exv10w2





EXHIBIT 10.2



	*		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-6907

Investment ID. #0006733

Property Name: Nashville Portfolio

Property Addresses: (various);

Nashville, Tennessee





Ladies and Gentlemen:




     The undersigned Healthcare Realty Trust Incorporated (the “Applicant”), with an
address at 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203, 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 a to-be-formed, special-purpose
limited liability company (the “Borrower”):



1. LOAN TERMS:





	 	(a)	 	Loan Amount: $31,250,000.
	 
	 	(b)	 	Interest Rate:






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




     (ii) 400 basis points (i.e., hundredths of 1% per annum) over the
one-month LIBOR rate (the “Floating Interest Rate”), 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) $75,400 (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 $20,000 (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).



4









 





     (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”) 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




5









 







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 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.




6









 








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




7











 




completion of such post-closing requirements, Lender shall promptly refund to 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.




8









 








20. MISCELLANEOUS:




     (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



9









 




the Exhibits hereto to numbered sections are references to the sections of this
Agreement.




     (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 E — Special Purpose Entity Requirements/Borrower’s Composition




Exhibit E-l  —  Ownership Chart




Exhibit F  —  Notice




Exhibit G  —  Closing Conditions




Exhibits H-l — 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
28th day 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)n = 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. 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 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 86.5% of the leasing on the attached rent roll shall be in effect at
Closing with tenants in physical occupancy, paying rent and free from bankruptcy, and (ii) the
Property shall have a minimum projected annual Net Operating Income of $4,000,000 and Debt Service
Coverage as of the Closing of at least 1.50x.



     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 organisation
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;




     (vi) 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



E-1









 







satisfy the obligations of any other person except for obligations for 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) will 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



E-3









 







Property, its bankruptcy-remote status, and/or the admission or removal of general partners
or members, as the case may be, provided that no 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 10% 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.



E-4









 





     (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 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









 









	 	 	 	 	 
	 	[NAME OF BORROWER], 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-69Q7

Investment ID. #0006733
	 
	 	 
	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-6907

Investment ID. #0006733






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
recognized 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 and ground leases 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 reimbursement of operating expenses, real estate
taxes and insurance



G-1









 




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 tenants St. Thomas Hospital
and Baptist Hospital 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;



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



G-2









 





     (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 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;



     (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



G-3









 




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;
(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



G-4









 




purchase and sale agreement with a bona fide third party purchaser, and a Debt Service Coverage of
not less than 1.50x; 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;



     (j) such covenants, warranties, representations and agreements of Borrower, Lender, the
administrator of the Deposit Account (defined herein)



G-5









 




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. 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 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


G-6









 






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 Exhibit H-1 through H-10 constitute the additional
provisions
applicable to the Loan.




Index




	 	 	 	 	 
	1.

	 	Extension Terms
	 	H-l
	2.

	 	Correspondent Authority and Fee Arrangement
	 	H-2
	3.

	 	Cross Collateralization
	 	H-3
	4.

	 	Ground Lease 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-l

LOAN EXTENSION PROVISIONS




EXHIBIT H — l




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 1.50x, (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 1.50x, (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 1(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 1.40x 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 TERMS




Ground Leases:




     Certain provisions of the ground leases 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 Agreements with Lender:




     As a condition to Closing, Borrower will deliver to Lender a document in recordable form
executed by each ground lessor 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 shall have the opportunity to cure said defaults (including an additional cure
period in the event ground lessee fails to cure any default which gives rise to a right to
terminate the ground lease), (b) that such ground lessor will enter into a new ground lease or
leases with Lender if the ground lease with such ground lessor is terminated at any time during the
term thereof for any reason, including rejection of such ground lease 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 provided that such separate document shall
not be required in the event the ground lease 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 l.l5x, 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 under 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 or 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.




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) 1.50x 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 (1) 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. LIMITATIONS




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



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



     (c) No Release will be permitted which would cause the aggregate of the Release Amounts to
exceed $10,000,000.



     (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-9-2









 





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) 1.50x
or



 









 





EX. H-10

SUBSTITUTION



(ii) the Debt Service Coverage based on Net Operating Income for the Property 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-10-2









 






     (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 $10,000,000.



     (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-10-2