Exhibit 10.3


 




 


 





LOAN AGREEMENT


 


 


Dated as of October 3, 2006


 


 


By and Between


 


10/120
SOUTH RIVERSIDE FEE LLC


 


and


 


10/120
SOUTH RIVERSIDE PROPERTY LLC,


collectively,
Borrower


 


 


and


 


 


MERRILL LYNCH MORTGAGE LENDING, INC.,

as Lender




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  I.

  	
  DEFINITIONS; PRINCIPLES OF
  CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
   

  	
  Principles of Construction

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  THE LOAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  The Loan

  	
  21

  
	
  2.1.1

  	
   

  	
  Agreement to Lend and Borrow

  	
  21

  
	
  2.1.2

  	
   

  	
  Single Disbursement to Borrower

  	
  21

  
	
  2.1.3

  	
   

  	
  The Note

  	
  21

  
	
  2.1.4

  	
   

  	
  Use of Proceeds

  	
  21

  
	
  2.1.5

  	
   

  	
  Components

  	
  21

  
	
  Section 2.2

  	
   

  	
  Interest Rate

  	
  22

  
	
  2.2.1

  	
   

  	
  Interest Rate

  	
  22

  
	
  2.2.2

  	
   

  	
  Intentionally Omitted

  	
  22

  
	
  2.2.3

  	
   

  	
  Default Rate

  	
  22

  
	
  2.2.4

  	
   

  	
  Interest Calculation

  	
  22

  
	
  2.2.5

  	
   

  	
  Usury Savings

  	
  22

  
	
  Section 2.3

  	
   

  	
  Loan Payments

  	
  22

  
	
  2.3.1

  	
   

  	
  Payment Before Maturity Date

  	
  22

  
	
  2.3.2

  	
   

  	
  Intentionally Omitted

  	
  23

  
	
  2.3.3

  	
   

  	
  Payment on Maturity Date

  	
  23

  
	
  2.3.4

  	
   

  	
  Late Payment Charge

  	
  23

  
	
  2.3.5

  	
   

  	
  Method and Place of Payment

  	
  23

  
	
  2.3.6

  	
   

  	
  Payments After Event of Default

  	
  23

  
	
  Section 2.4

  	
   

  	
  Prepayments

  	
  24

  
	
  2.4.1

  	
   

  	
  Voluntary Prepayments

  	
  24

  
	
  2.4.2

  	
   

  	
  Mandatory Prepayments

  	
  24

  
	
  2.4.3

  	
   

  	
  Prepayments After Default

  	
  24

  
	
  Section 2.5

  	
   

  	
  Release

  	
  25

  
	
  2.5.1

  	
   

  	
  Release of Property

  	
  25

  
	
  Section 2.6

  	
   

  	
  Permitted Mezzanine Loan

  	
  25

  
	
  2.6.1

  	
   

  	
  Mezzanine Loan

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Borrower Representations

  	
  27

  
	
  3.1.1

  	
   

  	
  Organization

  	
  27

  
	
  3.1.2

  	
   

  	
  Proceedings

  	
  28

  
	
  3.1.3

  	
   

  	
  No Conflicts

  	
  28

  
						



 


i

















 


	
  3.1.4

  	
   

  	
  Litigation

  	
  28

  
	
  3.1.5

  	
   

  	
  Agreements

  	
  28

  
	
  3.1.6

  	
   

  	
  Consents

  	
  28

  
	
  3.1.7

  	
   

  	
  Title

  	
  28

  
	
  3.1.8

  	
   

  	
  No Plan Assets

  	
  29

  
	
  3.1.9

  	
   

  	
  Compliance

  	
  29

  
	
  3.1.10

  	
   

  	
  Financial Information

  	
  29

  
	
  3.1.11

  	
   

  	
  Condemnation

  	
  29

  
	
  3.1.12

  	
   

  	
  Utilities and Public Access

  	
  30

  
	
  3.1.13

  	
   

  	
  Separate Lots

  	
  30

  
	
  3.1.14

  	
   

  	
  Assessments

  	
  30

  
	
  3.1.15

  	
   

  	
  Enforceability

  	
  30

  
	
  3.1.16

  	
   

  	
  Assignment of Leases

  	
  30

  
	
  3.1.17

  	
   

  	
  Insurance

  	
  30

  
	
  3.1.18

  	
   

  	
  Licenses

  	
  30

  
	
  3.1.19

  	
   

  	
  Flood Zone

  	
  31

  
	
  3.1.20

  	
   

  	
  Physical Condition

  	
  31

  
	
  3.1.21

  	
   

  	
  Boundaries

  	
  31

  
	
  3.1.22

  	
   

  	
  Leases

  	
  31

  
	
  3.1.23

  	
   

  	
  Filing and Recording Taxes

  	
  32

  
	
  3.1.24

  	
   

  	
  Single Purpose

  	
  32

  
	
  3.1.25

  	
   

  	
  Tax Filings

  	
  36

  
	
  3.1.26

  	
   

  	
  Solvency

  	
  36

  
	
  3.1.27

  	
   

  	
  Federal Reserve Regulations

  	
  37

  
	
  3.1.28

  	
   

  	
  Organizational Chart

  	
  37

  
	
  3.1.29

  	
   

  	
  Bank Holding Company

  	
  37

  
	
  3.1.30

  	
   

  	
  No Other Debt

  	
  37

  
	
  3.1.31

  	
   

  	
  Investment Company Act

  	
  37

  
	
  3.1.32

  	
   

  	
  Intentionally Omitted

  	
  37

  
	
  3.1.33

  	
   

  	
  No Bankruptcy Filing

  	
  37

  
	
  3.1.34

  	
   

  	
  Full and Accurate Disclosure

  	
  38

  
	
  3.1.35

  	
   

  	
  Foreign Person

  	
  38

  
	
  3.1.36

  	
   

  	
  Intentionally Omitted

  	
  38

  
	
  3.1.37

  	
   

  	
  No Change in Facts or
  Circumstances; Disclosure

  	
  38

  
	
  3.1.38

  	
   

  	
  Management Agreement

  	
  38

  
	
  3.1.39

  	
   

  	
  Perfection of Accounts

  	
  38

  
	
  3.1.40

  	
   

  	
  Unfunded Tenant Allowances

  	
  39

  
	
  3.1.41

  	
   

  	
  Air Rights Lease

  	
  39

  
	
  3.1.42

  	
   

  	
  REOA

  	
  39

  
	
  Section 3.2

  	
   

  	
  Survival of Representations

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  BORROWER COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Borrower Affirmative Covenants

  	
  40

  
	
  4.1.1

  	
   

  	
  Existence; Compliance with Legal
  Requirements

  	
  40

  
	
  4.1.2

  	
   

  	
  Taxes and Other Charges

  	
  41

  
					



 


ii

















 


	
  4.1.3

  	
   

  	
  Litigation

  	
  41

  
	
  4.1.4

  	
   

  	
  Access to Property

  	
  41

  
	
  4.1.5

  	
   

  	
  Further Assurances; Supplemental
  Mortgage Affidavits

  	
  42

  
	
  4.1.6

  	
   

  	
  Financial Reporting

  	
  42

  
	
  4.1.7

  	
   

  	
  Title to the Property

  	
  43

  
	
  4.1.8

  	
   

  	
  Estoppel Statement

  	
  44

  
	
  4.1.9

  	
   

  	
  Leases

  	
  44

  
	
  4.1.10

  	
   

  	
  Alterations

  	
  46

  
	
  4.1.11

  	
   

  	
  Intentionally Omitted

  	
  46

  
	
  4.1.12

  	
   

  	
  Material Agreements

  	
  46

  
	
  4.1.13

  	
   

  	
  Performance by Borrower

  	
  47

  
	
  4.1.14

  	
   

  	
  Costs of Enforcement/Remedying
  Defaults

  	
  47

  
	
  4.1.15

  	
   

  	
  Business and Operations

  	
  47

  
	
  4.1.16

  	
   

  	
  Loan Fees

  	
  47

  
	
  4.1.17

  	
   

  	
  O&M Program

  	
  47

  
	
  4.1.18

  	
   

  	
  Intentionally Omitted

  	
  47

  
	
  4.1.19

  	
   

  	
  Air Rights Lease

  	
  47

  
	
  4.1.20

  	
   

  	
  REOA

  	
  48

  
	
  Section 4.2

  	
   

  	
  Borrower Negative Covenants

  	
  49

  
	
  4.2.1

  	
   

  	
  Due on Sale and Encumbrance;
  Transfers of Interests

  	
  49

  
	
  4.2.2

  	
   

  	
  Liens

  	
  49

  
	
  4.2.3

  	
   

  	
  Dissolution

  	
  49

  
	
  4.2.4

  	
   

  	
  Change in Business

  	
  50

  
	
  4.2.5

  	
   

  	
  Debt Cancellation

  	
  50

  
	
  4.2.6

  	
   

  	
  Affiliate Transactions

  	
  50

  
	
  4.2.7

  	
   

  	
  Zoning

  	
  50

  
	
  4.2.8

  	
   

  	
  Assets

  	
  50

  
	
  4.2.9

  	
   

  	
  No Joint Assessment

  	
  50

  
	
  4.2.10

  	
   

  	
  Principal Place of Business

  	
  50

  
	
  4.2.11

  	
   

  	
  ERISA

  	
  50

  
	
  4.2.12

  	
   

  	
  Material Agreements

  	
  51

  
	
  4.2.13

  	
   

  	
  Air Rights Lease

  	
  51

  
	
  4.2.14

  	
   

  	
  REOA

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  INSURANCE, CASUALTY AND
  CONDEMNATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Insurance

  	
  52

  
	
  5.1.1

  	
   

  	
  Insurance Policies

  	
  52

  
	
  5.1.2

  	
   

  	
  Insurance Company

  	
  56

  
	
  Section 5.2

  	
   

  	
  Casualty and Condemnation

  	
  57

  
	
  5.2.1

  	
   

  	
  Casualty

  	
  57

  
	
  5.2.2

  	
   

  	
  Condemnation

  	
  57

  
	
  5.2.3

  	
   

  	
  Casualty Proceeds

  	
  58

  
	
  Section 5.3

  	
   

  	
  Delivery of Net Proceeds

  	
  58

  
	
  5.3.1

  	
   

  	
  Minor Casualty or Condemnation

  	
  58

  
	
  5.3.2

  	
   

  	
  Major Casualty or Condemnation

  	
  59

  
					



 


iii

















 


	
  VI.

  	
  RESERVE FUNDS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Intentionally Omitted

  	
  62

  
	
  Section 6.2

  	
   

  	
  Tax Funds

  	
  62

  
	
  6.2.1

  	
   

  	
  Deposits of Tax Funds

  	
  62

  
	
  6.2.2

  	
   

  	
  Release of Tax Funds

  	
  62

  
	
  Section 6.3

  	
   

  	
  Insurance Funds

  	
  63

  
	
  6.3.1

  	
   

  	
  Deposits of Insurance Funds

  	
  63

  
	
  6.3.2

  	
   

  	
  Release of Insurance Funds

  	
  63

  
	
  6.3.3

  	
   

  	
  Waiver of Insurance Funds

  	
  63

  
	
  Section 6.4

  	
   

  	
  Capital Expenditure Funds

  	
  63

  
	
  6.4.1

  	
   

  	
  Deposits of Capital Expenditure
  Funds

  	
  63

  
	
  6.4.2

  	
   

  	
  Release of Capital Expenditure
  Funds

  	
  64

  
	
  Section 6.5

  	
   

  	
  Rollover Funds

  	
  65

  
	
  6.5.1

  	
   

  	
  Deposits of Rollover Funds

  	
  65

  
	
  6.5.2

  	
   

  	
  Release of Rollover Funds

  	
  65

  
	
  Section 6.6

  	
   

  	
  Lease Termination Rollover Funds

  	
  67

  
	
  6.6.1

  	
   

  	
  Deposits of Lease Termination
  Rollover Funds

  	
  67

  
	
  6.6.2

  	
   

  	
  Release of Lease Termination
  Rollover Funds

  	
  67

  
	
  Section 6.7

  	
   

  	
  Unfunded Tenant Allowance Reserve
  Funds

  	
  69

  
	
  Section 6.8

  	
   

  	
  Intentionally Omitted

  	
  70

  
	
  Section 6.9

  	
   

  	
  Application of Reserve Funds

  	
  70

  
	
  Section 6.10

  	
   

  	
  Security Interest in Reserve Funds

  	
  70

  
	
  6.10.1

  	
   

  	
  Grant of Security Interest

  	
  70

  
	
  6.10.2

  	
   

  	
  Income Taxes

  	
  70

  
	
  6.10.3

  	
   

  	
  Prohibition Against Further
  Encumbrance

  	
  70

  
	
  Section 6.11

  	
   

  	
  Letters of Credit

  	
  71

  
	
  6.11.1

  	
   

  	
  Delivery of Letters of Credit

  	
  71

  
	
  Section 6.12

  	
   

  	
  Provisions Regarding Letters of
  Credit

  	
  71

  
	
  6.12.1

  	
   

  	
  Security for Debt

  	
  71

  
	
  6.12.2

  	
   

  	
  Additional Rights of Lender

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  PROPERTY MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  The Management Agreement

  	
  72

  
	
  Section 7.2

  	
   

  	
  Prohibition Against Termination or
  Modification

  	
  73

  
	
  Section 7.3

  	
   

  	
  Replacement of Manager

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  PERMITTED TRANSFERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Permitted Transfer of the Property

  	
  73

  
	
  Section 8.2

  	
   

  	
  Permitted Transfers of Interest in
  Borrower

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  SALE AND SECURITIZATION OF
  MORTGAGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Sale of Mortgage and Securitization

  	
  75

  
					



 


iv

















 


	
  Section 9.2

  	
   

  	
  Securitization Indemnification

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  DEFAULTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Event of Default

  	
  81

  
	
  Section 10.2

  	
   

  	
  Remedies

  	
  83

  
	
  Section 10.3

  	
   

  	
  Right to Cure Defaults

  	
  84

  
	
  Section 10.4

  	
   

  	
  Remedies Cumulative

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
   

  	
  Successors and Assigns

  	
  85

  
	
  Section 11.2

  	
   

  	
  Lender’s Discretion

  	
  85

  
	
  Section 11.3

  	
   

  	
  Governing Law

  	
  85

  
	
  Section 11.4

  	
   

  	
  Modification, Waiver in Writing

  	
  87

  
	
  Section 11.5

  	
   

  	
  Delay Not a Waiver

  	
  87

  
	
  Section 11.6

  	
   

  	
  Notices

  	
  87

  
	
  Section 11.7

  	
   

  	
  Trial by Jury

  	
  88

  
	
  Section 11.8

  	
   

  	
  Headings

  	
  88

  
	
  Section 11.9

  	
   

  	
  Severability

  	
  88

  
	
  Section 11.10

  	
   

  	
  Preferences

  	
  88

  
	
  Section 11.11

  	
   

  	
  Waiver of Notice

  	
  88

  
	
  Section 11.12

  	
   

  	
  Remedies of Borrower

  	
  89

  
	
  Section 11.13

  	
   

  	
  Expenses; Indemnity

  	
  89

  
	
  Section 11.14

  	
   

  	
  Schedules Incorporated

  	
  90

  
	
  Section 11.15

  	
   

  	
  Offsets, Counterclaims and Defenses

  	
  90

  
	
  Section 11.16

  	
   

  	
  No Joint Venture or Partnership; No
  Third Party Beneficiaries

  	
  90

  
	
  Section 11.17

  	
   

  	
  Publicity

  	
  91

  
	
  Section 11.18

  	
   

  	
  Waiver of Marshalling of Assets

  	
  91

  
	
  Section 11.19

  	
   

  	
  Waiver of
  Offsets/Defenses/Counterclaims

  	
  91

  
	
  Section 11.20

  	
   

  	
  Conflict; Construction of
  Documents; Reliance

  	
  91

  
	
  Section 11.21

  	
   

  	
  Brokers and Financial Advisors

  	
  91

  
	
  Section 11.22

  	
   

  	
  Exculpation

  	
  92

  
	
  Section 11.23

  	
   

  	
  Prior Agreements

  	
  94

  
	
  Section 11.24

  	
   

  	
  Servicer

  	
  94

  
	
  Section 11.25

  	
   

  	
  Joint and Several Liability

  	
  95

  
	
  Section 11.26

  	
   

  	
  Creation of Security Interest

  	
  95

  
	
  Section 11.27

  	
   

  	
  Assignments and Participations

  	
  95

  
					



 


v

















 


SCHEDULES


 


	
  Schedule
  I

  	
  –

  	
   

  	
  Rent
  Roll

  
	
  Schedule
  II

  	
  –

  	
   

  	
  Required
  Repairs

  
	
  Schedule
  III

  	
  –

  	
   

  	
  Organizational
  Chart

  
	
  Schedule
  IV

  	
  –

  	
   

  	
  Form
  of Subordination, Non-Disturbance and Attornment Agreement

  
	
  Schedule
  V

  	
  –

  	
   

  	
  Intentionally
  Omitted

  
	
  Schedule
  VI

  	
  –

  	
   

  	
  Unfunded
  Tenant Allowances

  
	
  Schedule
  VII

  	
  –

  	
   

  	
  Physical
  Condition Report

  



 


vi
















 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT, dated as of October 3, 2006 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this “Agreement”), by and between
MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation having an address
at 4 World Financial Center, New York, New York 10080 (“Lender”),
and 10/120 SOUTH RIVERSIDE FEE LLC (“Fee Borrower”)
and 10/120 SOUTH RIVERSIDE PROPERTY LLC (“Leasehold Borrower”;
together with Fee Borrower, “Borrower”), each a Delaware
limited liability company,
having an address c/o Beacon Capital Partners, LLC at One Federal Street, 26th
Floor, Boston, Massachusetts 02110 (“Borrower”).


 


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


 


W  I  T  N  E  S  S  E  T
H :


 


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


 


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


 


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


 


I.              DEFINITIONS; PRINCIPLES
OF CONSTRUCTION


 


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


 


“Accounts”
shall have the meaning ascribed thereto in the Cash Management Agreement.


 


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


 


“Agent”
shall mean the agent under the Cash Management Agreement and any successor
Eligible Institution thereto.


 


“Air Rights Lease”
shall mean, collectively, (a)(i) Lease dated September 13, 1963 by and
among CUSCO, The Pennsylvania Railroad Company and Pittsburgh, Fort Wayne


 

















 


and Chicago Railway Company, collectively as Lessor,
and Tishman-Gateway, Inc., and LaSalle National Bank as Trustee under Trust
Agreement dated September 5, 1963 and known as Trust Number 31511, jointly as
Lessee, as recorded with the Cook County Recorder on September 18, 1963 as
Document No. 18917214,
(ii) Supplement to Lease dated June 21, 1966 by and among CUSCO, The
Pennsylvania Railroad Company and Pittsburgh, Fort Wayne and Chicago Railway
Company, collectively as Lessor, and Tishman-Gateway, Inc., and LaSalle National
Bank as Trustee under Trust Agreement dated September 5, 1963 and known as
Trust Number 31511, jointly as Lessee, as recorded with the Cook County
Recorder on July 12, 1966 as Document No. 19881999, (iii) Second Supplement to
Lease dated November 29, 1977 by and among CUSCO, Penn Central Transportation
Company and Pittsburgh, Fort Wayne and Chicago Railway Company, collectively as
Lessor, and The Equitable Life Assurance Society of the United States, as
Lessee, as recorded with the Cook County Recorder on November 30, 1977 as
Document Nos. 24217073, 24217074 and 24217075, (iv) Third Supplement to Lease
dated March 21, 1989 by and among CUSCO and The Penn Central Corporation,
collectively as Lessor, and LaSalle National Bank as Trustee under Trust Agreement
dated December 1, 1983 and known as Trust Number 107361, as Lessee, as recorded
with the Cook County Recorder as Document No. 89173332, (v) Assignment &
Assumption of Ground Lease from H, B-H Associates to TrizecHahn Regional
Pooling LLC dated May 17, 2001 and recorded June 5, 2001 as Document No.
0010481879, (vi) Assignment and Assumption of Lease by PCC 38 Corp., as
assignor, to TrizecHahn 10/120 Fee LLC, dated May 31, 2002 and recorded June 6,
2002 as Document No. 0020634439, (vii) Side Letter dated March 21, 1989, (viii)
Letter dated July 1, 1977 by American Premier Underwriters, Inc. to CUSCO
regarding assignment to PCC 38 Corp., (ix) Master Lease dated April 19, 1989 by
and among CUSCO, as Lessor, and LaSalle National Bank as Trustee under Trust
Agreement dated December 1, 1983 and known as Trust No. 107361, as Lessee, as
recorded with the Cook County Recorder as Document No. 89173338, together with
Side Letter from CUSCO, dated April 19, 1989 (regarding Gross Income
calculation), Clarification Letter from CUSCO dated April 19, 1989
(clarification regarding the Base Year for Gross Income calculation) and Lessor’s
Estoppel Certificate dated May 16, 2001, (x) Assignment and Assumption of Master Leases by Chicago Union Station
Company, as assignor, to TrizecHahn 10/120 Fee LLC, as assignee, dated November
8, 2001 and recorded November 16, 2001 as Document No. 0011080262, (xi)
Assignment and Assumption of Ground Lease between H, B-H Associates to
TrizecHahn Regional Pooling LLC dated May 17, 2001 and recorded June 5, 2001 as
Document No. 00110481878, (xii) Amendment to Lease between TrizecHahn
10/120 Fee LLC as Lessor and TrizecHahn Regional Pooling LLC as Lessee, dated
as of May 31, 2002 and recorded June 6, 2002 with the Cook County Recorder as
Document No. 0020634441, (xiii) Assignment and Assumption of Ground Lease, 10
South Riverside, Chicago, Illinois (Lessor’s Interest) by and between
TrizecHahn 10/120 Fee LLC and 10/120 South Riverside Fee LLC dated and recorded
on or about the date hereof, and (xiv) Assignment and Assumption of Ground
Lease, 10 South Riverside, Chicago, Illinois (Lessee’s Interest) by and between
TrizecHahn Regional Pooling LLC and 10/120 South Riverside Property LLC dated
and recorded on or about the date hereof and (b)(i) Lease dated July 1, 1965 by
and among CUSCO, The Pennsylvania Railroad Company and Pittsburgh, Fort Wayne
and Chicago Railway Company, collectively as Lessor, and Tishman-Monroe, Inc.,
and LaSalle National Bank as Trustee under Trust Agreement dated June 3, 1965
and known as Trust Number 33724, jointly as Lessee, as recorded with the Cook
County Recorder on October 14, 1965 as Document No. 19618053, (ii) Supplement
to Lease dated November 21, 1967 by and among CUSCO, The


 


2

















 


Pennsylvania Railroad Company and Pittsburgh, Fort
Wayne and Chicago Railway Company, collectively as Lessor, and Tishman-Monroe,
Inc., and LaSalle National Bank as Trustee under Trust Agreement dated June 3,
1965 and known as Trust Number 33724, jointly as Lessee, as recorded with the
Cook County Recorder on January 3, 1968 as Document No. 20370303, (iii) Second
Supplement to Lease dated November 29, 1977 by and among CUSCO, Penn Central
Transportation Company and Pittsburgh, Fort Wayne and Chicago Railway Company,
collectively as Lessor, and The Equitable Life Assurance Society of the United
States, as Lessee, as recorded with the Cook County Recorder on November 30,
1977 as Document Nos. 24217076, 24217077 and 24217078, (iv) Third Supplement to
Lease dated March 21, 1989 by and among CUSCO and The Penn Central Corporation,
collectively as Lessor, and LaSalle National Bank as Trustee under Trust
Agreement dated December 1, 1983 and known as Trust Number 107362, as Lessee,
as recorded with the Cook County Recorder as Document No. 89173333, (v)
Assignment and Assumption of Ground Lease from Solano Associates to TrizecHahn
Regional Pooling LLC dated May 17, 2001 and recorded on June 5, 2001 as
Document No. 0010481862, (vi) Assignment and Assumption of Lease by AFC Coal
Properties, Inc., as assignor, to TrizecHahn 10/120 Fee LLC, as assignee, dated
May 31, 2002 and recorded June 6, 2002 as Document No. 0020634434, (vii) Side
Letter dated March 21, 1989, (viii) Letter dated July 1, 1977 by American Premier
Underwriters, Inc. to CUSCO regarding assignment to AFC Coal Properties, Inc.,
(ix) Master Lease dated April 19, 1989 by and among CUSCO, as Lessor, and
LaSalle National Bank as Trustee under Trust Agreement dated December 1, 1983
and known as Trust No. 107362, as Lessee, as recorded with the Cook County
Recorder as Document No. 89173339, together with Side Letter from CUSCO, dated
April 19, 1989 (regarding Gross Income calculation), Clarification Letter from
CUSCO dated April 19, 1989 (clarification regarding the Base Year for Gross
Income calculation) and Lessor’s Estoppel Certificate dated May 16, 2001, (x) Assignment and Assumption of Lease by The
Equitable Life Assurance Society of the United States to Solano Associates
pursuant to Assignment and Assumption of Lease dated December 9, 1998 and
recorded March 17, 1999 as Document No. 9928508, (xi) Assignment and Assumption
of Ground Lease (CUSCO) by Solano Associates to TrizecHahn Regional Pooling LLC
dated May 17, 2001 and recorded June 5, 2001 as Document No. 0010481861, (xii)
Assignment and Assumption of Master Leases by CUSCO to TrizecHahn 10/120 Fee
LLC dated November 8, 2001 and recorded November 16, 2001 as Document
0011080262, (xiii) Amendment to Lease between TrizecHahn 10/120 Fee LLC
as Lessor and TrizecHahn Regional Pooling LLC as Lessee, dated as of May 31,
2002 and recorded June 6, 2002 with the Cook County Recorder as Document No.
0020634436, (xiv) Assignment and Assumption of Ground Lease, 120 South
Riverside, Chicago, Illinois (Lessor’s Interest) by and between TrizecHahn
10/120 Fee LLC and 10/120 South Riverside Fee LLC dated and recorded on or
about the date hereof, and (xv) Assignment and Assumption of Ground Lease, 120
South Riverside, Chicago, Illinois (Lessee’s Interest) by and between
TrizecHahn Regional Pooling LLC and 10/120 South Riverside Property LLC dated
and recorded on or about the date hereof.


