Mezzanine Loan and the payment of the Loan and the New Mezzanine
Loan in such order of priority as may be designated by Lender; provided, that
(a) (i) the total amounts of the Loan and the New Mezzanine Loan shall equal the
amount of the Loan immediately prior to the restructuring, (ii) the weighted
average interest rate of the Loan and the New Mezzanine Loan, shall on the date
created equal the interest rate which was applicable to the Loan immediately
prior to the restructuring and (iii) the debt service payments on the Loan and
the New Mezzanine Loan shall on the date created equal the debt service payment
which was due under the Loan immediately prior to the restructuring; provided
that any such restructuring carried out after the closing of the Loan shall be
at no material cost to Borrower, and provided, further, that if Borrower is not
an SPE-Qualifying LLC, no SPE Component Entity shall be the borrower of (and the
ownership interests of any SPE Component Entity shall not be collateral for)
such New Mezzanine Loan, but appropriate structural changes shall be made to
result in comparable effect. Borrower shall cooperate with all reasonable
requests of Lender in order to restructure the Loan and create the New Mezzanine
Loan and shall (A) execute and deliver such documents including, without
limitation, in the case of the New Mezzanine Loan, a mezzanine note, a mezzanine
loan agreement, a pledge and security agreement and a mezzanine deposit account
agreement, (B) cause Borrower’s counsel to deliver such legal opinions and
(C) create such bankruptcy remote borrower under the New Mezzanine Loan as, in
the case of each of (A), (B) and (C) above, shall be reasonably required by
Lender and required by any Rating Agency in connection therewith, all in form
and substance reasonably satisfactory to Lender and satisfactory to any such
Rating Agency, including the severance of this Agreement, the Mortgage and other
Loan Documents if requested. In the event Borrower fails to execute and deliver
such documents to Lender within ten (10) Business Days following such request by
Lender, Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect such transactions,
Borrower ratifying all that such attorney shall do by virtue thereof. It shall
be an Event of Default if Borrower fails to comply with any of the terms,
covenants or conditions of this Section 8.24 after the expiration of ten
(10) Business Days after notice thereof.

8.25      Component Notes. Lender, without in any way limiting Lender’s other
rights hereunder, in its sole and absolute discretion, shall have the right at
any time to require Borrower to execute and deliver “component” notes (which may
include senior and junior notes), which notes may be paid in such order of
priority as may be designated by Lender, provided that (a) the aggregate
principal amount of such “component” notes shall equal the outstanding principal
balance of the Loan immediately prior to the

 

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creation of such “component” notes, (b) the weighted average interest rate of
all such “component” notes shall on the date created equal the interest rate
which was applicable to the Loan immediately prior to the creation of such
“component” notes, (c) the debt service payments on all such “component” notes
shall on the date created equal the debt service payment which was due under the
Loan immediately prior to the creation of such component notes and (d) the other
terms and provisions of each of the “component” notes shall be identical in
substance and substantially similar in form to the Loan Documents. Borrower
shall cooperate with all reasonable requests of Lender in order to establish the
“component” notes and shall execute and deliver such documents as shall
reasonably be required by Lender in connection therewith, all in form and
substance reasonably satisfactory to Lender, including, without limitation, the
severance of security documents if requested. It shall be an Event of Default if
Borrower fails to comply with any of the terms, covenants or conditions of this
Section 8.25 after the expiration of ten (10) Business Days after notice
thereof.

8.26       Updated Appraisals. Lender shall have the right to cause to be
prepared, from time to time, at Borrower’s expense, a new or updated appraisal
of the Property prepared by an M.A.I. appraiser selected by Lender; provided
that absent the existence of an Event of Default, Borrower shall not be required
to pay for the cost of such new or updated appraisal. In connection with any new
or updated appraisal of the Property requested by Lender, Borrower shall
cooperate with Lender and the appraiser in connection therewith, and shall
provide to the appraiser such information as the appraiser shall request in
order to prepare such new or updated appraisal.

8.27       SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

(a)         BORROWER, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE REAL
ESTATE IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM
OR RELATING TO THE NOTE, THIS AGREEMENT OR ANY OTHER OF THE LOAN DOCUMENTS,
(ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION OVER THE COUNTY IN WHICH THE REAL
ESTATE IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND,
(iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).
BORROWER FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN
SECTION 8.5, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).

(b)         LENDER AND BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, EACH
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR
ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

8.28       State-Specific Provisions. The following provisions shall govern and
control in the event of a conflict with any other provision of this Agreement:

(a)         SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT OBLIGATE BORROWER TO
INDEMNIFY LENDER FROM ALL CLAIMS OR LOSSES INCURRED OR SUFFERED BY LENDER,
INCLUDING, WITHOUT LIMITATION, THOSE RESULTING FROM THE JOINT, CONCURRENT OR
COMPARATIVE NEGLIGENCE OF LENDER, NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN SUCH INDEMNIFICATION PROVISIONS.

 

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(b)         Interest Calculation. The following language is hereby added to the
end of Section 2.2(b) of this Agreement:

“If calculating interest based on a 360 day year would result in a usurious
rate, interest shall be calculated on the per annum basis of a year of 365 or
366 days, as the case may be.”

(c)         Definitions.

(i)          The definition of “Interest Rate” under Section 1.1 of this
Agreement is hereby deleted in its entirety and the following substituted
therefor:

“Interest Rate” shall mean a rate equal to the lesser of 4.79% per annum or the
Highest Lawful Rate.”

