exv10w3






EXHIBIT 10.3




	*		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-6906 
Investment ID. #0006732 
Property Name: Dallas Portfolio

Property Addresses: (various); 
Dallas County and Collins County, 
Texas





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: $96,000,000 *






 




			
	*	 	In the event that the property known as Baylor-Plano Pavilion I is not
included as part of the collateral, the Loan Amount will be $78,500,000.





     (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”); provided that,
notwithstanding the inclusion of the property known as Baylor-Piano Pavilion I in
Exhibit C, Applicant shall have the right to remove Baylor-Plano Pavilion I from
the Property prior to Closing if Applicant is unable to obtain the consents required to
include it within 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



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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.



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) $95,800 (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.



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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.



     (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.



     (e) Notwithstanding any other provisions of this Agreement, 18.23% of
the Loan Deposit shall be fully refundable to Applicant in the event
Applicant elects to remove the Baylor-Plano Pavilion I property from the
Property as provided in Section 3.



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



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transaction contemplated by this Agreement and shall have taken any necessary action to
authorize the execution and delivery of the Loan Documents, the performance of Borrower’s
obligations under the Loan Documents and the consummation of the transaction contemplated
by this Agreement and shall be otherwise in compliance with all applicable Law (defined
herein).



     (b) Borrower shall not be an “employee benefit plan” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”)
that is subject to Title I of ERISA or a “plan” as defined in Section
4975(e)(l) 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/t11_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:



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



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14. ASSIGNMENT:




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



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



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by Lender to be necessary as a reserve for costs (including any additional Lender Legal
Fees) that Lender may incur in connection with Borrower’s satisfaction of such
post-closing requirements. Upon Borrower’s satisfactory completion of such post-closing
requirements, Lender shall promptly refund to 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



8









 







relieve Lender from the performance of the duties and obligations of Lender hereunder.



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




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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]





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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 	 



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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

PROPERTY




EXHIBIT D




SCHEDULE OF LEASES AND LEASING




     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 90% 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 (which leasing shall include a
master lease in form and substance reasonably acceptable to Lender from Borrower
for all vacant space up to 90% of the net rentable area of the Baylor-Medical
Pavilion), and (ii) the Property shall have a minimum projected annual Net
Operating Income of $11,000,000** and Debt Service Coverage as of the Closing of at
least 1.40x.







 




			
	**	 	In the event that the property known as Baylor-Piano Pavilion I is not
included as part of the collateral, the minimum projected annual Net Operating
Income threshold will be $7,900,000.





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



D-1









 






*




D-2









 





EX. E

COMPOSITION




EXHIBIT E




SPECIAL PURPOSE ENTITY REQUIREMENTS/BORROWER’S COMPOSITION




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



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




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




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




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




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




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




     (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 satisfy the obligations of any other person
except for obligations for



E-1









 







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




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




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




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




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




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




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



E-2









 






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




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




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



E-3









 






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


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




     As used herein, the term “Independent Manager” shall mean a duly appointed
member of the board of directors or board of managers who is provided by a
nationally-recognized company that provides professional independent directors/managers
who shall not have been at the time of initial appointment or at any time while serving as
an Independent Manager, and may not have been at any time during the preceding five years,
(i) a stockholder, director, officer, employee, partner, attorney or counsel of Borrower
or any affiliate of Borrower, (ii) a customer, supplier or other person who derives any of
its purchases or revenues from its activities with such entity or any affiliate of
Borrower, (iii) a person controlling or under common control with any such stockholder,
partner, customer, supplier or other person, or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier or other
person. For purposes of this Exhibit E, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the direction of the
management, policies or activities of a person, whether through ownership of voting
securities, by contract or otherwise, and the term “affiliate” means for the
specified person: (1) any person directly or indirectly owning, controlling or holding
with power to vote 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.



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



E-4









 







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




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



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



E-5









 





EX. E-l

OWNERSHIP CHART




EXHIBIT E — l




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 recognised 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-6906
	 

	 	Investment ID. #0006732
	 
	 	 
	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-6906
	 

	 	Investment ID. #0006732






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 tenant Baylor
Health Care System (“Baylor”) 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 front
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 1.40x; 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 Exhibits 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-1

LOAN EXTENSION PROVISIONS




EXHIBIT
H — 1




EXTENSION TERMS



      First Extension: At any time between the 78th and 83rd
month of the Initial Term and provided (i) no event of default exists under the Loan, (ii)
the Debt Service Coverage at the Property is at least
1.40x, (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 1.40x, (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 1.15x, provided that, if the Net Operating Income does
not provide such Debt Service Coverage, Borrower expressly authorizes and instructs
Lender (at Lender’s sole discretion) to apply an amount from the Proceeds to
reduction of the outstanding principal amount of the Loan in order to reduce the
annual debt service payments sufficiently for such Debt Service Coverage to be
achieved. The reduced debt service payments will be calculated using the Fixed
Interest Rate and an amortization schedule that will achieve the same proportionate
amortization of the reduced principal over the then-remaining Term as would have
been achieved if the principal and the originally scheduled debt service payments
had not been reduced. Borrower will execute any documentation that Lender deems
reasonably necessary to evidence the reduced principal and debt service payments.



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



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




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




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




H-5-2









 











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




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




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



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



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



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



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



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



H-5-3









 







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



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



H-5-4









 





EX. H-6

LIMIT. LIAB.




EXHIBIT
H — 6




LIMITATION OF LIABILITY




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



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



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



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




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




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



H-6-1









 








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




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




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




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




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




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




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




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




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




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



H-6-2









 







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




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




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




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




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


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





H-6-3









 










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



H-6-4









 





EX. H-6A

LIMIT. LIAB.




EXHIBIT H — 6A




MORTGAGE/DEED OF TRUST PROVISIONS




Part I:




Environmental Representations.




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




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




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



Environmental Covenants.





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




H-6-5









 














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




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




H-6-6









 










Part II:




Ground Lease Provisions.





	 	(a)	 	The Ground Lease is in full force and effect has not been
amended and represents the entire agreement between Borrower
and Ground Lessor and there are no defaults, events of
default or events which with the passage of time or the
giving of notice, would constitute a default or event of
default under the Ground Lease.
	 
	 	(b)	 	Borrower will pay the Ground Rent as and when required under
the Ground Lease and will perform all of Borrower’s
obligations as ground lessee 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)(l) 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) 1.40x or (ii) the Debt Service Coverage based on the Net Operating Income of the
Property inclusive of the Release Parcel for the 12-month period prior to the Release.



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



H-9-1









 







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




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



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



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



II. DE
MINIMIS RELEASE




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



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



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



H-9-2









 








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



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



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



III.
LIMITATIONS




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



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



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



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



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




H-9-3











 





EX. H-10

SUBSTITUTION




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-10-1




 









 










     (h) The Debt Service Coverage for the Property for the 22-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) 1.40x or (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.



     (l) 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.



H-10-1




 









 









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.



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



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



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



H-10-1