 


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


 


“Alteration Security”
shall have the meaning set forth in Section 4.1.10.


 


“Alteration Threshold”
shall mean three percent (3%) of the outstanding principal amount of the Loan.


 


3

















 


“Annual Budget”
shall mean the operating and capital budget for the Property setting forth
Borrower’s good faith estimate of Gross Revenue, Operating Expenses, and
Capital Expenditures for the applicable Fiscal Year.


 


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


 


“Award”
shall mean any compensation paid by any Governmental Authority in connection
with a Condemnation in respect of all or any part of the Property.


 


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


 


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


 


“Beacon Entity”
shall mean BCSP IV U.S. Investments, L.P., a Delaware limited partnership.


 


“Borrower”
shall have the meaning set forth in the preamble to this Agreement, together
with their respective permitted successors and assigns. The term “Borrower”, as
used herein, shall mean each entity constituting Borrower, collectively, or any
Borrower or each Borrower, as the context shall require.


 


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


 


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


 


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


 


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


 


“Cash Management Agreement”
shall mean that certain Cash Management Agreement dated as of the date hereof
among Lender, Borrower, Manager and Agent.


 


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


 


4

















 


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


 


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


 


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


 


“Clearing Account Agreement”
shall mean that certain Deposit Account Control Agreement dated as of the date
hereof among Lender, Leasehold Borrower and Clearing Bank.


 


“Clearing Bank”
shall mean Bank of America, N.A. and any successor Eligible Institution thereto.


 


“Closing Date”
shall mean the date of funding the Loan.


 


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


 


“Condemnation”
shall mean a temporary or permanent taking by any Governmental Authority as the
result or in lieu or in anticipation of the exercise of the right of
condemnation or eminent domain, of all or any part of the Property, or any
interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.


 


“CUSCO” shall mean Chicago Union
Station Company.


 


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


 


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


 


“Debt Service Coverage
Ratio” shall mean the ratio of (i) the projected Net Cash Flow
(as hereinafter defined) for the twelve (12) calendar month period immediately
following the date of calculation to (ii) the projected Debt Service that would
be due for the twelve (12) calendar month period immediately following such
calculation. For purposes of calculating the Debt Service Coverage Ratio, the “projected
Net Cash Flow” shall be deemed to be equal to the projected Gross Revenues for
the twelve (12) calendar month period immediately following the date of
calculation (based on, subject to the last sentence of this definition, Leases
in place, whether or not the applicable Tenants have commenced paying rents
thereunder so long as such Tenants are obligated to commence rent payments
during the six (6) calendar month period immediately following the date of
calculation) less (a) the actual Operating Expenses during the twelve (12)
calendar month period immediately preceding the date of calculation (provided
that (x) with respect to the quarter ending December 31, 2006, such
Operating Expenses shall be calculated by annualizing Operating Expenses for
the three (3) calendar month period


 


5

















 


immediately preceding the
date of calculation, (y) with respect to the quarter ending March 31, 2007,
such Operating Expenses shall be calculated by annualizing Operating Expenses
for the six (6) calendar month period immediately preceding the date of
calculation and (z) with respect to the quarter ending June 30, 2007, such
Operating Expenses shall be calculated by annualizing Operating Expenses for
the nine (9) calendar month period immediately preceding the date of
calculation), (b) an amount equal to $350,000 in respect of projected Capital
Expenditures for the twelve (12) calendar month period immediately following
the date of calculation and (c) an amount equal to $1,350,000 in respect of
projected tenant improvements, leasing commissions and other leasing costs for
the twelve (12) calendar month period immediately following the date of
calculation. In connection with each calculation of Debt Service Coverage
Ratio, Borrower shall provide back-up documentation reasonably acceptable to
Lender. Notwithstanding anything to the contrary contained herein or in any
other Loan Document, for purposes of calculating the Debt Service Coverage
Ratio, the projected Gross Revenues attributable to any Lease which may be
terminated without cause by the tenant thereunder upon less than six (6) months’
notice (including, without limitation, the Trizec Lease) shall be excluded.


 


“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 a rate per annum equal to the lesser of (i) the maximum rate
permitted by applicable law, or (ii) three percent (3%) above the Interest
Rate.


 


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


 


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


 


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


 


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


 


6

















 


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


 


“Environmental Report”
shall mean, collectively, (i) that certain Report on ASTM Phase I Environmental
Site Assessment, Drinking Water Sampling, Asbestos Survey and IAQ Assessment,
10 South Riverside, Chicago, Illinois, prepared by Haley & Aldrich, Inc.,
File No. 33523-000, dated September 21, 2006, and the reports and the other
documents attached thereto and/or referred to therein, and (ii) that certain
Report on ASTM Phase I Environmental Site Assessment, Drinking Water Sampling,
Asbestos Survey and IAQ Assessment, 120 South Riverside, Chicago, Illinois,
prepared by Haley & Aldrich, Inc., File No. 33523-000, dated September 21,
2006, and the reports and the other documents attached thereto and/or referred
to therein.


 


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


 


“ERISA”
shall have the meaning set forth in Section 4.2.11.


 


“Escrow Reserve Period”
means any period commencing on the first Business Day after the occurrence of
the Escrow Reserve Trigger Event through the first Business Day after Lender’s
determination, in its reasonable judgment, that (i) the applicable Event of
Default giving rise to such Escrow Reserve Trigger Event no longer exists and
(ii) no other Event of Default has occurred and is then continuing.


 


“Escrow Reserve
Trigger Event” shall mean the occurrence
and continuance of an Event of Default.


 


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


 


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


 


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


 


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


 


“Extraordinary Expense”
shall mean an extraordinary operating expense or extraordinary capital
expenditure incurred by Borrower which is not set forth in the Annual Budget.


 


“Fee Borrower”
shall have the meaning set forth in the preamble to this Agreement, together
with its permitted successors and assigns.


 


7

















 


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


 


“Fitch”
shall mean Fitch, Inc.


 


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


 


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


 


“Gross Revenue”
shall mean, as calculated in accordance with GAAP, all revenue, derived from
the ownership and operation of the Property from whatever source, including,
but not limited to, Rents (excluding Rents from Tenants more than ninety (90)
days in arrears under their respective Leases), but excluding sales, use and
occupancy or other taxes on receipts required to be accounted for by Borrower
to any Governmental Authority, non-recurring revenues as determined by Lender,
proceeds from the sale or refinancing of the Property, security deposits
(except to the extent reasonably determined by Lender to be properly utilized
to offset a loss of Rent), refunds and uncollectible accounts, proceeds of
casualty insurance and Awards (other than business interruption or other loss
of income insurance related to business interruption or loss of income for the
period in question), and any disbursements to Borrower from the Reserve Funds
or any other reserve fund established by the Loan Documents.


 


“Guarantor” shall mean Beacon
Capital Strategic Partners IV,
L.P., a Delaware limited partnership., in its capacity as guarantor
under the Guaranty, or any other Person reasonably approved by Lender (or, if a
Securitization has occurred, approved by the Rating Agencies).


 


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


 


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


 


“Indebtedness” shall mean, for any
Person, without duplication: (i) all indebtedness of such Person for borrowed
money, for amounts drawn under a letter of credit, or for the deferred purchase
price of property for which such Person or its assets is liable, (ii) all
unfunded amounts under a loan agreement, letter of credit, or other credit
facility for which such Person would be liable if such amounts were advanced
thereunder, (iii) all amounts required to be paid by such Person as a
guaranteed payment to partners, including any mandatory redemption of shares or
interests but excluding any preferred return or special dividend paid solely
from, and to the extent of, excess cash flow after the payment of operating
expenses,


 


8

















 


capital
improvements and debt service on all indebtedness, (iv) all indebtedness
guaranteed by such Person, directly or indirectly, (v) all obligations under
leases that constitute capital leases for which such Person is liable, and (vi)
all obligations of such Person under interest rate swaps, caps, floors, collars
and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss.


 


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


 


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


 


“Insolvency Opinion”
shall mean that certain bankruptcy non-consolidation opinion letter dated the
date hereof and delivered by Goulston & Storrs, P.C., in connection with
the Loan.


 


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


 


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


 


“Interest
Rate” means, as to Note A, the Note A Rate and as to Note
B, the Note B Rate.


 


“Investment Grade Rating”
shall mean a long-term unsecured debt rating of at least “BBB-” by Fitch and
S&P and “Baa3” by Moody’s.


 


“Late Payment Charge”
shall have the meaning set forth in Section 2.3.4.


 


“Lease”
shall mean any lease, sublease or subsublease, letting, license, concession or
other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any Person is granted a possessory interest in, or
right to use or occupy all or any portion of any space in the Real Property,
and every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such
lease, sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto, other than (i) subleases or
sub-subleases in which Borrower has no interest, (ii) the Air Rights Lease, and
(iii) the REOA or any other easements, reciprocal easement agreements and
similar agreements.


 


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


 


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


 


“Leasehold Borrower” shall have the meaning set forth in the
preamble to this Agreement, together with its permitted successors and assigns.


 


“Legal Requirements”
shall mean all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and


 


9

















 


injunctions of Governmental
Authorities affecting Borrower or the Property or any part thereof or the
construction, use, alteration or operation thereof, or any part thereof,
whether now or hereafter enacted and in force, including, without limitation,
the Americans with Disabilities Act of 1990, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower as being intended to be of record, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to the
Property or any part thereof, or (ii) in any way limit the use and enjoyment
thereof.


 


“Lender”
shall mean Merrill Lynch Mortgage Lending, Inc., together with its successors
and assigns.


 


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


 


“Letter of Credit”
shall mean an irrevocable, unconditional, transferable, clean sight draft
letter of credit acceptable to Lender (either an evergreen letter of credit or
one which does not expire until at least thirty (30) Business Days after the
Maturity Date) in favor of Lender and entitling Lender to draw thereon in New
York, New York, issued by a domestic Eligible Institution or the U.S. agency or
branch of a foreign Eligible Institution. If at any time the bank issuing any
such Letter of Credit shall cease to be an Eligible Institution, Lender shall
provide notice thereof to Borrower and if Borrower shall fail to provide Lender
a replacement Letter of Credit from an Eligible Institution within ten (10)
days from receipt of such written notice from Lender, Lender shall have the
right immediately to draw down the same in full and hold the proceeds of such
draw in accordance with the applicable provisions hereof.


 


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


 


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


 


“Loan” shall
mean the loan in the original principal amount of Two Hundred Twenty-Five
Million and No/100 Dollars ($225,000,000.00) made by Lender to Borrower
pursuant to this Agreement.


 


“Loan Amount”
shall mean $225,000,000.00.


 


“Loan Documents”
shall mean, collectively, this Agreement, the Note, the Mortgage, the
Assignment of Leases, the Cash Management Agreement, the Clearing Account
Agreement, the Guaranty, the Environmental Indemnity, the Subordination of
Management Agreement and any other documents now or hereafter executed and/or
delivered by Borrower or its Affiliates in connection with the Loan, as the
same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.


 


10

















 


“Major Lease”
shall mean any Lease (i) covering more than 37,000 square feet at the Property
or (ii) made with a Tenant that is a Tenant under another Lease at the Property
or that is an Affiliate of any other Tenant under a Lease at the Property, if
the Leases together cover more than 37,000 square feet.


 


“Management Agreement”
shall mean that certain Management Agreement dated as of even date herewith, by
and between Borrower and Manager, pursuant to which Manager is to provide
management and other services with respect to the Property.


 


“Manager”
shall mean 10/120 South Riverside Illinois Property Manager LLC, a Delaware
limited liability company, or another Affiliate of Beacon Entity or any other
manager approved in accordance with the terms and conditions of Section 7.3
hereof.


 


“Material Adverse Effect”
shall mean any event or condition that has a material adverse effect on (i) the
business, prospects, profits, operations or financial condition of Borrower,
(ii) the ability of Borrower to perform its obligations under each Loan
Document and to repay the principal and interest of the Debt as it becomes due
and/or (iii) the enforceability or validity of any Loan Document or the
perfection or priority of any Lien created under any of the Loan Documents.


 


“Material Agreements”
means each contract and agreement relating to the ownership, management,
development, use, operation, leasing, maintenance, repair or improvement of the
Property other than (i) the Air Rights Lease, (ii) the REOA, (iii) the
Management Agreement and union contracts related to the provision of
services to the Property, (iv)
the Leases, (v) contracts or agreements for tenant improvements at the
Property, provided such contracts or agreements are on commercially reasonable
terms, (vi) service contracts or contracts for the provision of utility
services, and (vii) contracts and agreements (x) which are terminable on thirty
(30) days’ or less notice without payment of any material termination fee or
penalty, (y) under which Borrower is not obligated to pay more than $750,000
per annum or (z) under which Lender or its designee would not be directly or
indirectly bound in the event that Lender or its designee succeeded to the
ownership of the Property as the result of a foreclosure or a deed in lieu
thereof.


 


“Maturity Date”
shall mean November 1, 2011 or such other date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.


 


“Maximum Legal Rate”
shall mean the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or received
on the indebtedness evidenced by the Note and as provided for herein or the
other Loan Documents, under the laws of such state or states whose laws are
held by any court of competent jurisdiction to govern the interest rate
provisions of the Loan.


 


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


 


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


 


“Mezzanine Borrower” shall mean the
borrower under the Mezzanine Loan.


 


11

















 


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


 


“Mezzanine Lender” shall mean the
lender or lenders which may hereafter make the Mezzanine Loan to Mezzanine
Borrower. Mezzanine Lender shall at all times be a Qualified Mezzanine Lender.


 


“Mezzanine Loan” shall mean the
mezzanine loan, if any, made by Mezzanine Lender to Mezzanine Borrower pursuant
to the terms of Section 2.6 hereof, which Mezzanine Loan shall only be
permitted in accordance with the terms of Section 2.6 hereof.


 


“Mezzanine Loan Agreement” shall
mean the mezzanine loan agreement which evidences and governs the Mezzanine
Loan between Mezzanine Lender and Mezzanine Borrower, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.


 


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


 


“Monthly Capital
Expenditures Deposit” shall have the meaning set forth in Section
6.4.1.


 


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


 


“Monthly Payment Date”
shall mean the first (1st) day of every calendar month occurring
during the term of the Loan commencing with November 2006.


 


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


 


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


 


“Net Operating Income”
shall mean Gross Revenues less Operating Expenses.


 


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


 


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


 


“Non-Reporting Event”
shall mean the entire principal balance of the Loan has been placed into one or
more Securitizations, and the issuers of all such Securitizations are no longer
required to file periodic reports under the Exchange Act.


 


12

















 


“Note” means, collectively, the Note A and the
Note B.


 


“Note
A” means that certain Promissory Note A, dated the
date hereof, made by Borrower to the order of Lender in the original principal
amount of $200,000,000.00, as the same may hereafter be amended, supplemented, restated, increased,
extended or consolidated from time to time.


 


“Note
A Rate” means a rate per annum equal to 6.05%.


 


“Note
B” means that certain Promissory Note B, dated the
date hereof, made by Borrower to the order of Lender in the original principal
amount of $25,000,000.00, as the same may hereafter be amended, supplemented, restated, increased,
extended or consolidated from time to time.


 


“Note
B Rate” means a rate per annum equal to 6.05%.


 


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


 


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


 


“Operating Expenses”
shall mean, as calculated in accordance with GAAP, all costs and expenses
relating to the operation, maintenance and management of the Property,
including, without limitation, utilities, repairs and maintenance, insurance,
property taxes and assessments, advertising expenses, payroll and related
taxes, equipment lease payments and the annual management fee, but excluding
actual Capital Expenditures, tenant improvements, leasing commissions and other
leasing costs, depreciation, amortization, Extraordinary Expenses, deposits
required to be made to the Reserve Funds, Debt Service and debt service on the
Mezzanine Loan, if any; provided, however, such costs and expenses shall be
subject to adjustment by Lender to normalize such costs and expenses.


 


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


 


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


 


“Permitted Encumbrances”
shall mean, collectively, (i) the Liens and security interests created by the
Loan Documents, (ii) all Liens, encumbrances and other matters (including,
without limitation, the Air Rights Lease and the REOA) disclosed in the Title
Insurance Policy, (iii) Liens, if any, for Taxes or Other Charges imposed by
any Governmental Authority not yet due or delinquent, (iv) Leases and equipment
leases (or equipment lease financings) existing as of the date hereof, (v) Leases
and equipment leases (or equipment lease financings) entered into after the
date hereof in accordance with the terms of the Loan Documents, and (vi) such
other title and survey exceptions as Lender has approved or may approve in
writing in Lender’s reasonable discretion.


 


13

















 


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


 


“Permitted Transferee” shall mean
any of the following entities (for purposes of this definition, “control” means the ability to control the day to day and
general management decisions regarding the Property):


 


(i)            a
pension fund, pension trust or pension account that immediately prior to such
transfer (a) owns, directly or indirectly, total real estate assets of at least
$800,000,000 and (b) is managed by a Person who controls at least $800,000,000
of real estate assets;


 


(ii)           a
pension fund advisor who (a) immediately prior to such transfer, controls,
directly or indirectly, at least $800,000,000 of real estate assets and (b) is
acting on behalf of one or more pension funds that, in the aggregate, satisfy
the requirements of clause (i) of this definition;


 


(iii)          an insurance company which is subject to
supervision by the insurance commissioner, or a similar official or agency, of
a state or territory of the United States (including the District of Columbia)
(a) with a net worth, determined as of a date no more than six (6) months prior
to the date of the transfer of at least $400,000,000 and (b) who, immediately
prior to such transfer, controls, directly or indirectly, real estate assets of
at least $800,000,000;


 


(iv)          a
corporation organized under the banking laws of the United States or any state
or territory of the United States (including the District of Columbia) (a) with
a combined capital and surplus of at least $400,000,000 and (b) who,
immediately prior to such transfer, controls, directly or indirectly, real
estate assets of at least $800,000,000;


 


(v)           any Person (a) with an Investment Grade Rating
from each of the Rating Agencies, (b) who has a net worth, determined as of a
date no more than six (6) months prior to the date of such transfer, of at
least $400,000,000 and (c) who,
immediately prior to such transfer, controls, directly or indirectly, real
estate assets of at least $800,000,000; or


 


(vi)          any
Person in which fifty one percent (51%) of the ownership interests are owned
directly or indirectly by any of the entities listed in subsections (i) through
(v) of this definition of “Permitted Transferee”, or any combination of more
than one such entity, and which is controlled directly or indirectly by such
entity or entities.


 


“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.


 


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


 


“Physical Condition Report”
shall mean that certain physical condition report set forth on Schedule VII
hereto.


 


14

















 


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


 


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


 


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


 


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


 


“Property”
shall mean each parcel of real property, the Improvements thereon, and all
personal property owned by Borrower (or leased pursuant to the Air Rights Lease
by Borrower), and encumbered by the Mortgage, together with all rights
pertaining to such property and Improvements, all as more particularly
described in the Granting Clauses of the Mortgage.


 


“Qualified Manager”
shall mean a property manager which manages at least 6,000,000 square feet of
Class A office space in major metropolitan areas, at least 1,500,000 square
feet of which shall be located in the Chicago Metropolitan area (excluding the
Property).


 


“Qualified Mezzanine Lender” shall
mean one or more of the following: (i) a real estate investment trust, bank,
saving and loan association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund or pension advisory
firm, mutual fund, government entity or plan, (ii) investment company, money
management firm or “qualified institutional buyer” within the meaning of Rule
144A under the Securities Act of 1933, as amended, or an institutional “accredited
investor” within the meaning of Regulation D under the Securities Act of 1933,
as amended, which is regularly engaged in the business of making or owning
loans of similar types to the Mezzanine Loan or the Loan, (iii) a Qualified
Trustee in connection with a securitization of, or the creation of
collateralized debt obligations (“CDO”)
secured by or financing through an “owner trust” of, the Mezzanine Loan, so
long as (A) the special servicer or manager of such securitization, CDO or
trust has the Required Special Servicer Rating, (B) the “controlling class” of
such securitization vehicle is held by a Qualified Mezzanine Lender and (C) the
operative documents of the related securitization vehicle, CDO or financing
must require that (1) the “controlling class” or “equity interest” in such
securitization vehicle or CDO are owned by a Permitted Transferee or a
Permitted Investment Fund and (2) if any of the relevant trustee, special
servicer, manager or controlling class fails to meet the requirements of such
clause, such entity must be replaced by a qualifying entity within 30 days, (iv)
an investment fund, limited liability company, limited partnership or general
partnership (a “Permitted Investment Fund”)
where a Qualified Mezzanine Lender or a Permitted Fund Manager acts as the
general partner, managing member or fund manager and at least 50% of the equity
interests in such Permitted Investment Fund are owned, directly or indirectly,
by one or more of the following: a Qualified Mezzanine Lender, an


 


15

















 


institutional “accredited investor”, within the
meaning of Regulation D promulgated under the Securities Act of 1933, as
amended, and/or a “qualified institutional buyer” or both within the meaning of
Rule 144A promulgated under the Securities Exchange Act of 1934 (provided each
institutional “accredited investor” or “qualified institutional buyer” meets
the test set forth in clause (vi) (A) below), as amended, (v) any other lender
or entity (including any opportunity funds) regularly engaged in the business
of making mezzanine loans which has been approved as a Qualified Mezzanine
Lender hereunder by the Rating Agencies, (vi) an institution substantially
similar to any of the foregoing entities described in clauses (i) or (ii) of
this definition, and as to each of the entities described in clauses (i), (ii)
and (vi) provided such entity (A) has total assets (in name or under
management) in excess of $1,000,000,000 and (except with respect to a pension
advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s
equity of $500,000,000; and (B) is regularly engaged in the business of making
or owning commercial real estate loans or commercial loans secured by a pledge
of interests in a mortgage borrower or owning and operating commercial real
property or (vii) any entity controlled (as defined below) by any one or more
of the entities described in clause (i) through (vi) of this definition. For
purposes of this definition only, “control” means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interest of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise. A “Qualified Trustee” means (i) a
corporation, national bank, national banking association or a trust company,
organized and doing business under the laws of any state or the United States
of America, authorized under such laws to exercise corporate trust powers and
to accept the trust conferred, having a combined capital and surplus of at
least $100,000,000 and subject to supervision or examination by federal or
state authority, (ii) an institution insured by the Federal Deposit Insurance Corporation
or (iii) an institution whose long-term senior unsecured debt is rated either
of the then in effect top two rating categories of S&P and either Fitch or
Moody’s (provided, however, if the Loan has been securitized, the rating
requirement of any agency not a Rating Agency will be disregarded). “Required Special Servicer Rating”  means a special servicer rating of “CSS1” in the case of
Fitch, a servicer on its approved list of special servicers in the case of
S&P and, in the case of Moody’s, a special servicer that is acting as
special servicer in a commercial mortgage loan securitization that was rated by
Moody’s within the six month period prior to the date of determination and
Moody’s has not downgraded or withdrawn the then-current rating on any class of
commercial mortgage securities or placed any class of commercial mortgage
securities on watch citing the continuation of such special servicer as special
servicer of such commercial mortgage securities (provided, however, the
requirement of any agency not a Rating Agency shall be disregarded). “Permitted Fund Manager” means any
entity which is not subject to a bankruptcy proceeding and (a) as determined by
Lender has been approved from time to time by the Rating Agencies as the
general partner, managing member or fund manager of a Permitted Investment
Fund, or (b) is a nationally - recognized manager of investment funds investing
in debt or equity interests relating to commercial real estate which is
investing through a fund which has committed capital of at least $500,000,000.


 


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


 


16

















 


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


 


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


 


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


 


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


 


“Related Loan”
means a loan made to an Affiliate of Borrower or secured by a Related Property,
that is included in a Securitization with the Loan.


 


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


 


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


 


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


 


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


 


“REOA” shall
mean, collectively, (i) that certain Easement and Operating Agreement
made by CUSCO and TrizecHahn 10/120 Fee LLC, dated as of November 8, 2001 and
recorded November 16, 2001 in the Office of the Recorder of Deeds of Cook
County, Illinois, as document 0011080264, as amended by that certain Amendment
to Easement and Operating Agreement dated as of May 31, 2002 recorded June 6,
2002 in the Office of the Recorder of Deeds of Cook County, Illinois, as
document 0020634435, and (ii) that certain Easement and Operating Agreement
made by CUSCO and TrizecHahn 10/120 Fee LLC, dated as of November 8, 2001 and
recorded November 16, 2001 in the Office of the Recorder of Deeds of Cook
County, Illinois, as document 0011080263, as amended by that certain Amendment
to Easement and Operating Agreement dated as of May 31, 2002 and recorded June
6, 2002 in the Office of the Recorder of Deeds of Cook County, Illinois, as
document 0020634440.


 


“REOA Estoppel”
shall mean, collectively, (i) the REOA Estoppel Certificate executed by CUSCO
with respect to 10 South Riverside, Chicago, Illinois and dated September 22,
2006 and (ii) the REOA Estoppel Certificate executed by CUSCO with respect to
120 South Riverside, Chicago, Illinois and dated September 22, 2006.


 


17
















 


“Replacement Lease”
shall have the meaning set forth in Section 6.5.1.


 


“Required Repairs”
shall have the meaning set forth in Section 4.21.


 


“Reserve Funds”
shall mean, collectively, the Capital Expenditure Funds, the Insurance Funds,
the Tax Funds, the Rollover Funds, the Lease Termination Rollover Funds and the
Unfunded Tenant Allowance Reserve Funds.


 


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


 


“Restoration Threshold”
shall mean three percent (3%) of the outstanding principal amount of the Loan.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


18

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Terrorism Coverage Amount”
shall have the meaning set forth in Section 5.1.1(a)(xi).


 


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


 


“Transfer” shall
have the meaning set forth in the Mortgage.


 


“TRIA” shall mean
the Terrorism Risk Insurance Act of 2002, as amended, or similar Federal
statute.


