exv10w8






Exhibit 10.8




 






Loan No: 31-0911774




LOAN AGREEMENT




Dated as of June 30, 2011



Between



COLE OF SAN ANTONIO TX, LLC,

a Delaware limited liability company



as Borrower



and



WELLS FARGO BANK, NATIONAL ASSOCIATION,



as Lender




 





 









 





Table of Contents




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Principles of Construction
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 2 GENERAL TERMS
	 	 	17	 
	Section 2.1 The Loan
	 	 	17	 
	Section 2.2 Disbursement to Borrower
	 	 	17	 
	Section 2.3 The Note and the other Loan Documents
	 	 	17	 
	Section 2.4 Intentionally Omitted
	 	 	17	 
	Section 2.5 Interest Rate
	 	 	17	 
	Section 2.6 Loan Payments
	 	 	19	 
	Section 2.7 Prepayments
	 	 	19	 
	Section 2.8 Defeasance
	 	 	20	 
	Section 2.9 Intentionally Omitted
	 	 	24	 
	Section 2.10 Release
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES
	 	 	24	 
	Section 3.1 Legal Status and Authority
	 	 	24	 
	Section 3.2 Validity of Documents
	 	 	24	 
	Section 3.3 Litigation
	 	 	25	 
	Section 3.4 Agreements
	 	 	25	 
	Section 3.5 Financial Condition
	 	 	25	 
	Section 3.6 Disclosure
	 	 	26	 
	Section 3.7 No Plan Assets
	 	 	26	 
	Section 3.8 Not a Foreign Person
	 	 	26	 
	Section 3.9 Business Purposes
	 	 	26	 
	Section 3.10 Borrower Information
	 	 	26	 
	Section 3.11 Status of Property
	 	 	26	 
	Section 3.12 Financial Information
	 	 	28	 
	Section 3.13 Condemnation
	 	 	28	 
	Section 3.14 Separate Lots
	 	 	28	 
	Section 3.15 Insurance
	 	 	28	 






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Table of Contents

(continued)





	 	 	 	 	 
	 	 	Page	 
	Section 3.16 Use of Property
	 	 	28	 
	Section 3.17 Leases and Rent Roll
	 	 	28	 
	Section 3.18 Filing and Recording Taxes
	 	 	29	 
	Section 3.19 Management Agreement
	 	 	29	 
	Section 3.20 Illegal Activity/Forfeiture
	 	 	29	 
	Section 3.21 Taxes
	 	 	30	 
	Section 3.22 Permitted Encumbrances
	 	 	30	 
	Section 3.23 Third Party Representations
	 	 	30	 
	Section 3.24 Intentionally Omitted
	 	 	30	 
	Section 3.25 Federal Reserve Regulations
	 	 	30	 
	Section 3.26 Investment Company Act
	 	 	30	 
	Section 3.27 Fraudulent Conveyance
	 	 	30	 
	Section 3.28 Embargoed Person
	 	 	31	 
	Section 3.29 Patriot Act
	 	 	31	 
	Section 3.30 Organizational Chart
	 	 	32	 
	Section 3.31 Bank Holding Company
	 	 	32	 
	Section 3.32 No Breach of Fiduciary Duty
	 	 	32	 
	Section 3.33 Property Document Representations
	 	 	32	 
	Section 3.34 No Change in Facts or Circumstances
	 	 	32	 
	Section 3.35 Guarantor Representations
	 	 	33	 
	 
	 	 	 	 
	ARTICLE 4 BORROWER COVENANTS
	 	 	33	 
	Section 4.1 Existence
	 	 	33	 
	Section 4.2 Applicable Law
	 	 	33	 
	Section 4.3 Maintenance and Use of Property
	 	 	34	 
	Section 4.4 Waste
	 	 	34	 
	Section 4.5 Taxes and Other Charges
	 	 	35	 
	Section 4.6 Litigation
	 	 	36	 
	Section 4.7 Access to Property
	 	 	36	 
	Section 4.8 Notice of Default
	 	 	36	 
	Section 4.9 Cooperate in Legal Proceedings
	 	 	36	 






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Table of Contents

(continued)