(ii)        The following definition is added to Section 1.1:

“Highest Lawful Rate” as used herein shall mean, with respect to the Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to time
may be contracted for, taken, reserved, charged or received on the Debt under
laws applicable to the Lender that are presently in effect or, to the extent
allowed by law, under such applicable laws that may hereafter be in effect and
that allow a higher maximum nonusurious interest rate than applicable laws now
allow.

(iii)       The definition of “Environmental Laws” as used in this Agreement and
the other Loan Documents shall include, without limitation, the Texas Solid
Waste Disposal Act (V.T.C.A. Health and Safety Code §361.001 et. Seq.), the
Texas Water Code (V.T.C.A. Water Code §§26.001-26.407) and Risk Reduction
Standard No. 1 (30 Tex. Adm. Code §335.554).

(d)         Replacement of the Term Maximum Legal Rate for Highest Lawful Rate.

(i)         The definition of “Maximum Legal Rate” is hereby deleted and the
phrase “Maximum Legal Rate” is hereby deleted wherever used in any of the Loan
Documents and the phrase “Highest Lawful Rate” substituted therefore.

(e)         Compliance with Usury Laws.

It is the intention of the parties hereto to conform strictly to applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under any such applicable law, then, and in that event, notwithstanding
anything to the contrary in this Agreement, or in any other instrument or
agreement entered into in connection with or as security for the Loan, it is
agreed as follows:

(i)         the aggregate of all consideration that constitutes interest under
any such applicable law and that is contracted for, charged or received under
this Agreement and the Note, or under any of the aforesaid instruments or
agreements or otherwise in connection with this Agreement and the Note (whether
designated as interest, fees, late charges, payments or otherwise) shall under
no circumstances exceed the maximum amount of interest permitted by any such
applicable law and any excess shall be cancelled automatically and, if
theretofore paid, shall be credited on the Note by Lender (or, if the Note has
been paid in full, refunded to Borrower);

 

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(ii)         in the event that the Maturity Date is accelerated by reason of an
Event of Default under this Agreement, or otherwise, then such consideration
that constitutes interest may never include more than the maximum amount
permitted by any such applicable law, and excess interest, if any, provided for
in this Agreement and the Note, or otherwise, shall be canceled automatically as
of the date of such acceleration or prepayment, and, if theretofore paid, shall
be credited on the Note (or, if the Note has been paid in full, refunded to
Borrower);

(iii)         to the extent that Lender is relying on Chapter 303, as amended,
of the Texas Finance Code to determine the maximum amount of interest permitted
by applicable law on the principal of the Note, Lender will utilize the weekly
rate ceiling from time to time in effect as provided in such Chapter 303, as
amended. To the extent United States federal law permits a greater amount of
Interest than is permitted under Texas law, Lender will rely on United States
federal law instead of such Chapter 303, as amended, for the purpose of
determining the maximum amount permitted by applicable law. Additionally, to the
extent permitted by applicable law now or hereafter in effect, Lender may, at
its option and from time to time, implement any other method of computing the
maximum lawful rate under such Chapter 303, as amended, or under other
applicable law by giving notice, if required, to maker as provided by applicable
law now or hereafter in effect. In no event shall the provisions of chapter 346
of the Texas Finance Code (which regulates certain revolving credit loan
accounts and revolving triparty accounts) apply to the indebtedness evidenced by
the Loan Documents; and

(iv)         all sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
rate or amount of interest on account of any such indebtedness does not exceed
the applicable usury ceiling.

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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the
day and year first above written.

 

BORROWER:

CIO 190, LIMITED PARTNERSHIP,

a Delaware limited partnership

By:     CIO 190 GP, LLC,   a Delaware limited liability company,   its General
Partner   By:/s/ James Farrar                              
                         Name:           James Farrar   Title:            
President

 

[ADDITIONAL SIGNATURE PAGE FOLLOWS]

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The undersigned is an “SPE Component Entity” with respect to Borrower and, as
such, hereby (a) represents and warrants to Lender that: (i) its sole asset is
its ownership interest in Borrower, and such ownership interest represents not
less than one-half of one percent (0.5%) direct ownership in Borrower; (ii) it
has at least one Independent Director (namely, Mr. Steven P. Zimmer, as of the
date hereof); (iii) it includes, in its Organizational Documents, provisions
substantially similar to clauses (i) through (v), inclusive, of Section 4.27(c)
of this Agreement; (iv) it includes, in its Organizational Documents, provisions
substantially similar to Section 4.27(d), (g), and (i) of this Agreement; (v) it
has no debt (whether secured or unsecured, direct or contingent, including
pursuant to any guaranty), and (b) covenants to Lender that, (i) it shall have,
at all times, at least one Independent Director, and (ii) for so long as
Borrower shall remain obligated for payment of the Loan, it shall not take any
actions that would cause itself or Borrower to violate the provisions of
Section 4.27 of this Agreement.

 

CIO 190 GP, LLC, a Delaware limited liability company
By:   /s/ James Farrar                                                 
Name:          James Farrar Title:            President

 

[ADDITIONAL SIGNATURE PAGE FOLLOWS]

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LENDER: CIBC INC., a Delaware corporation
By:/s/ Todd Roth                                                     
Name:               Todd Roth Title:                 Managing Director