 


“Trizec Lease”
shall mean, collectively, (i) that certain Lease dated January 18, 2005 between
Leasehold Borrower’s predecessor-in-interest, as landlord, and Trizec Holdings,
LLC, as tenant, for approximately 57,048 square feet at 10 South Riverside,
Chicago, Illinois, (ii) that certain Lease dated November 29, 2004 between
Leasehold Borrower’s predecessor-in-interest, as landlord, and Trizec Holdings,
LLC, as tenant, for approximately 8,427 square feet at 10 South Riverside,
Chicago, Illinois, and (iii) the lease or occupancy agreement between Leasehold
Borrower’s predecessor-in-interest, as landlord, and Trizec Office Properties,
as tenant, for approximately 2,994 square feet at 120 South Riverside, Chicago,
Illinois, each as amended or otherwise modified on or prior to the date hereof
and each as may hereafter be amended or otherwise modified from time to time in
accordance with the terms set forth in this Agreement.


 


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


 


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


 


19

















 


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


 


“Unfunded Tenant Allowances”
shall mean, collectively, (i) the amounts specifically set forth in any UTA
Lease as a payment to or on behalf of, or a reimbursement due to, a tenant from
Borrower and (ii) the leasing commissions payable by Borrower in connection
with any UTA Lease, in each case as specifically set forth on Schedule VI.


 


“Unfunded Tenant Allowance Account”
shall have the meaning set forth in Section 6.7 hereof.


 


“Unfunded Tenant Allowance Reserve
Funds” shall have the meaning set forth in Section 6.7
hereof.


 


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


 


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


 


“UTA Leases” shall
mean the Leases set forth on Schedule VI attached hereto, with respect
to which Leases there are Unfunded Tenant Allowances.


 


“Yield Maintenance Premium”
shall mean an amount equal to the greater of (a) one percent (1%) of the
outstanding principal balance of the Loan to be prepaid and (b) the present
value as of the Prepayment Date of the Calculated Payments from the Prepayment
Date through August 1, 2011 determined by discounting such payments at the
Discount Rate. As used in this definition, the term “Calculated Payments” shall mean the
monthly payments of interest only which would be due based on the principal
amount of the Loan being prepaid on the Prepayment Date and assuming an
interest rate per annum equal to the difference (if such difference is greater
than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury
Rate. As used in this definition, the term “Discount Rate” shall mean the rate equal to the sum of (i)
the rate which, when compounded monthly, is equivalent to the Yield Maintenance
Treasury Rate, when compounded semi-annually and (ii) 0.25%. As used in this
definition, the term “Yield Maintenance
Treasury Rate” shall mean the yield calculated by Lender by the
linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer or one shorter) most nearly approximating August 1, 2011. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Yield Maintenance Treasury Rate. In no event,
however, shall Lender be required to reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise.


 


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


 


20

















 


defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.


 


II.            THE LOAN


 


Section 2.1            The Loan.


 


2.1.1       Agreement to Lend and
Borrow.  Subject to and upon the
terms and conditions set forth herein, Lender has made the Loan to Borrower and
Borrower has accepted the Loan from Lender.


 


2.1.2       Single Disbursement to
Borrower.  Borrower shall receive
no further borrowings hereunder in respect of the Loan and any amount borrowed
and repaid hereunder in respect of the Loan may not be reborrowed.


 


2.1.3       The Note.  The Loan shall be evidenced by the Note and
shall be repaid in accordance with the terms of this Agreement and the Note.


 


2.1.4       Use of Proceeds.  Borrower shall use proceeds of the Loan to
(i) acquire the Property, including, without limitation, acquisition
transaction costs, (ii) pay and discharge any existing loans relating to the
Property, (iii) pay all past-due Basic Carrying Costs, if any, in respect of
the Property, (iv) deposit the Reserve Funds, to the extent applicable, (v) pay
costs and expenses incurred in connection with the closing of the Loan incurred
by Lender, (vi) fund any working capital requirements of the Property, and
(vii) retain the balance, if any.


 


2.1.5       Components.  Lender shall have the right from time to time
prior to a Securitization to modify the Loan in order to create components of
the Note A and/or the Note B and/or component notes, to reduce the number of
components and/or component notes, to reallocate the principal balances of the
components and/or the component notes or to eliminate any component structure
of the Loan provided that (a) the total principal balance of the Loan
immediately after the effective date of such modification equals the
outstanding principal balance of the Loan immediately prior to such
modification, (b) the weighted average of the interest rates for all components
of the Loan at all times after the effective date of such modification equals
the weighted average of the interest rates for all components immediately prior
to such modification (except following the application of Net Proceeds as
provided in Section 2.4.2 below or if an Event of Default shall occur),
and (c) there are no other changes to the economic terms of the Loan Documents,
or any increase in Borrower’s obligations or decrease in Borrower’s rights
under the Loan Documents. Lender shall have the right to modify the Note A, the
Note B and the components in accordance with this Section 2.1.5
upon prior notice to Borrower (in which event such modification shall then be
deemed effective). Lender shall provide certified copies of any modification of
the Note A, the Note B and the components to Borrower. If requested by Lender,
Borrower shall promptly execute an amendment to this Agreement, the Note A and
the Note B to evidence such modification. All of the foregoing shall be at
Lender’s cost and expense, and Lender shall reimburse Borrower for its
reasonable out-of-pocket costs and expenses incurred in connection therewith
(including reasonable legal fees).


 


21

















 


Section 2.2            Interest Rate.


 


2.2.1       Interest Rate.  Interest on the outstanding principal balance
of the Loan shall accrue from the date hereof up to but excluding the Maturity
Date at the Interest Rate.


 


2.2.2       Intentionally Omitted.


 


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


 


2.2.4       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 (that is, the Interest Rate
or the Default Rate, as then applicable, expressed as an annual rate divided by
360) by (c) the outstanding principal balance. The accrual period for
calculating interest due on the Monthly Payment Date occurring in November 2006
shall be the period from the date hereof through and including October 31, 2006
and the accrual period for calculating interest due on each Monthly Payment
Date thereafter shall be the period from the first (1st) day through
and including the last day of the calendar month immediately prior to such
Monthly Payment Date.


 


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


 


Section 2.3            Loan Payments.


 


2.3.1       Payment Before Maturity
Date.  Commencing on the Monthly
Payment Date occurring in November 2006 and on each Monthly Payment Date
thereafter to and including the Maturity Date, Borrower shall make a payment
(the “Monthly Debt Service Payment Amount”)
to Lender of interest only in arrears at the Interest Rate based on the
outstanding amount of the Loan. Provided no Event of Default shall have
occurred and be


 


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continuing,
each payment shall be applied to the accrued and unpaid interest on the Loan. Upon
the occurrence and during the continuance of an Event of Default, all payments
shall, at Lender’s election, be applied (i) first, to accrued and unpaid
interest under the Note A; (ii) second, to the outstanding principal
balance of the Note A until the Note A is paid in full; (iii) third,
to accrued and unpaid interest under the Note B, and (iv) lastly, to the
outstanding principal balance of the Note B. Any Net Proceeds applied to the
Debt by Lender in accordance with this Agreement shall, at Lender’s election,
be applied in accordance with the order of priority set forth in the
immediately preceding sentence.


 


2.3.2       Intentionally Omitted.


 


2.3.3       Payment on Maturity Date.  Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgage
and the other Loan Documents.


 


2.3.4       Late Payment Charge.  If any principal, interest or any other sum
due Lender under the Loan Documents, other than the payment of principal due on
the Maturity Date, is not paid by Borrower on the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of three
percent (3%) of such unpaid sum or the maximum amount permitted by applicable
law (a “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.


 


2.3.5       Method and Place of
Payment.  (a)  Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be
made to Lender not later than 1:00 p.m., New York City time, on the date when
due and shall be made in lawful money of the United States of America in
immediately available funds at Lender’s office, and any funds received by
Lender after such time shall, for all purposes hereof, be deemed to have been
paid on the next succeeding Business Day. Solely for purposes of determining
whether an Event of Default has occurred or a Late Payment Charge is payable,
payments from the Accounts shall be deemed to be made, provided sufficient
funds are on deposit in the Accounts for the purposes intended on the date such
payments are due and Borrower has not attempted to prevent or delay any
disbursement by Agent of any such amounts from the Accounts.


 


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


 


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


 


2.3.6       Payments After Event of
Default.  Any amounts received by
Lender following the occurrence and continuance of an Event of Default shall be
applied by Lender


 


23

















 


toward the
payment of interest and/or principal of Loan and/or any other amounts due under
the Loan Documents in such order, priority and proportions as Lender in its
sole discretion shall deem proper.


 


Section 2.4            Prepayments.


 


2.4.1       Voluntary Prepayments.  Except as otherwise provided herein, Borrower
shall not have the right to prepay the Loan in whole or in part. Borrower may,
at its option, prepay the Debt in whole (but not in part), provided the
following conditions are satisfied: (a) no Event of Default has occurred and is
continuing; (b) Borrower provides Lender with not less than fifteen (15) days
prior notice of the date of such prepayment (or such shorter period of time as
may be permitted by Lender in its sole discretion); (c) if such prepayment
is made prior to August 1, 2011, Borrower shall also pay to Lender the Yield
Maintenance Premium; provided, however, if such prepayment is made on or after
August 1, 2011, no Yield Maintenance Premium shall be payable by Borrower to
Lender; and (d) if any prepayment is received by Lender on a date other than a
Monthly Payment Date, such prepayment shall include interest which would have
accrued thereon to (but not including) the next Monthly Payment Date and such
amounts (i.e., principal and interest prepaid by Borrower) shall be held by
Lender as collateral security for the Loan in an interest bearing account at an
Eligible Institution, with interest accruing on such amounts to the benefit of
Borrower, and such amounts prepaid shall be applied to the Loan on the next
Monthly Payment Date, with any interest on such funds paid to Borrower on such
date provided no Event of Default then exists.


 


2.4.2       Mandatory Prepayments.  On each date on which Lender actually
receives a distribution of Net Proceeds, and if Lender is not required to (and
does not) make such Net Proceeds available to Borrower for a Restoration in
accordance with Section 5.3 hereof, Borrower shall, at Lender’s
option, prepay the outstanding principal balance of the Loan in an amount equal
to one hundred percent (100%) of such Net Proceeds together with interest that
would have accrued on such amounts through the next Monthly Payment Date and
shall have the option to prepay the remaining outstanding principal balance of
the Loan together with accrued interest thereon within 180 days of Lender’s
determination to apply Net Proceeds to the Loan. The full amount of any such
prepayment shall be applied to the Loan and any amount of such prepayment in
excess of that required to pay the Debt in full shall be distributed in the
following order of priority:  (i) if any
portion of the Mezzanine Loan, if any, is outstanding, to the Mezzanine Lender
to be applied in accordance with the Mezzanine Loan Agreement, and (ii) if no
portion of any Mezzanine Loan is outstanding, to Borrower. No Yield Maintenance
Premium shall be due in connection with any prepayment made pursuant to this Section 2.4.2.
Any prepayment received by Lender pursuant to this Section 2.4.2 on
a date other than a Monthly Payment Date shall be held by Lender as collateral
security for the Loan in an interest bearing account, with such interest
accruing to the benefit of Borrower, and shall be applied by Lender on the next
Monthly Payment Date.


 


2.4.3       Prepayments After
Default.  If after the occurrence
and during the continuance of an Event of Default, payment of all or any part
of the principal of the Loan is tendered by Borrower, a purchaser at
foreclosure or any other Person, such tender shall be deemed an attempt to
circumvent the prohibition against prepayment set forth in Section 2.4.1
and Borrower, such purchaser at foreclosure or other Person shall pay to Lender
the outstanding


 


24

















 


principal
balance of the Loan, all accrued and unpaid interest thereon, all other amounts
payable under the Loan Documents, plus, if any such prepayment is made prior to
August 1, 2011, a payment equal to the Yield Maintenance Premium. The full
amount of any such prepayment shall be applied by Lender toward the payment of
interest and/or principal of the Loan and/or any other amounts due under the
Loan Documents in such order, priority and proportions as Lender in its sole
discretion shall deem proper.


 


Section 2.5            Release.


 


2.5.1       Release of Property.  Except as set forth in this Section 2.5,
no repayment or prepayment of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien of
the Mortgage on the Property. Lender shall, upon the written request and at the
expense of Borrower, upon payment in full of all principal and interest on the
Loan and all other amounts due and payable under the Loan Documents in
accordance with the terms and provisions of the Note, this Agreement and the
other Loan Documents, release or assign (without recourse, representation or
warranty) the Liens of the Mortgage and other Loan Documents on the Property.


 


Section 2.6            Permitted Mezzanine
Loan.


 


2.6.1       Mezzanine Loan.  Notwithstanding anything to the contrary
contained herein or in any other Loan Document, on or after January 1, 2007,
Mezzanine Borrower shall be permitted to incur the Mezzanine Loan provided the
following conditions are satisfied:


 


(i)            Lender
receives written notice from Borrower that Mezzanine Borrower intends to incur
the Mezzanine Loan at least thirty (30) days prior to the closing of such
Mezzanine Loan.


 


(ii)           No
Event of Default has occurred and is continuing on the date Lender receives
notice of such Mezzanine Loan and on the date that Mezzanine Lender makes the
Mezzanine Loan to Mezzanine Borrower.


 


(iii)          The
principal amount of the Mezzanine Loan shall not exceed Ten Million Dollars
($10,000,000), and the full amount of the proceeds from the Mezzanine Loan
shall be used solely to improve the Property.


 


(iv)          Mezzanine
Lender that makes the Mezzanine Loan shall be a Qualified Mezzanine Lender.


 


(v)           The
Debt Service Coverage Ratio, calculated as of the last day of the month
immediately preceding the date of the closing of the Mezzanine Loan, will not be
less than 1.25:1.00 (which calculation shall include the prospective debt
service on the Mezzanine Loan).


 


(vi)          The
loan-to-value ratio, the numerator of which is the sum of (A) the outstanding
principal amount of the Loan and (B) the principal amount of the Mezzanine
Loan, and the denominator of which is equal to the then current appraised value
of the Property (based


 


25

















 


on an updated
appraisal obtained by Borrower at Borrower’s sole cost and expense and
reasonably acceptable to Lender), shall be no greater than eighty percent
(80%).


 


(vii)         The
Mezzanine Loan shall be subject to the approval of Lender, not to be
unreasonably withheld, or, if all or any portion of the Loan has been included
in a Securitization, Borrower shall have delivered to Lender a Rating Agency
Confirmation with respect to the Mezzanine Loan.


 


(viii)        The
collateral for the Mezzanine Loan shall include only pledges of the equity
interests in Borrower, any accounts established under a separate mezzanine cash
management arrangement (which shall not include the Accounts, and shall not
include any portion of the Property or any other collateral securing the Loan),
and one or more guaranties (other than from Borrower).


 


(ix)           The
Mezzanine Loan shall be subordinate in all respects to the Loan.


 


(x)            The
Mezzanine Loan shall not be cross-defaulted or cross-collateralized with any
other properties or loans (other than the Loan).


 


(xi)           Mezzanine
Lender shall enter into an intercreditor agreement with Lender in form and
substance reasonably acceptable to Lender and meeting then current Rating
Agency criteria.


 


(xii)          The
Mezzanine Loan shall be coterminous with the Loan.


 


(xiii)         If
the Mezzanine Loan bears interest at a variable rate, the Mezzanine Borrower
shall have obtained and shall maintain during the term of the Loan an interest
rate cap from a counterparty reasonably acceptable to Lender and the Rating
Agencies with a fixed strike price and an interest rate spread such that the
blended, weighted average interest rate of (A) the aggregate of such strike
price and such spread and (B) the Interest Rate is no greater than eight and a
half percent (8.50%) per annum.


 


(xiv)        If
the Mezzanine Loan bears interest at a fixed rate, the blended, weighted average
interest rate of (A) such fixed rate and (B) the Interest Rate shall be no
greater than eight and a half percent (8.50%) per annum.


 


(xv)         Interest
shall be due and payable monthly in the same manner as the Loan and, if the
Mezzanine Loan is a variable rate loan, such spread shall not be subject to
adjustment, or, if the Mezzanine Loan is a fixed rate loan, such interest rate
shall not be subject to adjustment.


 


(xvi)        Mezzanine
Borrower satisfies such other conditions as are customary in connection with
mezzanine loans and delivers such other documents, agreements, certificates and
legal opinions (including but not limited to a revised Insolvency Opinion which
shall be in form, scope and substance reasonably acceptable in all respects to
Lender and the Rating Agencies) as Lender shall reasonably request;


 


26

















 


(xvii)       Borrower
shall execute any amendments to the Loan Documents that Lender shall reasonably
require in order to evidence the Mezzanine Loan and any opinions that Lender
shall reasonably require in connection with such amendments, including, without
limitation, applicable due execution and enforceability opinions.


 


(xviii)      Mezzanine
Borrower and any other pledgors, if any, of interests in Borrower, shall be
structured into the organizational structure of Borrower in a manner such as
not to adversely affect the bankruptcy remote nature of Borrower and shall
comply with Rating Agency criteria, and all organizational documents of
Borrower shall be revised to the reasonable satisfaction of Lender.


 


(xix)         All
reasonable costs and expenses (including reasonable attorneys’ fees and any
fees charged by the Rating Agencies and any servicers) incurred by Lender in
connection with this Section 2.6 shall be paid by Borrower.


 


III.           REPRESENTATIONS AND
WARRANTIES


 


Section 3.1            Borrower
Representations.  Borrower represents
and warrants that:


 


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


 


(b)           Borrower’s
exact legal name is correctly set forth in the first paragraph of this
Agreement. Borrower is an organization of the type specified in the first
paragraph of this Agreement. Borrower is incorporated or organized under the
laws of the state specified in the first paragraph of this Agreement. Borrower’s
principal place of business and chief executive office, and the place where
Borrower keeps its books and records, including recorded data of any kind or
nature, regardless of the medium of recording, including software, writings,
plans, specifications and schematics, has been for the preceding four (4)
months (or, if less than four (4) months, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth in the
first paragraph of this Agreement (unless Borrower notifies Lender in writing
at least thirty (30) days prior to the date of such change). Fee Borrower’s
organizational identification number, if any, assigned by the state of its
incorporation or organization is 4220587. Fee Borrower’s federal tax
identification number is 33-1144217. Fee Borrower is not subject to back-up
withholding taxes. Leasehold Borrower’s organizational identification number,
if any, assigned by the state of its incorporation or organization is 4220588. Leasehold
Borrower’s federal tax identification number is 33-1144217. Leasehold Borrower
is not subject to back-up withholding taxes.


 


27

















 


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


 


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


 


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


 


3.1.5       Agreements.  To the best of Borrower’s knowledge, Borrower
is not in default with respect to any order or decree of any court or any
order, regulation or demand of any Governmental Authority, which default might
have consequences that would materially and adversely affect the condition
(financial or other) or operations of Borrower or its properties or might have
consequences that would materially adversely affect its performance hereunder.


 


3.1.6       Consents.  No consent, approval, authorization or order
of any court or Governmental Authority is required for the execution, delivery
and performance by Borrower of, or compliance by Borrower with, this Agreement
or the consummation of the transactions contemplated hereby, other than those
which have been obtained by Borrower or those the failure to obtain which would
not have a Material Adverse Effect.


 


3.1.7       Title.  Fee Borrower has good, marketable and
insurable fee simple title to the portion of the Property owned in fee and
Leasehold Borrower has good, marketable and insurable leasehold title to the
portion of the Property which constitutes the leasehold interest created by the
Air Rights Lease and Borrower has good title to the balance of the Property
owned by it, free and clear of all Liens whatsoever except the Permitted
Encumbrances. To the best of Borrower’s knowledge, the Mortgage, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will (to the
extent that the liens and security interests created thereby may be perfected
by recording or filing) create (i) a valid, first priority, perfected lien on
the Real Property, subject only to Permitted Encumbrances and (ii) perfected
security interests in and to, and perfected collateral assignments of, all
Leases and, to the extent such security interests may be perfected by the
filing of financing statements, all personalty, all in accordance with the
terms


 


28

















 


thereof, in
each case subject only to any Permitted Encumbrances. To the best of Borrower’s
knowledge, except for the mechanics’ lien filed by Walsh Construction Company
of Illinois and the litigation resulting therefrom, there are no mechanics’,
materialman’s or other similar liens or claims which have been filed for work,
labor or materials affecting the Property which are or may be liens prior to,
or equal or coordinate with, the lien of the Mortgage. None of the Permitted
Encumbrances, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by the Mortgage and this Loan
Agreement, materially and adversely affect the value of the Property,
materially impair the use or operations of the Property or impair Borrower’s
ability to pay its obligations in a timely manner.


 


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


 


3.1.9       Compliance.  To the best of Borrower’s knowledge, Borrower
and the Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes and Prescribed Laws. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which might materially adversely affect the
condition (financial or otherwise) or business of Borrower. Borrower has not committed
any act which may give any Governmental Authority the right to cause Borrower
to forfeit the Property or any part thereof or any monies paid in performance
of Borrower’s obligations under any of the Loan Documents.


 


3.1.10     Financial Information.  To the best of Borrower’s knowledge, all
financial data, including, without limitation, the statements of cash flow and
income and operating expense, that have been delivered to Lender, in its
capacity as “lender” hereunder, by Borrower in respect of the Property are
true, complete and correct in all material respects. Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Property or the operation thereof, except as
referred to or reflected in said financial statements. Since the date of the
financial statements, there has been no material adverse change in the
financial condition, operations or business of Borrower or the Property from
that set forth in said financial statements.


 


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


 


29

















 


3.1.12     Utilities and Public Access.  The Property is served by water, sewer,
sanitary sewer and storm drain facilities reasonably adequate to service the
Property for its intended uses. 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 are the subject of recorded
access easements for the benefit of the Property. The Property has rights of
access to public ways, and, to the best of Borrower’s knowledge, all roads
necessary for the full utilization of the Property for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of the
Property.


 


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


 


3.1.14     Assessments.  To the best of Borrower’s knowledge, there
are no pending or proposed special or other assessments for public improvements
or otherwise affecting the Property, nor are there any contemplated
improvements to the Property that may result in such special or other
assessments.


 


3.1.15     Enforceability.  The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.


 


3.1.16     Assignment of Leases.  To the best of Borrower’s knowledge, the Assignment
of Leases creates a valid assignment of, or a valid security interest in,
certain rights under the Leases, subject only to Permitted Encumbrances and a
license granted to Borrower to exercise certain rights and to perform certain
obligations of the lessor under the Leases, including, without limitation, the
right to operate the Property. No Person other than Borrower and Lender has any
interest in or assignment of the Leases or any portion of the Rents due and
payable or to become due and payable thereunder.


 


3.1.17     Insurance.  Borrower has obtained and has delivered to
Lender certificates of insurance, with all premiums paid thereunder, reflecting
the insurance coverages, amounts and other requirements set forth in this
Agreement. No claims have been made under any of the Policies with respect to
the Property or Borrower, and none of Borrower, its Affiliates or, to the best
of Borrower’s knowledge, any other Person, has done, by act or omission,
anything which would impair the coverage of any of the Policies.


 


3.1.18     Licenses.  To the best of Borrower’s knowledge, all
material permits and approvals, including without limitation, certificates of
occupancy (if applicable), required by any Governmental Authority for the use,
occupancy and operation of the Property in the manner in


 


30

















 


which the
Property is currently being used, occupied and operated have been obtained and
are in full force and effect.


 


3.1.19     Flood Zone.  Except as may otherwise be shown on the
Survey, none of the Improvements on the Property is located in an area
identified by the Federal Emergency Management Agency as a special flood hazard
area.


 


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


 


3.1.21     Boundaries.  Except as may otherwise be shown on the
Survey, all of the Improvements which were included in determining the
appraised value of the Property lie wholly within the boundaries and building
restriction lines of the Property, and no improvements on adjoining properties
encroach upon the Property, and no easements or other encumbrances affecting
the Property encroach upon any of the improvements, so as to materially
adversely affect the value or marketability of the Property except for the
Permitted Encumbrances and those which are insured against by title insurance.


 


3.1.22     Leases.  Borrower represents and warrants to Lender
with respect to the Leases (except as may otherwise be disclosed in any Tenant
or seller estoppel certificate delivered to Lender on or prior to the date
hereof) that: (a) to the best of Borrower’s knowledge, the rent roll with
respect to the Property attached hereto as Schedule I is true, complete
and correct in all material respects and the Property is not subject to any
Leases other than the Leases described in Schedule I, (b) the Leases
identified on Schedule I are in full force and effect and, to the best
of Borrower’s knowledge and except as set forth on Schedule I, there are
no material defaults thereunder by either party, (c) the copies of the Leases
delivered to Lender are true and complete, (d) except for payments made (on a
quarterly or annual basis) by the providers of telecommunications and drop box
services or as otherwise set forth on Schedule I, no Rent (including security
deposits) has been paid more than one (1) month in advance of its due date, (e)
all work to be performed by Borrower under each Lease (other than work which is
not required to be completed as of the Closing Date) has been performed as
required and, to the best of Borrower’s knowledge, has been accepted by the
applicable Tenant, (f) to the best of Borrower’s knowledge, except for the
Unfunded Tenant Allowances or as otherwise set forth on Schedule I, any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any Tenant has
already been


 


31

















 


received by
such Tenant, and (g) all security deposits are being held in accordance with
Legal Requirements.


 


3.1.23     Filing and Recording Taxes.  All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid
under applicable Legal Requirements in connection with the transfer of the
Property to Borrower have been paid or are being paid simultaneously herewith. All
mortgage, mortgage recording, stamp, intangible or other similar tax required
to be paid under applicable Legal Requirements in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid or are being paid simultaneously herewith. All taxes
and governmental assessments due and owing in respect of the Property have been
paid, or an escrow of funds in an amount sufficient to cover such payments has
been established hereunder or are insured against by the title insurance policy
to be issued in connection with the Mortgage.


 


3.1.24     Single Purpose.  Borrower hereby represents and warrants to,
and covenants with, Lender that as of the date hereof and until such time as
the Debt shall be paid in full (unless otherwise hereafter consented to by
Lender or, if the Loan has been included in a Securitization, unless a Rating
Agency Confirmation is received):


 


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


 


(b)           Borrower
will not engage, directly or indirectly, in any business other than the
ownership, management and operation of the Property and Borrower will conduct
and operate its business as presently conducted and operated.


 


(c)           Except
for capital contributions or distributions permitted under the terms and
conditions of Borrower’s operating agreements and properly reflected on the
books and records of Borrower, Borrower will not enter into any contract or
agreement with any Affiliate of Borrower, any constituent party of Borrower or
any Affiliate of any such constituent party, except upon terms and conditions
that are commercially reasonable and substantially similar to those that would
be available on an arms-length basis with third parties other than any such
party.