	 	 	 	 	 
	 	 	Page	 
	Section 4.10 Performance by Borrower
	 	 	36	 
	Section 4.11 Awards
	 	 	36	 
	Section 4.12 Books and Records
	 	 	36	 
	Section 4.13 Estoppel Certificates
	 	 	39	 
	Section 4.14 Leases and Rents
	 	 	40	 
	Section 4.15 Management Agreement
	 	 	41	 
	Section 4.16 Payment for Labor and Materials
	 	 	43	 
	Section 4.17 Performance of Other Agreements
	 	 	44	 
	Section 4.18 Debt Cancellation
	 	 	44	 
	Section 4.19 ERISA
	 	 	44	 
	Section 4.20 No Joint Assessment
	 	 	45	 
	Section 4.21 Alterations
	 	 	45	 
	Section 4.22 REA Covenants
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 5 ENTITY COVENANTS
	 	 	46	 
	Section 5.1 Single Purpose Entity/Separateness
	 	 	46	 
	Section 5.2 Independent Director
	 	 	49	 
	Section 5.3 Compliance Certificate
	 	 	50	 
	Section 5.4 Change of Name, Identity or Structure
	 	 	51	 
	Section 5.5 Business and Operations
	 	 	51	 
	 
	 	 	 	 
	ARTICLE 6 NO SALE OR ENCUMBRANCE
	 	 	51	 
	Section 6.1 Transfer Definitions
	 	 	51	 
	Section 6.2 No Sale/Encumbrance
	 	 	51	 
	Section 6.3 Permitted Transfers of Equity Interests
	 	 	52	 
	Section 6.4 Permitted Property Transfers (Assumptions)
	 	 	54	 
	Section 6.5 Lender’s Rights
	 	 	56	 
	 
	 	 	 	 
	ARTICLE 7 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
	 	 	56	 
	Section 7.1 Insurance
	 	 	56	 
	Section 7.2 Casualty
	 	 	62	 
	Section 7.3 Condemnation
	 	 	62	 
	Section 7.4 Restoration
	 	 	63	 






iii









 





Table of Contents

(continued)





	 	 	 	 	 
	 	 	Page	 
	ARTICLE 8 RESERVE FUNDS
	 	 	67	 
	Section 8.1 Intentionally Omitted
	 	 	67	 
	Section 8.2 Intentionally Omitted
	 	 	67	 
	Section 8.3 Intentionally Omitted
	 	 	67	 
	Section 8.4 Minimed TI Reserve
	 	 	67	 
	Section 8.5 The Accounts Generally
	 	 	67	 
	 
	 	 	 	 
	ARTICLE 9 CASH MANAGEMENT AGREEMENT
	 	 	69	 
	Section 9.1 Cash Management Agreement
	 	 	69	 
	Section 9.2 Cash Flow Sweep
	 	 	69	 
	 
	 	 	 	 
	ARTICLE 10 EVENTS OF DEFAULT; REMEDIES
	 	 	70	 
	Section 10.1 Event of Default
	 	 	70	 
	Section 10.2 Remedies
	 	 	72	 
	 
	 	 	 	 
	ARTICLE 11 SECONDARY MARKET
	 	 	74	 
	Section 11.1 Securitization
	 	 	74	 
	Section 11.2 Securitization Indemnification
	 	 	75	 
	Section 11.3 Reserves/Escrows
	 	 	79	 
	Section 11.4 Servicer
	 	 	79	 
	Section 11.5 Rating Agency Costs
	 	 	79	 
	Section 11.6 Mezzanine Option
	 	 	79	 
	Section 11.7 Conversion to Registered Form
	 	 	79	 
	 
	 	 	 	 
	ARTICLE 12 INDEMNIFICATIONS
	 	 	80	 
	Section 12.1 GENERAL INDEMNIFICATION
	 	 	80	 
	Section 12.2 MORTGAGE AND INTANGIBLE TAX AND TRANSFER TAX INDEMNIFICATION
	 	 	81	 
	Section 12.3 ERISA INDEMNIFICATION
	 	 	81	 
	Section 12.4 Duty to Defend, Legal Fees and Other Fees and Expenses
	 	 	81	 
	Section 12.5 Survival
	 	 	81	 
	Section 12.6 Environmental Indemnity
	 	 	82	 
	 
