exv10w4









EXHIBIT 10.4




	*		Portions of this exhibit have been omitted
pursuant to a request for confidential treatment and have been filed
separately with the Commission.





LOAN APPLICATION AND COMMITMENT AGREEMENT




July 20, 2009




Teachers Insurance and Annuity

     Association of America (the “Lender”)

730 Third Avenue

New York, NY 10017





	 	Re: 	 	TIAA Authorization #AAA-6905 

Investment ID. #0006731 

Property Name: Charlotte Portfolio

Property Addresses: (various); 

Mecklenburg County, North Carolina 

and York County, South Carolina





Ladies and Gentlemen:




     The undersigned Healthcare Realty Trust Incorporated (the “Applicant”) applies for a
loan (the “Loan”) upon the terms and subject to the provisions set forth in this Loan
Application and Commitment Agreement (the
“Agreement”), on behalf of HR of Carolinas, LLC,
a Delaware limited liability company with an address at 3310 West End Avenue, Suite 700, Nashville,
Tennessee 37203 (the “Borrower”):



1. LOAN TERMS:




     (a) Loan Amount: $80,000,000.



     (b) Interest Rate:




     (i) 7.25% per annum (the “Fixed Interest Rate”) for the Initial Terra
(defined herein); and




     (ii) 400 basis points (i.e., hundredths of 1% per annum) over the
one-month LIBOR rate (the “Floating Interest Rats”), but with a floor rate
of 7.25% for any Extension Term (defined herein).



     (c) Initial Term: 7 years from the first day of the first calendar
month following Closing (defined herein).



     (d) Extension Terms: Borrower shall have the option to extend the
Initial Term for two, one-year floating rate Extension Terms in accordance
with the provisions contained in Exhibit H-1. For purposes of this
Agreement, the “Term” shall mean the Initial Term as it may be extended for
one or both of the Extension Terms.



     (e) Repayment Terms: Monthly installments of principal and fixed
interest calculated on a 30-year amortization schedule. The Fixed Interest
Rate shall be calculated on a 30-day month/360-day year, except that payments
for the first and last months of the Term, if such payments pertain to
partial months, shall be based upon the actual number of days in such months
that the Loan is outstanding and a 365-day or 366-day year, as applicable.
The entire outstanding principal balance plus all accrued interest and any



 









 







other sums due under the Loan Documents (defined herein) will be due and payable upon the
expiration of the Term,



     (f) Optional Prepayment: Borrower, at Borrower’s option, may elect to prepay the
Loan in whole, but not in part, on the first day of any calendar month, upon not less than 60 days’
prior written notice to Lender and in accordance with the provisions
of Exhibit A;
provided, however, that Borrower shall not be permitted to make such a prepayment election during
the first 24 months of the Initial Term.



2. CLOSING, CLOSING DATE AND LOAN DISBURSEMENT:




     Upon Acceptance (defined herein), and Borrower’s compliance on or before the date that is 60
days after Acceptance (the “Closing Date”) with all of the provisions of this Agreement,
Lender will disburse the Loan Amount at or from Lender’s offices
in New York, New York (the “Closing”).



3. SECURITY FOR LOAN:




     The Loan will be secured by a first lien on Borrower’s interests in the land, the improvements
(the “Improvements”) and the other real
property interests described in Exhibit C,
by a first security interest in the personal property and other intangibles described in
Exhibit C, by a collateral assignment of the leases affecting, and the rents, issues,
profits and revenues arising from, such property, and by the additional collateral, security and
security interests, if any, described or referred to in Exhibit
C (collectively, the
“Property”).



4. LIMITATION OF LIABILITY:




     The Loan will be non-recourse to Borrower except for the carve-outs from non-recourse that are
specified in Exhibit G. Borrower will deliver to Lender a Guaranty of Borrower’s recourse
obligations under the Loan (the “Carve-Out
Guaranty”) at Closing, executed by Applicant (in
such capacity, the “Guarantor”).



5. ENVIRONMENTAL INDEMNITY:




     At Closing, Borrower will deliver to Lender an Environmental Indemnity (the
“Environmental Indemnity”) executed by Applicant (in such capacity, the
“Indemnitor”) in a form reasonably acceptable to Lender.



6. ACCUMULATIONS:




     At Closing and monthly thereafter, Borrower shall, pursuant to an agreement reasonably
acceptable to Lender, deposit reserves for taxes and assessments against the Property with Lender
or Lender’s designated agent in such amounts as Lender or its designated agent reasonably estimates
to be necessary to permit Lender or its designated agent to pay such taxes and assessments as and
when they are due during the Term. Any funds remaining in the account upon the expiration of the
Term or permitted prepayment of the Loan will be returned to Borrower.



2









 





7. DEPOSITS, FEES AND EXPENSES:




     (a) Simultaneously with Applicant’s submission of this Agreement, Applicant is
delivering to Lender the following fees:




     (i) 1% of the Loan Amount (the “Application Fee”);




     (ii)
$140,050 (the “Consultant Fees”) to be used only after Acceptance
(unless Applicant gives Lender written authorization for use prior to Acceptance) to pay
for the Appraisal, the Environmental and Compliance Reports and the Engineering Reports
(all defined in Exhibit G ) together with the attendant inspections (collectively,
the “Consultants’ Inspections and Reports”);




     (iii)
an administrative fee of $100,000 (the
“Administrative Fee”) for
Lender’s time and services in preparing this Agreement and in preparing for Closing, which
Administrative Fee is deemed earned and nonrefundable upon Applicant’s submission of this
Agreement; and




     (iv)
a retainer for Lender’s outside counsel legal fees (the “Lender Legal
Fees”) incurred or payable in connection with the Loan in the amount of $25,000 (the
“Legal Fee Retainer”).



     (b) The Application Fee, the Legal Fee Retainer, and the Letter of Credit (defined herein)
or the Additional Cash Deposit (defined herein) are in consideration of Lender’s locking the Fixed
Interest Rate and conducting due diligence and analysis of the Loan, all of which Applicant
acknowledges to have significant commercial value. If Lender does not accept this Agreement,
Lender will return (i) the Application Fee less any reasonable, out-of-pocket expenses (not
otherwise stated herein) actually incurred by Lender to date, (ii) the Legal Fee Retainer less any
reasonable Lender Legal Fees incurred or payable as of that date, and (iii) the Consultant Fees
less any expenses for the Consultants’ Inspections and Reports incurred by Lender pursuant to
Applicant’s specific written authorization. After Acceptance, Applicant agrees to pay upon
demand, regardless of whether the Loan closes and as an obligation that survives Closing or the
expiration or termination of this Agreement, any costs of the Consultants’ Inspections and Reports
that exceed the Consultant Fees and any reasonable Lender Legal Fees that exceed the Legal Fee
Retainer.



     (c) Within 10 days following Acceptance, Applicant will deliver to Lender either an
irrevocable, unconditional letter of credit (the “Letter
of Credit”) or, at Applicant’s
election, a cash deposit (the “Additional Cash
Deposit”) in an amount equal to 1% of the
Loan Amount (the Letter of Credit or the Additional Cash Deposit and the Application Fee are
referred to collectively as the “Loan Deposit”). The Letter of Credit must be in form
reasonably acceptable to Lender, in the required amount in favor of “Teachers Insurance and Annuity
Association of America”, irrevocable, expiring no less than 60 days after the Closing Date, issued
and payable by a bank approved by Lender, and unconditionally available to Lender by Lender’s
drafts, at sight. If the Letter of Credit is not issued and payable by a New York City bank, said
Letter of Credit must give Lender the express right to present the original sight draft to the
issuing bank by overnight delivery.



3









 





     (d) Lender is not obligated to pay any brokerage fee or commission or any other premium or
charge in connection with this Agreement or with Closing that is based on any agreement or
understanding of Applicant or Borrower with a broker, agent or finder. Borrower will indemnify,
defend and hold harmless Lender against any claim for such fees, commissions, premiums or charges
based on any such agreement or understanding with Applicant or Borrower, regardless of whether
Lender accepts this Agreement or the Loan closes. This obligation on the part of Borrower survives
Closing or the expiration or termination of this Agreement.



8. ACCEPTANCE PROCEDURE:




     Unless and until Acceptance occurs, this Agreement constitutes Applicant’s offer for Borrower
to borrow the Loan Amount from Lender upon the terms and conditions set forth in this Agreement.
In consideration of Lender’s engaging in initial due diligence and analysis with respect to the
proposed Loan, Applicant agrees that such offer is irrevocable and exclusive for 15 days from the
date Lender or its designated servicer or correspondent receives this Agreement executed by
Applicant, together with the Consultant Fees, the Application Fee and the Legal Fee Retainer. All
prior representations and understandings between Applicant and Lender with respect to Applicant’s
offer to borrow are merged into this Agreement, Lender may accept or decline this offer in
Lender’s sole discretion. This Agreement is not a binding commitment unless and until Lender
accepts this Agreement as provided herein. Unless and until Acceptance occurs, Applicant is
obligated only to maintain this Agreement as an irrevocable and exclusive offer for the time
specified and to pay the fees, costs and expenses set forth in this Agreement and Lender is
obligated only to return such fees as provided herein. If Lender approves Applicant’s application
as described in this Agreement, Lender will execute and date this Agreement (the
“Acceptance”). Upon Acceptance, this Agreement becomes a binding agreement, enforceable
against Applicant and Lender, that obligates Borrower to accept and Lender to make the Loan upon
and subject to the provisions contained in this Agreement, which alone sets forth the entire
understanding between Applicant and Lender with respect to the Loan. As soon as practicable after
Acceptance, Lender will deliver a copy of this Agreement to Applicant.



9. REPRESENTATIONS AND WARRANTIES BY BORROWER:




     Applicant agrees that the following representations and warranties will be correct at
Closing, and Borrower will be deemed to repeat and reaffirm the same at Closing:



     (a) Borrower shall have the requisite power and authority under its organizational documents
to execute and deliver the Loan Documents, to perform Borrower’s obligations under the Loan
Documents and to consummate the transaction contemplated by this Agreement and shall have taken any
necessary action to authorize the execution and delivery of the Loan Documents, the performance of
Borrower’s obligations under the Loan Documents and the consummation of the transaction
contemplated by this Agreement and shall be otherwise in compliance with all applicable Law
(defined herein).



     (b) Borrower
shall not be an “employee benefit plan” as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974
(“ERISA”)



4









 







that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, and the related Treasury Regulations (the
“Code”) that is subject to
Section 4975 of the Code, and the assets of Borrower shall not
constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or
Section 4975 of the Code.



     (c) Borrower
shall not be a “governmental
plan” within the meaning of
Section 3(32) of ERISA and transactions by or with Borrower shall not be
subject to any laws regulating investments of and fiduciary obligations with
respect to governmental plans.



     (d) None of Borrower, Guarantor or Indemnitor or any of their
respective Affiliates (defined herein) (i) shall be during the Term in
violation of any laws relating to terrorist acts, acts of war and money
laundering (the “Anti-Terrorism
Laws”), or (ii) shall be a
“Prohibited Person”as defined under the Anti-Terrorism Laws or will be identified as a
“specially designated national and blocked person” on the most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website http://www.treas.gov/ofac/tll_sdn.pdf or at any
replacement website or official publication of such list (the “OFAC List”).
For purposes of this Section 9(d), the term “Affiliate” is defined as any
person that controls, is under common control with, or is controlled by the
specified person, and the term “control” is defined as the power to direct or
cause the direction of the management and policies of the applicable entity
through ownership of voting securities or beneficial interests, by contract
or otherwise, and persons having control include any general partner,
managing member, manager or executive officer of the applicable entity, and
any direct or indirect holder of more than 10% of the equity ownership
interests of the applicable entity.



     (e) The Loan proceeds will not be used for any illegal purposes and
no portion of the Property has been acquired with funds derived from illegal
activities. No interest in Borrower shall have been acquired with funds
derived from illegal activities.



     (f) Borrower shall covenant and agree to deliver to Lender any
certification or other evidence requested from time to time by Lender in its
sole discretion, confirming Borrower’s compliance with Anti-Terrorism Laws.
The representations and warranties pertaining to Anti-Terrorism Laws and
Borrower, Guarantor, Indemnitor or any of their respective Affiliates shall
be deemed repeated and reaffirmed by Borrower as of the Closing and as of
each date that Borrower makes a payment to Lender under the Loan Documents or
receives any payment from Lender.



10. REPRESENTATIONS AND WARRANTIES OF APPLICANT:




     Applicant hereby represents and warrants as follows:



     (a) Applicant has the requisite power and authority under its organizational documents to
execute and deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transaction contemplated by this Agreement, and has taken any necessary action to
authorize the execution and delivery of this Agreement, the performance of its obligations under
this Agreement and the consummation of the transaction



5









 







contemplated by this Agreement and is otherwise in material compliance with applicable Law.



     (b) Applicant
is not an “employee benefit plan” as defined in Section 3(3) of ERISA
that is subject to Title I of ERISA or a
“plan” as defined in Section 4975(e) (1) of the
Code which is subject to Section 4975 of the Code, and the assets of Applicant do not constitute
“plan assets” of one or more such plans for
purposes of Title I of ERISA or Section 4975
of the Code.