 


(d)           Borrower
has not incurred and will not incur any Indebtedness other than (i) the Debt,
(ii) unsecured trade payables and operational debt not evidenced by a note and
(iii) Indebtedness incurred in the financing of equipment and other personal
property used on the Property; provided that any Indebtedness incurred pursuant
to subclauses (ii) and (iii) shall be (x) not more than sixty (60) days past
due, (y) incurred in the ordinary course of business and (z) not more than five
percent (5%) of the outstanding principal amount of the Loan at any one time. No
Indebtedness other than the Debt may be secured (subordinate or pari  passu)
by the Property, except that any permitted equipment financing or equipment
lease may be secured by such equipment.


 


32

















 


(e)           Borrower
has not made and will not make any loans or advances in the nature of loans to
any other Person (including any Affiliate or constituent party), and shall not
acquire obligations or securities of its Affiliates or owners or any other
Person (except for securities that are Permitted Investments).


 


(f)            Subject
to there being sufficient revenues from the Property, Borrower is and will
remain solvent and Borrower will pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the same
shall become due.


 


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


 


(h)           Borrower
will maintain all of its books, records, financial statements and bank accounts
separate from those of its Affiliates and any other Person. Borrower’s assets
will not be listed as assets on the financial statement of any other Person,
provided, however, Borrower’s assets may be included in a consolidated financial
statement of any Affiliate provided that (i) inclusion on such consolidated
financial statement is in accordance with the requirements of GAAP (or such
other accounting method reasonably acceptable to Lender), (ii) such
consolidated financial statement shall contain a footnote to the effect that
Borrower’s assets are owned by Borrower and (iii) such assets are listed on
Borrower’s own separate balance sheet. Borrower will file its own tax returns
unless Borrower is a tax-disregarded entity not required to file tax returns
under applicable law and if Borrower is a corporation will not file a
consolidated federal income tax return with any other Person. Borrower shall
pay any taxes required to be paid under applicable law. Borrower shall maintain
its books, records, resolutions (if any) and agreements as official records.


 


(i)            Borrower
will be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate of
Borrower or any constituent party of Borrower), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks bearing its own name.


 


(j)            Subject
to there being sufficient revenues from the Property, Borrower will maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations.


 


(k)           To
the fullest extent permitted by law, neither Borrower nor any constituent party
will seek or effect the liquidation, dissolution, winding up, consolidation or
merger, in whole or in part, of Borrower.


 


33

















 


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


 


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


 


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


 


(o)           (i)
If Borrower is a limited partnership or a limited liability company (other than
a single member limited liability company), each general partner or managing
member (each, an “SPC Party”)
shall be a corporation whose sole asset is its interest in Borrower and each
such SPC Party will at all times comply, and will cause Borrower to comply,
with each of the representations, warranties, and covenants contained in this Section 3.1.24
as if such representation, warranty or covenant was made directly by such SPC
Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower,
Borrower shall immediately appoint a new SPC Party whose articles of
incorporation are substantially similar to those of such SPC Party and deliver
a new non-consolidation opinion to the Rating Agency or Rating Agencies, as
applicable, with respect to the new SPC Party and its equity owners.


 


(ii)           If
Borrower is a single member Delaware limited liability company, Borrower shall
at all times have either a Delaware corporation or two (2) Independent Directors
as Borrower’s springing member(s) which, upon the dissolution of the sole
member of Borrower or the withdrawal or the disassociation of the sole member
from Borrower, shall immediately become the sole member(s) of Borrower.


 


(p)           Borrower
shall at all times cause there to be at least two duly appointed members of the
board of directors of each SPC Party (if any) or, if Borrower is a single
member Delaware limited liability company, at least two duly appointed managers
of Borrower who in each case are provided by a nationally recognized company
that provides professional independent directors or managers (each, an “Independent Director”) who shall not
have been at the time of such individual’s appointment or at any time while
serving as a director of such SPC Party or manager of such Borrower, and may
not have been at any time during the preceding five years, (i) a
stockholder, director (other than as an Independent Director of such SPC
party), officer, manager (other than as Independent Director of Borrower, if
Borrower is a single member limited liability company), employee, partner,
member, attorney or counsel of such SPC Party, Borrower or any Affiliate of any
of them, (ii) a creditor, customer, supplier or other Person who derives any of
its purchases or revenues from its activities with such SPC Party, Borrower or
any Affiliate of either of them (other than a Person provided to serve as
Independent Director by a company that provides professional independent
directors or managers or other general corporate services to Borrower, such SPC
Party or any Affiliate of either of them), (iii) a Person or other entity
controlling or under common control with any such stockholder, partner,
customer, supplier or other Person, or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other


 


34

















 


Person. As
used in this definition, the term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management, policies or activities of a Person, whether
through ownership of voting securities, by contract or otherwise. A natural
person who satisfies the foregoing definition other than clause (ii) shall not
be disqualified from serving as an Independent Director of the Borrower or the
SPC Party if such individual is an Independent Director provided by a
nationally-recognized company that provides professional independent directors
and/or managers (a “Professional
Independent Director”) and other corporate services in the
ordinary course of its business. A natural person who otherwise satisfies the
foregoing definition other than clause (i) by reason of being the independent
director or manager of a “special purpose entity” affiliated with the Borrower
or the SPC Party shall not be disqualified from serving as an Independent
Director of the Borrower or SPC Party if such individual is either (A) a
Professional Independent Director or (B) the fees that such individual earns
from serving as independent director or manager of affiliates of the Borrower
or SPC Party in any given year constitute in the aggregate less than five
percent (5%) of such individual’s annual income for that year. Notwithstanding
the immediately preceding sentence, an Independent Director may not
simultaneously serve as Independent Director of the Borrower or SPC Party and
independent director or manager of a special purpose entity that owns a direct
or indirect equity interest in the Borrower or SPC Party or a direct or
indirect interest in any co-borrower with the Borrower or SPC Party. For
purposes of this paragraph, a “special purpose entity” is an entity, whose
organizational documents contain restrictions on its activities substantially
similar to those set forth in this Section 3.1.24.


 


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


 


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


 


(s)           Borrower
will not permit any Affiliate or constituent party independent access to its
bank accounts, other than Manager (including its authorized employees) in
accordance with the Management Agreement.


 


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


 


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


 


35

















 


(v)           Borrower
shall allocate fairly and reasonably any overhead expenses that are shared with
any Affiliate, including for shared office space and for services performed by
any employee of an Affiliate.


 


(w)          Borrower
shall not pledge its assets for the benefit of any other Person (other than (i)
to Lender with respect to the Loan and (ii) equipment secured by permitted
equipment financings or equipment leases) and Borrower shall not engage in any
sale or transfer of its assets outside the ordinary course of its business or
in violation of this Agreement and the other Loan Documents.


 


(x)            Borrower
shall not buy or hold evidence of indebtedness issued by any other Person
(other than cash and investment-grade securities).


 


(y)           Borrower
shall not form, acquire or hold any subsidiary or own any equity interest in
any other entity.


 


(z)            Neither
Borrower nor any SPC Party shall, without the affirmative vote of the managing
member and the board of directors of Borrower or of such SPC Party, as
applicable, including both Independent Directors of Borrower or of such SPC
Party, as applicable:


 


(i)            File
or consent to the filing of any bankruptcy, insolvency or reorganization case
or proceeding; institute any proceedings under any applicable insolvency law or
otherwise seek relief under any laws relating to the relief from debts or the
protection of debtors generally, on behalf of Borrower or of SPC Party;


 


(ii)           Seek
or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for SPC Party or Borrower or a
substantial portion of either of their properties;


 


(iii)          Make
any assignment for the benefit of the creditors of SPC Party or Borrower; or


 


(iv)          Take
any action in furtherance of any of the foregoing.


 


Notwithstanding anything to the contrary contained in this Agreement or
any of the other Loan Documents, each Borrower shall comply with all of the
provisions of this Section 3.1.24 with respect to all Persons other than
its co-borrower as contemplated by the Loan Documents.


 


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


 


3.1.26     Solvency.  Borrower (a) has not entered into this
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received


 


36

















 


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


 


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


 


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


 


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


 


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


 


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


 


3.1.32     Intentionally Omitted.


 


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


 


37
















 


3.1.34     Full and Accurate
Disclosure.  To the best of
Borrower’s knowledge, no information contained in this Agreement, the other
Loan Documents, or any written statement furnished by or on behalf of Borrower
pursuant to the terms of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no fact or circumstance
presently known to Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, the Property, Borrower or its business, operations or condition
(financial or otherwise).


 


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


 


3.1.36     Intentionally Omitted.


 


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


 


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


 


3.1.39     Perfection of Accounts.  Borrower hereby represents and warrants to
Lender that upon the execution and delivery of the Cash Management Agreement by
all parties thereto, and assuming that the Accounts have been established
pursuant to the Cash Management Agreement:


 


(a)           This
Agreement, together with the other Loan Documents, create a valid and
continuing security interest (as defined in the Uniform Commercial Code) in the
Accounts in favor of Lender, which security interest is prior to all other
Liens, other than Permitted Encumbrances, and is enforceable as such against
creditors of and purchasers (other than as expressly provided in Section 9-320
of the UCC) from Borrower. Other than in connection with the Loan Documents and
except for Permitted Encumbrances, Borrower has not sold or otherwise conveyed
the Accounts;


 


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


 


(c)           Pursuant
and subject to the terms of the Cash Management Agreement, Agent has agreed to
comply with all instructions originated by Lender, without further consent by
Borrower, directing disposition of the Accounts and all cash, securities,
instruments or other financial assets at any time held, deposited or invested
therein, together with any interest or other earnings thereon, and all proceeds
thereof (including proceeds of sales and other dispositions),


 


38

















 


whether
accounts, general intangibles, chattel paper, deposit accounts, instruments,
documents or securities; and


 


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


 


3.1.40     Unfunded Tenant Allowances.  There are no Unfunded Tenant Allowances
except as set forth on Schedule VI.


 


3.1.41     Air Rights Lease.  Borrower hereby represents and warrants to
Lender the following with respect to the Air Rights Lease:


 


(a)           Fee
Borrower is the lessor and Leasehold Borrower is the lessee under the Air
Rights Lease.


 


(b)           The
Air Rights Lease has a term which extends not less than twenty (20) years
beyond the Maturity Date.


 


(c)           As
of the date hereof, to the best of Borrower’s knowledge, the Air Rights Lease
is in full force and effect and no default has occurred under the Air Rights
Lease and there is no existing condition which, but for the passage of time or
the giving of notice, could result in a default under the terms of the Air
Rights Lease.


 


3.1.42     REOA.  Borrower hereby represents and warrants to
Lender that, except as may otherwise be set forth in the REOA Estoppel:


 


(a)           Fee
Borrower is a party to the REOA and, to the best of Borrower’s knowledge, the
REOA is in full force and effect and has not been amended or modified and Fee
Borrower’s interest therein has not been assigned pursuant to any assignment
which survives the Closing Date except the assignment to Lender pursuant to the
Loan Documents;


 


(b)           to
the best of Borrower’s knowledge, the REOA is in full compliance with all
applicable local, state and federal laws, rules and regulations,


 


(c)           to
the best of Borrower’s knowledge, Fee Borrower is not in default under the REOA
and no other party to the REOA is in default thereunder and there are no
grounds for default thereunder after the giving of the requisite notice thereunder;


 


(d)           Borrower
has no knowledge of any notice of termination or default given with respect to
the REOA;


 


(e)           to
the best of Borrower’s knowledge, and after giving effect to notices of Fee
Borrower’s address given to CUSCO on or about the date hereof, the current
addresses to which notices are sent to Fee Borrower or any other party to the
REOA are correctly set forth in the REOA;


 


39

















 


(f)            to
the best of Borrower’s knowledge, there are no set-offs, claims, counterclaims
or defenses being asserted or capable of being asserted after giving the
requisite notice, if any, required under the REOA for the enforcement of the
obligations under the REOA;


 


(g)           to
the best of Borrower’s knowledge, there are no liens capable of being asserted
for amounts due under the provisions of the REOA which, if unpaid, would become
a lien prior to the lien of the Mortgage;


 


(h)           to
the best of Borrower’s knowledge, neither Fee Borrower nor any other party to
the REOA has requested that a matter be submitted to arbitration under the
REOA;


 


(i)            to
the best of Borrower’s knowledge, Fee Borrower enjoys the quiet and peaceful
possession of all easements relating to or appurtenant to the Property granted
by the REOA;


 


(j)            to
the best of Borrower’s knowledge, there are no charges due and payable under
the REOA to Fee Borrower or any other party to the REOA (except in the ordinary
course of business); and


 


(k)           Lender
is a “Mortgagee” for purposes of the REOA and is entitled to all rights of a “Mortgagee”
or holder of a “Mortgage” as defined in the REOA.


 


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


 


IV.                                BORROWER
COVENANTS


 


Section 4.1            Borrower Affirmative
Covenants.  Borrower hereby covenants
and agrees with Lender from and after the date hereof and until the full
payment and performance of all obligations under the Loan Documents, that:


 


4.1.1       Existence; Compliance
with Legal Requirements.  Borrower
shall do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its existence, rights, licenses, permits and
franchises and comply in all material respects with all Legal Requirements
applicable to it and the Property, including, without limitation, Prescribed
Laws. Notwithstanding the foregoing, after prior notice to Lender, Borrower, at
its own expense, may suspend such compliance and contest by appropriate legal
proceeding, conducted in good faith and with due diligence, the validity or
applicability of any Legal Requirements to Borrower and/or the Property,
provided that (i) no Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) Borrower
shall establish to Lender’s reasonable satisfaction that neither the Property
nor any part thereof or interest therein will be in imminent danger of being
sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly
upon final determination thereof comply with such resulting Legal Requirements,
and shall pay all costs, interest and penalties which may be payable in
connection therewith; and (v) if required by


 


40

















 


Lender,
Borrower shall deposit with Lender cash, or other security as may be approved
by Lender, in an amount equal to 100% of the amount of all damages, costs,
interest and penalties that may be assessed against Borrower as a result of
such non-compliance, as reasonably determined by Lender, less any amount that
Borrower has paid to any Governmental Authority in connection with such contest
as security for the payment of such damages, costs, interest and penalties.


 


4.1.2       Taxes and Other Charges.  Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof as the same become due and payable; provided, however,
Borrower’s obligation to directly pay Taxes shall be suspended for so long as
Borrower complies with the terms and provisions of Section 6.2
hereof. Borrower shall furnish to Lender receipts for the payment of the Taxes
and the Other Charges prior to the date the same shall become delinquent;
provided, however, that Borrower is not required to furnish such receipts for
payment of Taxes in the event that such Taxes have been paid by Lender pursuant
to Section 6.2 hereof. Subject to Borrower’s right to contest set
forth in Section 3.6(b) of the Mortgage, 
Borrower shall not permit or suffer and shall promptly discharge any
lien or charge against the Property other than Permitted Encumbrances. After
prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, conducted in good faith and with due diligence,
the amount or validity of any Taxes or Other Charges, provided that (i) no
Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) neither the Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith;
(v) unless Taxes or Other Charges have been previously paid, such
proceeding shall suspend the collection of Taxes or Other Charges from the
Property; and (vi) to the extent that Borrower has not paid to or deposited
with the applicable taxing authority the full amount of the contested Taxes or
Other Charges or if Borrower is paying Taxes to Lender pursuant to Section
6.2 hereof and has requested Lender to not pay the contested amount of the
Taxes during the continuance of the legal proceeding (in which event Lender
shall not pay such amount of the Taxes during the continuance of such
proceeding), Borrower shall deposit with Lender cash, or other security as may
be approved by Lender, in an amount equal to one hundred twenty-five percent (125%)
of the unpaid contested amount, to insure the payment of any such Taxes or
Other Charges, together with all interest and penalties thereon, but no such
security shall be required if Borrower is paying Taxes to Lender pursuant to Section
6.2 hereof. Lender may pay over any such cash or other security held by
Lender to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established.


 


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


 


4.1.4       Access to Property.  Borrower shall permit agents, representatives
and employees of Lender to inspect the Property or any part thereof at
reasonable hours upon reasonable advance notice, subject to the rights of
Tenants under their applicable Leases.


 


41

















 


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


 


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


 


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


 


4.1.6       Financial Reporting.  (a) 
Borrower shall keep and maintain or will cause to be kept and maintained
proper and accurate books and records, in accordance with GAAP (or such other
accounting method reasonably acceptable to Lender), reflecting the financial
affairs of Borrower. Lender shall have the right from time to time during
normal business hours upon reasonable notice to Borrower to examine such books
and records at the office of Borrower or other Person maintaining such books
and records and to make such copies or extracts thereof as Lender shall desire.


 


(b)           Borrower
shall furnish Lender annually, within one hundred twenty (120) days following
the end of each Fiscal Year, a complete copy of either (i) Borrower’s annual
financial statements audited by a “big four” accounting firm or other
independent certified public accountant reasonably acceptable to Lender and
prepared in accordance with GAAP (or such other accounting method reasonably
acceptable to Lender) or (ii) if a Mezzanine Loan is outstanding, a
consolidated and annotated annual financial statement of Borrower and Mezzanine
Borrower audited by a “big four” accounting firm or other independent certified
public accountant reasonably acceptable to Lender and prepared in accordance
with GAAP (or such other accounting method reasonably acceptable to Lender),
provided such consolidated financial statement complies with Section
3.1.24(h) and is required or permitted by GAAP (or such other accounting
method reasonably acceptable to Lender). In addition, if a Mezzanine Loan is
outstanding, Borrower shall furnish Lender annually, within one hundred twenty
(120) days following the end of each Fiscal Year, unaudited statements of
income and expense and cash flow for the Property, which unaudited statements
shall account for the Loan separately from the Mezzanine Loan, if any, and, if
Borrower furnished Lender consolidated statements pursuant to subsection (ii)
of the previous sentence, an unaudited separate balance sheet for Borrower,
which balance sheet shall account for the Loan separately from the Mezzanine
Loan, if any. Borrower’s annual financial statements shall be accompanied by a
certificate executed by an authorized officer of Borrower stating that such
annual financial statement presents fairly the financial condition and the
results of operations of Borrower and the Property. Together with Borrower’s
annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying as of the date thereof whether to the best of Borrower’s
knowledge there exists an event or circumstance which constitutes a Default or
Event of Default by Borrower under the Loan Documents and if such Default or
Event of Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy the same.


 


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


 


(i)            for
each quarter from and after the quarter ending December 31, 2006, quarterly and
year-to-date statements of income and expense and cash flow prepared for such
quarter with respect to the Property, with a balance sheet for such quarter for
Borrower;


 


(ii)           for
each quarter from and after the quarter ending December 31, 2006, a calculation
reflecting the Debt Service Coverage Ratio as of the last day of such quarter,
for such quarter, together with back-up documentation reasonably acceptable to
Lender;


 


(iii)          for
each quarter from and after the quarter ending December 31, 2006, a current
rent roll for the Property;


 


(iv)          intentionally
omitted; and


 


(v)           for
each quarter from and after the quarter ending December 31, 2006, any written
notice received from a Tenant under a Major Lease threatening non-payment of
Rent or other default, alleging or acknowledging a default by landlord,
requesting a termination of a Major Lease or a material modification of any
Major Lease or notifying Borrower of the exercise or non-exercise of any option
provided for in such Tenant’s Major Lease, or any other similar material
correspondence received by Borrower from Tenants under Major Leases during the
subject quarter.


 


(d)           Intentionally
Omitted.


 


(e)           Borrower
shall submit the Annual Budget for the 2007 Fiscal Year to Lender not later
than December 28, 2006. With respect to each Fiscal Year commencing with the
2008 Fiscal Year, Borrower shall submit the Annual Budget to Lender not later
than thirty (30) days prior to the commencement of such Fiscal Year.


 


(f)            Borrower
shall furnish to Lender, within ten (10) days after request (or as soon
thereafter as may be reasonably possible), such further detailed information
with respect to the operation of the Property and the financial affairs of
Borrower as may be reasonably requested by Lender, including, without
limitation, a comparison of the budgeted income and expenses and the actual
income and expenses year to date for the Property, together with a detailed
explanation of any variances of more than the greater of five percent (5%) or
$100,000 between budgeted and actual amounts for such year to date.


 


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


 


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


 


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


 


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


 


4.1.9       Leases.  (a)  All
Leases and all renewals of Leases (other than renewals exercised pursuant to
Leases which existed (including the renewal terms) on the Closing Date and (A)
for which Borrower has no discretion as to the terms of such renewal and (B)
which renewal terms have not been modified since the Closing Date) executed
after the date hereof shall (i) be the product of an arm’s-length transaction,
(ii) be on commercially reasonable terms, (iii) as to new Leases, provide that
such Lease is subordinate to the Mortgage and that the lessee will attorn to
Lender and any purchaser at a foreclosure sale and (iv) not contain any terms
which would materially adversely affect Lender’s rights under the Loan
Documents or the Property. All Major Leases and all renewals, amendments and
modifications thereof (other than renewals, amendments and modifications
strictly limited to the implementation of options or rights expressly contained
in Major Leases and for which Borrower has no discretion as to the terms of
such renewals, amendments and modifications) shall be subject to Lender’s prior
approval, which approval shall not be unreasonably withheld or delayed. Lender
shall execute and deliver a Subordination Non-Disturbance and Attornment
Agreement in the form annexed as Schedule IV to Tenants under Leases
approved (as opposed to deemed approved) by Lender promptly upon request with
such commercially reasonable changes as may be requested by Tenants, from time
to time, and which are reasonably acceptable to Lender.


 


(b)           Borrower
(i) shall observe and perform the obligations imposed upon the lessor under the
Leases in a commercially reasonable manner; (ii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed in a commercially reasonable manner,
provided, however, Borrower shall not terminate (other than due to a monetary
or material non-monetary default by the tenant under a Major Lease) or accept a
surrender of a Major Lease (other than pursuant to a right or option of a
Tenant contained therein) without Lender’s prior approval, which approval shall
not be unreasonably withheld or delayed; (iii) shall not collect any of the
Rents more than one (1) month in advance (other than security deposits), except
as approved by Lender or as provided in


 


44

















 


Leases that
exist as of the date hereof or that are entered into after the date hereof in
accordance with the terms and provisions of this Section 4.1.9 and, if
the amount of any such prepaid Rent shall equal or exceed $250,000 for any
Lease, then as a condition to any approval by Lender for Borrower to collect
such Rents more than one (1) month in advance, Lender may require that Borrower
deposit all such prepaid Rents with Lender to be held in an interest-bearing
account and applied to the Debt as it comes due and payable pursuant to the
Loan Documents during the period represented by the prepaid Rent; (iv) shall
not execute any assignment of lessor’s interest in the Leases or the Rents
(except as contemplated by the Loan Documents); and (v) shall hold all security
deposits under all Leases in accordance with Legal Requirements. Upon request,
Borrower shall furnish Lender with executed copies of all Leases.


 


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


 


(i)            whenever
Lender’s approval or consent is required pursuant to the provisions of this Section 4.1.9,
Borrower shall have the right to submit a term sheet of such transaction to
Lender for Lender’s approval, such approval not to be unreasonably withheld or
delayed. Any such term sheet submitted to Lender shall set forth all material
terms of the proposed transaction including, without limitation, identity of
tenant, square footage, term, rent, rent credits, abatements, work allowances
and tenant improvements to be constructed by Borrower. Lender shall use good
faith efforts to respond within eight (8) Business Days after Lender’s receipt
of Borrower’s written request for approval or consent of such term sheet. If
Lender fails to respond to such request within eight (8) Business Days, and
Borrower sends a second request containing a legend in bold letters stating
that Lender’s failure to respond within five (5) Business Days shall be deemed
consent or approval, Lender shall be deemed to have approved or consented to
such term sheet if Lender fails to respond to such second written request
before the expiration of such five (5) Business Day period;


 


(ii)           whenever
Lender’s approval or consent is required pursuant to the provisions of this Section 4.1.9
for any matter that Lender has not previously approved (or deemed approved) a
term sheet pursuant to Section 4.1.9(c)(i) above, Lender shall use
good faith efforts to respond within eight (8) Business Days after Lender’s
receipt of Borrower’s written request for such approval or consent. If Lender
fails to respond to such request within eight (8) Business Days, and Borrower
sends a second request containing a legend in bold letters stating that Lender’s
failure to respond within five (5) Business Days shall be deemed consent or
approval, Lender shall be deemed to have approved or consented to the matter
for which Lender’s consent or approval was sought if Lender fails to respond to
such second written request before the expiration of such five (5) Business Day
period;


 


(iii)          whenever
Lender’s approval or consent is required pursuant to the provisions of this Section 4.1.9
for any matter that Lender has previously approved (or deemed approved) a term
sheet pursuant to Section 4.1.9(c)(i) above, Lender shall use good
faith efforts to respond within five (5) Business Days after Lender’s receipt
of Borrower’s written request for such approval or consent. If Lender fails to
respond to such request within five (5) Business Days, and Borrower sends a
second request containing a legend in bold letters stating that Lender’s failure
to respond within five (5) Business Days shall be deemed consent or approval,
Lender shall be deemed to have approved or consented to the matter for which
Lender’s consent or approval was sought if Lender fails to respond to such
second written request before the


 


45

















 


expiration of
such five (5) Business Day period, provided that there have been no material
deviations from the term sheet and that the aggregate economics of the
transaction are not materially less favorable to Borrower than as set forth in
the term sheet;


 


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


 


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


 


4.1.10     Alterations.  Lender’s prior approval shall be required in
connection with any alterations to any Improvements (except tenant improvements
under any Lease approved or deemed approved by Lender or under any Lease for
which approval was not required by Lender under this Agreement) (a) that is
reasonably likely to have a material adverse effect on Borrower’s financial
condition, the value of the Property or the ongoing revenues and expenses of
the Property or (b) the cost of which (including any related alteration,
improvement or replacement) is reasonably anticipated to exceed the Alteration
Threshold, which approval may be granted or withheld in Lender’s reasonable
discretion. If the total unpaid amounts incurred and to be incurred with
respect to such alterations to the Improvements shall at any time exceed the
Alteration Threshold, Borrower shall promptly deliver to Lender as security for
the payment of such amounts and as additional security for Borrower’s
obligations under the Loan Documents any of the following (such security, “Alteration Security”): (i) cash, (ii)
Letters of Credit, (iii) U.S. Obligations, (iv) other securities reasonably
acceptable to Lender, provided that, if the Loan shall have been included in a
Securitization, Lender shall have received a Rating Agency Confirmation as to
the form and issuer of same, or (v) a completion bond, provided that, if the
Loan shall have been included in a Securitization, Lender shall have received a
Rating Agency Confirmation as to the form and issuer of same. Such security
shall be in an amount equal to the excess of the total unpaid amounts incurred
and to be incurred with respect to such alterations to the Improvements over
the Alteration Threshold. Provided that no Event of Default shall have occurred
and be continuing, any Alteration Security held by Lender in accordance with
this Section 4.1.10 shall be returned to Borrower in the event that
Borrower provides Lender with reasonably satisfactory evidence that (x) the
aggregate unpaid amount with respect to the alteration to which such Alteration
Security relates is less than the Alteration Threshold and (y) after the
release of such Alteration Security, adequate Alteration Security shall remain
on deposit with Lender with respect any other alterations then undertaken by
Borrower in accordance with this Section 4.1.10.