	 	 	 	 
	ARTICLE 13 EXCULPATION
	 	 	82	 
	Section 13.1 Exculpation
	 	 	82	 






iv









 





Table of Contents

(continued)





	 	 	 	 	 
	 	 	Page	 
	Section 13.2 Survival
	 	 	84	 
	 
	 	 	 	 
	ARTICLE 14 NOTICES
	 	 	85	 
	Section 14.1 Notices
	 	 	85	 
	 
	 	 	 	 
	ARTICLE 15 FURTHER ASSURANCES
	 	 	86	 
	Section 15.1 Replacement Documents
	 	 	86	 
	Section 15.2 Recording of Security Instrument, etc
	 	 	86	 
	Section 15.3 Further Acts, etc
	 	 	86	 
	Section 15.4 Changes in Tax, Debt, Credit and Documentary Stamp Laws
	 	 	87	 
	 
	 	 	 	 
	ARTICLE 16 WAIVERS
	 	 	87	 
	Section 16.1 Remedies Cumulative; Waivers
	 	 	87	 
	Section 16.2 Modification, Waiver in Writing
	 	 	88	 
	Section 16.3 Delay Not a Waiver
	 	 	88	 
	Section 16.4 Waiver of Trial by Jury
	 	 	88	 
	Section 16.5 Waiver of Notice
	 	 	88	 
	Section 16.6 Remedies of Borrower
	 	 	89	 
	Section 16.7 Marshalling and Other Matters
	 	 	89	 
	Section 16.8 Waiver of Statute of Limitations
	 	 	89	 
	Section 16.9 Waiver of Counterclaim
	 	 	89	 
	Section 16.10 Sole Discretion of Lender
	 	 	89	 
	 
	 	 	 	 
	ARTICLE 17 MISCELLANEOUS
	 	 	89	 
	Section 17.1 Survival
	 	 	89	 
	Section 17.2 Governing Law
	 	 	90	 
	Section 17.3 Headings
	 	 	90	 
	Section 17.4 Severability
	 	 	90	 
	Section 17.5 Preferences
	 	 	90	 
	Section 17.6 Expenses
	 	 	90	 
	Section 17.7 Cost of Enforcement
	 	 	91	 
	Section 17.8 Exhibits and Schedules Incorporated
	 	 	92	 
	Section 17.9 Offsets, Counterclaims and Defenses
	 	 	92	 
	Section 17.10 No Joint Venture or Partnership; No Third Party Beneficiaries
	 	 	92	 






v









 





Table of Contents

(continued)





	 	 	 	 	 
	 	 	Page	 
	Section 17.11 Publicity; Confidentiality
	 	 	93	 
	Section 17.12 Conflict; Construction of Documents; Reliance
	 	 	94	 
	Section 17.13 Entire Agreement
	 	 	94	 
	Section 17.14 Liability
	 	 	94	 
	Section 17.15 Duplicate Originals; Counterparts
	 	 	94	 
	 
	 	 	 	 
	SCHEDULES AND EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Schedule I Intentionally Omitted
	 	 	 	 
	 
	 	 	 	 
	Schedule II Intentionally Omitted
	 	 	 	 
	 
	 	 	 	 
	Schedule III Organizational Chart
	 	 	 	 
	 
	 	 	 	 
	Schedule IV Description of REA’s
	 	 	 	 











vi









 








LOAN AGREEMENT




     THIS LOAN AGREEMENT, dated as of June 30, 2011 (as amended, restated, replaced, supplemented
or otherwise modified from time to time, this “Agreement”), between WELLS FARGO BANK, NATIONAL
ASSOCIATION, having an address at Wells Fargo Center, 1901 Harrison Street, 2nd Floor, Oakland,
California 94612 (together with its successors and/or assigns, “Lender”), and COLE OF SAN ANTONIO
TX, LLC, a Delaware limited liability company, having an address c/o Cole Real Estate Investments,
2555 East Camelback Road, Suite 400, Phoenix, Arizona 85016 (together with its successors and/or
assigns, “Borrower”).



RECITALS:




     Borrower desires to obtain the Loan (defined below) from Lender.



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



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



ARTICLE 1




DEFINITIONS; PRINCIPLES OF CONSTRUCTION



     Section 1.1 Definitions.



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



     “30/360 Basis” means on the basis of a 360-day year consisting of 12 months of 30 days each.