     (c) Applicant
is not a “governmental plan” within the meaning of
Section 3(32) of ERISA and transactions by or with Applicant are not subject
to any laws regulating investments of and fiduciary obligations with respect
to governmental plans.



     (d) Applicant is not in violation of any Anti-Terrorism Laws, is not
a Prohibited Person as defined under the Anti-Terrorism Laws and is not
identified as a “specially designated national and blocked person” on the
OFAC List.



     (e) The Loan proceeds will not be used for any illegal purposes and
no portion of the Property has been acquired with funds derived from illegal
activities. To Applicant’s knowledge, no interest in Applicant has been
acquired with funds derived from illegal activities.



     (f) Applicant covenants and agrees to deliver to Lender any
certification or other evidence requested from time to time by Lender in its
sole discretion to confirm Applicant’s compliance with Anti-Terrorism Laws.



11.NOTICES,
CONSENTS AND APPROVALS:




     Any notice, demand, consent or approval provided for in this Agreement will be in writing and
delivered in accordance with Exhibit F.



12.ADDITIONAL
PROVISIONS:




     Additional Loan terms and Closing conditions, if any, applicable to the Loan are set forth in
Exhibits G and H.



13.
LENDER’S APPROVAL:




     After Acceptance, Lender’s approval of, consent to or satisfaction with any matter referred to
in this Agreement will not be unreasonably withheld unless expressly provided otherwise.



14.ASSIGNMENT:




     Applicant will not assign this Agreement without Lender’s prior consent, which may be
withheld in Lender’s sole discretion.



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15.
APPLICABLE
LAW; JURISDICTION:




     This Agreement is delivered in the State of New York and is intended to be performed in New
York and construed in accordance with the laws of New York, except to the extent otherwise set
forth in the Loan Documents. All legal proceedings arising out of this Agreement will be litigated
in the state or federal courts located in New York, New York and Applicant consents and submits to
the jurisdiction of such courts, agrees to institute any litigation arising out of this Agreement
in such courts, consents to service of process by mail and waives any right it may have to transfer
or change the venue of any litigation brought against Applicant by Lender arising out of this
Agreement.



16.
AMENDMENTS:




     Before Acceptance, Applicant cannot amend this Agreement except in writing and with Lender’s
prior consent, which may be withheld in Lender’s sole discretion. After Acceptance, except as
expressly provided herein, this Agreement can only be amended by an Agreement signed by Applicant
and Lender. After Acceptance, Lender reserves the right:




     (i) to waive, in whole or in part, any of the provisions benefiting Lender or to
extend unilaterally any date or time period prescribed for the performance by
Applicant hereunder to enable Applicant to so perform; and




     (ii) to extend unilaterally the Closing Date as Lender, acting in good faith and in a
commercially reasonable manner, deems necessary; provided, however, that such extensions of
the Closing Date shall not exceed 60 days in the aggregate.



17.
RETURN OF LOAN DEPOSIT AND EXCESS CONSULTANT FEES AND EXCESS LEGAL FEE RETAINER UPON CLOSING:




     If the Closing occurs, then Lender shall return to Applicant at Closing the Loan Deposit, any
unused Consultant Fees and any unused portion of the Legal Fee Retainer as follows:



     (a) If there are no post-closing requirements to be completed, Lender
will refund the Loan Deposit to Applicant, less any sums due to or on behalf
of Lender (the “Net Cash Deposit”) at Closing upon Lender’s receipt of
Applicant’s original, executed wiring instructions. Lender will also (i)
deduct any Lender Legal Fees from the Legal Fee Retainer and then refund any
excess portion of Legal Fee Retainer to Applicant at Closing, and (ii) deduct
the costs of any of the Consultants’ Inspections and Reports from the
Consultant Fees and then refund any excess portion of the Consultant Fees to
Applicant at Closing.



     (b) If there are any post-closing requirements to be completed,
Lender will retain the portion of the Net Cash Deposit reasonably determined
by Lender to be necessary as a reserve for costs (including any additional
Lender Legal Fees) that Lender may incur in connection with Borrower’s
satisfaction of such post-closing requirements. Upon Borrower’s satisfactory
completion of such post-closing requirements, Lender shall promptly refund to



7









 







Borrower, upon receipt of Borrower’s wiring instructions, such retained portion of the Net Cash
Deposit, less any sums due to or on behalf of Lender.



18. TERMINATION:




     (a) Subject
to Section 18(b), if Applicant fails to deliver the Letter of Credit or
Additional Cash Deposit, as applicable, within 10 days after Acceptance or if Closing does not
occur on or before the Closing Date due to Applicant’s failure to comply with the terms of this
Agreement, then Lender will have the right to retain, as Lender’s sole and exclusive remedy, the
Loan Deposit, which Applicant agrees will be fully earned by Lender as liquidated damages (the
“Liquidated Damages”) to compensate Lender in some measure for time spent, services
performed, expenses incurred and losses that Lender may incur. Applicant acknowledges that it
would be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by
failure of the Loan to close, and that the Liquidated Damages represent a reasonable estimate of
Lender’s damages and are not a penalty. If any remedy described in this Agreement is denied,
Lender may pursue any alternate remedy at law or in equity.



     (b) Notwithstanding the foregoing, if (i) Lender does not approve the Appraisal, (ii) Lender
cannot comply with any Law, (iii) provided Applicant has complied with all other terms and
conditions of this Agreement, Lender’s approval of the Engineering Report or the Environmental and
Compliance Report is conditioned upon remediation of specified conditions, the cost of which
exceeds the greater of 2% of the Loan Amount or $1,000,000 in the aggregate (as reasonably
determined by Lender), and Applicant has determined not to proceed with the necessary remediation,
or (iv) the Closing does not occur on or before the Closing Date for any other reason (including a
termination of this Agreement pursuant to Section 20(f) hereof), other than Lender’s
willful default or Applicant’s failure to comply with the terms of this Agreement as set forth in
Section 18(a), then, in any such event, Lender shall give Applicant notice of same and,
upon Applicant’s receipt of such notice, this Agreement shall terminate. Lender’s sole obligation
under such circumstances will be to return the Loan Deposit to Applicant, together with (A) the
excess of the Consultant Fees over the aggregate actual costs of the Consultants’ Inspections and
Reports, and (B) the excess of the Legal Fee Retainer over the reasonable Lender Legal Fees
incurred or payable to date, but less any sums due to or on behalf of Lender under this Agreement,
including, if such termination is pursuant to clause (iii) above, a breakage fee in the amount of
1% of the Loan Amount.



19.
NOMINEE:




     After Acceptance and upon notice to Applicant, Lender may designate a nominee to perform
Lender’s obligations under this Agreement and Applicant will cause every item or document which is
required under this Agreement to be delivered or assigned to Lender, to name and be delivered or
assigned to Lender’s nominee, provided that such designation must occur not later than 10
days prior to Closing and no such designation by Lender shall release or relieve Lender from the
performance of the duties and obligations of Lender hereunder.



20.
MISCELLANEOUS:




8









 








     (a) Compliance with the provisions set forth in this Agreement by
Applicant and Borrower is a prerequisite to Lender’s making the Loan.



     (b) Applicant and Borrower shall retain all risk of loss with respect
to the Property.



     (c) After Acceptance, Lender reserves the right to inspect the
Property periodically upon reasonable advance notice to Applicant.



     (d) Any agreement by or duty imposed on Applicant or Borrower in this
Agreement to perform any obligation or to refrain from any act or omission
constitutes a covenant on its part and includes a covenant by Applicant or
Borrower, as the case may be, to cause its partners, members, principals,
agents, representatives and employees to perform the obligation or to refrain
from the act or omission in accordance with this Agreement. Any statement or
disclosure contained in this Agreement about facts or circumstances relating
to the Property, Borrower or the Loan constitutes a representation and
warranty by Applicant made as of the date of Applicant’s execution of this
Agreement.



     (e) Any document, instrument or other writing to be delivered to or
to be satisfactory to Lender must be reasonably satisfactory to Lender in
both form and content.



     (f) Lender shall not be obligated to close the Loan in the event that
there is a “Material Adverse Change”, which shall mean a change that has a
material adverse effect upon the use, value or condition of the Property or
upon the business, properties, assets, condition (financial or otherwise) or
results of operations of Borrower or Applicant. The parties hereto
acknowledge that the financial, real estate, banking and/or capital markets
are presently subject to a material disruption and that any further
deterioration in (or adverse change affecting) any or all of such markets as
determined by Lender in its discretion would be deemed to be a Material
Adverse Change for all purposes hereunder.



     (g) That certain Confidentiality Letter dated May 7, 2009, between
Applicant and TIAA-CREF Global Investments, LLC remains in effect and shall
not be modified or affected by the terms of this Agreement. If the Loan does
not close, the Confidentiality Letter shall thereafter remain in effect in
accordance with its terms. If the Loan closes, the Loan Documents will
contain all confidentiality obligations among Lender, Borrower, Guarantor and
Indemnitor, and the terms and provisions of the Confidentiality Letter will
be merged therein.



21.
DEFINITIONS AND RULES OF CONSTRUCTION:




     (a) References
in this Agreement to lettered exhibits are references to the
Exhibits
attached to this Agreement, all of which are incorporated in and constitute a part of this
Agreement. References in this Agreement and the Exhibits hereto to numbered sections are
references to the sections of this Agreement.



9









 





     (b) The singular of any word includes the plural and the plural
includes the singular. The use of any gender includes all genders.



     (c) No inference in favor of or against any entity with respect to
any provision in this Agreement may be drawn from the fact that the entity
drafted this Agreement.



     (d) “Certificate” means the sworn, notarized statement of the entity
giving the certificate, made by a duly authorized person satisfactory to
Lender affirming the truth and accuracy of every statement in the
certificate. Any document that is “certified”means the document has been
appended to a Certificate of the entity certifying the document which affirms
the truth and accuracy of everything in the document being certified.



     (e) The phrase “free from bankruptcy” means free from bankruptcy or
reorganization proceedings and from a general assignment for the benefit of
creditors.



     (f) The
terms “include,”
“including” and similar terms are construed
as if followed by the phrase “without limitation”.



     (g) The
term “Law” means all present and future codes, constitutions,
cases, opinions, rules, regulations, laws, orders, ordinances, requirements
and statutes, as amended, of any government that affect or that may be
interpreted to affect the Property, Borrower or the Loan.



     (h) The
term “person” includes a natural person, firm, partnership, limited
liability company, corporation and any other public or private legal entity.



     (i) The
term “provisions” includes terms, covenants, conditions, agreements
and requirements.



22.
EXHIBITS:




     Attached
to this Agreement are the Exhibits listed below.



Exhibit A
— Prepayment Premium; Evasion of Prepayment Premium




Exhibit B — Permitted Future Leasing




Exhibit C — Description of Property




Exhibit D — Schedule of Leases and Leasing Requirements




Exhibit D-1 — Shell Tenants




Exhibit E — Special Purpose Entity Requirements Borrower’s Composition




Exhibit E-1 — Ownership Chart



Exhibit F — Notice




Exhibit G — Closing Conditions



Exhibits H-1 — H-10 — Additional Provisions




10









 





23.
COUNTERPARTS:




     This Agreement may be executed in any number of counterparts and all of the counterparts
together will constitute a single original document.



24. APPLICANT’S AGREEMENT:




     This Agreement is executed by Applicant on the date first set forth above. Applicant agrees
to be bound by all of the provisions hereof, and each person executing this Agreement on behalf of
Applicant represents that (s) he has full authority to bind Applicant.



	 	 	 	 	 
	 	HEALTHCARE REALTY TRUST INCORPORATED,

a Maryland corporation

3310 West End Avenue, Suite 700

Nashville, Tennessee 37203

 	 
	 	By:  	/s/ Stephen E. Cox, Jr. 	 
	 	 	Name:  	Stephen E. Cox, Jr. 	 
	 	 	Title:  	Vice President

Applicant’s Taxpayer I.D. No: 62-1507028 	 
	 



25. CONFIRMATION OF FIXED INTEREST RATE:





     The Fixed Interest Rate for the Loan is 7.25% per annum.



[LENDER’S SIGNATURE TO APPEAR ON THE FOLLOWING PAGE]




11









 








26.
LENDER’S ACCEPTANCE:




     This
Agreement is accepted by Lender on this day 28th of July, 2009, and
is now a binding contract between Applicant and Lender.



	 	 	 	 	 
	 	TEACHERS INSURANCE AND ANNUITY

ASSOCIATION OF AMERICA

 	 
	 	By:  	/s/
William A. Lane 	 
	 	 	Name:  	William A. Lane 	 
	 	 	Title:  	Director 	 



12









 






	 	 	 	 	 



EX. A

PREPAY




EXHIBIT A




PREPAYMENT PREMIUM; EVASION OF PREPAYMENT PREMIUM




Prepayment Premium:





     Any prepayment made pursuant to Section 1(f) will include a
simultaneous payment of a prepayment premium equal to the amount which is the greater of (a) an
amount equal to 1% (the “Prepayment Percentage”) times the amount of the principal of the
Loan outstanding on the date of prepayment (the “Prepayment Date Principal”), or (b) the
amount by which the sum of the Discounted Values (defined herein) of the Note Payments (defined
herein), derived by using the Discount Rate (defined herein), exceeds the Prepayment Date
Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining
Note Payment will be discounted and the resulting Discounted Values will be added together. The
Loan may be prepaid without premium during the last 120 days of the Term.