 


4.1.11     Intentionally Omitted.


 


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


 


46

















 


(c) promptly
enforce the performance and observance of all of the material covenants and
agreements required to be performed and/or observed by the other party under
each Material Agreement to which it is a party in a commercially reasonable
manner.


 


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


 


4.1.14     Costs of
Enforcement/Remedying Defaults.  In
the event (a) that the Mortgage is foreclosed in whole or in part or the Note
or any other Loan Document is put into the hands of an attorney for collection,
suit, action or foreclosure, (b) of the foreclosure of any Lien or mortgage
prior to or subsequent to the Mortgage in which proceeding Lender is made a
party, (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or Guarantor or an assignment by Borrower or
Guarantor for the benefit of its creditors, or (d) Lender shall remedy or
attempt to remedy any Event of Default hereunder, Borrower shall be chargeable
with and agrees to pay all costs incurred by Lender as a result thereof,
including costs of collection and defense (including reasonable attorneys’,
experts’, consultants’ and witnesses’ fees and disbursements) in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, which shall be due and payable on demand, together
with interest thereon from the date incurred by Lender at the Default Rate, and
together with all required service or use taxes.


 


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


 


4.1.16     Loan Fees.  Borrower shall pay all fees and costs
required of Borrower pursuant to the terms of that certain term sheet between
Beacon Capital Strategic Partners IV Acquisition, LLC and Lender dated July 26,
2006.


 


4.1.17     O&M Program.  Borrower will comply with all existing (if
any) and future operations and maintenance programs related to asbestos and
asbestos containing materials and will maintain such programs as are reasonably
necessary at the Property.


 


4.1.18     Intentionally Omitted.


 


4.1.19     Air Rights Lease. The
Borrower hereby covenants and agrees with Lender with respect to the Air Rights
Lease as follows:


 


(a)           Fee
Borrower shall, at its sole cost and expense, promptly and timely perform and
observe all material terms, covenants and conditions required to be performed
and observed by Fee Borrower in its capacity as the lessor under the Air Rights
Lease.


 


47

















 


(b)           Leasehold
Borrower shall, at its sole cost and expense, promptly and timely perform and
observe all material terms, covenants and conditions required to be performed
and observed by Leasehold Borrower in its capacity as the lessee under the Air
Rights Lease.


 


4.1.20     REOA. The Borrower
hereby covenants and agrees with Lender with respect to the REOA as follows:


 


(a)           Fee
Borrower shall pay all charges and other sums to be paid by Fee Borrower
pursuant to the terms of the REOA as the same shall become due and payable and
prior to the expiration of any applicable grace period therein provided. After
prior written notice to Lender, Fee Borrower, at its sole cost and expense, may
contest by appropriate legal proceeding, conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any
charges or other sums required to be paid by Fee Borrower pursuant to the REOA,
provided that (i) no Event of Default has occurred and is then continuing;
(ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of the REOA and any other instrument to which
Fee Borrower is subject or by which the Property is bound and shall not
constitute a default thereunder and such proceeding shall be conducted in accordance
with all applicable statutes, laws and ordinances; (iii) the Property and
no part thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (iv) the REOA will not be in danger of
being terminated; (v) Fee Borrower shall promptly upon final determination
thereof pay the amount of any such charges, together with all costs, interest
and penalties which may be payable in connection therewith; (vi)  unless
the charges or other sums have been previously paid, such proceeding shall
suspend the collection of such charges from Fee Borrower and the Property; and
(vii) Fee Borrower shall furnish such security as may be required in the
proceeding to insure the payment of any such charges, together with all interest
and penalties thereon;


 


(b)           Fee
Borrower shall comply, in all material respects, with all of the terms,
covenants and conditions on the Fee Borrower’s part to be complied with
pursuant to terms of the REOA;


 


(c)           Fee
Borrower shall take all actions as may be necessary from time to time to
preserve and maintain the REOA in accordance with applicable laws, rules and
regulations;


 


(d)           Fee
Borrower shall enforce, in a commercially reasonably manner, the obligations to
be performed by the parties to the REOA (other than Fee Borrower);


 


(e)           Fee
Borrower shall promptly furnish to Lender any notice of default or other
communication delivered in connection with the REOA by any party to the REOA or
any third-party other than routine correspondence and invoices; and


 


(f)            If
Lender, its nominee, designee, successor, or assignee acquires title and/or
rights of Fee Borrower under the REOA by reason of foreclosure of the Mortgage,
deed-in-lieu of foreclosure or otherwise, such party shall (x) succeed to
all of the rights of and benefits accruing to Fee Borrower under the REOA, and
(y) be entitled to exercise all of the rights and benefits accruing to Fee
Borrower under the REOA. At such time as Lender shall


 


48

















 


request, Fee
Borrower agrees to execute and deliver to Lender such documents as Lender and
its counsel may reasonably require in order to insure that the provisions of
this section will be validly and legally enforceable and effective against Fee
Borrower and all parties claiming by, through, under or against Fee Borrower.


 


4.1.21     Required Repairs. Borrower
shall perform the repairs at the Property described on Schedule II
hereto (such repairs hereinafter referred to as “Required Repairs”). Borrower shall complete the Required
Repairs within the applicable time frames set forth in Schedule II.


 


Section 4.2            Borrower Negative
Covenants.  Borrower covenants and
agrees with Lender that:


 


4.2.1       Due on Sale and
Encumbrance; Transfers of Interests. 
Without the prior written consent of Lender and except as otherwise
specifically provided in Article VIII hereof, neither Borrower nor
any other Person having a direct or indirect ownership or beneficial interest
in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge,
assign or transfer any interest, direct or indirect, in Borrower, the Property
or any part thereof, whether voluntarily or involuntarily, in violation of the
covenants and conditions set forth in the Mortgage and this Agreement. Notwithstanding
the foregoing, provided the Mezzanine Loan is outstanding, Mezzanine Borrower
shall be permitted to pledge its direct or indirect equity interest in Borrower
to Mezzanine Lender.


 


4.2.2       Liens.  Subject to Section 3.6(b) of the Mortgage,
Borrower shall not create, incur, assume or suffer to exist any Lien on any
portion of the Property except for Permitted Encumbrances, unless such Lien is
discharged or otherwise removed as a Lien from the Property within thirty (30)
days after Borrower first has knowledge of such Lien; provided, however,
that the existence of liens resulting from mechanics or materialmen hired by a
Tenant shall not constitute a Default or an Event of Default hereunder provided
such lien is subordinate to the Mortgage and so long as Borrower is diligently
taking all commercially reasonable action to enforce the obligation of such
Tenant to cause such lien to be removed.


 


4.2.3       Dissolution.  Borrower shall not, without Lender’s prior
consent, (i) engage in any dissolution, liquidation or consolidation or
merger with or into any other business entity, (ii) engage in any business
activity not related to the ownership, operation and refinancing of the
Property, (iii) transfer, lease or sell, in one transaction or any combination
of transactions, all or substantially all of the property or assets of Borrower
except to the extent expressly permitted by the Loan Documents, or (iv) cause,
permit or suffer any SPC Party to (A) dissolve, wind up or liquidate or
take any action, or omit to take an action, as a result of which such SPC Party
would be dissolved, wound up or liquidated in whole or in part, or
(B) amend, modify, waive or terminate the certificate of incorporation or
bylaws of such SPC Party in any manner that (1) violates the single
purpose covenants set forth in Section 3.1.24, or (2) amends,
modifies or otherwise changes any provision thereof that by its terms cannot be
modified at any time when the Loan is outstanding or by its terms cannot be
modified without Lender’s consent. Upon payment of the Debt and the
satisfaction of all other obligations of Borrower under the Loan Documents,
Lender will execute and deliver to Borrower, at Borrower’s request and sole
cost and expense (including Lender’s reasonable out-of-pocket costs


 


49

















 


and expenses),
a certificate in a form reasonably acceptable to Lender and required by the
Delaware Secretary of State and/or as reasonably required by Borrower to
evidence repayment of the Debt and the ability of the SPC Party to thereafter
amend its certificate of incorporation and by-laws or other organizational
documents.


 


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


 


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


 


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


 


4.2.7       Zoning.  Borrower shall not initiate or consent to any
zoning reclassification of any portion of the Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender; provided, however,
that the foregoing shall not prohibit the continued use of the Property in its
then current manner if such use becomes a permitted non-conforming use by
virtue of a change in zoning or other land use laws which was not initiated by
Borrower.


 


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


 


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


 


4.2.10     Principal Place of
Business.  Borrower shall not
change its principal place of business from the address set forth on the first
page of this Agreement without first giving Lender thirty (30) days prior
notice.


 


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


 


50

















 


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


 


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


 


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


 


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


 


(iv)          The
assets of Borrower are not otherwise “plan assets” of one or more “employee
benefit plans” (as defined in Section 3(3) of ERISA) subject to Title I of
ERISA, within the meaning of 29 C.F.R. §2510.3-101.


 


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


 


4.2.13     Air Rights Lease.  The Borrower hereby covenants and agrees with
Lender with respect to the Air Rights Lease as follows:


 


(a)           Borrower
shall not, without Lender’s prior written consent, materially amend, modify or
supplement the Air Rights Lease except that Lender shall not unreasonably
withhold or delay its consent to any amendment or modification which will not
be deemed to have a Material Adverse Effect;


 


(b)           Borrower
shall not, without the prior written consent of Lender, take (and hereby
assigns to Lender any right it may have to take) any action to terminate the
Air Rights Lease; and


 


(c)           Borrower
shall not, without the prior written consent of Lender, permit or suffer the
merger of the fee estate and the leasehold estate under the Air Rights Lease.


 


51

















 


Notwithstanding the foregoing, Lender agrees that Borrower may terminate
the Air Rights Lease at such time, if any, as all Tenants under then existing
Leases agree (or have previously agreed) to attorn to Fee Borrower upon a
termination of the Air Rights Lease and Borrower has delivered to Lender
evidence reasonably satisfactory to Lender of such agreement by all such
Tenants. In connection with such termination of the Air Rights Lease, Fee
Borrower shall execute and deliver assumption agreements or replacements of the
Loan Documents to which Leasehold Borrower (but not Fee Borrower) is a party,
in each case in form and substance reasonably acceptable to Lender (it being
agreed that replacements of Loan Documents that are substantially similar to
the corresponding Loan Documents executed and delivered prior to such termination
of the Air Rights Lease shall be reasonably acceptable to Lender).


 


4.2.14     REOA.  The Borrower hereby covenants and agrees with
Lender with respect to the REOA as follows:


 


(a)           Fee
Borrower shall not, without Lender’s prior written consent, materially amend,
modify or supplement, or consent to or suffer the material amendment,
modification or supplementation of, the REOA except that Lender shall not
unreasonably withhold or delay its consent to any amendment or modification
which is not reasonably likely to have a Material Adverse Effect;


 


(b)           Fee
Borrower shall not, without the prior written consent of Lender, as determined
in its sole discretion, take (and hereby assigns to Lender any right it may
have to take) any action to terminate, surrender, or accept any termination or
surrender of, the REOA; and


 


(c)           Fee
Borrower shall not assign (other than to Lender) or encumber its rights under
the REOA.


 


V.                                    INSURANCE,
CASUALTY AND CONDEMNATION


 


Section 5.1            Insurance.


 


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


 


(i)            so
called “all risk” or special perils property insurance on the Improvements and
the personal property at the Property (A) in an amount equal to one hundred
percent (100%) of the “Full Replacement Cost,” which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and personal property at the Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) for all such insurance coverage; and
(D) including contingent liability from the Operation of Building Laws or
Demolition Costs and Increased Cost of Construction Endorsements (in either
case, “D&ICC Endorsement”),
in the case of coverage parts B and C of the D&ICC Endorsement, with a
sublimit of not less than Twenty Five Million


 


52

















 


and No/100
Dollars ($25,000,000.00). In addition, Borrower shall obtain: (y) if any
portion of the Improvements is currently or at any time in the future located
in a federally designated “special flood hazard area,” flood hazard insurance
in an amount equal to the lesser of (1) the aggregate outstanding principal
balance of the Loan or (2) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be amended
or such greater amount as Lender shall require; and (z) earthquake insurance in
amounts and in form and substance satisfactory to Lender in the event the
Property is located in an area with a high degree of seismic activity, provided
that the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required under this
subsection (i) and shall be commercially available at a reasonable cost;


 


(ii)           commercial
general liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about the Property, such
insurance (A) to be on the so-called “occurrence” form with a combined limit,
excluding umbrella coverage, of not less than One Million and No/100 Dollars
($1,000,000.00) per occurrence and Two Million and No/100 Dollars
($2,000,000.00) in the aggregate; (B) to continue at not less than the
aforesaid limit until required to be changed by Lender by reason of changed
economic conditions making such protection inadequate; and (C) to cover at
least the following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4)
blanket contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 9 of the Mortgage
to the extent the same is available;


 


(iii)          business
or rental income insurance with a limit of insurance adequate to cover a loss
of business or rental income for a period of eighteen (18) months inclusive of
the extended period of indemnity required below (A) with loss payable to Lender
under a Lender Loss Payable or Standard Mortgagee endorsement satisfactory to
Lender; (B) covering all risks required to be covered by the insurance provided
for in subsection (i) above and subsections (vi) and (xi) below for a period
commencing at the time of loss for such length of time (not exceeding twelve
(12) months) as it takes to repair or replace with the exercise of due
diligence and dispatch; (C) containing an extended period of indemnity
endorsement which provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of income will be
insured until such income either returns to the same level it was at prior to
the loss, or the expiration of six (6) months from the date that the Property
is repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period. Subject
to the provisions of Section 5.2 and Section 5.3 of
this Agreement, all proceeds payable to Lender pursuant to this subsection
shall be held by Lender and shall be applied to the obligations secured by the
Loan Documents from time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve Borrower of
its obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note and the other Loan
Documents except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;


 


(iv)          at
all times during which structural construction, repairs or alterations are
being made with respect to the Improvements, and only if the property and liability
coverage


 


53

















 


forms do not
otherwise apply, (A) owner’s contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called builder’s risk
completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to subsection (i) above, (3) including permission to
occupy the Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;


 


(v)           workers’
compensation, subject to the statutory limits of the state in which the
Property is located, and employer’s liability insurance with a limit of at
least Five Hundred Thousand and No/100 Dollars ($500,000.00) per accident and
per disease per employee, and Five Hundred Thousand and No/100 Dollars
($500,000.00) for disease aggregate in respect of any work or operations on or
about the Property, or in connection with the Property or its operation (if
applicable);


 


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


 


(vii)         umbrella
liability insurance in addition to primary coverage in an amount not less than
One Hundred Million and No/100 Dollars ($100,000,000.00) per occurrence on
terms consistent with the commercial general liability insurance policy
required under subsection (ii) above and (viii) below (such limit may be
achieved by any combination of primary and excess limits);


 


(viii)        motor
vehicle liability coverage for all owned and non-owned vehicles, including
rented and leased vehicles containing minimum limits per occurrence, including
umbrella coverage, of One Million and No/100 Dollars ($1,000,000.00);


 


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


 


(x)            insurance
against employee dishonesty in an amount not less than One Million and No/100
Dollars ($1,000,000.00) and with a deductible not greater than Twenty Five
Thousand and No/100 Dollars ($25,000.00);


 


(xi)           if
at any time during the term of the Loan the commercial property and business
income insurance policies required under subsections (i) and (iii) above do not
cover perils of terrorism or acts of terrorism, or other similar acts or
events, Borrower shall obtain an endorsement to such policy, or a separate
policy from an insurance provider which maintains at least an Investment Grade
Rating, insuring against all loss resulting from perils and acts of terrorism
and “fire following”, to the extent such policy or endorsement is available, in
an amount determined by Lender in its sole discretion (but in no event more
than an amount equal to the sum of one hundred percent (100%) of the
construction costs associated with the reconstruction of the Improvements and a
minimum of eighteen (18) months of business or rental interruption insurance
(inclusive of six (6) months extended period of indemnity) (the “Terrorism Coverage Amount”)); provided,
however, if TRIA is no longer in effect, the total


 


54

















 


annual premium
payable by Borrower for such terrorism coverage shall not exceed an amount
equal to one hundred seventy-five percent (175%) of the result of (x) the
annual premium for “all-risk” or special perils property insurance coverage as
of the date hereof minus (y) the portion of such annual premium
attributable to terrorism coverage. The endorsement or policy shall be in form
and substance reasonably satisfactory to Lender and shall meet Rating Agency
criteria for securitized loans; and


 


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


 


(b)           All
insurance provided for in Section 5.1.1(a) shall be obtained under
valid and enforceable policies (collectively, the “Policies” or, in the singular, the “Policy”) and, to the extent not
specified above, shall be subject to the reasonable approval of Lender as to
deductibles, loss payees and insureds. Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, or as soon as
available, but in no event later than seven (7) days following such date of
expiration, certificates of insurance evidencing the Policies accompanied by
evidence satisfactory to Lender of payment of the premiums then due thereunder
(the “Insurance Premiums”),
shall be delivered by Borrower to Lender; provided, however, that
Borrower is not required to furnish receipts for payment of Insurance Premiums
in the event that such Insurance Premiums are payable by Lender pursuant to Section 6.3
hereof and sufficient funds have been deposited with Lender for the payment
thereof in the manner required by Section 6.3.


 


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


 


(d)           All
Policies of insurance provided for or contemplated by Section 5.1.1(a)
shall be primary coverage and, except for the Policy referenced in Sections 5.1.1(a)(v),
(viii) and (x), shall name Borrower as the insured and Lender and its
successors and/or assigns as the additional insured, as its interests may
appear, and in the case of property damage, boiler and machinery, flood,
earthquake and terrorism insurance and resulting loss of business income or
rental income, shall contain a so-called New York standard non-contributing
Mortgagee or Lender Loss Payee clause or endorsement in favor of Lender
providing that the loss thereunder shall be payable to Lender subject to the
provisions of Section 5.2 and Section 5.3 hereof. Borrower
shall not procure or permit any of its constituent entities to procure any
other insurance coverage which would be on the same level of payment as the
Policies or would adversely impact in any way the ability of Lender or Borrower
to collect any proceeds under any of the Policies.


 


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


 


55

















 


(i)            no
act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant
or other occupant, or failure to comply with the provisions of any Policy,
which might otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;


 


(ii)           the
Policy shall not be canceled without at least thirty (30) days’ (or ten (10)
days’ for non-payment of any premium) written notice to Lender and any other
party named therein as an additional insured and, if obtainable by Borrower
using commercially reasonable efforts, shall not be materially changed (other
than to increase the coverage provided thereby) without such a thirty (30) day
notice; and


 


(iii)          Lender
shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.


 


(f)            If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right,
with notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate and all premiums incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the Mortgage
and shall bear interest at the Default Rate.


 


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


 


(h)           Notwithstanding
anything in Section 5.1.1(a)(i) to the contrary, Borrower shall be
required to obtain and maintain Policies which do not contain exclusions for “fire
following” to the extent that insurance coverage is available without such
exclusions.


 


5.1.2       Insurance Company.  The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the
state in which the Property is located and having a claims paying ability
rating of “A” or better by S&P and, to the extent rated by Moody’s and/or
Fitch, the equivalent rating from each of Moody’s and/or Fitch, as applicable
(provided, however, that the Policies for general liability insurance set forth
in subsections (a)(ii), (a)(v), (a)(vii) and (a)(viii) above shall be issued by
insurance companies having a claims paying ability rating of “A-” or better by
S&P and, to the extent rated by Moody’s and/or Fitch, the equivalent rating
from each of Moody’s and/or Fitch, as applicable). If a Securitization occurs,
(i) the foregoing required insurance company rating by a Rating Agency not
rating any Securities shall be disregarded and (ii) if the insurance company
complies with the aforesaid S&P required rating (and S&P is rating the
Securities) and the other Rating Agencies rating the Securities do not rate the
insurance company, such insurance company shall be deemed acceptable with
respect to such Rating Agency not rating such insurance company. Notwithstanding
the foregoing, Borrower shall be permitted to maintain the Policies with


 


56

















 


insurance
companies which do not meet the foregoing requirements (an “Otherwise Rated Insurer”), provided
Borrower obtains a “cut-through” endorsement (that is, an endorsement which
permits recovery against the provider of such endorsement) with respect to any
Otherwise Rated Insurer from an insurance company which meets the claims paying
ability ratings required above. Moreover, if Borrower desires to maintain
insurance required hereunder from an insurance company which does not meet the
claims paying ability ratings set forth herein but the parent of such insurance
company, which owns at least fifty-one percent (51%) of such insurance company,
maintains such ratings, Borrower may use such insurance companies if approved
by the Rating Agencies (such approval may be conditioned on items required by
the Rating Agencies including a requirement that the parent guarantee the
obligations of such insurance company).


 


Section 5.2            Casualty and
Condemnation.


 


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


 


5.2.2       Condemnation.  Borrower shall give Lender prompt notice of
any actual or threatened Condemnation by any Governmental Authority of all or
any part of the Property and shall deliver to Lender a copy of any and all
papers served in connection with such proceedings. Provided no Event of Default
has occurred and is continuing, in the event of a Condemnation where the amount
of the taking does not exceed the Restoration Threshold, Borrower may settle and
compromise such Condemnation; provided that the same is effected in a
commercially reasonable and timely manner. In the event of a Condemnation where
the amount of the taking exceeds the Restoration Threshold or if an Event of
Default then exists, Borrower may settle and compromise the Condemnation only
with the consent of Lender (which consent shall not be unreasonably withheld or
delayed) and Lender shall have the opportunity to participate, at Borrower’s
cost, in any litigation and settlement discussions in respect thereof and
Borrower shall from time to time deliver to Lender all instruments requested by
Lender to permit such participation. Borrower shall, at its expense, diligently
prosecute any such proceedings, and


 


57

















 


shall consult
with Lender, its attorneys and experts, and cooperate with them in the carrying
on or defense of any such proceedings. Notwithstanding any Condemnation,
Borrower shall continue to pay the Debt at the time and in the manner provided
for its payment in the Note and in this Agreement. Lender shall not be limited
to the interest paid on the Award by any Governmental Authority but shall be
entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by any
Governmental Authority, Borrower shall, subject to Legal Requirements of any
Governmental Authorities, promptly commence and diligently prosecute the
Restoration of the Property and otherwise comply with the provisions of Section 5.3.
If the Property is sold, through foreclosure or otherwise, prior to the receipt
by Lender of the Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the outstanding Debt.


 


5.2.3       Casualty Proceeds.  Notwithstanding the last sentence of Section 5.1.1(a)(iii)
and provided no Event of Default exists hereunder, proceeds received by Lender
on account of the business interruption insurance specified in Subsection 5.1.1(a)(iii)
above with respect to any Casualty shall be deposited by Lender directly into
the Deposit Account (as defined in the Cash Management Agreement) to be used to
pay the Monthly Debt Service Payment Amount as it becomes due under the Loan
Documents. Provided no Event of Default exists and Lender reasonably determines
that sufficient other funds will remain available for the payment of all other
amounts due under the Loan Documents, all business interruption insurance
proceeds remaining after the payment of the Monthly Debt Service Payment Amount
shall be released to Mezzanine Lender, if a Mezzanine Loan is outstanding, or
to Borrower, if no Mezzanine Loan is outstanding. Notwithstanding the
foregoing, if such business interruption insurance proceeds are paid to Lender
in a lump sum, then, provided no Event of Default exists, Lender shall disburse
on a monthly basis (i) if a Mezzanine Loan is outstanding, to Mezzanine Lender,
or (ii) if no Mezzanine Loan is outstanding, to Borrower, a portion of such
proceeds in an amount equal to the amount of such proceeds which represent the
Rents for such month less the Monthly Debt Service Payment Amount due on the
Monthly Payment Date in such month. All other such proceeds shall be held by
Lender and disbursed in accordance with Section 5.3 hereof.


 


Section 5.3            Delivery of Net
Proceeds.


 


5.3.1       Minor Casualty or
Condemnation.  If a Casualty or
Condemnation has occurred to the Property and the Net Proceeds (less any
business interruption proceeds) shall be less than the Restoration Threshold
and the costs of completing the Restoration shall be less than the Restoration
Threshold, and provided no Event of Default shall have occurred and remain
uncured, the Net Proceeds will be disbursed by Lender to Borrower. Promptly
after receipt of the Net Proceeds, subject to Legal Requirements of any
Governmental Authorities, Borrower shall commence and satisfactorily complete
with due diligence the Restoration in accordance with the terms of this Article V.
If any Net Proceeds (other than business interruption insurance proceeds
released to Borrower pursuant to Section 5.2.3) are received by Borrower
and may be retained by Borrower pursuant to the terms hereof, such Net Proceeds
shall, until completion of the Restoration, be held in trust for Lender and
shall be segregated from other funds of Borrower to be used to pay for the cost
of Restoration in accordance with the terms hereof.