     “Acceptable Delaware LLC” shall mean a limited liability company formed under Delaware law
which (i) has at least one springing member, which, upon the dissolution of all of the members or
the withdrawal or the disassociation of all of the members from such limited liability company,
shall immediately become the sole member of such limited liability company, and (ii) otherwise
meets the Rating Agency criteria then applicable to such entities.



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



     “Act” shall have the meaning set forth in Section 5.1(c) hereof.



     “Actual/360 Basis” means on the basis of a 360-day year and charged on the basis of actual
days elapsed for any whole or partial month in which interest is being calculated.



 









 





     “Additional Mezzanine Borrower” shall have the meaning set forth in Section 11.6 hereof.



     “Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly, is in
Control of, is Controlled by or is under common Control with such Person.



     “Affiliated Manager” shall mean any managing agent of the Property that is an Affiliate of
Borrower, Guarantor or any SPE Component Entity (if any).



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



     “Alteration Threshold” shall mean an amount equal to four percent (4%) of the outstanding
principal balance of the Loan.



     “Annual Budget” shall have the meaning set forth in Section 4.12(a)(v) hereof.



     “Applicable Law” shall mean all applicable federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting Borrower or the Property or any part thereof, or
the construction, use, alteration or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act
of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any instruments, either of record
or known to Borrower, at any time in force affecting Borrower or the Property or any part thereof,
including, without limitation, any which may (i) require repairs, modifications or alterations in
or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.



     “Appraisal” shall mean an appraisal acceptable to Lender prepared in accordance with the
requirements of FIRREA, prepared by an independent third party appraiser holding an MAI
designation, who is state licensed or state certified if required under the laws of the state where
the Property is located, who meets the requirements of FIRREA and who otherwise satisfies the
Prudent Lender Standard.



     “Approved ID Provider” shall mean each of CT Corporation, Corporation Service Company,
National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company and Lord
Securities Corporation; provided, that additional national providers of Independent Directors may
be deemed added to the foregoing hereunder to the extent approved in writing by Lender and the
Rating Agencies.



     “Assignment of Management Agreement” shall mean (i) prior to the execution and delivery of the
Prime Management Agreement, that certain Conditional Assignment of Sub-Management Agreement, dated
as of the date hereof, among Lender, Borrower and Transwestern Property Company SW GP, LLC (d/b/a
Transwestern), as the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time, and (ii) from and after the execution and delivery of the Prime Management
Agreement, that certain Conditional Assignment of Management Agreement, to be dated the date of the
Prime Management Agreement, among Lender, Borrower and Cole Realty Advisors, Inc., as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to time.



2









 





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



     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as
amended from time to time, and any successor statute or statutes and all rules and regulations from
time to time promulgated thereunder.



     “Borrower” shall have the meaning set forth in the introductory paragraph hereof.



     “Borrower Party” shall mean any Person acting on behalf of or at the direction of Borrower,
Guarantor and SPE Component Entity.



     “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which
commercial banks in the State of California are not open for business.



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



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



     “Casualty” shall have the meaning set forth in Section 7.2 hereof.



     “Casualty Consultant” shall have the meaning set forth in Section 7.4 hereof.



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



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



     “Constituent Members” shall have the meaning set forth in Section 5.2(b) hereof.



     “Construction Allowance” shall mean that certain One Million Twelve Thousand Four Hundred
Eighty and No/100 Dollars ($1,012,480.00) construction allowance under the Minimed Lease, to be
paid by Borrower to Minimed for the Mandatory Expansion Space, pursuant to the terms and conditions
of the Minimed Lease.



     “Control” shall mean the power to direct the management and policies of an entity, directly or
indirectly, whether through the ownership of voting securities or other beneficial interests, by
contract or otherwise.



     “Creditors Rights Laws” shall mean any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its
debts or debtors.



3









 





     “DBRS” shall mean DBRS, Inc.



     “Debt” shall mean the outstanding principal amount set forth in, and evidenced by, this
Agreement and the Note together with all interest accrued and unpaid thereon and all other sums due
to Lender in respect of the Loan under the Note, this Agreement or the other Loan Documents,
including, without limitation, the payment of all sums advanced and costs and expenses incurred
(including unpaid or unreimbursed servicing and special servicing fees) by Lender in connection
with the enforcement and/or collection of the Debt or any part thereof pursuant to the terms of the
Loan Documents.