Evasion of Prepayment Premium:




     If, at any time during the Term, the Loan is accelerated after an event of default or there is
any prepayment not permitted by the Loan Documents, then any tender of payment of the amount
necessary to satisfy the entire Loan, any judgment of foreclosure, any sum due at foreclosure and
any tender of payment during any redemption period will include, to the extent permitted by Law, an
amount (the “Evasion of Prepayment Premium”) which is the greater of (a) an amount equal to
the Prepayment Percentage plus 300 basis points times the Prepayment Date Principal, or (b) the
amount by which the sum of the Discounted Values of the Note Payments, derived by using the Default
Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the
sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and
the resulting Discounted Values will be added together.



Defined Terms:




     (a) “Discount Rate” means the annual yield on a U.S. Treasury issue selected by
Lender (or such other commonly used benchmark as Lender selects in its reasonable discretion, if
Lender determines that U.S. Treasury issues are not commonly used as benchmarks on the date of
calculation), as reported by Bloomberg.com (or in any similar national financial newspaper,
periodical or website designated by Lender if Bloomberg.com is not available), two weeks prior to
prepayment, having a maturity date corresponding (or most closely corresponding, if not
identical) to the last day of the then-existing Term, and, if applicable, a coupon rate
corresponding (or most closely corresponding, if not identical) to the Fixed Interest Rate.



     (b) “Default Discount Rate” means the Discount Rate less 300 basis points.



A-1









 







     (c) “Discounted
Value” means the Discounted Value of a Note Payment based on the following formula:



	 	 	 
	NP
 


	 	 
	(1 + R/12)D

	= 	Discounted Value







	 	NP  	= 	Amount of Note Payment.
	 
	 	R  	= 	Discount Rate or Default Discount Rate as the case may be.
	 
	 	n  	= 	The number of months between the date of prepayment and the scheduled
date of the Note Payment in question rounded to the nearest integer.





     (d) “Note Payments” means (i) each of the scheduled payments of
monthly debt service on the Loan for the period from the first day of the
month subsequent to the date of prepayment through the end of the then-existing Term and (ii) the scheduled repayment of principal, if any, at the
end of the Term.



A-2









 





EX. B

LEASING




EXHIBIT B




PERMITTED FUTURE LEASING




     The Loan Documents will permit Borrower to enter into leases without Lender’s prior consent,
provided that there is no event of default under the Loan Documents then continuing, the terms of
the lease are consistent with generally prevailing market terms in the geographic region in which
the Property is located, and the lease either is written on a Lender-approved form of lease or is
submitted with Lender’s standard form of subordination, non-disturbance and attornment agreement
executed by the tenant thereunder.



     If the Debt Service Coverage (defined herein) for the Loan declines below 1.30x, Lender
reserves the right to revoke, upon 60 days’ notice, Borrower’s privilege to enter into new
leases without Lender’s consent.



     The Loan Documents will require Borrower to obtain. Lender’s prior consent to (a) any new
lease of 20,000 square feet or more of interior space within the Improvements, and/or (b) any new
lease representing 10% or more of the gross revenues or of the net rentable area of the Property.



     Lender agrees to use best efforts to respond to requests for new lease approvals within 10
business days of notice thereof. No additional fee shall be due to Lender in connection with any
request for Lender’s consent to a lease, provided that Borrower shall agree to reimburse
Lender for reasonable legal fees incurred by Lender in responding to such request in an amount not
to exceed $1,000 per request.



     Borrower will deliver to Lender an original or certified copy of each new lease, together with
a reasonably detailed lease abstract, within 30 days after execution of the lease.



     The
term “Debt Service Coverage” shall mean the Net Operating Income (defined herein)
of the Property for the 12 months ending as of the end of the mostly recently ended fiscal quarter
of Borrower divided by the amount of scheduled monthly debt service payments over such period. The
term “Net Operating Income” shall mean the gross revenues derived from the Property after
payment of annual insurance premiums, taxes and assessments and operating expenses of the Property
(including ground rent if any). “Operating expenses of the Property” shall not include interest
expense, income taxes, depreciation, amortization, capital costs (including tenant improvements),
extraordinary expenses, and out-of-period revenue or expense adjustments.



B-1









 





EX. C

PROPERTY




EXHIBIT C




DESCRIPTION OF PROPERTY



Location: See attached Property Summary.



Land: See attached Property Summary.



Improvements: See attached Property Summary.



Title: Leasehold as to Land and Improvements by virtue of one or more ground leases
(and/or ground subleases, as applicable). Additional provisions relating to the leasehold
estate(s) are set forth in Exhibit H.



Personal Property: Borrower’s interest in any personal property located on the land or
in the Improvements and essential to the operation and enjoyment of the Property including
furniture, furnishings, equipment, appliances, accounts receivable, general intangibles,
licenses, permits and the like.



Additional
Collateral: Borrower’s interest in any operating agreements, reciprocal
easement agreements, management agreements and other material agreements affecting the Property.
In addition, Borrower’s interest in all reserve accounts required by this Agreement and any
additional security, collateral or credit enhancements described in Exhibit H, if any.





C-1











 





*






C-2









 








EX. D

LEASES




EXHIBIT D




SCHEDULE OF LEASES AND LEASING REQUIREMENTS 




     In addition to the other provisions in this Agreement, it is a condition to Closing that the leasing
described below is in effect at Closing, with tenants satisfactory to Lender in
physical occupancy (except for those “shell” tenants listed in Exhibit D-1)
that are paying rent and free from bankruptcy. Such leasing represents the minimum
leasing required for Borrower to qualify for the Loan.



     In addition to the other provisions in this Agreement, the conditions to Closing
include the following: (i) not less than 91.5% of the leasing on the attached rent roll
shall be in effect at Closing with tenants in physical occupancy (except for those
“shell” tenants listed in Exhibit D-1), paying rent and free from bankruptcy,
and (ii) the Property shall have a minimum projected annual Net Operating Income of
$10,400,000 and Debt Service Coverage as of the Closing of at least 1.58x.



     Applicant represents and warrants that, on the date on which Applicant has
executed this Agreement, all existing leases of space within the Improvements are
listed on the rent roll attached to this Agreement, which rent roll includes the square
footage, commencement date, expiration date, current rent and future rent (if such
future rent is subject to a set increase) for each tenant and a summary of each
tenant’s operating expense reimbursement. Notwithstanding the foregoing, Applicant
agrees that it shall, within 15 business days after Acceptance, provide to Lender a
summary of any tenant purchase options, early lease termination options and lease
renewal options.




D-1









 






*







D-2









 






EX. E

COMPOSITION




EXHIBIT E




SPECIAL PURPOSE ENTITY REQUIREMENTS/BORROWER’S COMPOSITION




     Applicant agrees that the following will be correct at Closing, and Borrower will
recertify the following at Closing:



     (a) Borrower is and will continue to be a Single Purpose Entity and if Borrower is a general
partnership, each of Borrower’s general partners is and will continue to be a corporation, limited
partnership or limited liability company which is a Single Purpose
Entity. “Single Purpose
Entity” means an entity whose organizational documents set forth single purpose entity
covenants satisfactory to Lender, in its sole discretion, including covenants that the entity:




     (i) is formed solely for the purpose of owning, managing and operating the Property
and is not engaged and will not engage, either directly or indirectly, in any business other
than the ownership, management and operation of the Property;




     (ii) does not have and will not acquire or use any assets other than the Property and
personal property incidental to the business of owning, managing and operating the Property
and activities incidental thereto; without limiting the foregoing, the Property shall be
operated as a single property or project, generating substantially all of Borrower’s gross
income, it being the intent that the Property shall constitute “single asset real estate”
for purposes of Section 362(d)(3) of the Bankruptcy Code;




     (iii) will not liquidate or dissolve (or suffer any liquidation or dissolution), or
enter into any transaction of merger or consolidation, or acquire by purchase or otherwise
all or substantially all the business or assets of, or any stock or other evidence of
beneficial ownership of, any entity;




     (iv) will not, nor will any partner, limited or general, member or shareholder
thereof, as applicable, violate the terms of its partnership certificate, partnership
agreement, articles of incorporation, bylaws, operating agreement, articles of organization
or other formation agreement or document, as applicable;




     (v) will observe, if it is a limited liability company, all limited liability
company formalities that relate to the entity’s separateness pursuant to its formation
documents, operating agreement, bylaws or partnership agreement (as the case may be), or any
other organizational filing or document governing its affairs;




     (i) has not and will not guarantee, pledge its assets for the benefit of, or
otherwise become obligated for, the obligations of any other person or hold out its credit
or assets as being available to satisfy the obligations of any other person except for
obligations for



E-1









 









indemnification and other obligations of Borrower pursuant to its operating agreement, bylaws
or partnership agreement, as applicable;




     (vii) has not incurred and will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (A) the Loan and (B) unsecured trade
debt incurred in the ordinary course of business (not evidenced by a note) and paid in the ordinary
course of business in connection with owning, operating and maintaining the Property,
provided that such indebtedness is paid within 90 days of when incurred (unless the claim
for such indebtedness is disputed in good faith and cash reserves are maintained therefor during
the period of such dispute which would be sufficient to discharge fully such indebtedness);




     (viii) will be and will at all times hold itself out to the public as a legal entity separate
and distinct from any other entity (including, without limitation,
any affiliate (defined herein),
general partner or member, as applicable, or any affiliate of any of its general partners or
members, as applicable), will correct any known misunderstanding concerning its separate identity,
and will not identify any other entity (including, without limitation, any affiliate, general
partner or member, or any affiliate of any of its general partners or members, as applicable) as a
division or part of it;




     (ix) subject to the management of the Property by a property manager using a single
operating account and to the commingling of reserves and other funds held by Lender as required
under the Loan Documents, will not commingle its funds or assets with those of any other person,
and will maintain and account for its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those of any other person;




     (x) will maintain its own separate, complete and accurate accounts, books, records and
financial statements complying with GAAP, provided that it may file or may be part of a
consolidated federal tax return to the extent required or permitted by applicable Law so long as
there is an appropriate notation indicating its separate existence and its assets and liabilities;




     (xii) will pay its obligations and expenses from its own funds and assets (to the extent that
it has funds to do so);




     (xiii) will not have any paid manager or director for the entity (other than the Independent
Manager (defined herein)) and, to the extent it has any employees, it will pay the salaries of its
own employees from its own funds and in the absence of such paid employees, it will obtain all
necessary services through third parties or independent contractors;




E-2











 









          (xiv) will conduct and operate business in its own name or in the name of the Property, will
allocate fairly and reasonably any overhead for shared office space and use separate stationary,
invoices and checks;




          (xv) will not enter into or be a party to any transaction with any of its general partners,
principals, affiliates or members, as applicable, or any affiliate of any of its general partners,
principals or members, except in the ordinary course of business and upon terms and conditions that
are intrinsically fair and substantially similar to those that would be available on an arms-length
basis with a third party other than an affiliate;




          (xvi)
rwill not make loans or advance credit to any person (including affiliates) other than
to tenants of the Property in the form of tenant allowances or tenant improvements,
provided that this covenant shall not preclude such entity from amending or modifying the
financial terms of leases for the Property pursuant to lease amendments or modifications completed
in accordance with the provisions of the Loan Documents;




          (xvii) will not take any action which, under the terms of its formation document or other
applicable organizational documents, requires the unanimous consent of all directors, partners or
members, as applicable, without such required vote;




          (xviii) will not engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, asset sale, bankruptcy or insolvency filing, or material amendment to or
modification (including any amendments or modifications of its separateness covenants) of its
partnership agreement, articles of incorporation, bylaws, operating agreement, articles of
organization or other formation agreement or document, as applicable, without the required written
consent of Lender;




          (xix) will continue to operate its business with the goal of maintaining capital which is
adequate for the normal obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations, to the extent funds are available from the
Property; and




          (xx) will not fail at any time to have at least one Independent Manager that will vote on
material matters affecting it, which matters shall include (a) any proposed insolvency or
bankruptcy proceeding of such entity, (b) incurring indebtedness outside the ordinary course of
business, (c) any merger or consolidation of it with any other entity, (d) any dissolution or
liquidation of such entity, and (e) any amendment or modification of any provision of its
organizational documents relating to company purpose, title to or management of the Property, its
bankruptcy-remote status, and/or the admission or removal of general partners or members, as the
case may be, provided that no



E-3









 







termination or change of the Independent Manager shall be made without giving Lender at
least 20 days’ prior written notice, which notice shall include a copy of any bio-profile
or resume of such replacement Independent Manager.


Borrower shall agree to keep the Single Purpose Entity covenants set forth in this paragraph (a)
and such covenants will be included in the Loan Documents and shall be, at the time of the
Closing, included in Borrower’s organizational documents.