 


58
















 


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


 


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


 


(ii)           (A)
in the event the Net Proceeds are insurance proceeds, less than thirty percent
(30%) of the total floor area of the Improvements at the Property has been
damaged, destroyed or rendered unusable as a result of such Casualty or (B) in
the event the Net Proceeds are an Award, (1) (x) less than ten percent (10%) of
the air rights constituting a portion of the Property is taken, and (y) less
than ten percent (10%) of the land constituting a portion of the Property is
taken and such land is located along the perimeter or periphery of the
Property, and (2) no portion of the Improvements is the subject of the
Condemnation (other than immaterial portions thereof which do not affect
(x) the use or operation of the Property, (y) the Net Operating
Income or value of the Property in any material respect and (z) the
compliance of the Property with applicable Legal Requirements);


 


(iii)          Leases
requiring payment of annual rent equal to at least seventy percent (70%) of the
Gross Revenue received by Borrower during the twelve (12) month period
immediately preceding the Casualty or Condemnation shall remain in full force
and effect during and after completion of the Restoration without abatement of
rent beyond the time required for Restoration, notwithstanding the occurrence
of such Casualty or Condemnation;


 


(iv)          Borrower
shall commence the initial proceedings to commence Restoration (commencement
for purposes hereof shall be deemed to include the filing for a building permit
or other initial permits with respect to such Restoration) as soon as
reasonably practicable (but in no event later than sixty (60) days after such
Casualty or Condemnation, whichever the case may be, occurs) and shall
diligently pursue the same to satisfactory completion;


 


(v)           Lender
shall be satisfied in its good faith opinion that the Property shall produce
sufficient cash flow to pay all Operating Expenses and all payments of
principal and interest under the Note will be paid during the period required
for Restoration from (A) the Net Proceeds, or (B) other funds of Borrower;


 


(vi)          Lender
shall be satisfied that the Restoration will be completed on or before the
earliest to occur of (A) the date three (3) months prior to the Maturity Date,
(B) such time as may be required under applicable Legal Requirements in
order to repair and restore the Property to the condition it was in immediately
prior to such Casualty or to as nearly as possible the condition it was in
immediately prior to such Condemnation, as applicable or (C) the
expiration of the insurance coverage referred to in Section 5.1.1(a)(iii),
unless Borrower deposits sufficient additional funds with Lender as determined
by Lender in good faith;


 


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


 


59

















 


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


 


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


 


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


 


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


 


(d)           In
no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for
work


 


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in place as
part of the Restoration, as certified by the Casualty Consultant, less the
Casualty Retainage. The term “Casualty
Retainage” shall mean, as to each contractor, subcontractor or
materialman engaged in the Restoration, an amount equal to ten percent (10%) of
the costs actually incurred for work in place as part of the Restoration, as
certified by the Casualty Consultant, until the Restoration has been completed.
The Casualty Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 5.3.2(d), be less than the
amount actually held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Casualty Retainage shall not be
released until the Casualty Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Section 5.3.2(d)
and that all approvals necessary for the re-occupancy and use of the Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty Consultant
certifies to Lender that the contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in accordance
with the provisions of the contractor’s, subcontractor’s or materialman’s
contract, the contractor, subcontractor or materialman delivers the lien
waivers and evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or by the
title company issuing the Title Insurance Policy, and Lender receives an
endorsement to the Title Insurance Policy insuring the continued priority of
the lien of the Mortgage and evidence of payment of any premium payable for
such endorsement. If required by Lender, the release of any such portion of the
Casualty Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.


 


(e)           Lender
shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.


 


(f)            If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the good faith opinion of Lender in consultation with the Casualty Consultant,
be sufficient to pay in full the balance of the costs which are estimated by
the Casualty Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender
before any further disbursement of the Net Proceeds shall be made. The Net
Proceeds Deficiency deposited with Lender shall be held by Lender in an
interest-bearing account and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the disbursement
of the Net Proceeds, and until so disbursed pursuant to this Section 5.3.2
shall constitute additional security for the Debt. The Net Proceeds Deficiency
shall be invested in Permitted Investments from time to time selected by
Borrower subject to the same terms and conditions applicable to the investment
of Reserve Funds in Permitted Investments set forth in the Cash Management
Agreement.


 


(g)           The
excess, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in


 


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full, shall be
remitted by Lender to Borrower, provided no Event of Default shall have
occurred and shall be continuing under any of the Loan Documents.


 


(h)           All
Net Proceeds not required to be made available for the Restoration may be
retained and applied by Lender toward the payment of the Debt (and Borrower
shall not be required to pay any Yield Maintenance Premium in connection with
such payment), whether or not then due and payable, first to accrued and unpaid
interest and then to the outstanding principal amount of the Loan. Upon payment
in full of the Debt and in the event a Mezzanine Loan is outstanding, any
remaining Net Proceeds shall be paid to Mezzanine Lender for application in
accordance with the Mezzanine Loan Agreement.


 


VI.           RESERVE FUNDS


 


Section 6.1            Intentionally Omitted.


 


Section 6.2            Tax Funds.


 


6.2.1       Deposits of Tax Funds.  Pursuant to the Cash Management Agreement,
upon the occurrence of an Escrow Reserve Trigger Event and during the continuance
of an Escrow Reserve Period, there shall be deposited with Agent on each
Monthly Payment Date an amount equal to one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months in order
to accumulate sufficient funds to pay all such Taxes at least ten (10) days
prior to their respective due dates. Amounts deposited pursuant to this Section 6.2.1,
together with interest earned thereon, are referred to herein as the “Tax Funds”. If at any time Lender
reasonably determines that the Tax Funds will not be sufficient to pay the
Taxes, Lender shall notify Borrower of such determination and the monthly
deposits for Taxes shall be increased by the amount that Lender estimates is
sufficient to make up the deficiency at least ten (10) days prior to the
respective due dates for the Taxes; provided that if Borrower receives notice
of any deficiency after the date that is ten (10) days prior to the date that
Taxes are due, Borrower will deposit such amount within one (1) Business Day
after its receipt of such notice. Once any Escrow Reserve Period has ended and
no other Escrow Reserve Period then exists, all Tax Funds on deposit shall be
promptly returned to Borrower on or before the following Monthly Payment Date. The
Tax Funds shall be held in an interest-bearing account and invested in
Permitted Investments in accordance with the terms of the Cash Management
Agreement.


 


6.2.2       Release of Tax Funds.  During an Escrow Reserve Period, provided
that Lender has not accelerated the Loan, Lender shall apply the Tax Funds to
the payment of Taxes. In making any payment relating to Taxes, Lender shall do
so according to the bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds
shall exceed the amounts due for Taxes, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax Funds. Any Tax Funds remaining after the Debt has been paid
in full shall be promptly returned to Borrower.


 


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Section 6.3            Insurance Funds.


 


6.3.1       Deposits of Insurance
Funds.  Pursuant to the Cash
Management Agreement, upon the occurrence of an Escrow Reserve Trigger Event
and during the continuance of an Escrow Reserve Period, there shall be
deposited with Agent on each Monthly Payment Date an amount equal to
one-twelfth of the Insurance Premiums that Lender estimates will be payable for
the renewal of the coverage afforded by the Policies upon the expiration
thereof in order to accumulate sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies. Amounts
deposited pursuant to this Section 6.3.1, together with interest
earned thereon, are referred to herein as the “Insurance Funds”. If at any time Lender reasonably
determines that the Insurance Funds will not be sufficient to pay the Insurance
Premiums, Lender shall notify Borrower of such determination and the monthly
deposits for Insurance Premiums shall be increased by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to expiration of the Policies. Once any Escrow Reserve Period has ended
and no other Escrow Reserve Period then exists, all Insurance Funds on deposit
shall be promptly returned to Borrower on or before the following Monthly
Payment Date. The Insurance Funds shall be held in an interest-bearing account
and invested in Permitted Investments in accordance with the terms of the Cash
Management Agreement.


 


6.3.2       Release of Insurance Funds.  During an Escrow Reserve Period, provided
that Lender has not accelerated the Loan, Lender shall apply the Insurance
Funds to the payment of Insurance Premiums. In making any payment relating to
Insurance Premiums, Lender shall do so according to the bill, statement or
estimate procured from the insurer or its agent, without inquiry into the
accuracy of such bill, statement or estimate. If the amount of the Insurance
Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Insurance Funds. Any Insurance Funds
remaining after the Debt has been paid in full shall be promptly returned to
Borrower.


 


6.3.3       Waiver of Insurance Funds.  Notwithstanding anything to the contrary set
forth in this Section 6.3, Borrower shall not be required to make
deposits described in Section 6.3.1 above, provided Borrower
delivers, throughout the term of the Loan, evidence reasonably satisfactory to
Lender that all Insurance Premiums required to be made by Borrower hereunder
shall have been paid under the Beacon Entity’s or its Affiliate’s blanket
insurance policy covering the Property.


 


Section 6.4            Capital Expenditure
Funds.


 


6.4.1       Deposits of Capital
Expenditure Funds.  Pursuant to
the Cash Management Agreement, upon the occurrence of an Escrow Reserve Trigger
Event and during the continuance of an Escrow Reserve Period, Borrower shall
deposit with Agent on each Monthly Payment Date an amount equal to $29,166.67
(the “Monthly Capital Expenditures Deposit”)
for annual Capital Expenditures reasonably approved by Lender. Amounts
deposited pursuant to this Section 6.4.1, together with interest
earned thereon, are referred to herein as the “Capital Expenditure Funds.”  Once any Escrow Reserve Period has ended and
no other Escrow Reserve Period then exists, all Capital Expenditure Funds on
deposit shall be promptly returned to Borrower on or before the following
Monthly Payment Date. The Capital


 


63

















 


Expenditure
Funds shall be held in an interest-bearing account and invested in Permitted
Investments in accordance with the terms of the Cash Management Agreement.


 


6.4.2       Release
of Capital Expenditure Funds.  (a)  Intentionally omitted.


 


(b)           During
an Escrow Reserve Period, provided that Lender has not accelerated the Loan,
Lender shall direct Agent to disburse to Borrower the Capital Expenditure Funds
in order to pay or reimburse Borrower for Capital Expenditures reasonably
approved by Lender. Lender may require that Borrower satisfy the following
conditions prior to directing Agent to make such disbursements: (i) at least
ten (10) days prior to the disbursement, Borrower shall submit to Lender a
request for payment, which request shall specify the Capital Expenditures to be
paid, (ii) Lender shall receive a certificate from Borrower (A) stating that
the items to be funded by the requested disbursement are Capital Expenditures,
(B) stating that all Capital Expenditures (or part thereof) at the Property to
be funded by the requested disbursement have been completed in a good and
workmanlike manner and in accordance with all applicable Legal Requirements,
such certificate to be accompanied by a copy of any license, permit or other
approval required by any Governmental Authority in connection with the Capital
Expenditures, (C) identifying each Person that supplied materials or labor in
connection with the Capital Expenditures to be funded by the requested
disbursement, and (D) stating that each such Person has been paid in full or
will be paid in full (for all work performed to date, exclusive of any
applicable retainage) upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment reasonably
satisfactory to Lender (which may be conditional as to the requested
disbursement), (iv) at Lender’s option, if the disbursement is in excess of
$100,000, Lender shall receive a title search for the Property indicating that
the Property is free from all Liens, claims and other encumbrances not
previously approved by Lender other than Permitted Encumbrances, and
(v) Lender shall receive such other evidence as Lender shall reasonably
request that the Capital Expenditures at the Property to be funded by the
requested disbursement have been completed and are paid for or will be paid
(other than retainage, if applicable) upon such disbursement to Borrower.


 


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


 


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


 


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(e)           During
an Escrow Reserve Period, if Borrower requests that Capital Expenditure Funds
in excess of $500,000 be paid or reimbursed to Borrower for a Capital
Expenditure reasonably approved by Lender, Lender may, upon completion of such
Capital Expenditure and at its reasonable discretion, require an inspection of
the Property at Borrower’s expense prior to making the final disbursement of
Capital Expenditure Funds for such Capital Expenditure in order to verify
completion of the Capital Expenditures Work for which reimbursement is sought. Lender
may require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and may require a certificate of
completion by an independent qualified professional architect acceptable to
Lender prior to the disbursement of such Capital Expenditure Funds. Borrower
shall pay the reasonable, out-of-pocket expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional architect.


 


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


 


(g)           Any
Capital Expenditure Funds remaining after the Debt has been paid in full shall
be promptly returned to Borrower.


 


Section 6.5            Rollover Funds.


 


6.5.1       Deposits of Rollover
Funds.  On the Closing Date,
Borrower has deposited with Agent the sum of Four Million and No/100 Dollars
($4,000,000.00) to be held by Agent in an interest-bearing account and invested
in Permitted Investments in accordance with the terms of the Cash Management
Agreement, which amount shall be disbursed to Borrower pursuant to this Section
6.5 for tenant improvements, leasing commissions and other leasing costs
(including free rent to the extent Borrower provides the applicable Tenant with
free rent in lieu of a tenant improvement allowance) incurred by Borrower in
connection with any Leases or renewals of Leases (a) executed after the date
hereof and (b) relating to (i) space demised under the Trizec Lease as of the
date hereof or (ii) space which is vacant as of the date hereof (each, a “Replacement
Lease”). Amounts deposited pursuant to this Section 6.5.1, and
any interest earned thereon, are referred to herein as the “Rollover Funds”.


 


6.5.2       Release of Rollover Funds.  (a) Subject to the provisions set forth
in Section 6.6.2(c), Lender shall direct Agent to disburse to Borrower
the Rollover Funds upon satisfaction by Borrower of each of the following
conditions: (i) Borrower shall submit a request for payment to Lender at least
ten (10) days prior to the date on which Borrower requests such payment be made
and specifies the tenant improvement costs, leasing commissions and/or other
leasing costs to be paid, (ii) on the date such request is received by Lender
and on the date such payment is to be made, no Event of Default shall exist and
remain uncured, (iii) Lender shall have approved, to the extent required by Section 4.1.9
hereof, the applicable Replacement Lease (or such Replacement Lease shall have
been deemed approved in accordance with Section 4.1.9 hereof), in
respect of which Borrower is obligated to pay or reimburse the tenant
improvement costs, leasing commissions and/or other leasing costs specified in
its request for payment (or, in


 


65

















 


the case of
free rent, in respect of which Borrower is obligated to provide free rent
specified in its request for payment), (iv) with respect to any Rollover Funds
to be released by Lender for tenant improvements required to be performed by
Borrower, leasing commissions or other leasing costs pursuant to any
Replacement Lease, Lender shall have received a budget for such tenant
improvement costs and a reasonably detailed schedule of leasing commissions
payments and other leasing costs (including free rent, if any) and the
requested disbursement will be used to pay all or a portion of such costs and
payments, (v) with respect to any Rollover Funds to be released by Lender for
tenant improvements required to be performed by Borrower pursuant to or in
connection with a Replacement Lease, Lender shall have received a certificate
from Borrower (A) stating that all such tenant improvements at the Property to
be funded by the requested disbursement have been completed in good and workmanlike
manner and in accordance with all applicable federal, state and local laws,
rules and regulations, such certificate to be accompanied by a copy of any
license, permit or other approval by any Governmental Authority required in
connection with such tenant improvements, (B) identifying each Person that
supplied materials or labor in connection with the tenant improvements to be
funded by the requested disbursement, and (C) stating that each such Person has
been paid in full or will be paid in full upon such disbursement for work
performed to date subject to applicable retainage (if any), such certificate to
be accompanied by lien waivers or other evidence of payment reasonably
satisfactory to Lender (which may be conditional as to the requested disbursement),
(vi) with respect to any Rollover Funds to be released by Lender for tenant
improvements required to be performed by Borrower pursuant to or in connection
with a Replacement Lease, at Lender’s option, if the disbursement is in excess
of $250,000, a title search for the Property indicating that the Property is
free from all Liens, claims and other encumbrances not previously approved by
Lender other than Permitted Encumbrances and (vii) with respect to any Rollover
Funds to be released by Lender for tenant improvements required to be performed
by Borrower pursuant to a Replacement Lease, Lender shall have received such
other evidence as Lender shall reasonably request that the tenant improvements
at the Property to be funded by the requested disbursement have been completed
and are paid for or will be paid upon such disbursement to Borrower (subject to
retainage amounts, if applicable). Lender shall not be required to disburse
Rollover Funds more frequently than once each calendar month, unless such requested
disbursement is in an amount greater than the Minimum Disbursement Amount (or a
lesser amount if the total amount of Rollover Funds is less than the Minimum
Disbursement Amount, in which case only one disbursement of the amount
remaining in the account shall be made). All disbursements of Rollover Funds
made by Lender in respect of any free rent shall be deposited into the Clearing
Account as if such sums were received by Borrower as Rent during the calendar
month after such request is made by Borrower.


 


(b)           Notwithstanding
the foregoing provisions of this Section 6.5, provided no Event of
Default exists, (i) if Borrower achieves a Debt Service Coverage Ratio of at
least 1.30 to 1.0 for two (2) consecutive calendar quarters, then any remaining
Rollover Funds shall be promptly returned to Borrower, and (ii) if Borrower
enters into Leases or renewals of Leases after the date hereof for all of the
space at the Property for which Rollover Funds may be used hereunder, then any
remaining Rollover Funds shall be promptly returned to Borrower; provided
that, with respect to clause (ii), (A) such Leases may not be terminated
without cause by the tenants thereunder upon less than six (6) months’ notice
and (B) there are no outstanding tenant improvements, leasing commissions or
other leasing costs under or with respect to such Leases or renewals of Leases
that have not been paid for or otherwise satisfied. In addition, any


 


66

















 


Rollover Funds
remaining after the Debt has been paid in full shall be promptly returned to
Borrower.


 


(c)           For
purposes of clarification, it is understood and agreed that no portion of
Rollover Funds disbursed by Lender in accordance with this Section 6.5
may be used to pay for any tenant improvements, leasing commissions and other
leasing costs that a Tenant is obligated to pay for under such Tenant’s Lease
unless Borrower is obligated to reimburse such Tenant for such items pursuant
to such Tenant’s Lease.


 


Section 6.6            Lease Termination
Rollover Funds.


 


6.6.1       Deposits of Lease
Termination Rollover Funds.  In
the event that Borrower receives any fees, payments or other compensation from
any Tenant relating to or in exchange for the termination of such Tenant’s
Lease, which fees, payments and compensation in the aggregate with respect to
such Lease exceed $350,000 (a “Lease
Termination Fee”), Borrower shall immediately deposit such Lease
Termination Fee with Agent, which amounts shall be held in an interest-bearing
account and invested in Permitted Investments in accordance with the terms of
the Cash Management Agreement, to be utilized for tenant improvements, leasing
commissions and other leasing costs (including free rent to the extent Borrower
provides the applicable Tenant with free rent in lieu of a tenant improvement
allowance) that may be incurred by Borrower with respect to the space relating
to such Lease Termination Fee (a “Termination
Space”) and, in the event that there is a Rent Deficiency for
the Termination Space from and after the date that the Lease for the
Termination Space was terminated, in replacement of Rent. Amounts deposited
pursuant to this Section 6.6.1, and any interest earned thereon,
are referred to herein as the “Lease
Termination Rollover Funds”.


 


6.6.2       Release of Lease
Termination Rollover Funds.  (a) Lender
shall direct Agent to disburse to Borrower the Lease Termination Rollover Funds
upon satisfaction by Borrower of each of the following conditions: (i) Borrower
shall submit a request for payment to Lender at least ten (10) days prior to
the date on which Borrower requests such payment be made and (A) specifies the
tenant improvement costs, leasing commissions and/or other leasing costs to be
paid for the Termination Space or (B) specifies the amount by which the rent
expected to be obtained by Borrower for the Termination Space during the next
succeeding calendar month pursuant to the Lease or Leases (if any) for such
Termination Space (a “Termination Space
Replacement Lease”) is less than the amount of monthly rent received
from the previous Tenant in the Termination Space pursuant to its Lease prior
to such termination (the “Rent Deficiency”),
(ii) on the date such request is received by Lender and on the date such
payment is to be made, no Event of Default shall exist and remain uncured,
(iii) Lender shall have approved, to the extent required by Section 4.1.9
hereof, the Termination Space Replacement Lease (or such Termination Space
Replacement Lease shall have been deemed approved in accordance with Section 4.1.9
hereof), in respect of which Borrower is obligated to pay or reimburse certain
tenant improvement costs, leasing commissions and/or other leasing costs
specified in its request for payment (or, in the case of free rent, in respect
of which Borrower is obligated to provide free rent specified in its request
for payment), (iv) with respect to any Lease Termination Rollover Funds to be
released by Lender for tenant improvements required to be performed by
Borrower, leasing commissions or other leasing costs pursuant to a Termination
Space Replacement Lease, Lender shall have received a budget for such tenant
improvement costs and a reasonably detailed


 


67

















 


schedule of
leasing commissions payments and other leasing costs (including free rent, if
any) and the requested disbursement will be used to pay all or a portion of
such costs and payments, (v) with respect to any Lease Termination Rollover
Funds to be released by Lender for tenant improvements required to be performed
by Borrower pursuant to a Termination Space Replacement Lease, Lender shall
have received a certificate from Borrower (A) stating that all such tenant
improvements at the Property to be funded by the requested disbursement have
been completed in good and workmanlike manner and in accordance with all
applicable federal, state and local laws, rules and regulations, such
certificate to be accompanied by a copy of any license, permit or other
approval by any Governmental Authority required in connection with such tenant
improvements, (B) identifying each Person that supplied materials or labor in
connection with the tenant improvements to be funded by the requested
disbursement, and (C) stating that each such Person has been paid in full or
will be paid in full upon such disbursement for work performed to date subject
to applicable retainage (if any), such certificate to be accompanied by lien
waivers or other evidence of payment reasonably satisfactory to Lender (which
may be conditional as to the requested disbursement), (vi) with respect to any
Lease Termination Rollover Funds to be released by Lender for tenant
improvements required to be performed by Borrower pursuant to a Termination
Space Replacement Lease, at Lender’s option, if the disbursement is in excess
of $250,000, a title search for the Property indicating that the Property is
free from all Liens, claims and other encumbrances not previously approved by
Lender other than Permitted Encumbrances and (vii) with respect to any Lease
Termination Rollover Funds to be released by Lender for tenant improvements
required to be performed by Borrower pursuant to a Termination Space
Replacement Lease, Lender shall have received such other evidence as Lender
shall reasonably request that the tenant improvements at the Property to be
funded by the requested disbursement have been completed and are paid for or
will be paid upon such disbursement to Borrower (subject to retainage amounts,
if applicable). Lender shall not be required to disburse Lease Termination
Rollover Funds more frequently than once each calendar month, unless such
requested disbursement is in an amount greater than the Minimum Disbursement
Amount (or a lesser amount if the total amount of Lease Termination Rollover
Funds is less than the Minimum Disbursement Amount, in which case only one
disbursement of the amount remaining in the account shall be made). All Rent
Deficiency disbursements made by Lender shall be deposited into the Clearing
Account as if such sums were received by Borrower as Rent during the calendar
month after such request is made by Borrower. All disbursements of Lease
Termination Rollover Funds made by Lender in respect of any free rent shall be
deposited into the Clearing Account as if such sums were received by Borrower as
Rent during the calendar month after such request is made by Borrower.


 


(b)           Notwithstanding
the foregoing provisions of this Section 6.6.2, upon receipt by Lender
of evidence that, with respect to any new Termination Space Replacement Lease
with a term of at least five (5) years, all tenant improvements required to be
completed by Borrower pursuant to the Termination Space Replacement Lease, if
any, have been completed and all leasing commissions required to be paid by
Borrower with respect to the Termination Space Replacement Lease, if any, have
been paid, and provided no Event of Default then exists, Lender shall direct
Agent to disburse to Borrower the Lease Termination Rollover Funds on deposit
with respect to such Termination Space. Any Lease Termination Rollover Funds
remaining after the Debt has been paid in full shall be promptly returned to
Borrower.


 


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(c)           In
connection with any tenant improvements, leasing commissions and other leasing
costs incurred by Borrower with respect to any Termination Space, if the
conditions to the disbursement of Rollover Funds set forth in Section 6.5
and the conditions to the disbursement of Lease Termination Rollover Funds set
forth in Section 6.6 are both satisfied, Lease Termination Rollover
Funds shall be disbursed to Borrower to pay for such tenant improvements,
leasing commissions and other leasing costs, but Lender shall not disburse any
Rollover Funds to Borrower to pay for such tenant improvements, leasing commissions
and other leasing costs; provided, that, if then remaining Lease
Termination Rollover Funds shall not be sufficient to pay for such tenant
improvements, leasing commissions and other leasing costs, Lender shall
disburse to Borrower Rollover Funds in an amount equal to such deficiency.


 


(d)           For
purposes of clarification, it is understood and agreed that no portion of Lease
Termination Rollover Funds disbursed by Lender in accordance with this Section
6.6 may be used to pay for any tenant improvements, leasing commissions and
other leasing costs that a Tenant is obligated to pay for under such Tenant’s
Lease unless Borrower is obligated to reimburse such Tenant for such items
pursuant to such Tenant’s Lease.


 


Section 6.7            Unfunded Tenant
Allowance Reserve Funds.  On the
Closing Date, Borrower has deposited with Agent the sum of $16,690,498 to be
held by Agent in an interest-bearing account and invested in Permitted
Investments in accordance with the terms of the Cash Management Agreement,
which amount shall be disbursed to Borrower pursuant to this Section 6.7
for Unfunded Tenant Allowances associated with the Leases set forth on Schedule
VI attached hereto, and the amount of such disbursements shall not exceed
the applicable amount of Unfunded Tenant Allowances set forth on Schedule VI.
Amounts so deposited with Agent and all interest earned thereon shall
hereinafter be referred to as the “Unfunded
Tenant Allowance Reserve Funds” and the account to which such
amounts are held shall hereinafter be referred to as the “Unfunded Tenant Allowance Reserve Account”.
Lender shall direct Agent to disburse to Borrower Unfunded Tenant Allowance
Reserve Funds for tenant improvements or any other cost represented by the
relevant Unfunded Tenant Allowance provided (i) Borrower submits to Lender a
request for payment on Lender’s standard form of draw request or other form
reasonably acceptable to Lender at least five (5) Business Days prior to the
date on which Borrower requests such payment be made, (ii) on the date such
payment is to be made, no Event of Default shall exist and remain uncured,
(iii) Lender shall have received a certificate from Borrower certifying that
any conditions to the disbursement of funds set forth in the applicable Lease
have been satisfied, (iv) if applicable, such certificate is accompanied by
paid invoices (or unpaid invoices if such disbursement is being made to pay
such invoices) for the amounts requested, and (v) the aggregate amount of any
such disbursements for any Lease shall not exceed the amount of Unfunded Tenant
Allowance designated for such Lease on Schedule VI attached hereto. Provided
no Event of Default exists, all funds remaining in the Unfunded Tenant
Allowance Reserve Account after all disbursements of the Unfunded Tenant Allowance
Reserve Funds have been made in accordance with this Section 6.7 shall
be released to Borrower, along with any interest earned thereon; provided,
however, if Borrower can demonstrate to Lender’s reasonable satisfaction that
the full amount of all Unfunded Tenant Allowances owed to a Tenant under a
particular Lease have been funded by Lender to Borrower pursuant to the terms
set forth in this Section 6.7, then, provided no Event of Default
exists, any excess Unfunded Tenant Allowance Reserve Funds remaining in the
Unfunded Tenant Allowance Reserve Account and allocated to such Lease shall be
disbursed to Borrower.