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



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



     “Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of
(i) the Maximum Legal Rate, or (ii) five percent (5%) above the Interest Rate.



     “Defeasance Approval Item” shall have the meaning set forth in Section 2.8 hereof.



     “Defeasance Collateral Account” shall have the meaning set forth in Section 2.8 hereof.



     “Defeasance Lockout Release Date” shall mean the earlier to occur of (i) the fourth
anniversary of the Closing Date and (ii) the date that is two (2) years from the “startup day”
(within the meaning of Section 860G(a)(9) of the IRS Code) of the REMIC Trust established in
connection with the last Securitization involving any portion of or interest in the Loan.



     “Disclosure Document” shall have the meaning set forth in Section 11.2 hereof.



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



     “Eligible Institution” shall mean (a) a depository institution or trust company insured by the
Federal Deposit Insurance Corporation, (i) the short term unsecured debt obligations or commercial
paper of which are rated at least “A-1+” (or its equivalent) from each of the Rating Agencies in
the case of accounts in which funds are held for thirty (30) days or less and (ii) the senior
unsecured debt obligations of which are rated at least “AA” (or its equivalent) from each of the
Rating Agencies in the case of accounts in which funds are held for more than thirty (30)



4









 




days or (b) such other depository institution otherwise approved by the Rating Agencies from
time-to-time.




     “Embargoed Person” shall have the meaning set forth in Section 3.28 hereof.



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



     “Environmental Laws” shall have the meaning set forth in the Environmental Indemnity.



     “Equity Collateral” shall have the meaning set forth in Section 11.6 hereof.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may
heretofore have been or shall be amended, restated, replaced or otherwise modified.



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



     “Exchange Act” shall have the meaning set forth in Section 11.2 hereof.



     “Exchange Act Filing” shall mean any filing under or pursuant to the Exchange Act in
connection with or relating to a Securitization.



     “Exculpated Parties” shall have the meaning set forth in Section 13.1 hereof.



     “Fifth Amendment to Lease” shall mean that certain Fifth Amendment to Office Lease and Consent
to Parking Garage between Borrower and Minimed Distibution Corp.



     “Fitch” shall mean Fitch, Inc.



     “Flood Insurance Acts” shall have the meaning set forth in Section 7.1 hereof.



     “GAAP” shall mean generally accepted accounting principles in the United States of America as
of the date of the applicable financial report.



     “Governmental Authority” shall mean any court, board, agency, commission, office or other
authority of any nature whatsoever for any governmental unit (foreign, federal, state, county,
district, municipal, city or otherwise) whether now or hereafter in existence, having authority
over Borrower, Guarantor, Lender and/or the Property.



     “Gross Rents” shall mean an amount computed in accordance with GAAP (or such other basis of
accounting acceptable to Lender and consistently applied) equal to annual rental income reflected
in a current rent roll for all Tenants paying rent pursuant to Leases which are in full force and
effect (whether or not such Tenant is in occupancy of the Property or open for business), less the
annual rental income for any Tenant in bankruptcy that has not affirmed its Lease in the applicable
bankruptcy proceeding pursuant to a final, non-appealable order of a court of competent
jurisdiction.



5









 





     “Guarantor” shall mean Cole Corporate Income Trust, Inc., a Maryland corporation.



     “Guaranty” shall mean that certain Guaranty of Recourse Obligations executed by Guarantor and
dated as of the date hereof.



     “Hazardous Substances” shall have the meaning set forth in the Environmental Indemnity.



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



     “Indebtedness” shall mean, for any Person, without duplication: (i) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase
price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a
loan agreement, letter of credit, or other credit facility for which such Person would be liable if
such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person as a
guaranteed payment to partners or a preferred or special dividend, including any mandatory
redemption of shares or interests, (iv) all indebtedness guaranteed by such Person, directly or
indirectly, (v) all obligations under leases that constitute capital leases for which such Person
is liable, and (vi) all obligations of such Person under interest rate swaps, caps, floors, collars
and other interest hedge agreements, in each case whether such Person is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss.