     As used herein, the term “Independent Manager” shall mean a duly appointed member of
the board of directors or board of managers who is provided by a nationally-recognized company
that provides professional independent directors/managers who shall not have been at the time of
initial appointment or at any time while serving as an Independent Manager, and may not have been
at any time during the preceding five years, (i) a stockholder, director, officer, employee,
partner, attorney or counsel of Borrower or any affiliate of Borrower, (ii) a customer, supplier
or other person who derives any of its purchases or revenues from its activities with such entity
or any affiliate of Borrower, (iii) a person 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 person.
For purposes of this Exhibit E, 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,
and the term “affiliate” means for the specified person: (1) any person directly or
indirectly owning, controlling or holding with power to vote 20% or more of the outstanding voting
securities or interests of such specified person; (2) any person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held with power to vote by such
specified person; (3) any person directly or indirectly controlling, controlled by or under common
control with such specified person; (4) any officer, director or partner of such specified person;
(5) if such specified person is an officer, director or partner, any entity for which such person
or entity acts in any such capacity; and (6) any close relative or spouse of such specified person
if an individual.



     If Borrower is a single-member limited liability company, then such limited liability company
must be duly organized and in good standing under the laws of Delaware.



     (b) Borrower shall be duly organized and in good standing and
qualified to do business in the state where the Property is located.
Applicant will, prior to the Closing, transfer the Property to Borrower if
Borrower is not currently the owner thereof.



     (c) Attached
hereto as Exhibit E-1 is an Ownership Chart prepared by
Applicant that shows Borrower’s proposed ownership structure, including the
name, state of formation and type of entity of Borrower and each of





E-4









 







Borrower’s constituents and their respective percentage interests in Borrower, and showing the
complete form of signature block for Borrower, including the name and title of its authorized
representative.




     (d) Applicant will deliver to Lender no later than 20 days before
Closing, all applicable organizational documents of Borrower and its
constituents and of Applicant, and will identify all owners of 10% or more of
direct or indirect ownership interests in Borrower, the percentage interest
of each such owner, and Borrower’s taxpayer identification number and address
if different from Applicant’s as indicated in Section 24. After Lender’s
approval, none of the foregoing may be amended without Lender’s consent.



     (e) The Ownership Chart and all organizational documents and
information delivered or to be delivered to Lender are correct and complete,
and Borrower shall be deemed to have recertified the same as of the Closing
Date.



E-5









 





EX. E-1

OWNERSHIP CHART




EXHIBIT E — 1




OWNERSHIP CHART




E-1-1









 














	 	 	 	 	 
	 	HR OF CAROLINAS, LLC, a Delaware limited liability

company

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 
	 



Authorized Representatives:




David R. Emery—President and Chief Executive Officer




B. Douglas Whitman, II—Executive Vice President and Chief Operating Officer




Scott W. Holmes—Executive Vice President and Chief Financial Officer




John M,
Bryant, Jr.—Executive Vice Present and General Counsel




Todd J.
Meredith—Senior Vice President—Real Estate Investments




Brince R. Wilford—Senior Vice President—Real Estate Investments




Julie A. Wilson—Senior Vice President




Frederick M. Langreck—Senior Vice President, Treasurer
and Assistant Secretary




James C. Douglas—Vice President—Asset Administration




Stephen E. Cox, Jr.—Vice President and Assistant General Counsel




Andrew E. Loope—Vice President and Corporate Counsel



Rita H. Todd—Secretary



E-1-2









 





EX. F

NOTICE




EXHIBIT F




NOTICE



All acceptances, approvals, consents, demands, notices, requests and other communications
(the “Notices”) required or permitted to be given under this Agreement must be in
writing and sent by certified mail, return receipt requested, or by nationally recognized
overnight delivery service that provides evidence of the date of delivery, with all
charges prepaid (for next business day delivery if sent by overnight delivery service),
addressed to the appropriate party at its address listed below:




	 	 	 
	If to Applicant or Borrower:

	 	Healthcare Realty Trust Incorporated
 3310
West End Avenue, Suite 700
Nashville,
Tennessee 37203
Attn: James C. Douglas
	 
	 	 
	with courtesy copies to:

	 	Healthcare Realty Trust Incorporated
 3310
West End Avenue, Suite 700
Nashville,
Tennessee 37203
Attn: General Counsel
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	Baker, Donelson, Bearman, Caldwell
&
Berkowitz, P.C.
 211 Commerce Street, Suite
1000
Nashville, Tennessee 37201
Attn: David J. White
	 
	 	 
	If to Lender:

	 	Teachers Insurance and Annuity Association

730 Third Avenue
 New York, New York 10017

Attn: Director, Global Private
          Markets,
Portfolio Management
TIAA Authorization
#AAA-6905
 Investment ID. #0006731
	 
	 	 
	with courtesy copies to:

	 	Teachers Insurance and Annuity Association

730 Third Avenue
 New York, New York 10017

Attn: Associate General Counsel and

          Director, Asset Management Law
 TIAA
Authorization #AAA-6905
Investment ID.
#0006731






F-1









 









	 	 	 
	 

	 	and
	 
	 	 
	 

	 	Teachers Insurance and Annuity Association

8500 Andrew Carnegie Boulevard
 Mailstop: 8500N-C2-07
	 

	 	 Charlotte, North Carolina
28262
 Attn: Nicole Brovet Cantu





Lender and Applicant each may change the address to which Notices must be sent, by notice given in
accordance with the provisions of this Exhibit F. All Notices given in accordance with the
provisions of this Exhibit F will be deemed to have been received upon the date of receipt
if sent by certified mail, or one business day after having been deposited with a nationally
recognised overnight delivery service if sent by overnight delivery.
Notwithstanding the foregoing,
any Notice sent to the last designated address of any person to which it is required to be sent
pursuant to this Agreement shall not be deemed ineffective if actual delivery cannot be made due to
a change of address of the person to which the Notice is directed or the refusal of such person to
accept delivery thereof.





F-2









 








EX. G

CLOSING CONDITIONS




EXHIBIT G




CLOSING CONDITIONS




     Lender’s obligation to make the Loan is subject to timely satisfaction of the conditions
set forth below:



     1. Applicant shall have delivered (or caused Borrower or title company to deliver) to
Lender the following items relating to the Property as soon as practicable after Acceptance and a
reasonable period of time prior to Closing but in all cases in accordance with any time period
specifically set forth below, all items to be reasonably satisfactory
to Lender (and Applicant
acknowledges that Acceptance does not constitute Lender’s approval of any items delivered to Lender
prior to Acceptance):



     (a) originals or certified copies of all operating agreements, ground
leases and ground subleases affecting the Property to which Applicant or any
of its affiliates is a party (including, without limitation, any master
ground lease or other ground lease affecting the Property), and copies of
reciprocal easement agreements, management agreements, material agreements
all non-residential leases, including leases described or referred to in
Exhibit D, together with any short form leases, amendments, addenda,
exhibits, lease guarantees or assignments relating thereto, and as soon as
practicable after execution, copies of all non-residential leases or other
material agreements affecting the Property executed after the initial
delivery of leases and other material agreements hereunder. After Lender’s
approval, none of the foregoing may be amended without Lender’s prior
consent;



     (b) two copies of the standard proposed form lease for the Property,
which may not be amended in any material respect after approval by Lender;



     (c) final plans and specifications for the Improvements described in
Exhibit C for any portion of the Improvements that is in Seismic Zone 3 or 4;



     (d) a current title report or binder (including the fee underlying
any leasehold estate), a search of appropriate UCC records, and, at Closing,
an ALTA Loan Title Insurance Policy with such coinsurance, reinsurance and
endorsements as Lender deems necessary issued by a title insurance company
approved by Lender and excluding any creditors’ rights exceptions or
exclusions;



     (e) a current ALTA as-built survey certified to Lender;



     (f) a pro forma certification of the rent roll verifying information
about the leases affecting the Property (to be revised as necessary with new
or amended information arising after the pro forma was prepared), certified
by Borrower no more than 15 days and not less than 5 days before Closing,
which rent roll shall include (i) the square footage, commencement date,
expiration date, current rent and future rent (if such future rent is subject
to a set increase), (ii) a summary of each tenant’s lease
provision(s) for





G-1









 





reimbursement of operating expenses, real estate taxes and insurance premiums, and (iii) a
summary of any tenant purchase options, early lease termination options and lease renewal
options;




     (g) not less than 30 days before Closing, an original or certified copy of insurance
policies and evidence of payment of the insurance premium for full replacement cost of the
Improvements and Personal Property referred to in Exhibit C (without deduction for
depreciation), which insurance will include fire and sprinkler leakage, extended coverage,
vandalism, malicious mischief, boiler and machinery, terrorism coverage, windstorm, earthquake and
flood insurance (if located in earthquake or flood zones), a minimum of 12 months of rent loss
insurance, and such other kinds of insurance as may be required by Lender in its sole discretion,
premiums prepaid, issued by companies and in amounts reasonably satisfactory to Lender, with a
standard mortgagee endorsement in Lender’s favor for the property insurance, an additional insured
endorsement in Lender’s favor for liability insurance and a waiver of subrogation endorsement,
where applicable;



     (h) an original or certified copy of the unconditional certificate of occupancy or other
unconditional certificate of appropriate governmental authorities evidencing compliance with all
zoning, building and applicable regulations, and an original or certified copy of any other
consents, permits, licenses, approvals and franchises referred to in paragraph 5 of this
Exhibit G;



     (i) not more than 30 days and not less than 5 days before Closing, (1) original tenant
estoppel certificates dated not more than 30 days before Closing from tenant Carolina Health
Systems (“CHS”) and any additional tenants such that the total square footage covered by all
received estoppels equals or exceeds at least 75% of the total leased area of the Property, as
shown on the attached rent roll, and (2) an original tenant estoppel certificate dated not more
than 30 days before Closing for each non-residential lease affecting the Property under which the
tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements
and an original subordination, non-disturbance and attornment agreement for each non-residential
lease affecting the Property under which the tenant thereunder leases not less than 20,000 square
feet of interior space within the Improvements and designated by Lender in its sole discretion;



     (j) a certified inventory of Personal Property included in the Property;



     (k) to the extent the Property is composed of one or more separate tax parcels, copies of
receipted tax and assessment bills for the current tax year and for the previous tax year for such
tax parcels;



     (l) a form of opinion prepared by counsel satisfactory to Lender covering such legal matters
as Lender deems reasonably appropriate, including due authorization, due execution, enforceability,
usury or choice of law, and



G-2









 







due organization and good standing of Borrower, with the original to be signed, dated and
delivered to Lender at Closing;




     (m) year-to-date operating statements for the Property for the fiscal year in which Closing
occurs and operating statements for the Property for the prior fiscal year; capital and operating
budgets for the Property for the remainder of the fiscal year in which Closing occurs and for the
next succeeding fiscal year; and such other financial information covering operations of the
Property and the financial condition of Borrower, Borrower’s constituent entities and Applicant as
Lender may reasonably request;



     (n) standard UCC, bankruptcy, state and federal tax lien, and pending litigation/judgment
searches for (i) Borrower, (ii) Applicant, and (iii) the Property Manager (if affiliated with
Borrower or Applicant);



     (o) not less than 5 business days before Closing, ground lessor estoppel and agreements in
form and substance reasonably acceptable to Lender from any fee owners (or ground sublessors, as
applicable) of the Property; and



     (p) from time to time before Closing, such other documentation or information as Lender
may reasonably request in connection with Closing.



     2. In the event that the terms of any operating agreements, ground
leases, reciprocal easement agreements, management agreements and other
material agreements affecting the Property entitle Borrower to request an
estoppel certificate concerning the status or effectiveness of or compliance
with the terms and conditions of any such instrument (individually,
an “REA
Estoppel Certificate”) and Lender so requests any such REA Estoppel
Certificate prior to Closing, Borrower shall use its good faith efforts to
obtain any such REA Estoppel Certificate prior to Closing in the form and
from the parties prescribed by such instrument (or, in the event no such form
is prescribed, in a form reasonably acceptable to Lender).