 


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The funds deposited by Borrower into the Unfunded Tenant Allowance
Reserve Account represent Unfunded Tenant Allowances with respect to the UTA
Leases. Lender and Borrower acknowledge and agree that Borrower is not required
to deposit (and has not deposited with Lender) any funds with respect to
Unfunded Tenant Allowances applicable to any Lease other than the UTA Leases,
and no Unfunded Tenant Allowance Reserve Funds shall be disbursed by Lender
with respect to any Unfunded Tenant Allowances for any Leases other than the
UTA Leases. Any Unfunded Tenant Allowance Reserve Funds remaining after the
Debt has been paid in full shall be promptly returned to Borrower.


 


Section 6.8            Intentionally Omitted.


 


Section 6.9            Application of Reserve
Funds.  (a)  In the event Lender accelerates the Loan
during the continuance of an Event of Default, Lender, at its option, may
withdraw the Reserve Funds and apply the Reserve Funds to the items for which
the Reserve Funds were established or to payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender’s
right to withdraw and apply the Reserve Funds shall be in addition to all other
rights and remedies provided to Lender under the Loan Documents.


 


(b)           Without
limiting the generality of the provisions set forth in Section 6.9(a),
upon the occurrence and during the continuance of an Event of Default, Lender,
at its option, may withdraw the Rollover Funds, the Lease Termination Rollover
Funds and/or the Unfunded Tenant Allowance Reserve Funds and apply the same to
the items for which such Reserve Funds were established or to payment of the
Debt in such order, proportion and priority as Lender may determine in its sole
discretion. Lender’s right to withdraw and apply the Rollover Funds, the Lease
Termination Rollover Funds and the Unfunded Tenant Allowance Reserve Funds
shall be in addition to all other rights and remedies provided to Lender under
the Loan Documents.


 


Section 6.10         Security Interest in
Reserve Funds.


 


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


 


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


 


6.10.3     Prohibition Against
Further Encumbrance.  Borrower
shall not, without the prior consent of Lender, further pledge, assign or grant
any security interest in the Reserve Funds or permit any lien or encumbrance to
attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.


 


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Section 6.11         Letters of Credit.


 


6.11.1     Delivery of Letters of
Credit.  (a)  In lieu of making the payments to any of the
Reserve Funds, Borrower may deliver to Lender a Letter of Credit in accordance
with the provisions of this Section 6.11. Additionally, Borrower
may deliver to Lender a Letter of Credit in accordance with the provisions of
this Section 6.11 in lieu of deposits previously made to the
Reserve Funds. The aggregate amount of any Letter of Credit and cash on deposit
with respect to the Capital Expenditure Funds, the Rollover Funds, the Lease
Termination Rollover Funds and/or the Unfunded Tenant Allowance Reserve Funds
shall at all times be at least equal to the aggregate amount which Borrower is
required to have on deposit in such Reserve Fund pursuant to this Agreement. The
aggregate amount of any Letter of Credit and cash on deposit with respect to
the Tax Funds shall at all times be at least equal to the aggregate which
Borrower would be required to deposit in such Reserve Fund over the next twelve
(12) month period. The aggregate amount of any Letter of Credit and cash on
deposit with respect to the Insurance Funds shall at all times be at least
equal to the aggregate which Borrower would be required to deposit in such
Reserve Fund over the next twelve (12) month period. In the event that a Letter
of Credit is delivered in lieu of any portion of the Tax Funds or the Insurance
Funds, Borrower shall be responsible for the payment of Taxes or Insurance
Premiums, as applicable, and Lender shall not be responsible therefor. Any
Letter of Credit delivered by Borrower to Lender with respect to the Rollover
Funds, the Lease Termination Rollover Funds and/or the Unfunded Tenant
Allowance Reserve Funds may provide that the amount thereof reduces (or that
Borrower may amend such Letter of Credit to reduce the amount thereof) to
reflect the payment of the applicable tenant improvement costs, leasing
commissions and other leasing costs in accordance with the terms of this
Agreement.


 


(b)           Borrower shall give Lender no less than
thirty (30) days notice of Borrower’s election to deliver a Letter of Credit
and Borrower shall pay to Lender all of Lender’s reasonable out-of-pocket costs
and expenses in connection therewith. Borrower shall not be entitled to draw
from any such Letter of Credit. Upon thirty (30) days notice to Lender,
Borrower may replace a Letter of Credit with a cash deposit to the applicable
Reserve Fund if a Letter of Credit has been outstanding for more than six (6)
months. Prior to the return of a Letter of Credit, Borrower shall deposit an
amount equal to the amount that would have accumulated in the applicable
Reserve Fund and not been disbursed in accordance with this Agreement if such
Letter of Credit had not been delivered.


 


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


 


Section 6.12         Provisions Regarding
Letters of Credit.


 


6.12.1     Security for Debt.  (a) 
Each Letter of Credit delivered under this Agreement shall be additional
security for the payment of the Debt.


 


(b)           In
the event Lender accelerates the Loan during the continuance of an Event of
Default, Lender shall have the right, at its option, to draw on any Letter of
Credit and to


 


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apply all or any part thereof to the payment of the items for which
such Letter of Credit was established or to apply each such Letter of Credit to
payment of the Debt in such order, proportion or priority as Lender may
determine. Any such application to the Debt shall be subject to the terms set
forth in Section 2.4.3. On the Maturity Date, any such Letter of Credit
may be applied to reduce the Debt.


 


(c)           Without
limiting the generality of the provisions set forth in Section 6.12.1(b),
upon the occurrence and during the continuance of an Event of Default, Lender
shall have the right, at its option, to draw on any Letter of Credit with
respect to the Rollover Funds, the Lease Termination Rollover Funds and/or the
Unfunded Tenant Allowance Reserve Funds and to apply all or any part thereof to
the payment of the items for which such Letter of Credit was established or to
apply each such Letter of Credit to payment of the Debt in such order,
proportion or priority as Lender may determine. Any such application to the
Debt shall be subject to the terms set forth in Section 2.4.3.


 


6.12.2     Additional Rights of
Lender.  In addition to any other
right Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw
in full any Letter of Credit:  (a) with
respect to any evergreen Letter of Credit, if Lender has received a notice from
the issuing bank that the Letter of Credit will not be renewed and a substitute
Letter of Credit is not provided at least thirty (30) days prior to the date on
which the outstanding Letter of Credit is scheduled to expire; (b) with respect
to any Letter of Credit with a stated expiration date, if Lender has not
received a notice from the issuing bank that it has renewed the Letter of
Credit at least thirty (30) days prior to the date on which such Letter of
Credit is scheduled to expire and a substitute Letter of Credit is not provided
at least thirty (30) days prior to the date on which the outstanding Letter of
Credit is scheduled to expire; (c) upon receipt of notice from the issuing bank
that the Letter of Credit will be terminated (except if the termination of such
Letter of Credit is permitted pursuant to the terms and conditions of this
Agreement or a substitute Letter of Credit is provided); or (d) if Lender has
received notice that the bank issuing the Letter of Credit shall cease to be an
Eligible Institution. Notwithstanding anything to the contrary contained in the
above, Lender is not obligated to draw any Letter of Credit upon the happening
of an event specified in (a), (b), (c) or (d) above and shall not be liable for
any losses sustained by Borrower due to the insolvency of the bank issuing the
Letter of Credit if Lender has not drawn the Letter of Credit.


 


VII.         PROPERTY MANAGEMENT


 


Section 7.1            The Management
Agreement.  Borrower shall cause
Manager to manage the Property in accordance with the Management Agreement and
Lender acknowledges that the Management Agreement has been approved by Lender. Borrower
shall (i) diligently perform and observe all of the terms, covenants and conditions
of the Management Agreement on the part of Borrower to be performed and
observed and (ii) promptly notify Lender of any notice to Borrower of any
default by Borrower in the performance or observance of any of the terms,
covenants or conditions of the Management Agreement on the part of Borrower to
be performed and observed. If Borrower shall default, beyond the expiration of
any applicable notice and cure period, in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
Borrower to be performed or observed, then, without limiting Lender’s other
rights or remedies under this Agreement or the other Loan


 


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Documents, and
without waiving or releasing Borrower from any of its obligations hereunder or
under the Management Agreement, Lender shall have the right, but shall be under
no obligation, to pay any sums and to perform any act as may be appropriate to
cause all the material terms, covenants and conditions of the Management
Agreement on the part of Borrower to be performed or observed.


 


Section 7.2            Prohibition Against
Termination or Modification.  Borrower
shall not surrender, terminate, cancel or materially modify the Management
Agreement, or enter into any other agreement relating to the management of the
Property with Manager or any other Person, or consent to the assignment by the
Manager of its interest under the Management Agreement, in each case without
the express consent of Lender, which consent shall not be unreasonably
withheld; provided, however, the Borrower shall have the right at
any time upon at least thirty (30) days notice to Lender to replace the Manager
with a new property manager provided (i) no Event of Default exists or shall
occur as a result of such replacement, (ii) either (A) such replacement
property manager is a Qualified Manager or (B) if such replacement property
manager is not a Qualified Manager and a Securitization has occurred, Borrower
delivers to Lender a Rating Agency Confirmation as to such new property manager
and property management agreement, and (iii) the property management agreement
entered into between the Borrower and such replacement property manager shall
be subject to Lender’s approval, which approval shall not be unreasonably
withheld. If any new property manager is an Affiliate of Borrower, then, as a
further condition to the replacement of the Manager, Borrower shall be required
to deliver to Lender a non-consolidation opinion reasonably acceptable to
Lender (or, in the event that a Securitization shall have occurred, acceptable
to the Rating Agencies). Any such new property manager and Borrower shall, as a
further condition to the replacement of the Manager, execute a subordination of
management agreement in the form delivered in connection with the Loan.


 


Section 7.3            Replacement of
Manager.  Lender shall have the right
to require Borrower to replace the Manager with a Person which is not an
Affiliate of, but is chosen by, Borrower and approved by Lender (which approval
shall not be unreasonably withheld or delayed) upon the occurrence of any one
or more of the following events: (i) at any time following the occurrence and
during the continuance of an Event of Default, (ii) the Maturity Date occurs
and the Loan has not been paid and satisfied in full, and/or (iii) if Manager
shall be in material default under the Management Agreement beyond any
applicable notice and cure period or if at any time the Manager has engaged in
gross negligence, fraud, willful misconduct or misappropriation of funds.


 


VIII.        PERMITTED TRANSFERS


 


Section 8.1            Permitted Transfer of
the Property.  Lender shall not
withhold its consent to a conveyance of the Property in its entirety to any
transferee provided that (a) Lender has received an agreement, acceptable to it
in its reasonable discretion, pursuant to which such transferee assumes all of
Borrower’s obligations under the Loan Documents, (b) Lender receives a transfer
fee equal to (i) Ten Thousand and No/100 Dollars ($10,000.00) if such transfer
is to Beacon Entity or any entity at least fifty percent (50%) directly or
indirectly owned by Beacon Entity and directly or indirectly controlled by
Beacon Entity or (ii) Seventy-Five Thousand and No/100 Dollars ($75,000.00) if such
transfer is to any other entity, (c) Lender


 


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shall have
received such documents, certificates and legal opinions as it may reasonably
request, (d) no Event of Default shall have occurred and be continuing
hereunder, and, if a Mezzanine Loan is outstanding, no “Event of Default” has
occurred and is continuing under the Mezzanine Loan Agreement, (e) Borrower
shall pay all reasonable, out-of-pocket costs and expenses of Lender in
connection with such transfer, (f) either (i) such transferee is a Permitted
Transferee or (ii) if such transferee is not a Permitted Transferee, Lender
shall have approved such transferee (such approval not to be unreasonably
withheld, conditioned or delayed) or, if any Securities are outstanding, Lender
has received a Rating Agency Confirmation as to the conveyance of the Property,
(g) the transferee qualifies as a single purpose, bankruptcy remote entity
under criteria established by the Rating Agencies, and (h) there is delivered
to Lender a non-consolidation opinion acceptable to the Rating Agencies (or if
no Securities are outstanding at the time, acceptable to Lender in its
reasonable discretion). If a Mezzanine Loan is outstanding, Borrower shall not
be permitted to transfer the Property unless Borrower obtains the prior written
consent of Mezzanine Lender to the extent required by the Mezzanine Loan
Agreement. In the event that such conveyance is a transfer of the Property in
its entirety to a Person that is not an Affiliate of Borrower or Guarantor, the
current Guarantor shall be released from and relieved of any of its obligations
under the Guaranty arising or occurring after the date of such conveyance or
transfer (other than for any acts or events which were caused by or arise out
of any acts, events or omissions of Guarantor, Borrower or its Affiliates
occurring prior to such conveyance) provided  that, and as a
condition to such release, (1) there is delivered to Lender a Rating
Agency Confirmation with respect to the replacement Guarantor, if the Loan has
been included in a Securitization, (2) an Affiliate of the transferee of the
Property approved by the Lender (in its reasonable discretion) assumes the
obligations of the current Guarantor under the Guaranty (as to any acts or
events which occur after the conveyance or transfer) and (3) if applicable but
subject to the provisions in subsection (2) above, such new Guarantor executes,
without any cost or expense to Lender, a substitution agreement or a new
Guaranty in substantially the same form as the Guaranty executed as of the date
hereof.


 


Section 8.2            Permitted Transfers of
Interest in Borrower.


 


Notwithstanding anything to the contrary contained in the Loan
Documents, the restrictions on Transfers of direct or indirect ownership
interests in Borrower (including, without limitation, direct or indirect
interests in Beacon Entity) set forth herein, in the Mortgage or in any other
Loan Document shall not apply to the Transfer of direct or indirect interests
in Borrower (including, without limitation, direct or indirect interests in
Beacon Entity) provided that (i) no Event of Default shall have occurred and be
continuing, (ii) Borrower shall pay all reasonable out-of-pocket costs and
expenses of Lender in connection with such Transfer, (iii) Lender shall have
received such documents, certificates and legal opinions as it may reasonably
request, (iv) after such Transfer Borrower shall maintain its status as a
single purpose, bankruptcy remote entity under criteria established herein, (v)
if after giving effect to such Transfer and all prior Transfers, more than
forty nine percent (49%) in the aggregate of direct or indirect interests in
Borrower are owned by any Person and its Affiliates that owned less than a
forty nine percent (49%) direct or indirect interest in Borrower as of the
Closing Date, Lender shall receive a non-consolidation opinion reasonably
acceptable to Lender and acceptable to the Rating Agencies and (vi) following
such Transfer (x) Beacon Entity owns directly or indirectly fifty


 


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percent (50%) or more of the interests in Borrower on an unencumbered
basis and directly or indirectly controls Borrower, or (y) Permitted
Transferees own in the aggregate directly or indirectly fifty percent (50%) or
more of the interests in Borrower on an unencumbered basis and directly or
indirectly control Borrower, provided Mezzanine Lender, if any, approves such
Permitted Transferee in accordance with and to the extent required by the
Mezzanine Loan Agreement, or (z) another Person (A) which Lender has
approved (such approval not to be unreasonably withheld, conditioned or
delayed) or, if any Securities are outstanding, with respect to which Lender
has received a Rating Agency Confirmation, and which Mezzanine Lender, if any,
has approved in accordance with and to the extent required by the Mezzanine
Loan Agreement; and (B) owns in the aggregate directly or indirectly fifty
percent (50%) or more of the interests in Borrower on an unencumbered basis and
directly or indirectly controls Borrower. For purposes of this Section 8.2,
“control” shall mean the ability to control the day to day and general
management decisions regarding the Property. In the event that any such
conveyance or transfer of any direct or indirect interests in Borrower results
in the then current Guarantor and its Affiliates owning directly or indirectly
no legal or beneficial interests in Borrower, then the current Guarantor shall
be released from and relieved of any of its obligations under the Guaranty
arising or occurring after the date of such conveyance or transfer (other than
for any acts or events which were caused by or arise out of any acts, events or
omissions of Guarantor, Borrower or its Affiliates occurring prior to such
conveyance) provided  that, and as a condition to such release,
(1) there is delivered to Lender a Rating Agency Confirmation with respect
to the replacement Guarantor, if the Loan has been included in a
Securitization, (2) an Affiliate of the transferee of the Property approved by
the Lender (in its reasonable discretion) assumes the obligations of the
current Guarantor under the Guaranty (as to any acts or events which occur
after the conveyance or transfer) and (3) if applicable but subject to the
provisions in subsection (2) above, such new Guarantor executes, without any
cost or expense to Lender, a substitution agreement or a new Guaranty in
substantially the same form as the Guaranty executed as of the date hereof.


 


IX.           SALE AND SECURITIZATION
OF MORTGAGE


 


Section 9.1            Sale of Mortgage and
Securitization.


 


(a)           Lender
shall have the right (i) to sell or otherwise transfer the Loan or any portion
thereof as a whole loan, (ii) to sell participation interests in the Loan or
(iii) to securitize the Loan or any portion thereof in a single asset
securitization or a pooled loan securitization (the transactions referred to in
clauses (i), (ii) and (iii) shall hereinafter be referred to collectively as “Secondary Market Transactions” and the
transactions referred to in clause (iii) shall hereinafter be referred to as a “Securitization.”  Any certificates, notes or other securities
issued in connection with a Securitization are hereinafter referred to as “Securities”).


 


(b)           If
requested by Lender, for so long as the Loan is outstanding, Borrower shall in
connection with any Secondary Market Transaction:


 


(i)            (A)
provide updated financial and other information with respect to the Property,
the business operated at the Property, Borrower and the Manager (if an
Affiliate of Borrower and, if not an Affiliate of Borrower, only such
information as is reasonably requested by Lender and within Borrower’s
possession), (B) provide updated budgets relating to the Property and (C)
provide updated appraisals, market studies, environmental reviews (Phase I’s
and, if recommended by Phase I’s, Phase II’s), property condition reports
and other due diligence


 


75

















 


investigations
of the Property (the “Updated Information”),
together, if customary, with appropriate verification of the Updated
Information through letters of auditors or opinions of counsel acceptable to
Lender and the Rating Agencies;


 


(ii)           provide
opinions of counsel, which may be relied upon by Lender and the Rating
Agencies, as to non-consolidation, fraudulent conveyance, and true sale or any
other opinion customary in Secondary Market Transactions or required by the
Rating Agencies with respect to the Property and Borrower and Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and
satisfactory to the Rating Agencies;


 


(iii)          provide
updated, as of the closing date of the Secondary Market Transaction,
representations and warranties made in the Loan Documents and such additional
representations and warranties as the Rating Agencies may require and
consistent with the facts covered by the representations and warranties
contained in this Agreement; and


 


(iv)          execute
amendments to the Loan Documents and Borrower’s organizational documents
reasonably requested by Lender; provided, however, that Borrower shall not be
required to modify or amend any Loan Document if such modification or amendment
would (A) change the interest rate, the stated maturity or the amortization of
principal as set forth herein or in the Note, (B) modify or amend any other
economic term of the Loan or (C) otherwise increase the obligations or decrease
the rights of Borrower under the Loan Documents.


 


Notwithstanding the foregoing, Lender shall (unless Borrower shall otherwise
be required to deliver any of the foregoing under another provision of this
Agreement at its cost and expense) (x) pay the costs and expenses incurred by
Lender with respect to the issuance of any Securities and any other costs and
expenses incurred by Lender in connection with a Secondary Market Transaction
and (y) reimburse Borrower for all reasonable third party fees and costs
(including the reasonable fees and disbursements of Borrower’s attorneys and
accountants) actually incurred by Borrower in connection with Borrower’s
cooperation with Lender pursuant to this Section 9.1(b).


 


(c)           If
requested by Lender, Borrower shall provide Lender with the following financial
statements:


 


(i)            If,
at the time a Disclosure Document is being prepared for a Securitization,
Lender expects that Borrower alone or Borrower and one or more Affiliates of
Borrower collectively, or the Property alone or the Property and Related
Property collectively, will be a Significant Obligor, Borrower shall furnish to
Lender upon request (x) the selected financial data relating to Borrower or the
Property or, if applicable, Net Operating Income, required under Item
1112(b)(1) of Regulation AB, if Lender expects that the principal amount of the
Loan together with any Related Loans as of the cut-off date for such
Securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization does, equal or
exceed ten percent (10%) (but less than twenty percent (20%)) of the aggregate
principal amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization or (y) the financial statements relating to
Borrower or the Property required under Item 1112(b)(2) of Regulation AB, if
Lender expects that the principal


 


76

















 


amount of the
Loan together with any Related Loans as of the cut-off date for such
Securitization may, or if the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization does, equal or
exceed twenty percent (20%) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the Securitization.
Such financial data or financial statements shall be furnished to Lender
(A) within ten (10) Business Days (or, if an audit is required, thirty
(30) Business Days) after notice from Lender in connection with the preparation
of Disclosure Documents for the Securitization, (B) not later than forty
(40) days after the end of each fiscal quarter of Borrower and (C) not later
than eighty-five (85) days after the end of each Fiscal Year of Borrower; provided,
however, that Borrower shall not be obligated to furnish financial data
or financial statements pursuant to clauses (B) or (C) of this sentence with
respect to any period for which a filing pursuant to the Exchange Act in
connection with or relating to the Securitization (an “Exchange Act Filing”) is not required. If
requested by Lender, Borrower shall use commercially reasonable efforts to
obtain and deliver to Lender financial data and/or financial statements for any
tenant of the Property if, in connection with a Securitization, Lender expects
there to be, with respect to such tenant or group of affiliated tenants, a
concentration within all of the mortgage loans included or expected to be
included, as applicable, in the Securitization such that such tenant or group
of affiliated tenants would constitute a Significant Obligor.


 


(ii)           All
financial data and financial statements provided by Borrower hereunder pursuant
to this Section 9.1(c) shall meet the requirements of Regulation AB and
other applicable legal requirements. All financial statements referred to in Section 9.1(c)(i)(y)
above shall be audited by independent accountants of Borrower reasonably
acceptable to Lender in accordance with Regulation AB and all other applicable
legal requirements, shall be accompanied by the manually executed report of the
independent accountants thereon, which report shall meet the requirements of
Regulation AB and all other applicable legal requirements, and shall be further
accompanied by a manually executed written consent of the independent
accountants, in form and substance reasonably acceptable to Lender, to the
inclusion of such financial statements in any Disclosure Document and any
Exchange Act Filing and, if available to Borrower on a commercially reasonable
basis, to the use of the name of such independent accountants and the reference
to such independent accountants as “experts” in any Disclosure Document and
Exchange Act Filing, all of which shall be provided at the same time as the
related financial statements are required to be provided. All other financial
data and financial statements (i.e., unaudited)
provided by Borrower pursuant to this Section 9.1(c) shall be
accompanied by an Officer’s Certificate stating the financial information
attached thereto is true, accurate and complete in all material respects, but
with no obligation to certify as to compliance with Regulation AB. Except when
a specific time period is required by Section 9.1(c)(i) through (iv),
Borrower shall use commercially reasonable efforts to obtain the documents,
data and other information required thereunder.


 


(iii)          If
requested by Lender in connection with a Securitization, Borrower shall provide
Lender, promptly upon request, with any other or additional financial
statements, or financial, statistical or operating information, as Lender shall
determine in good faith to be required pursuant to Regulation AB or any
amendment, modification or replacement thereto or other legal requirements in
connection with any Disclosure Document or any Exchange Act Filing or as shall
otherwise be reasonably requested by Lender to meet disclosure or rating agency
requirements.


 


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(iv)          In
the event Lender determines in good faith, in connection with a Securitization,
that the financial statements required in order to comply with
Regulation AB or any amendment, modification or replacement thereto or
other legal requirements are other than as provided herein, then
notwithstanding the provisions of Section 9.1(c)(ii) hereof, Lender
may request, and Borrower shall promptly provide, such other financial data and
financial statements as Lender determines in good faith to be necessary or appropriate
for such compliance.


 


(v)           Any
reports, statements or other information required to be delivered pursuant to
this Section 9.1(c) shall be delivered (i) in paper form,
(ii) on a diskette, and (iii) if requested by Lender and within the
capabilities of Borrower’s data systems without change or modification thereto,
in electronic form and prepared using a Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet
program and saved as word processing files). 
Borrower agrees that Lender may disclose information regarding the
Property and Borrower that is provided to Lender pursuant to this Section 9.1(c)(v)
in connection with the Securitization to such parties requesting such
information in connection with such Securitization.


 


Lender shall (unless Borrower shall otherwise be required to deliver
any of the foregoing under another provision of this Agreement at its cost and
expense) reimburse Borrower for all reasonable third party fees and costs
(including the reasonable fees and disbursements of Borrower’s attorneys and
accountants) actually incurred by Borrower in connection with Borrower’s
delivery of financial statements and other materials requested by Lender
pursuant to this Section 9.1(c).


 


Section 9.2            Securitization
Indemnification.