     “Indemnified Parties” shall mean (a) Lender, (b) any successor owner or holder of the Loan or
participations in the Loan, (c) any Servicer or prior Servicer of the Loan, (d) any Investor or any
prior Investor in any Securities, (e) any trustees, custodians or other fiduciaries who hold or who
have held a full or partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other Creditors Rights
Laws proceeding, (g) any officers, directors, shareholders, partners, members, employees, agents,
servants, representatives, contractors, subcontractors, affiliates or subsidiaries of any and all
of the foregoing, and (h) the heirs, legal representatives, successors and assigns of any and all
of the foregoing (including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties’ assets and business) in all
cases whether during the term of the Loan or as part of or following a foreclosure of the Loan.



     “Independent Director” shall have the meaning set forth in Section 5.2 hereof.



     “Insurance Premiums” shall have the meaning set forth in Section 7.1 hereof.



     “Interest Accrual Period” shall mean the period beginning on the first day of each calendar
month during the term of the Loan and ending on (but including) the last day of such calendar
month.



     “Interest Rate” shall mean a rate per annum equal to four and sixty-five one hundredths
percent (4.65%).



     “Interest Shortfall” shall have the meaning set forth in Section 2.7 hereof.



6









 





     “Investor” shall mean any investor in the Loan (or any portion thereof or interest therein) in
connection with a Securitization of the Loan (or any portion thereof or interest therein).



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



     “Land” shall have the meaning set forth in the Security Instrument.



     “Lease” shall mean any and all leases, subleases, rental agreements, and other similar
agreements providing a comparable right of use, enjoyment or occupancy, whether or not in writing,
of the Land and/or the Improvements heretofore or hereafter entered into by Borrower (or a
predecessor-in-interest to Borrower), and all extensions, amendments, modifications and supplements
thereto, whether before or after the filing by or against Borrower of any petition for relief under
Creditors Rights Laws.



     “Lender” shall have the meaning set forth in the introductory paragraph hereof.



     “Liabilities” shall have the meaning set forth in Section 11.2 hereof.



     “Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement.



     “Loan Bifurcation” shall have the meaning set forth in Section 11.1 hereof.



     “Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument,
the Environmental Indemnity, the Assignment of Management Agreement, the Guaranty, the Cash
Management Agreement and all other documents executed and/or delivered by Borrower and/or Guarantor
in connection with the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.



     “Loan-To-Value Ratio” shall mean a percentage calculated by multiplying (i) a fraction, the
numerator of which is the outstanding principal balance of the Note and the denominator of which is
the value of the Property based on a current Appraisal thereof, by (ii) one hundred (100) percent.



     “Losses” shall mean any and all claims, suits, liabilities (including, without limitation,
strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses,
fines, penalties, charges, fees, judgments, awards, amounts paid in settlement of whatever kind or
nature (including but not limited to reasonable legal fees and other costs of defense).



     “Major Lease” shall mean, (i) any Lease which, individually or when aggregated with all other
Leases with the same Tenant or its Affiliate, either (A) accounts for fifteen percent (15%) or more
of the total rental income for the Property, or (B) demises fifteen percent (15%) or more of the
Property’s gross leasable area, (ii) any Lease which contains any option, offer, right of first
refusal or other similar entitlement to acquire all or any portion of the Property, or (iii) any
instrument guaranteeing or providing credit support for any Lease meeting the requirements of (i)
and/or (ii) above.



7









 





     “Management Agreement” shall mean (i) prior to the execution and delivery of the Prime
Management Agreement, that certain Building Management Agreement (Limited Scope) dated as of
February 7, 2011 between Cole Realty Advisors, Inc., as primary manager, and Transwestern Property
Company SW GP, LLC, d/b/a Transwestern, as manager, and (ii) from and after the execution and
delivery of the Prime Management Agreement, the Prime Management Agreement.



     “Manager” shall mean (i) prior to the execution and delivery of the Prime Management
Agreement, Transwestern Property Company SW GP, LLC, d/b/a Transwestern, or such other entity
selected as the manager of the Property in accordance with the terms of this Agreement or the other
Loan Documents, and (ii) from and after the execution and delivery of the Prime Management
Agreement, Cole Realty Advisors, Inc., an Arizona corporation, or such other entity selected as the
manager of the Property in accordance with the terms of this Agreement or the other Loan Documents.