     3. The
leasing requirements set forth in Exhibit D shall have been
satisfied.



     4. Borrower shall have executed and delivered to Lender documents
satisfactory to Lender (the “Loan Documents”) evidencing and securing the
Loan and any other obligations of Borrower set forth in this Agreement, which
will include provisions substantially in the form of the following:




     (a) late charges of 5% of any late payment; a default interest rate of 5% per annum over the
Fixed Interest Rate; the Evasion of Prepayment Premium described in
Exhibit A, payable upon
repayment of the Loan after an event of default or upon any other prepayment not permitted by the
Loan Documents; and provisions for payment of reasonable fees relating to actions of Lender
requested by Borrower under the Loan Documents;



G-3









 








     (b) a 5-day grace period for monetary defaults; and a 30-day grace
period after notice for non-monetary defaults which will be extended as
necessary for non-monetary defaults not susceptible of cure within 30 days,
if Borrower commences to cure within the 30-day period, diligently prosecutes
the cure to completion and the entire grace period for a non-monetary default
does not exceed 120 days;



     (c) conditions to Borrower’s right to enter into leases affecting the
Property without Lender’s consent, which conditions are more particularly
described in Exhibit B;



     (d) requirements to deliver to Lender quarterly and annual financial
statements for the Property (and for annual financial statements for Borrower
and Guarantor/Indemnitor upon request) and such other financial information
as Lender may reasonably request from time to time. The financial statements
(which shall include partial fiscal years) shall be certified by Borrower and
may be unaudited, except that following an event of default, the annual
financial statements will be audited and accompanied by a satisfactory
opinion from a CPA approved by Lender;



     (e) a requirement to deliver to Lender quarterly and annual
certifications of the rent roll for the Property, certified by Borrower,
verifying information about all leases affecting the Property and verifying
Borrower’s compliance with the provisions of the Loan Documents relating to
leasing;



     (f) subject to paragraphs 4(g) and 4(h) of this Exhibit G,
prohibitions on prior or subordinate liens and encumbrances against the
Property or any interest in the Property and on certain direct or indirect
sales, assignments, pledges or other transfers of the Property or any estate
or interest therein without Lender’s prior written consent which may be
withheld in Lender’s sole and absolute discretion, it being understood that
prohibited transfers include (A) direct or indirect changes (by operation of
law or otherwise and including mergers) in the identity or composition of
Borrower or a change in control (as defined in Exhibit E) of Borrower and (B)
pledges of stock or of partnership or membership interests, as the case may
be, in Borrower, provided that any change in control of Guarantor or
Indemnitor shall not constitute a change in control of Borrower while the
equity securities of Guarantor or Indemnitor are listed on a public
securities exchange or the over-the-counter market;



     (g) a one-time sale of the Property will be permitted, subject to the
following conditions: (i) Lender’s approval of the transferee, which must
have a net worth of at least $400 million and must be an institutional
investor or developer with a reputation and experience comparable to those of
Applicant at Closing; (ii) transferee’s express assumption of Borrower’s
obligations under the Loan Documents and with respect to the Property; (iii)
Lender’s approval in its sole discretion of a substitute guarantor and
substitute indemnitor, and delivery of substitute guaranty and indemnity
instruments in substantially the forms provided to Lender at Closing; (iv)
satisfaction of the conditions set forth in paragraph 4 (h) of this Exhibit G;





G-4









 







(v) Lender’s receipt of satisfactory evidence that, immediately prior to the transfer and at least
12 months subsequent to the transfer, the Property supports a loan to value ratio no greater than
55%, with value to be determined by the purchase price of the Property pursuant to an executed
purchase and sale agreement with a bona fide third party purchaser, and a Debt Service Coverage of
not less than 1.58x; and (vi) payment of a transfer and assumption fee in the amount of 1% of the
outstanding principal balance of the Loan;




     (h) the following conditions under which transfers of the membership interests in Borrower
will be permitted, subject to there being no change in control (as
defined in Exhibit E)
of Borrower or the Property:




     (i) Lender shall have received prior notice;




     (ii) there shall then be no existing default under the Loan Documents
and all of Borrower’s payment obligations to Lender shall have been satisfied
through the date of transfer;




     (iii) Borrower shall have paid Lender’s costs (including legal fees and
expenses) and a processing fee relating to the transfer;




     (iv) the transfer shall not cause an ERISA violation;




     (v) the property manager of the Property shall be satisfactory to
Lender;




     (vi)
the transferee (including substitute guarantor or indemnitor) shall be
domiciled in the United States and/or is a citizen of the United States, shall not
be a “specifically designated national and blocked person” on the OFAC List and
otherwise shall not be in violation of any Anti-Terrorism Laws, shall not have had
adversarial dealings with Lender or had a monetary default under any other
investment with Lender, shall not have been found guilty of criminal charges, and
shall be free from bankruptcy;




     (vii) prior to the transfer, Borrower shall have provided Lender with a
Uniform Commercial Code search report satisfactory to Lender relating to the
transferee; and




     (viii) prior to the transfer, Borrower shall have delivered to Lender a
certification as to all of the foregoing matters executed by an entity satisfactory
to Lender, together with such evidence to confirm the accuracy of such certification
as Lender may reasonably request;



     (i) carve-outs from the non-recourse limitation on liability, which are set forth in
Exhibit H-6;



G-5









 







     (j) such covenants, warranties, representations and agreements of Borrower, Lender, the
administrator of the Deposit Account (defined herein) and a depositary institution as are required
to satisfy the lock-box requirements set forth in Exhibit H-7; and



     (k) a requirement that any termination fee paid to Borrower in excess of $250,000 in
connection with any lease termination shall be paid to Lender and used to reimburse Borrower for
tenant improvement costs and leasing commissions associated with the affected leased premises
(provided certain conditions are met); provided, however that upon an event of default
under the Loan Documents, any and all lease termination fees (regardless of the amount) shall be
paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions
associated with the affected leased premises.



     5. Except for permitted transfers of interests in Borrower,
Borrower’s composition shall continue to be the same as set
forth in Exhibit
E, and the representations and warranties contained therein shall be true,
correct and complete as of the Closing Date.




     6. Lender shall have received evidence satisfactory to Lender that
(i) the Property shall be in material compliance with all applicable Law,
including those relating to construction, land use, health, safety and
environmental matters and (ii) all permits, licenses, approvals and
franchises required for the construction, use, operation, occupancy and
management of the Property have been obtained and are in good standing and
Borrower has complied with any specific conditions or requirements applicable
to the Property.




     7. Lender shall have received and approved the following
Consultants’ Inspections and Reports relating to the Property:




(a) a
current appraisal (the “Appraisal”) prepared by an appraiser
(the “Appraiser”) engaged by Lender in accordance with Lender’s scope


of work. The Appraisal must support a loan to value ratio not to
exceed 55%;




(b) a
report (the “Engineering Report”), prepared by an independent
engineer (the “Engineering Consultant”) engaged by Lender, in
accordance with Lender’s scope of work. Applicant agrees to provide
the Engineering Consultant with a copy of any soils investigation
report with respect to the Property in Applicant’s possession. The
Engineering Report will be based on a physical inspection of the
Improvements and review of the final plans and specifications of the
Improvements (to the extent they are required to be provided
hereunder); and




(c) Environmental assessment and compliance reports (the
“Environmental and Compliance Report”) prepared by an independent




G-6









 









expert
(the “Environmental Consultant”) engaged by Lender in accordance with
Lender’s scope of work.


Applicant will cooperate and use reasonable efforts to cause its tenants, its property manager and
other third parties with an interest in or information about the Property to cooperate with the
consultants in their investigations. Lender agrees to provide Borrower with copies of the
Consultants’ Inspections and Reports within 10 days after Closing. Neither Lender nor any of the
consultants will have any liability or responsibility to Borrower with respect to the Consultants’
Inspections and Reports.



     8. Borrower and all of Borrower’s members shall be (i) free from bankruptcy and (ii)
solvent, as determined by Lender in its sole discretion, both in that the value of their respective
assets exceeds their respective liabilities and that it is likely that they will be able to pay
their debts, including, where applicable, payments required by the Loan Documents, as they become
due in the foreseeable future.



     9. Lender shall have approved all legal matters.



Notwithstanding
the requirements of this Exhibit G for the delivery of information and
other materials, Applicant and Borrower may satisfy their delivery obligations under this
Exhibit G for all or part of the information and other materials to be delivered by
providing Lender with the addresses of one or more Internet web sites at which such information and
other materials may be accessed by Lender.





G-7











 





EX. H

ADDITIONAL PROVISIONS




EXHIBIT H




ADDITIONAL
PROVISIONS



The attached Exhibits H-1 through H-10 constitute the additional provisions applicable to
the Loan.




Index




	 	 	 	 	 
	1.

	 	Extension Terms
	 	H-1
	2.

	 	Correspondent Authority and Fee Arrangement
	 	H-2
	3.

	 	Cross Collateralization
	 	H-3
	4.

	 	Ground Lease/Ground Sublease Terms
	 	H-4
	5.

	 	Insurance Proceeds and Condemnation Awards
for Restoration — Conditions to Use
	 	H-5
	6.

	 	Limitation of Liability
	 	H-6
	7.

	 	Mortgage/Deed of Trust Provisions
	 	H-6A
	8.

	 	Lock-Box Requirements
	 	H-7
	9.

	 	Allocated Loan Amounts
	 	H-8
	10.

	 	Release Provisions — Partial Release
	 	H-9
	11.

	 	Substitution of Collateral
	 	H-10






H-1









 






EX. H-1

LOAN EXTENSION PROVISIONS




EXHIBIT H — 1




EXTENSION TERMS




     First Extension: At any time between the 78th and 83rd month of
the Initial Term and provided (i) no event of default exists under the Loan, (ii) the Debt Service
Coverage at the Property is at least 1.65x, (iii) the loan to value ratio is not greater than 55%,
and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding
principal amount of the Loan, Borrower will have the option to extend the Initial Term for an
additional 12-month extension term (the “First Extension”), subject to the following: the
First Extension will on a floating rate basis, priced at 400 basis points over the 1 - month LIBOR
rate with a minimum coupon of 7.25% and will be amortized on a 30-year schedule.



     Second Extension: At any time between the 10th and 11th month
of the First Extension and provided (i) no event of default exists under the Loan, (ii) the Debt
Service Coverage at the Property is at least 1.65x, (iii) the loan to value ratio is not greater
than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current
outstanding principal amount of the Loan, Borrower will have the option to extend the then-existing
Term for an additional 12-month extension term (the “Second Extension”) on the same terms
and conditions as the First Extension.



     Prepayment during either the First Extension or the Second Extension will be subject to the
provisions of Section l(f) and Exhibit A.



     In the event the Term is extended for either the First Extension or the Second Extension,
Lender will require Borrower to purchase an interest rate cap from a “AA” rated counterparty and in
a form reasonably acceptable to Lender. The interest rate cap will be required at the first day of
each extension and shall cover the ensuing 12 months of such extension. The interest rate cap
shall be at a rate that will provide for a minimum 1.65x Debt Service Coverage at the Property and
such interest rate cap shall be assigned to Lender. The LIBOR rate cap required shall be
calculated by Lender based on the lower of actual Net Operating Income of the Property for the
preceding 12-month period and budgeted Net Operating Income for the ensuing 12-month period.



H-1-1









 





EX. H-2

CORRESPONDENT




EXHIBIT H — 2




CORRESPONDENT AUTHORITY AND FEE ARRANGEMENT




     Lender has retained Holliday Fenoglio Fowler, L.P. (the
“Correspondent”) to originate and obtain applications for mortgage loans for consideration
by Lender. Correspondent has been retained solely as an independent contractor and will not be
considered or construed under any circumstances to be an agent of Lender. Applicant understands
and agrees that Correspondent has no authority to accept or execute this Agreement on behalf of
Lender and that all representations, documents and understandings between Applicant and
Correspondent with respect to Applicant’s offer for Borrower to borrow are merged into this
Agreement. Separate and apart from this Agreement, Applicant and Correspondent have entered into
an agreement that provides for Applicant to pay to Correspondent a brokerage fee or commission in
connection with the Loan and, notwithstanding the merger provision contained in the preceding
sentence, such agreement is not merged into this Agreement.



     Applicant further acknowledges and agrees that Lender may have a separate compensation
arrangement with Correspondent pursuant to which payments may be made by Lender to Correspondent or
other compensation earned by Correspondent based on various factors. Such factors may, among other
things, include the volume of new loan originations done by Correspondent with Lender (which may
include the Loan or other loans made by Lender to other borrowers), the amount of loans serviced by
Correspondent for Lender (which may include servicing of the Loan as well as other loans made by
Lender to other borrowers), the scope of services and duties performed as part of the servicing
performed by Correspondent over the Term, or the existence of a sub-servicing arrangement in
connection with the Loan. Such compensation paid by Lender to Correspondent will be in addition to
any fees paid to Correspondent by Applicant or Borrower.



H-2-1









 





EX. H-3

CROSS COLLATERALIZATION




EXHIBIT H — 3




CROSS COLLATERALIZATION




     The Loan Documents will contain cross-collateralization, cross-prepayment and cross-default
provisions satisfactory to Lender, subject to the terms of and limitations imposed by
the ground leases described in Exhibit H-4. Lender may, at Lender’s option, determine that
multiple notes, guarantees and/or mortgages are required to document the Loan, and Borrower will
execute such notes, guarantees and mortgages. The Loan Documents will provide that if an event of
default occurs under any one of the notes and/or guarantees or under any one of the mortgages
securing the notes and/or guarantees or under any of the other Loan Documents, such event of
default will also constitute an event of default under the other notes and/or guarantees and
mortgages and Lender will be entitled to exercise its remedies under all of the notes and/or
guarantees, mortgages and other Loan Documents, including to foreclose upon all of the properties
comprising the Property.



H-3-1









 





EX. H-4

GROUND LEASE TERMS




EXHIBIT H — 4




GROUND LEASE / GROUND SUBLEASE TERMS




Ground
Leases / Ground Subleases:




     Certain provisions of the ground leases (or ground subleases, as applicable) that
currently govern the terms of the leasehold interests comprising part of the Property are set
forth in the schedule attached to this
Exhibit H-4.



Ground Lessor / Ground Sublessor Agreements with Lender:




     As a condition to Closing, Borrower will deliver to Lender a document in recordable form
executed by each ground lessor (and/or ground sublessor, as applicable) and reasonably satisfactory
to Lender which confirms, among other things, (a) that Lender shall have the right to receive
copies of all notices of default sent under the ground lease (and/or ground sublease, as
applicable) and shall have the opportunity to cure said defaults (including an additional cure
period in the event ground lessee (and/or ground sublessee) fails to cure any default which gives
rise to a right to terminate the ground lease (or ground sublease, as applicable), (b) that such
ground lessor (and/or ground sublessor) will enter into a new ground lease (or ground sublease) or
leases with Lender if the ground lease (or ground sublease) with such ground lessor (or ground
sublessor) is terminated at any time during the term thereof for any reason, including rejection of
such ground lease (or ground sublease) in a bankruptcy proceeding, and/or (c) that Lender shall
have the right of prior review and approval of any amendment, cancellation or termination of the
ground lease (or ground sublease) provided that such separate document shall not be required in the
event the ground lease (or ground sublease) expressly extends and provides such rights to Lender.