 


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


 


(b)           Borrower
shall provide in connection with each of (i) a preliminary and a final private
placement memorandum or (ii) a preliminary and final prospectus or prospectus
supplement, as applicable, an agreement (A) certifying that Borrower has
examined the sections of the Disclosure Documents delivered by Lender to
Borrower relating solely to Borrower, Borrower Affiliates, the Property, and
the Manager (the “Specified Sections”),
and that such Specified Sections do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading or specifying such untrue statement (it being agreed that
Borrower shall not be required to review any other sections of the Disclosure
Document other than the Specified Sections), (B) indemnifying Lender (and for
purposes of this Section 9.2, Lender hereunder shall include its
officers and directors), the Affiliate of Merrill


 


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Lynch &
Co., Inc. (“Merrill”) that
has filed the registration statement relating to the Securitization (the “Registration Statement”), each of its
directors, each of its officers who have signed the Registration Statement and
each Person that controls the Affiliate within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (collectively, the
“Merrill Group”), Merrill,
any other placement agent or underwriter with respect to the Securitization,
each of their respective directors and each Person who controls Merrill or any
other placement agent or underwriter within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”) for any losses,
claims, damages or liabilities (collectively, the “Liabilities”) to which Lender, the
Merrill Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such Specified Sections 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 sections or necessary in
order to make the statements in such Specified Sections, in light of the
circumstances under which they were made, not misleading (it being agreed that
Borrower shall not be responsible for any losses which would not have been
suffered if Lender had corrected any statements contained in the Specified
Sections identified by Borrower in writing to have been untrue or misleading)
and (C) agreeing to reimburse Lender, the Merrill Group and/or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the
Merrill Group and the Underwriter Group in connection with investigating or
defending the Liabilities; provided, however, that Borrower will be liable in
any such case under clauses (B) or (C) above only to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with
information furnished to Lender in its capacity as “lender” hereunder by or on
behalf of Borrower in connection with the preparation of the Disclosure
Document or in connection with the underwriting or closing of the Loan,
including, without limitation, financial statements of Borrower, operating
statements and rent rolls with respect to the Property and provided further,
however, that with respect to statements made in such Specified Sections that
are based upon information provided by third parties, Borrower will be liable
only if Borrower knew that such information was false or omitted to state a
material fact known to Borrower and necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
This indemnity agreement will be in addition to any liability which Borrower
may otherwise have.


 


(c)           In
connection with Exchange Act Filings, Borrower shall (i) indemnify Lender, the
Merrill Group and the Underwriter Group for Liabilities to which Lender, the
Merrill Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to
state in the Specified Sections a material fact required to be stated in the
Specified Sections in order to make the statements in the Specified Sections,
in light of the circumstances under which they were made, not misleading and
(ii) reimburse Lender, the Merrill Group or the Underwriter Group for any
legal or other expenses reasonably incurred by Lender, the Merrill Group or the
Underwriter Group in connection with defending or investigating the Liabilities.
Borrower will be liable in any such case under this Section 9.2(c) only to
the extent that any such liability arises out of or is based upon any such
untrue statement or omission made in the Specified Sections in reliance upon
and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the Disclosure Documents or in
connection with the underwriting of the Loan, including, without limitation,
financial statements of Borrower, operating statements and


 


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rent rolls
with respect to the Property, provided, however, that with
respect to statements made in the Specified Sections that are based upon
information provided by third parties, Borrower will be liable only if Borrower
knew that such information was false or omitted to state a material fact known
to Borrower and necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.


 


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


 


(e)           In
order to provide for just and equitable contribution in circumstances in which
the indemnity agreement provided for in Section 9.2(b) or (c)
is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 9.2(b)
or (c), the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages or
liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, the following factors shall be considered: (i) Borrower’s relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.


 


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(f)            The
liabilities and obligations of both Borrower and Lender under this Section 9.2
shall survive the termination of this Agreement and the satisfaction and
discharge of the Debt.


 


X.            DEFAULTS


 


Section 10.1         Event of Default.


 


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


 


(i)            if
(A) any monthly installment of interest due under the Note or the payment due
on the Maturity Date is not paid when due or (B) any other portion of the Debt
is not paid when due and such non-payment continues for five (5) days following
notice to Borrower that the same is due and payable;


 


(ii)           if
any of the Taxes or Other Charges are not paid when due (other than Taxes and
Other Charges for which funds have been deposited with Lender pursuant to Article VI
and the release of which Borrower is not contesting);


 


(iii)          if
the Policies are not kept in full force and effect (other than as a result of
failure to pay the Insurance Premiums for which funds have been deposited with
Lender pursuant to Article VI);


 


(iv)          subject
to Section 4.2.2, if Borrower breaches or permits or suffers a breach of
Article 6 of the Mortgage;


 


(v)           if
any representation or warranty made by Borrower herein or in any other Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender by or on behalf of
Borrower shall have been false or misleading in any material respect as of the
date the representation or warranty was made; provided that Borrower shall have
twenty (20) days after notice from Lender to cure in a manner satisfactory to
Lender any such breach of a representation or warranty that is susceptible to
cure, except that Borrower shall have no opportunity to cure any breach of a
representation or warranty (A) made to the best of Borrower’s knowledge
(i.e., which Borrower knew was false when made), (B) that was otherwise intentionally
misrepresented, or (C) made pursuant to Section 3.1.8 or 3.1.24
hereof;


 


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


 


(vii)         if
a receiver, liquidator or trustee shall be appointed for Borrower, any SPC
Party or Guarantor or if Borrower, any SPC Party or Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, any SPC Party or Guarantor, or if any proceeding
for the dissolution or liquidation of Borrower, any SPC Party or Guarantor
shall be instituted;


 


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provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, any SPC Party or Guarantor, upon
the same not being discharged, stayed or dismissed within ninety (90) days;


 


(viii)        if
Borrower attempts to assign its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan
Documents;


 


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


 


(x)            if
Borrower breaches any representation, warranty or covenant contained in Section 3.1.24
hereof in any material respect;


 


(xi)           if
Borrower fails to comply with the covenants as to Prescribed Laws set forth in Section 4.1.1;


 


(xii)          if
there shall be an “Event of Default” under (and as defined in) any of the other
Loan Documents;  


 


(xiii)         if
(A) there occurs any event or condition that gives any party to the REOA
(other than Fee Borrower) the right to terminate or cancel the REOA and such
event or condition is not cured within any applicable cure period under the
REOA, or (B) the REOA is terminated or cancelled without Lender’s prior
consent or (C) any of the terms, covenants or conditions of the REOA shall
be materially modified, supplemented, or amended without the prior written
consent of Lender; or


 


(xiv)        if
Borrower or any Affiliate shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document not specified in subsections (i) to (xiii) above, for ten (10) days
after notice to Borrower from Lender, in the case of any Default which can be
cured by the payment of a sum of money, or for thirty (30) days after notice
from Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30-day period and provided further that Borrower shall have
commenced to cure such Default within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period
shall be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not to
exceed ninety (90) days plus time permitted for Excusable Delays.


 


(b)           Upon
the occurrence of an Event of Default (other than an Event of Default described
in clause (vi), (vii) or (viii) above) and at any time thereafter during the
continuance of an Event of Default Lender may, in addition to any other rights
or remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, take such action, without notice or demand,
that Lender deems advisable to protect and enforce its rights against Borrower
and in and to the Property, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of
any or all


 


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rights or
remedies provided in the Loan Documents against Borrower and the Property, including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clause (vi), (vii) or (viii) above, the
Debt and all other obligations of Borrower hereunder and under the other Loan
Documents shall immediately and automatically become due and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.


 


Section 10.2         Remedies.


 


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


 


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


 


(c)           During
the continuance of an Event of Default, Lender shall have the right from time
to time to sever the Note and the other Loan Documents into one or more
separate notes, mortgages and other security documents (the “Severed Loan Documents”) in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such


 


83

















 


other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make
and execute all documents necessary or desirable to effect the aforesaid severance,
Borrower ratifying all that its said attorney shall do by virtue thereof;
provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to Borrower by
Lender of Lender’s intent to exercise its rights under such power. Except as
may be required in connection with a Securitization pursuant to Section 9.1
hereof, (i) Borrower shall not be obligated to pay any costs or expenses
incurred in connection with the preparation, execution, recording or filing of
the Severed Loan Documents, and (ii) the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.


 


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


 


Section 10.3         Right to Cure Defaults.  Upon the occurrence and during the
continuance of an Event of Default, Lender may, but without any obligation to
do so and without notice to or demand on Borrower and without releasing
Borrower from any obligation hereunder or being deemed to have cured any Event
of Default hereunder, make, do or perform any obligation of Borrower hereunder
in such manner and to such extent as Lender may deem necessary. Lender is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property for
such purposes, and the cost and expense thereof (including reasonable attorneys’
fees to the extent permitted by law), with interest as provided in this Section 10.3,
shall constitute a portion of the Debt and shall be due and payable to Lender
upon demand. All such costs and expenses incurred by Lender in remedying such
Event of Default or such failed payment or act or in appearing in, defending,
or bringing any such action or proceeding shall bear interest at the Default
Rate, for the period after such cost or expense was incurred to the date of
payment to Lender. All such costs and expenses incurred by Lender together with
interest thereon calculated at the Default Rate shall be deemed to constitute a
portion of the Debt and be secured by the liens, claims and security interests
provided to Lender under the Loan Documents and shall be immediately due and
payable upon demand by Lender therefor.


 


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


 


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Default with
respect to Borrower shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.


 


XI.           MISCELLANEOUS


 


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


 


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


 


Section 11.3         Governing Law.


 


(A)          THIS AGREEMENT WAS
NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY
BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD
TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE PROPERTY (OTHER THAN
WITH RESPECT TO LIENS AND SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND
PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE
CLEARING ACCOUNT AND THE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE
JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9-301 THROUGH 9-307
OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT,


 


85

















 


TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, EXCEPT AS OTHERWISE PROVIDED ABOVE.


 


(B)          ANY LEGAL SUIT, ACTION
OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:


 


GOULSTON & STORRS, PC

750 THIRD AVENUE, 22ND FLOOR

NEW YORK, NEW YORK 10017

ATTN:  MARC B. HELLER


 


AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE
MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND
ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW
YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.


 


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


 


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


 


Section 11.6         Notices.  All notices, demands, requests, consents,
approvals or other communications (any of the foregoing, a “Notice”) required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier
addressed to the party to be so notified at its address hereinafter set forth,
or to such other address as such party may hereafter specify in accordance with
the provisions of this Section 11.6. Any Notice shall be deemed to
have been received: (a) three (3) days after the date such Notice is mailed,
(b) on the date of sending by telefax if sent during business hours on a
Business Day (otherwise on the next Business Day), (c) on the date of delivery
by hand if delivered during business hours on a Business Day (otherwise on the
next Business Day), and (d) on the next Business Day if sent by an overnight
commercial courier, in each case addressed to the parties as follows:


 


	
  If to Lender:

  	
   

  	
  c/o Merrill Lynch & Co., Inc.

  
	
   

  	
   

  	
  4 World Financial Center

  
	
   

  	
   

  	
  New York, New York 10080

  
	
   

  	
   

  	
  Attn: Robert J. Spinna, Jr.

  
	
   

  	
   

  	
  Facsimile No. (212) 449-7684

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Cadwalader, Wickersham & Taft LLP

  
	
   

  	
   

  	
  One World Financial Center

  
	
   

  	
   

  	
  New York, New York 10281

  
	
   

  	
   

  	
  Attention: Alan Lawrence, Esq.

  
	
   

  	
   

  	
  Facsimile No. (212) 504-6666

  



 


87

















 


	
  If to Borrower:

  	
   

  	
  c/o Beacon Capital Partners, LLC

  
	
   

  	
   

  	
  One Federal Street, 26th Floor

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
  Facsimile No. (617) 457-0499

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Goulston & Storrs, PC

  
	
   

  	
   

  	
  400 Atlantic Avenue

  
	
   

  	
   

  	
  Boston, Massachusetts 02110-3333

  
	
   

  	
   

  	
  Attention: Robert J. Mack, Esq.

  
	
   

  	
   

  	
  Facsimile No. (617) 574-7613

  



 


Section 11.7         Trial by Jury.  BORROWER AND LENDER EACH HEREBY AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL
BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.


 


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


 


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


 


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


 


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


 


88

















 


the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to Borrower.


 


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


 


Section 11.13       Expenses; Indemnity.


 


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


 


(b)           Borrower
shall indemnify, defend and hold harmless Lender and its officers, directors,
agents, employees (and the successors and assigns of the foregoing) (the “Lender Indemnitees”) from and against
any and all liabilities, obligations, losses, damages (excluding consequential
damages), penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the


 


89

















 


reasonable
fees and disbursements of counsel for the Lender Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced or threatened,
whether or not the Lender Indemnitees shall be designated a party thereto),
that may be imposed on, incurred by, or asserted against the Lender Indemnitees
in any manner relating to or arising out of (i) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in,
this Agreement or the other Loan Documents, or (ii) the use or intended use of
the proceeds of the Loan (collectively, the “Indemnified Liabilities”); provided, however, that
Borrower shall not have any obligation to the Lender Indemnitees hereunder to
the extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of the Lender Indemnitees. To the
extent that the undertaking to indemnify, defend and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Lender Indemnitees.


 


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


 


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


 


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


 


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


 


(b)           This
Agreement and the other Loan Documents are solely for the benefit of Lender and
Borrower and nothing contained in this Agreement or the other Loan Documents
shall be deemed to confer upon anyone other than Lender any right to insist
upon or to enforce the performance or observance of any of the obligations
contained herein or therein. All conditions to the obligations of Lender to make
the Loan hereunder are imposed solely and exclusively for the benefit of Lender
and Borrower and no other Person shall have standing to require satisfaction of
such conditions in accordance with their terms or be entitled to assume that
Lender will refuse to make the Loan in the absence of strict compliance with
any or all thereof and no other Person shall under any circumstances be deemed
to be a beneficiary of such


 


90

















 


conditions,
any or all of which may be freely waived in whole or in part by Lender if, in
Lender’s sole discretion, Lender deems it advisable or desirable to do so.


 


Section 11.17       Publicity.  Unless required by law, all news
releases, publicity or advertising by Borrower or its Affiliates through any
media intended to reach the general public which refers to the Loan Documents
or the financing evidenced by the Loan Documents, to Lender or any of their
Affiliates shall be subject to the prior approval of Lender, not to be
unreasonably withheld or delayed.


 


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


 


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


 


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


 


Section 11.21       Brokers and Financial
Advisors.  Borrower hereby represents
that it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement other than Eastdil


 


91

















 


Secured. Borrower
shall indemnify, defend and hold Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind (including Lender’s
attorneys’ fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein. The provisions of this Section 11.21
shall survive the expiration and termination of this Agreement and the payment
of the Debt.


 


Section 11.22       Exculpation.  Subject to the qualifications below,
Lender shall not enforce the liability and obligation of Borrower to perform
and observe the obligations contained in the Note, this Agreement, the Mortgage
or the other Loan Documents by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
under the Note, this Agreement, the Mortgage and the other Loan Documents, or
in the Property, the Rents, or any other collateral given to Lender pursuant to
the Loan Documents; provided, however, that, except as specifically provided
herein, any judgment in any such action or proceeding shall be enforceable
against Borrower only to the extent of Borrower’s interest in the Property, in
the Rents and in any other collateral given to Lender, and Lender, by accepting
the Note, this Agreement, the Mortgage and the other Loan Documents, shall not
sue for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding under or by reason of or under or in connection with the
Note, this Agreement, the Mortgage or the other Loan Documents. The provisions
of this Section shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Mortgage; (c) affect the validity
or enforceability of any guaranty made in connection with the Loan or any of
the rights and remedies of Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of the
Assignment of Leases; (f) constitute a prohibition against Lender to commence
any appropriate action or proceeding in order to fully realize on any security
given by Borrower in connection with the Loan or to commence any other
appropriate action or proceeding in order for Lender to exercise its remedies
against such security; or (g) constitute a waiver of the right of Lender to
enforce the liability and obligation of Borrower, by money judgment or
otherwise, to the extent of any loss, damage (excluding consequential damages),
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys’ fees and costs reasonably incurred) arising out of or in
connection with the following: 


 


(a)           fraud
or intentional material misrepresentation by Borrower or any guarantor in
connection with the Loan;


 


(b)           actual
physical waste or damage to the Property resulting from the willful misconduct
of Borrower;


 


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


 


92

















 


(d)           the
removal or disposal of any portion of the Property after an Event of Default;


 


(e)           the
misapplication or conversion by Borrower of (A) any insurance proceeds paid by
reason of any loss, damage or destruction to the Property, (B) any Awards or
other amounts received in connection with the Condemnation of all or a portion
of the Property, or (C) any Rents during the existence of an Event of Default,
in each case to the extent of such misapplication or conversion;


 


(f)            if
the Property generates sufficient cash flow from operation after payment of
Taxes and Other Charges, failure to pay charges for labor or materials or other
charges that can create Liens on any portion of the Property other than those
being contested in accordance with the terms of this Agreement;


 


(g)           if
the Property generates sufficient cash flow from operation to pay for Taxes and
Other Charges, failure to pay such Taxes and Other Charges (subject to the
Borrower’s right to contest the same in accordance with the terms set forth in
this Agreement);


 


(h)           the
mechanics’ lien filed by Walsh Construction Company of Illinois and the
litigation resulting therefrom;


 


(i)            any
security deposits, advance deposits or any other deposits collected with
respect to the Property which are not delivered to Lender upon a foreclosure of
the Property or action in lieu thereof, except to the extent any such deposits
were applied in accordance with the terms and conditions of any of the Leases
prior to the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof;


 


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


 


(k)           the
Borrower filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law;


 


(l)            an
Affiliate, officer, director, or representative which controls, directly or
indirectly, Borrower filing, or joining in the filing of, an involuntary
petition against Borrower under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or the soliciting, or causing to be
solicited, petitioning creditors for any involuntary petition against Borrower
from any Person;


 


(m)          Borrower
filing an answer consenting to or otherwise acquiescing in or joining in any
involuntary petition filed against it by any other Person under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law, or soliciting,
or causing to be solicited, petitioning creditors for any involuntary petition
against Borrower from any Person;


 


(n)           any
Affiliate of Borrower consenting to or acquiescing in or joining in an
application for the appointment of a custodian, receiver, trustee, or examiner
for Borrower or any portion of the Property;


 


93

















 


(o)           Borrower
making an assignment for the benefit of creditors, or admitting in writing or
in any legal proceeding its insolvency or inability to pay its debts as they
become due;


 


(p)           failure
to obtain Lender’s prior consent to any subordinate financing or other
voluntary Lien encumbering the Property, except to the extent expressly
permitted herein; and


 


(q)           failure
to obtain Lender’s prior consent to any assignment, transfer, or conveyance of
the Property or any interest therein as required by the Mortgage or this
Agreement.


 


Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents.


 


Section 11.23       Prior Agreements.  This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, including,
without limitation, the term sheet dated July 26, 2006 between Beacon Capital
Strategic Partners IV Acquisition, LLC and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.


 


Section 11.24       Servicer.


 


(a)           At
the option of Lender, the Loan may be serviced by a servicer (the “Servicer”) selected by Lender and
Lender may delegate all or any portion of its responsibilities under this
Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the “Servicing Agreement”)
between Lender and Servicer. Borrower shall not be responsible for any
reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement nor for payment of the monthly servicing fee due to the
Servicer under the Servicing Agreement. Servicer shall, however, be entitled to
reimbursement of costs and expenses as and to the same extent (but without
duplication) as Lender is entitled thereto under the applicable provisions of
this Agreement and the other Loan Documents.


 


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


 


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


 


94

















 


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


 


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


 


Section 11.27       Assignments and
Participations.


 


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


 


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


 


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


 


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


 


[NO FURTHER TEXT ON THIS PAGE]


 


95

















 


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


 


	
  BORROWER:

  
	
   

  
	
  10/120 SOUTH RIVERSIDE FEE LLC,

  
	
  a Delaware limited liability company

  
	
   

  
	
  By:

  	
  BCSP IV Illinois Manager LLC, a Delaware

  	
   

  
	
   

  	
  limited liability company, its manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BCSP IV U.S. Investments, L.P., a Delaware limited

  
	
   

  	
   

  	
  partnership, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BCSP REIT IV, Inc., a Maryland corporation,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Nancy J. Broderick

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
  10/120 SOUTH RIVERSIDE PROPERTY LLC,

  
	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  By:

  	
  BCSP IV Illinois Manager LLC, a Delaware

  	
   

  
	
   

  	
  limited liability company, its manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BCSP IV U.S. Investments, L.P., a Delaware limited

  
	
   

  	
   

  	
  partnership, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BCSP REIT IV, Inc., a Maryland corporation,

  	
   

  
	
   

  	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Nancy J. Broderick

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Managing Director

  	
   

  	
   

  
												



 

















 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH MORTGAGE LENDING, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


SCHEDULE I


 


RENT ROLL


 
















 


SCHEDULE II


 


REQUIRED REPAIRS


 


Replace damaged and
displaced granite pavers in certain affected areas (both 10 South Riverside and
120 South Riverside) within ninety (90) days after the date hereof


 


ADA Elevators – provide
audible signals for floor changes & lobby arrival (both 10 South Riverside
and 120 South Riverside) within two (2) years after the date hereof


 


ADA Restrooms – provide ADA
accessibility for bathrooms on all floors (both 10 South Riverside and 120
South Riverside) within one (1) year after the date hereof


 


ADA Site Ramp – provide ADA
ramp at Madison Street steps (10 South Riverside only) within two (2) years
after the date hereof


 

















 


SCHEDULE III


 


ORGANIZATIONAL CHART


 

















 


SCHEDULE IV


 


	
   

  	
   

  	
   

  
	
   

  	
  (Lender)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  -
  and -

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Tenant)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUBORDINATION, NON-DISTURBANCE

  	
   

  
	
   

  	
  AND ATTORNMENT AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Location:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section:

  	
   

  
	
   

  	
  Block:

  	
   

  
	
   

  	
  Lot:

  	
   

  
	
   

  	
  County:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PREPARED BY AND UPON

  	
   

  
	
   

  	
  RECORDATION RETURN TO:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Messrs. Cadwalader, Wickersham & Taft LLP

  	
   

  
	
   

  	
  One World Financial Center

  	
   

  
	
   

  	
  New York, New York 10281

  	
   

  
	
   

  	
  Attention: Alan Lawrence, Esq.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  File No.:

  	
   

  
	
   

  	
  Title No.:

  	
   

  
					



 


1

















 


SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT


 


THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT (this “Agreement”)
is made as of the        day of                       ,
20   by and between [LENDER], having an address at [LENDER’S ADDRESS]
(“Lender”), and                                                                   ,       
having         an         address
        at                                                                            
(“Tenant”).


 


RECITALS:


 


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


 


B.                                     Tenant occupies a portion of the Property
under and pursuant to the provisions of a certain lease dated                                  ,
       between                               ,
as landlord (“Landlord”) and Tenant, as
tenant (the “Lease”); and


 


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


 


AGREEMENT:


 


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


 


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


 


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


 


2

















 


provided that at the time of
the commencement of any such action or proceeding or at the time of any such
sale or exercise of any such other rights the Lease shall be in full force and
effect and Tenant shall not be in default under any of the terms, covenants or
conditions of the Lease or of this Agreement on Tenant’s part to be observed or
performed beyond the expiration of any applicable notice or grace periods.


 


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


 


4.                                       Notice to Tenant. After notice is given to Tenant by Lender
that the Landlord is in default beyond any applicable notice and cure period
under the Note and the Mortgage and that the rentals under the Lease should be
paid to Lender pursuant to the terms of


 


3

















 


the assignment of leases and
rents executed and delivered by Landlord to Lender in connection therewith,
Tenant shall thereafter pay to Lender or as directed by the Lender, all rentals
and all other monies due or to become due to Landlord under the Lease and
Landlord hereby expressly authorizes Tenant to make such payments to Lender and
hereby releases and discharges Tenant from any liability to Landlord on account
of any such payments.


 


5.                                       Lender’s Consent. Tenant shall not, without obtaining the
prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed, [(a) enter into any agreement amending, modifying or
terminating the Lease INSERT THIS PROVISION ONLY IF THE CONSENT OF LENDER IS
REQUIRED UNDER THE LOAN DOCUMENTS], (b) prepay any of the rents, additional
rents or other sums due under the Lease for more than one (1) month in advance
of the due dates thereof, [(c) voluntarily surrender the premises demised under
the Lease or terminate the Lease without cause or shorten the term thereof -
INSERT THIS PROVISION ONLY IF THE CONSENT OF LENDER IS REQUIRED UNDER THE LOAN
DOCUMENTS], or (d) assign the Lease or sublet the premises demised under
the Lease or any part thereof other than pursuant to the provisions of the
Lease; and any such [amendment, modification, termination,] prepayment,
[voluntary surrender,] assignment or subletting, without Lender’s prior
consent, shall not be binding upon Lender.


 


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


 


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


 


	
  If to Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Facsimile No.

  	
   

  	
   

  
	
   

  	
   

  
	
  If to Lender:

  	
  [Lender’s Notice]

  
							



 


4

















 


	
  With a copy to:

  	
  Cadwalader, Wickersham
  & Taft LLP

  
	
   

  	
  One World Financial Center

  
	
   

  	
  New York, New York 10281

  
	
   

  	
  Attention: Alan Lawrence,
  Esq.

  
	
   

  	
  Facsimile No. (212)
  504-6666

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


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


 


6

















 


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


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The undersigned accepts and agrees to

  	
   

  
	
  the provisions of Section 4 hereof:

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
   

  	
  , a

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
												



 


7

















 


ACKNOWLEDGMENTS


 


[INSERT STATE SPECIFIC ACKNOWLEDGMENT]


 


8

















 


EXHIBIT A


 


LEGAL DESCRIPTION


 


9

















 


SCHEDULE V


 


[RESERVED]


 

















 


SCHEDULE VI


 


UNFUNDED TENANT ALLOWANCES


 


	
  Tenant

  	
   

  	
  Leased Premises

  (Sq. Ft.)

  	
   

  	
  Type of

  Expenditure

  	
   

  	
  Unfunded Tenant

  Allowance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


SCHEDULE VII


 


PHYSICAL CONDITION REPORT


 


	
  SUBJECT OF REPORT

  	
   

  	
  NAME OF PROVIDER

  	
   

  	
  DATE OF REPORT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10
  South Riverside, Chicago, Illinois

  	
   

  	
  EMG

  	
   

  	
  September 28, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  120
  South Riverside, Chicago, Illinois

  	
   

  	
  EMG

  	
   

  	
  September 28, 2006