     “Mandatory Expansion Space” shall have the meaning set forth in the Minimed Lease.



     “Material Adverse Effect” shall mean a material adverse effect on (i) the Property, (ii) the
business, profits, operations or financial condition of Borrower, Guarantor or Operating
Partnership, (iii) the enforceability, validity, perfection or priority of the lien of the Security
Instrument or the other Loan Documents, (iv) the ability of Borrower to perform its obligations
under the Security Instrument or the other Loan Documents, or (v) the ability of Guarantor to
perform its obligations under the Guaranty.



     “Maturity Date” shall mean (i) July 1, 2016 or (ii) such other date on which the final payment
of the principal amount of the Note becomes due and payable as therein or herein provided, whether
at such stated maturity date, by declaration of acceleration, or otherwise.



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



     “Member” is defined in Section 5.1 hereof.



     “Mezzanine Borrower” shall mean Cole MezzCo San Antonio TX, LLC, a Delaware limited liability
company.



     “Mezzanine Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as
of the date hereof, between Lender and Mezzanine Lender relating to the Loan and the Mezzanine
Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time
to time in accordance with its terms.



     “Mezzanine Lender” shall mean Wells Fargo Bank, National Association, in its capacity as the
mezzanine lender under the Mezzanine Loan.



     “Mezzanine Loan” shall mean the loan in the original principal amount of Five Million Dollars
($5,000,000) made by Mezzanine Lender to Mezzanine Borrower as of the date hereof.



8









 





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



     “Mezzanine Loan Documents” shall mean the Mezzanine Note, the Mezzanine Loan Agreement, the
Mezzanine Pledge and Security Agreement, Mezzanine Environmental Indemnity Agreement, Mezzanine
Guaranty of Recourse Obligations and the Mezzanine Intercreditor Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to time.



     “Mezzanine Note” shall mean that certain Mezzanine Promissory Note of even date herewith, in
the stated principal amount of Five Million and No/100 Dollars ($5,000,000.00) executed by
Mezzanine Borrower and payable to the order of Mezzanine Lender in evidence of the Mezzanine Loan
(as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated
from time to time).



     “Mezzanine Pledge and Security Agreement” shall mean that certain Pledge and Security
Agreement, dated as of the date hereof, by Mezzanine Borrower in favor of Mezzanine Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from time to time.



     “Mezzanine Option” shall have the meaning set forth in Section 11.6 hereof.



     “Minimed” shall mean Minimed Distribution Corp., a Delaware corporation.



     “Minimed Lease” shall mean that certain Lease dated June 26, 2009 by and between Minimed
Distribution Corp., as tenant, and Borrower’s predecessor in interest, as landlord, as amended from
time to time.



     “Minimed TI Funds” shall have the meaning set forth in Section 8.4 hereof.



     “Minimum Disbursement Amount” shall mean Ten Thousand and No/100 Dollars ($10,000).



     “Monthly Debt Service Payment Amount” shall mean with respect to the Monthly Payment Date
occurring in August, 2011 and for each Monthly Payment Date occurring thereafter up to and
including the Monthly Payment Date immediately preceding the Maturity Date, a payment equal to the
amount of interest which has accrued during the preceding Interest Accrual Period computed at the
Interest Rate.



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



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



     “Net Proceeds” shall mean: (i) the net amount of all insurance proceeds (other than Rent Loss
Proceeds, but subject to the terms of Section 7.1(a)(iii) hereof) payable as a result of a Casualty
to the Property, after deduction of reasonable costs and expenses (including, but not



9









 




limited to, reasonable attorneys’ fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but
not limited to, reasonable attorneys’ fees), if any, in collecting such Award.




     “Net Proceeds Deficiency” shall have the meaning set forth in Section 7.4 hereof.



     “New Manager” shall have the meaning set forth in Section 4.15 hereof.



     “Non-Conforming Policy” shall have the meaning set forth in Section 7.1 hereof.



     “Note” shall mean that certain Promissory Note of even date herewith in the principal amount
of $18,000,000.00, made by Borrower in favor of Lender, as the same may be amended, restated,
replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time.



     “OFAC” shall have the meaning set forth in Section 3.28 hereof.