H-4-1









 




*







H-4-2









 





EX. H-5

INS. / CONDEMNATION




EXHIBIT H — 5




INSURANCE PROCEEDS AND CONDEMNATION AWARDS FOR

RESTORATION — CONDITIONS TO USE




     The terms of the applicable ground leases shall govern the application of insurance proceeds
and condemnation awards (the “Proceeds”) payable with the respect to the Property during
the Term, provided that, to the extent permitted by the applicable ground leases, the Loan
Documents will permit Lender to apply Proceeds against the Loan subject to the following provisions
to be included in the Loan Documents:



     (a) Notwithstanding
the foregoing, after a casualty or a condemnation (a “Destruction
Event”), Lender will make the Proceeds (less any costs incurred by Lender in collecting the
Proceeds) available for restoration in accordance with the conditions
for disbursements set forth
in the Loan Documents, provided that the following conditions are met:




     (i) Borrower or the transferee under a permitted transfer, if any, continues to be
Borrower at the time of the Destruction Event and at all times thereafter until the Proceeds
have been fully disbursed;




     (ii) no default under the Loan Documents exists at the time of the Destruction
Event and no event of default has occurred during the 12 months prior to the
Destruction Event;




     (iii) all leases in effect immediately prior to the Destruction Event continue in full
force and effect notwithstanding the Destruction Event, except as otherwise approved by
Lender;




     (iv) if the Destruction Event is a condemnation, Borrower delivers to Lender
evidence satisfactory to Lender that the Improvements can be restored to an
economically and architecturally viable unit;




     (v) Borrower delivers to Lender evidence satisfactory to Lender that the Proceeds are
sufficient to complete such restoration or if the Proceeds are insufficient to complete such
restoration, Borrower first deposits with Lender funds (the
“Additional Funds”) that
when added to the Proceeds will be sufficient to complete such restoration;




     (vi) if the Destruction Event is a casualty, Borrower delivers to Lender evidence
satisfactory to Lender that the insurer under each affected insurance policy has not denied
liability under such policy as to Borrower or the insured under such policy;




     (vii) Lender is satisfied that the proceeds of any rent loss insurance in effect
together with other available gross revenues from the Property are sufficient to pay debt
service payments after paying taxes and assessments, insurance premiums, reasonable and
customary



H-5-1









 







operating expenses and capital expenditures until the restoration is complete;




     (viii) Lender is satisfied that the restoration will be completed on or before the
date (the “Restoration Completion Date”) that is the earliest of: (A) 12 months
prior to the expiration of the then-existing Term; (B) 12 months after the Destruction
Event; (C) the earliest date required for completion of restoration under any lease
affecting the Property; or (D) any date required by Law; and




     (ix) for the 12-month period immediately preceding the Destruction Event, the annual
Debt Service Coverage was at least 1.15x and, at the time of the Destruction Event, is at
least 1.15x, provided that, if the Net Operating Income does not provide such Debt Service
Coverage, Borrower expressly authorizes and instructs Lender (at Lender’s sole discretion)
to apply an amount from the Proceeds to reduction of the outstanding principal amount of the
Loan in order to reduce the annual debt service payments sufficiently for such Debt Service
Coverage to be achieved. The reduced debt service payments will be calculated using the
Fixed Interest Rate and an amortization schedule that will achieve the same proportionate
amortization of the reduced principal over the then-remaining Term as would have been
achieved if the principal and the originally scheduled debt service payments had not been
reduced. Borrower will execute any documentation that Lender deems reasonably necessary to
evidence the reduced principal and debt service payments.



     (b) If the total Proceeds for any Destruction Event are $250, 000 or less and Lender elects or
is obligated by Law or under the Loan Documents to make the Proceeds available for restoration,
Lender will disburse to Borrower the entire amount received by Lender, and Borrower will commence
restoration promptly after the Destruction Event and complete restoration not later than the
Restoration Completion Date.



     (c) If the Proceeds for any Destruction Event exceed $250,000 and Lender elects or is
obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender
will disburse the Proceeds and any required additional funds (the
“Restoration Funds”) upon
Borrower’s request as restoration progresses, generally in accordance with normal construction
lending practices for disbursing funds for construction costs, provided that the following
conditions are met:




     (i) Borrower commences restoration, promptly after the Destruction Event
and completes restoration on or before the Restoration Completion Date;




     (ii) if Lender requests, Borrower delivers to Lender prior to commencing restoration,
for Lender’s approval, plans and specifications and a detailed budget for the restoration;



H-5-2









 








     (iii) Borrower delivers to Lender satisfactory evidence of the costs of the
restoration incurred prior to the date of the request and such other documents as Lender
may request, including mechanics’ lien waivers and title insurance endorsements;




     (iv) Borrower pays all costs of restoration whether or not the Restoration Funds are
sufficient and, if at any time during the restoration, Lender determines that the
undisbursed balance of the Restoration Funds is insufficient to complete restoration,
Borrower deposits with Lender, as part of the Restoration Funds, an amount equal to the
deficiency within 30 days after receiving notice of the deficiency from Lender; and




     (v) there is no default under the Loan Documents at the time Borrower requests funds
or at the time Lender disburses funds.



     (d) If an event of default under the Loan Documents occurs at any time after the Destruction
Event, then Lender will have no further obligation to make any remaining Proceeds available for
restoration and may apply any remaining Proceeds as a credit against any portion of the Loan
selected by Lender in its sole discretion.



     (e) Lender may elect at any time prior to or during the course of restoration to retain, at
Borrower’s expense, an independent engineer or other environmental consultant to review the plans
and specifications, to inspect restoration as it progresses and to provide reports. If any matter
included in a report by the engineer or consultant is unsatisfactory to Lender, Lender may suspend
disbursement of the Restoration Funds until the unsatisfactory matters contained in the report are
resolved to Lender’s satisfaction.



     (f) If Borrower fails to commence and complete restoration in accordance with the terms of the
Loan Documents, then in addition to any other remedies available to Lender, Lender may elect to
restore the Improvements on Borrower’s behalf and reimburse itself out of the Restoration Funds for
costs and expenses incurred by Lender in restoring the Improvements or Lender may apply the
Restoration Funds as a credit against any portion of the Loan selected by Lender in its sole
discretion.



     (g) Lender may commingle the Restoration Funds with its general assets and will not be liable
to pay any interest or other return on the Restoration Funds unless otherwise required by Law.
Lender will not hold any Restoration Funds in trust. Lender may elect to deposit the Restoration
Funds with a depository satisfactory to Lender under a disbursement and security agreement
satisfactory to Lender.



     (h) Borrower will pay all of Lender’s expenses incurred in connection with a Destruction
Event or restoration. If Borrower fails to do so, then in addition to any other remedies available
to Lender, Lender may from time to time reimburse itself out of the Restoration Funds.



H-5-3









 







     (i) If any excess Proceeds remain after restoration, Lender may elect, in its sole discretion, either to apply the excess as a credit against any portion of the Loan as selected by Lender in its sole discretion or to deliver the excess to Borrower.



     (j) No Prepayment Premium or Evasion of Prepayment Premium shall be due in connection with any prepayment of the Loan from Proceeds.




H-5-4











 





EX. H - 6

LIMIT. LIAB.




EXHIBIT H — 6




LIMITATION OF LIABILITY




     The Loan Documents will include the following provisions relating to the limitation of
Borrower’s liability:



     (a) Notwithstanding any provision in the Loan Documents to the contrary, except as set forth
in paragraphs (b) and (c) of this Exhibit H-6, if Lender seeks to enforce the collection of
the Loan, Lender will foreclose its mortgage/deed of trust instead of instituting suit on the note
or other instrument evidencing the Loan. If a lesser sum is realized from a foreclosure of the
mortgage/deed of trust and the sale of the Property than the then-outstanding amount owed under the
Loan, Lender will not institute any suit or proceeding against Borrower or Borrower’s general
partners, if any, for or on account of the deficiency, except as set forth in paragraphs (b) and
(c) of this Exhibit H-6.



     (b) The
limitation of liability in paragraph (a) of this
Exhibit H-6 will not affect
or impair (i) the lien of the mortgage/deed of trust or Lender’s other rights and remedies under
the Loan Documents, including Lender’s right as mortgagee or secured party to commence an action to
foreclose any lien or security interest Lender has under the Loan Documents;
(ii) the validity of the Loan Documents or the obligations evidenced thereby;
(iii) Lender’s rights under any Loan Documents that are not expressly non-recourse; or (iv)
Lender’s right to present and collect on any letter of credit or other credit enhancement document
held by Lender in connection with the obligations evidenced by the Loan Documents.



     (c) The following are excluded and excepted from the limitation of liability in paragraph (a)
of this Exhibit H-6 and Lender may recover personally against Guarantor and Borrower and
its general partners, if any, for the following:




     (i) all losses suffered and liabilities and expenses incurred by Lender relating to
any fraud, intentional misrepresentation or omission by Borrower or any of Borrower’s
partners, members, officers, directors, shareholders or principals in connection with (A)
the performance of any of the conditions to Lender making the Loan; (B) any inducements to
Lender to make the Loan; (C) the execution and delivery of the Loan Documents; (D) any
certificates, representations or warranties given in connection with
the Loan; or (E)
Borrower’s performance of the obligations evidenced by the Loan Documents;




     (ii) all rents derived from the Property after an event of default under the Loan
Documents which event of default is a basis of a proceeding by Lender to enforce the
collection of the Loan and all moneys that, on the date such event of default occurs, are on
deposit in one or more accounts used by or on behalf of Borrower relating to the operation
of the Property, except to the extent properly applied to payment of debt service payments,
taxes and assessments, insurance



H-6-1









 








premiums and any reasonable and customary expenses incurred by Borrower in the operation,
maintenance and leasing of the Property or delivered to Lender directly or pursuant to the
Lock-Box Agreement;




     (iii) the cost of remediation of any Environmental Activity affecting the Property, any
diminution in the value of the Property arising from any Environmental Activity affecting the
Property and any other losses suffered and any other liabilities and expenses incurred by Lender
arising from a default under the provisions of the mortgage/deed of trust substantially in the form
of Exhibit H-6A, Part I (and as mutually agreed to by Lender and Borrower);




     (iv) all security deposits collected by Borrower or any of Borrower’s predecessors and not
refunded to tenants in accordance with their respective leases, applied in accordance with the
leases or Law or delivered to Lender, and all tenant letters of credit and advance rents collected
by Borrower or any of Borrower’s predecessors and not applied in accordance with the leases or
delivered to Lender directly or pursuant to the Lock-Box Agreement;




     (v) any fee paid upon the termination of a lease affecting the Property received by Borrower
which is not paid to Lender (or an escrow agent selected by Lender) to the extent required under
the terms and conditions of the Loan Documents;




     (vi) the replacement cost of any fixtures and personal property owned by Borrower and removed
from the Property by Borrower after an event of default occurs;




     (vii) all losses suffered and liabilities and expenses incurred by Lender relating to any acts
or omissions by Borrower that result in waste (including economic and non-physical waste) on the
Property;




     (viii) all protective advances and other payments made by Lender pursuant to express
provisions of the Loan Documents after the occurrence and during the continuance of a default
thereunder to protect Lender’s security interest in the Property or to protect the assignment of
the property effected by the Loan Documents;




     (ix) all mechanics’ or similar liens relating to work performed on or materials delivered to
the Property prior to Lender’s exercising its remedies under the Loan Documents but only to the
extent Lender had advanced funds to pay for the work or materials;




     (x) all Proceeds that are not applied in accordance with the Loan Documents;




     (xi) all losses suffered and liabilities and expenses incurred by Lender relating to the
forfeiture or threatened forfeiture of the Property to a governmental authority;



H-6-2









 







     (xii) all losses suffered and liabilities and expenses incurred by Lender relating to
any default by Borrower under any of the provisions of the mortgage/deed of trust relating
to ERISA;




     (xiii) all losses suffered and liabilities and expenses incurred by Lender relating to
any default under any of the provisions of the mortgage/deed of trust relating to
anti-terrorism or money laundering;




     (xiv) all losses suffered and liabilities and expenses incurred by Lender relating to
any default by Borrower under the provisions of the mortgage/deed of trust requiring
Borrower to provide prior notice to Lender of any change in Borrower’s legal name, place of
business or state of organization;




     (xv) all losses suffered and liabilities and expenses incurred by Lender relating to
the failure to maintain, or to pay the premiums for, any insurance required to be
maintained under the Loan Documents; and




     (xvi) all losses suffered and liabilities and reasonable expenses incurred by Lender
in connection with any default by Borrower beyond any applicable grace and cure period
under any ground leases affecting the Property (including any master ground leases, as
applicable) under which Borrower is the tenant or any violation of any covenant contained
in the mortgage/deed of trust substantially in the form set forth in
Exhibit H-6A, Part
II (and as mutually agreed to by Lender and Borrower) or in connection with a
termination of any ground lease affecting the Property (but with respect to any default
caused by the failure to pay rent under any such ground lease, only to the extent that
there exists or existed sufficient funds from the operation of the Property for the payment
thereof).


Notwithstanding the foregoing, the limitation of liability set forth in paragraph (a) of this
Exhibit H-6 SHALL BECOME NULL AND VOID and shall be of no further force and effect and
Lender may recover personally against Borrower and its general partners, if any, in the event of
(i) a voluntary bankruptcy or insolvency proceeding of Borrower filed without the prior consent of
Lender if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of
trust, (ii) an involuntary bankruptcy or insolvency proceeding of Borrower, in which Borrower, any
of its principals, officers, general partners or members, or Guarantor colludes with creditors in
such bankruptcy or insolvency proceeding if such proceeding is not dismissed in accordance with the
terms of the mortgage/deed of trust, (iii) an event of default occurs under any of the covenants or
requirements contained in the mortgage/deed of trust relating to maintenance and operation of
Borrower as a Special Purpose Entity, or (iv) a transfer of the Property that is not permitted
under the mortgage/deed of trust, including the prohibition on any transfer that results in a
violation of ERISA, money-laundering laws or the Anti-Terrorism Laws.




H-6-3









 








     (d) Nothing
under paragraph (a) of this Exhibit H-6 will be deemed to be a waiver of
any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code or under any other Law relating to bankruptcy or insolvency to file a claim
for the full amount of the Loan or to require that all collateral will continue to secure all of
the obligations evidenced by the Loan Documents in accordance therewith.




H-6-4












 




 EX. H-6A

LIMIT. LIAB.



EXHIBIT
H — 6A




MORTGAGE/DEED
OF TRUST PROVISIONS




Part I:




Environmental Representations.




     Except as disclosed in the Environmental Report and to Borrower’s knowledge as of the date of
this Deed of Trust:




     (i) no Environmental Activity has occurred or is occurring on the Property other than
the use, storage, and disposal of Hazardous Materials which (A) are in the ordinary course
of business consistent with the Permitted Use; (B) are in compliance with all Environmental
Laws and (C) have not resulted in Material Environmental Contamination of the Property; and




     (ii) no Environmental Activity has occurred or is occurring on any property in the
vicinity of the Property which has resulted in Material Environmental Contamination of the
Property.



Environmental Covenants.





	 	(a)	 	Borrower will not cause or knowingly permit any Material
Environmental Contamination of the Property.
	 
	 	(b)	 	Borrower will not cause or knowingly permit any Environmental Activity to occur
on the Property other than the use, storage and disposal of Hazardous Materials which
(A) are in the ordinary course of business consistent with the Permitted Use; (B) are in
compliance with all Environmental Laws; and (C) do not create a risk of Material
Environmental Contamination of the Property.
	 
	 	(c)	 	Borrower will notify Lender immediately upon Borrower
becoming aware of (i) any
Material Environmental Contamination of the Property or (ii) any Environmental Activity
with respect to the Property that is not in accordance with the preceding subsection
(b). Borrower promptly will deliver to Lender copies of all documents delivered to or
received by Borrower regarding the matters set forth in this subsection, including
notices of Proceedings or investigations concerning any Material Environmental
Contamination of the Property or Environmental Activity or concerning Borrower’s status
as a potentially responsible party (as defined in the Environmental Laws). Borrower’s
notification of Lender in accordance with the provisions of this subsection will not be
deemed to excuse any default under the Loan Documents resulting from the violation of
Environmental Laws or the Material Environmental Contamination of the Property or
Environmental Activity that is the subject of the notice. If Borrower receives




H-6-5









 













	 	 	 	notice of a suspected violation of Environmental Laws in the vicinity of the Property
that poses a risk of Material Environmental Contamination of the Property, Borrower
will give Lender notice and copies of any documents received relating to such
suspected violation.
	 
	 	(d)	 	From time to time at Lender’s request, Borrower will deliver to Lender any
information known and documents available to Borrower relating to the environmental
condition of the Property.
	 
	 	(e)	 	Lender may perform or engage an independent consultant to perform an assessment
of the environmental condition of the Property and of Borrower’s compliance with this
Section on an annual basis, or at any other time for reasonable cause, or after an
Event of Default. In connection with the assessment: (i) Lender or consultant may
enter and inspect the Property and perform tests of the air, soil, ground water and
building materials; (ii) Borrower will cooperate and use best efforts to cause tenants
and other occupants of the Property to cooperate with Lender or consultant, subject to
the terms of such tenants’ respective leases and applicable law;
(iii) Borrower will
receive a copy of any final report prepared after the assessment, to be delivered to
Borrower not more than 10 days after Borrower requests a copy and executes Lender’s
standard confidentiality and waiver of liability letter; (iv) Borrower will accept
custody of and arrange for lawful disposal of any Hazardous Materials required to be
disposed of as a result of the tests; (v) Lender will not have liability to Borrower
with respect to the results of the assessment; and (vi) Lender will not be responsible
for any damage to the Property resulting from the tests described in this subsection
and Borrower will look solely to the consultant to reimburse Borrower for any such
damage. The consultant’s assessment and reports will be at Borrower’s expense (i) if
the reports disclose any material adverse change in the environmental condition of the
Property from that disclosed in the Environmental Report; (ii) if Lender engaged the
consultant when Lender had reasonable cause to believe Borrower was not in compliance
with the terms of this Section and, after written notice from Lender, Borrower failed
to provide promptly reasonable evidence that Borrower is in compliance; or (iii) if
Lender engaged the consultant after the occurrence of an Event of Default.




If Lender has reasonable cause to believe that there is Environmental Activity at the Property,
Lender may elect in its sole discretion to release from the lien of this Deed of Trust any portion
of the Property affected by the Environmental Activity and Borrower will accept the release.




H-6-6









 









Part II:




Ground Lease Provisions. *





	 	(a)	 	The Ground Lease is in full force and effect has not been
amended and represents the entire agreement between Borrower and Ground Lessor
and there are no defaults, events of default or events which with the passage
of time or the giving of notice, would constitute a default or event of
default under the Ground Lease.
	 
	 	(b) 	 	 Borrower will pay the Ground Rent as and when required under the Ground
Lease and will perform all of Borrower’s obligations as ground lessee tinder the Ground
Lease as and when required, under the Ground Lease.
	 
	 	(c)	 	Borrower will cause Ground Lessor to pay and perform all of Ground Lessor’s
obligations under the Ground Lease as and when required under the Ground Lease, will not
give any approval required or permitted under the Ground Lease without Lender’s prior
approval and will not exercise any options under the Ground Lease without Lender’s prior
approval.
	 
	 	(d)	 	Borrower will not amend ox waive any provisions of the Ground Lease; cancel or
surrender the Ground Lease; or release or discharge Ground Lessor from any of the terms
or obligations of the Ground Lease, without in each instance Lender’s prior approval
which may be withheld in its sole discretion.
	 
	 	(e)	 	Borrower promptly will deliver to Lender copies of any notices of default or of
termination that Borrower receives or delivers relating to the Ground Lease.
	 
	 	(f)	 	Without limiting Lender’s independent rights and remedies under Section
365(h) of the Bankruptcy Code:






	 	(i)	 	Borrower will not elect to treat the Ground
Lease as terminated under Subsection 365 (h) (1) of the
Bankruptcy Code without Lender’s prior consent to be exercised
in its sole discretion, any such election made without Lender’s
prior consent is null and void;
	 
	 	(ii)	 	Without in any manner limiting the provisions
of subparagraph (i) of this Section, the lien of this Deed of Trust will
attach to all of




H-6-7









 








	 	 	 	Borrower’s rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, including all of Borrower’s rights to
remain in possession of the Property and Lender may assert, or direct Borrower
to assert, any of such rights and remedies.
	 
	 	(iii)	 	If, pursuant to Subsection 365(h) of the Bankruptcy Code, Borrower seeks to offset
against Ground Rent the amount of any damages caused by Ground Lessor’s failure to perform any
of its obligations under the Ground Lease after the Ground Lessor rejects the Ground Lease
under the Bankruptcy Code, Borrower will, prior to effecting such offset, notify Lender of its
intent to do so, setting forth the amount proposed to be so offset and the basis therefor.
Lender will have the right to object to all or any part of such offset and, in the event of
such objection, Borrower will not effect any offset of the amount so objected to by Lender.
Neither Lender’s failure to object as aforesaid nor any objection or other communication
between Lender and Borrower relating to such offset will constitute an approval of any such
offset by Lender. Borrower will indemnify, defend and save Lender harmless from and against
any and all claims, demands, actions, suits, proceedings, damages, losses, costs and expenses
of every nature whatsoever (including attorneys’ fees) arising from or relating to any offset
by Borrower against the rent reserved in the Ground Lease.
	 
	 	(iv)	 	Borrower unconditionally assigns, transfers and sets over to Lender all of Borrower’s
claims and rights to the payment of damages arising from any rejection by Ground Lessor of the
Ground Lease under the Bankruptcy Code. Lender will have the right to proceed in its own name
or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the
rejection of the Ground Lease, including the right to file and prosecute, to the exclusion of
Borrower, any proofs of claim, complaints, motions, application, notice and other documents,
in any case in respect of Ground Lessor under the Bankruptcy Code. This assignment
constitutes a present, irrevocable and unconditional assignment of the foregoing




H-6-8









 








	 	 	 	claims, rights and remedies, and will continue in effect until all of the
indebtedness and obligations secured by this Deed of Trust will have been
satisfied and discharged in full. Any amounts received by Lender as damages
arising out of the rejection of the Ground Lease as aforesaid will be applied
first to all costs and expenses of Lender (including attorneys’ fees) incurred
in connection with the exercise of any of its rights or remedies under this
subsection (iv) and then in accordance with subsection (iii) of this Section.
	 
	 	(v)	 	In any Proceeding under the Bankruptcy Code
relating to the Ground Lease or the Property, Borrower will appear in the
Proceeding and will protect Lender’s interests in the Property and under the
Loan Documents with attorneys and other professionals retained by Borrower and
approved by Lender. Lender may elect, in Lender’s sole discretion, to engage
its own attorneys and other professionals at Borrower’s expense to appear in the
Proceeding and to protect Lender’s interests in the Property and under the Loan
Documents. Borrower will not commence any Proceeding, file any application or
make any motion relating to the Ground Lease in any Proceeding in its sole
discretion under the Bankruptcy Code without Lender’s prior consent.
	 
	 	(vi)	 	Borrower will give Lender prompt notice of any filing by or against Ground Lessor or
Borrower of a Proceeding under the Bankruptcy Code. The notice will set forth any information
available to Borrower about the proceeding, including the date of the filing, the court in
which the Proceeding was filed, and the relief sought. Borrower also will deliver to Lender,
promptly following Borrower’s receipt thereof, any notices, summonses, pleadings, applications
and other documents received by Borrower in connection with the Proceeding.
	 
	 	(vii)	 	If a Proceeding under the Bankruptcy Code is commenced by or against Borrower and
Borrower, as lessee under the Ground Lease, rejects the Ground Lease pursuant to Section
365(a) of the Bankruptcy Code without giving Lender not less than 10 Business Days’ prior
notice of the date on which Borrower will apply to the bankruptcy court for authority to
reject the Ground Lease.




H-6-9









 









	 	 	 	Lender may, in its sole discretion, give Borrower notice
within such 10-Business Day period stating that (a) Lender
demands that Borrower assume the Ground Lease and assign it to
Lender pursuant to Section 365 of the Bankruptcy Code and (b)
Lender will cure or provide adequate assurance of prompt cure
of all defaults and will provide adequate assurance of future
performance under the Ground Lease. In that event, Borrower
will not seek to reject the Ground Lease and will comply with
the demand provided for in (a) above within 30 days after
Lender’s notice was given provided Lender performs its
obligations under (b) above.




Effective upon the entry of an order for relief in respect of Borrower under Chapter 7 of the
Bankruptcy Code, Borrower hereby assigns and transfers to Lender a non-exclusive right to apply to
the bankruptcy court under Subsection 365(d)(1) of the Bankruptcy Code for an order extending the
period during which the Ground Lease may be rejected or assumed.



 



	*	 	Note that for the properties commonly known as CMC Morrocroft I and CMC Morrocroft II, the
parties agree and acknowledge that (i) the foregoing Ground Lease provisions shall be revised to
apply to the Ground Subleases (defined below) (and all references to the fee owner or ground lessor
therein shall be revised to reference the ground sublessor), and (ii) upon. Lender’s complete
review of the Master Ground Lease (defined below) and the Ground Subleases (and all other
documentation related thereto), Lender may include additional Borrower representations and
warranties related to the Master Ground Lease as Lender deems reasonably necessary.






“Master
Ground Lease” shall mean that certain Lease Agreement dated December 7, 1995, by
and between The Carolinas Healthcare Foundation, Inc., a North Carolina nonprofit corporation
(“CHF”), and The Charlotte-Mecklenburg Hospital Authority, a North Carolina body corporate and
politic (“CMHA”), and all amendments thereto.



“Ground
Subleases” shall mean those two certain Lease Agreements dated as of December 31,
2008, by and between CHF and CMHA and Borrower, and all amendments thereto, relating to the
properties known as CMC Morrocroft I and CMC Morrocroft II, respectively.





H-6-10











 





EX. H-7

LOCK-BOX




EXHIBIT
H — 7




LOCK-BOX
REQUIREMENTS




     At Closing, Borrower will execute an agreement (the “Lock-Box Agreement”) satisfactory
to Lender providing for the establishment of an account and sub-accounts (collectively, the
“Deposit Account”). The Lock-Box Agreement will include the following provisions:



     (a) On the date of Closing, all revenues from the Property will
thereafter be deposited directly into the Deposit Account and disbursed in
accordance with the Lock-Box Agreement. The Lock-Box Agreement shall provide
that upon a Trigger Event (defined herein), including Borrower’s failure to
pay the Loan on or prior to the maturity date of the Loan, Lender will give
the administrator of the Deposit Account notice and all funds shall be
applied to Lender’s payment “waterfall” prior to any funds being disbursed to
Borrower, provided that, while any event of default under the Loan Documents
is continuing, Lender will retain the right to declare the Loan immediately
due and payable and to exercise all other remedies under the Loan Documents.



     (b) The Deposit Account will be maintained in Lender’s name at a
depository institution satisfactory to Lender.



     (c) Lender will have a first priority perfected security interest in
the Deposit Account and in all cash and instruments on deposit therein and in
any interest thereon or proceeds therefrom and Borrower will execute any
documents Lender deems reasonably necessary to document and perfect such
security interest.



     (d) Interest earned on the funds in the Deposit Account or any
investments thereof will remain in the Deposit Account.



     (e) Borrower will pay the fees and expenses of the administrator of
the Deposit Account.



     (f) As
used herein, the term “Trigger Event” shall mean either (i)
the occurrence of an event of default under the Loan Documents, (ii) a
decline in the Debt Service Coverage for the Property below 1.25x, or (iii)
if both (A) Applicant fails to maintain a long term debt rating of at least
BBB- by Standard & Poor’s Credit Ratings Services, a division of The McGraw
Hill Companies, Inc. and Baa by Moody’s Investors Service, Inc.
and (B) the
Debt Service Coverage for the Property falls below 1.40x.



H-7-1









 





EX. H-8

MULTI. PROP.




EXHIBIT
H — 8




ALLOCATED LOAN AMOUNTS




	 	 	 	 	 
	 

	 	 	 	Allocated
	Property

	 	Size (S. F.)
	 	Loan Amount
	 

	 	 
	 	 




Lender will allocate the Loan Amount among the properties comprising the Property based on the
Appraisal obtained by Lender pursuant to this Agreement. Lender will notify Borrower of such
allocations not less than 10 business days prior to Closing.




H-8-1









 








EX.
H-9
RELEASE




EXHIBIT
H — 9




RELEASE
PROVISIONS — PARTIAL RELEASE




     During
the Term, if Borrower proposes to sell a parcel (the
“Release Parcel”) which is
part of the Property to a bona fide third party purchaser, then Borrower will be permitted to
obtain a release (a “Release”) of the Release Parcel subject to the following conditions
and limitations:



I.
CONDITIONS:




     (a) The Release is solely for the purpose of a transfer of the
Release Parcel to an unaffiliated bona fide purchaser.



     (b) Not less than 90 days prior to the date of the Release, Borrower
shall deliver to Lender (i) a notice setting forth (A) the date of the
Release, (B) the name of the proposed transferee, and (C) any other
information reasonably necessary for Lender to analyze the terms of the
Release, and (ii) a non-refundable fee of $35,000 for such Release.



     (c) There shall be no event of default under the Loan Documents on
either the notice date or the date of the Release.



     (d) Borrower shall pay all of Lender’s fees and expenses relating to
the Release, including third party reports, title costs and outside counsel
fees, if applicable.



     (e) Borrower shall deliver to Lender copies of the executed documents
evidencing the transfer of the Release Parcel.



     (f) The loan to value ratio of the Property excluding the Release
Parcel shall be less than the lesser of (i) 55% or (ii) the loan to value
ratio of the Property including the Release Parcel immediately prior to the
Release as determined by an appraisal satisfactory to Lender, paid for by
Borrower and prepared by an appraiser appointed by Lender.



     (g) The Debt Service Coverage for the 12-month period following the
Release based on projected Net Operating Income for the Property exclusive of
the Release Parcel will be greater than the greater of (i) 1.58x or (ii) the
Debt Service Coverage based on the Net Operating Income of the Property
inclusive of the Release Parcel for the 12-month period prior to the Release.



     (h) Lender shall receive (i) 110% of the outstanding principal amount allocated to the
Release Parcel (or if no allocation exists in the Loan Documents, an amount equal to 105% of the
value of the Release Parcel as determined by an appraisal satisfactory to Lender and paid for by
Borrower)(the “Release Amount”) to be applied to the outstanding principal balance of the
Loan; (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; and
(iii) the Prepayment Premium (for purposes of determining such Prepayment Premium (A) the
Prepayment Date Principal shall equal the principal amount being prepaid and (B) the Note



H-9-1









 






Payments
shall be deemed to include each of (1) the scheduled debt service payments (determined as
if the principal balance of the Loan was equal to the Release Amount) for the period from the date
of the Release through the maturity date of the Loan and (2) the Release Amount); in connection
with such payment, Lender will reset the monthly installments of principal and interest based upon
the remaining term of the original amortization schedule.




     (i) Borrower shall satisfy such conditions as Lender may reasonably require to the Release,
including providing any consents or approvals which may be necessary pursuant to Law or documents
affecting the Release Parcel and confirming that the Property which remains encumbered by the
mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities,
and Borrower shall deliver to Lender any other information, approvals and documents reasonably
required by Lender relating to the Release.



     (j) Borrower and, if applicable, any Guarantor and Indemnitor, shall execute amendments to
the Loan Documents to the extent necessary (as determined by and reasonably acceptable to Lender)
and shall deliver to Lender such other documents, instruments, opinions and certificates as Lender
shall deem necessary, in its reasonable discretion.



     (k) The Release shall not negatively affect the Property with regard to overall credit risk,
tenant quality, geographic risk, lease expiration and similar matters, in each case as determined
by Lender in its sole discretion. Lender will not release a property if (i) leases of more than 5%
of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel)
would expire within 12 months following the date of Release or within 12 months before or after the
maturity date of the Loan and (ii) leases of more than 5% of the net rentable interior square
footage of the Improvements (exclusive of the Release Parcel) would expire during any 12-month
period during the remainder of the then-existing Term.



II. DE
MINIMIS RELEASE




     Notwithstanding
the foregoing provisions of Section I of this
Exhibit H-9 but subject
to the limitations set forth in Section III of this
Exhibit H-9, Borrower shall have the
right to obtain a Release for any Release Parcel for any reason upon satisfaction of the following
conditions (a “De Minimis Release”):



     (a) The principal amount of the Loan allocated to the Release Parcel
at Closing shall not exceed $2,500,000 (and such allocation shall be based
upon the balance of the loan amount at the time of such release),



     (b) Not less than 90 days prior to the date of the Release, Borrower
shall deliver to Lender a notice setting forth (i) the date of the Release,
(ii) the name of the proposed transferee, and (iii) any other information
reasonably necessary for Lender to analyze the terms of the Release.



H-9-2









 







     (c) Lender shall receive (i) the Release Amount to be applied to the
outstanding principal balance of the Loan, and (ii) accrued interest and all
other sums due on the Loan allocated to the Release Parcel; in connection
with such payment, Lender will reset the monthly installments of principal
and interest based upon the remaining term of the original amortization
schedule.



     (d) Borrower shall provide any consents or approvals which may be
necessary pursuant to Law or documents affecting the Release Parcel and shall
confirm that the Property which remains encumbered by the mortgage/deed of
trust complies with applicable Law and has direct access to streets and
utilities.



     (e) Borrower shall comply with the conditions set forth in paragraphs
(b), (c), (d), (e) and (j) of Section I of this Exhibit H-9.



III. LIMITATIONS




     (a) No Release will be allowed during the first 12 months of the Term.



     (b) The aggregate number of Releases (exclusive of De Minimis
Releases) allowed during the Term may not exceed three.



     (c) No Release (including a De Minimis Release) will be permitted
which would cause the aggregate of the Release Amounts to exceed $30,000,000.



     (d) In any three month period, there shall be no more than one
Release.



     (e) If a proposed Release does not comply with all of the applicable
terms and conditions set forth above, or if an event of default exists under
the Loan Documents, the Release will not be permitted.



H-9-3









 





EXHIBIT
H — 10




SUBSTITUTION
OF COLLATERAL




     During the Term, if Borrower proposes to sell a parcel (the “Substituted Parcel”)
which is part of the Property to a bona fide third party purchaser, then as limited below, Borrower
will be permitted to substitute (a “Substitution”) a property (the “Substitution New
Parcel”) and obtain a release from Lender’s lien for the Substituted Parcel subject to the
satisfaction of the following conditions and limitations, satisfaction to be determined by Lender
in its reasonable discretion except as otherwise expressly stated:



I. CONDITIONS:




     (a) Lender shall receive not less than 90 days prior written notice
of the Substitution, such notice to include (i) a full package of information
concerning the Substitution New Parcel and (ii) the payment of a non-refundable fee of $60,000 for each Substitution.



     (b) Borrower shall pay, within 10 days of notice by Lender, a deposit
for the costs of any appraisal, engineering or environmental reports required
in connection with the Substitution in an amount reasonably determined by
Lender.



     (c) There is no event of default under the Loan Documents on either
the notice date or the date of the Substitution.



     (d) Borrower shall pay all of Lender’s fees and expenses relating to
the Substitution, including third party reports, title costs and outside
counsel fees, if applicable.



     (e) Prior to release of the Substituted Parcel, Lender shall receive
evidence satisfactory to Lender that the Substituted Parcel is being sold to
a bona fide third party purchaser.



     (f) Intentionally deleted;



     (g) The appraised value of the Substitution New Parcel shall be the
greatest of the following values: (i) the actual appraised value of the
Substituted Parcel or the appraised value allocated to the Substituted Parcel
as part of a pool of properties, as selected by Lender in its sole and
absolute discretion, in either case as determined at the time of Closing;
(ii) the appraised value of the Substituted Parcel at the time of the
Substitution (the appraised values described in (i) and (ii) to be determined
by appraisals satisfactory to Lender, paid for by Borrower and prepared by an
appraiser appointed by Lender); and (iii) the purchase price of the
Substituted Parcel pursuant to an executed purchase and sale agreement with a
bona fide third party purchaser.



     (h) The Debt Service Coverage for the Property for the 12-month period following the
Substitution based on projected Net Operating Income for the Property exclusive of the Substituted
Parcel but inclusive of the Substitution New Parcel shall not be less than the greater of (i) 1.58x
or (ii) the Debt Service Coverage based on Net Operating Income for the Property



 









 





EX. H-10

SUBSTITUTION



inclusive of the Substituted Parcel for the 12-month period prior to the Substitution.




     (i) The Substitution New Parcel conforms in all respects to Lender’s underwriting standards
and criteria as well as such other environmental, engineering, legal or title requirements, as
Lender may determine in its sole discretion. In addition, the Substitution New Parcel will not
negatively affect the Property with regard to overall credit risk, geographic risk, tenant quality,
lease expiration and similar matters, as determined by Lender in its sole discretion. A
Substitution will not be permitted if (A) leases of more than 5% of the net rentable square footage
of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New
Parcel) would expire within 12 months following the date of Substitution or within 12 months before
or after the maturity date of the Loan or (ii) leases of more than 5% of the net rentable square
footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution
New Parcel) would expire during any 12-month period during the remainder of the then-existing Term.



     (j) Borrower, and if applicable, Guarantor and Indemnitor, shall execute and deliver
appropriate amendments to the Loan Documents satisfactory to Lender making the Substitution New
Parcel part of the security for the Loan, Indemnitor shall execute an Environmental Indemnity with
respect to the Substitution New Parcel and Lender shall receive such title assurances and
endorsements to its existing policies confirming the priority of its lien on the Substitution New
Parcel and extending the coverage of all insurance (including endorsements) offered under the
existing policies to the Substitution New Parcel, consenting to the release of the Substituted
Parcel, and otherwise confirming no adverse changes in title coverage or the amount thereof.



     (k) Borrower shall satisfy as to the Substitution in a timely fashion each of the Closing
conditions set forth in this Agreement that would have been applicable if the Substitution New
Parcel had been included in the original Property.



     (1) Borrower shall satisfy such conditions as Lender may reasonably require to the
Substitution, including providing any consents or approvals which may be necessary pursuant to Law
or documents affecting the Substituted Parcel and confirming that the Property which remains
encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to
streets and utilities.



II. LIMITATIONS:



     (a) No Substitution will be allowed during the first 24 months of the
Initial Term.



     (b) No more than three Substitutions will be allowed during the Term.



H-10-5









 







     (c) After giving effect to the proposed Substitution, the aggregate
amount of the appraised value of the Substitution New Parcel and the
appraised values of Substitution New Parcels in any prior Substitutions
(measured as of the date of each such Substitution) shall not exceed
$30,000,000.



     (d) In any three-month period, there shall be no more than one
Substitution.



     (e) If a proposed Substitution does not comply with the terms and
conditions set forth above, or if an event of default exists under the Loan
Documents, the Substitution will not be permitted.




H-10-6