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



     “Open Period Start Date” shall have the meaning set forth in Section 2.7(a) hereof.



     “Operating Expenses” shall mean the total of all expenditures, computed in accordance with
GAAP (or such other basis of accounting acceptable to Lender and consistently applied), of whatever
kind relating to the operation, maintenance and management of the Property that are incurred by
Borrower on a regular monthly or other periodic basis, including without limitation, (and without
duplication) (a) utilities, ordinary repairs and maintenance, insurance, license fees, Taxes and
Other Charges, advertising expenses, payroll and related taxes, computer processing charges,
management fees (equal to the greater of (x) two percent (2%) of the sum of (1) Reimbursements and
Other Operating Income for the trailing twelve (12) month period plus (2) Gross Rents or (y) actual
management fees payable under the Management Agreement), operational equipment or other lease
payments as expressly permitted by the terms hereof, but specifically excluding (i) depreciation,
(ii) amortization (i.e., depreciation of lease assets), (iii) Debt Service, (iv) non-recurring or
extraordinary expenses, (v) costs to acquire the Property, (vi) prepayments of principal (to the
extent permitted under this Agreement), (vii) impairment charges, (viii) actual capital
expenditures and tenant improvement and leasing commission expenditures, and (ix) deposits into the
Reserve Funds, and (b) normalized capital expenditures equal to $0.25 per square foot per annum.



     “Operating Partnership” shall mean Cole Corporate Income Operating Partnership, LP, a Delaware
limited partnership.



     “Other Charges” shall mean all maintenance charges, impositions other than Taxes, and any
other charges, vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Property or any part thereof, now or hereafter levied or assessed or imposed against
the Property or any part thereof.



     “Patriot Act” shall have the meaning set forth in Section 3.29 hereof.



10









 





     “Permitted Encumbrances” shall mean collectively, (a) the lien and security interests created
by this Agreement and the other Loan Documents, (b) all liens, encumbrances and other matters
disclosed in the Title Insurance Policy, including, without limitation, any REA, (c) liens, if any,
for Taxes imposed by any Governmental Authority or any Other Charges not yet due or delinquent, (d)
the Leases existing as of the date hereof and any Leases entered into after the date hereof in
accordance with Section 4.14 hereof, and, subject to the terms of the Loan Documents, any liens
that the Tenants under such Leases are allowed to suffer, contest or create pursuant to the express
terms of such Leases, but only to the extent and for the duration so expressly allowed, and (e)
such other title and survey exceptions which do not have a Material Adverse Effect or which Lender
has approved or may approve in writing in Lender’s sole discretion.



     “Permitted Equipment Leases” shall mean equipment leases or other similar instruments entered
into by Borrower or Manager with respect to the Personal Property; provided, that, in each case,
such equipment leases or similar instruments (i) are entered into on commercially reasonable terms
and conditions in the ordinary course of Borrower’s business and (ii) relate to Personal Property
which is (A) used in connection with the operation and maintenance of the Property in the ordinary
course of Borrower’s business and (B) readily replaceable without material interference or
interruption to the operation of the Property.



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



     “Personal Property” shall mean the “Personal Property” as defined in the Security Instrument.



     “Policies” shall have the meaning specified in Section 7.1 hereof.



     “Prime Management Agreement” shall mean that certain Property Management and Leasing Agreement
by and between Borrower and Manager, to be entered into in August, 2011, pursuant to which Manager
is to provide management and other services with respect to the Property or any portion thereof, as
the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.



     “Prohibited Transfer” shall have the meaning set forth in Section 6.2 hereof.



     “Property” shall have the meaning set forth in the Security Agreement.



     “Property Documents” shall mean, individually and/or collectively, as the context may require,
each REA.



     “Property Document Event” shall mean any event within Borrower’s reasonable control under or
with respect to any Property Document (which shall include Borrower’s obligation to enforce any of
Borrower’s rights under a Property Document) which would, directly or indirectly, (i) cause a
termination right, right of first refusal, right of first offer or any other similar right with
respect to the Property, and/or cause any termination fees to be due by Borrower under the Property
Documents or (ii) cause a Material Adverse Effect; provided, however, any of the foregoing shall
not be deemed a Property Document Event to the extent



11









 




Lender’s prior written consent, such consent not to be unreasonably withheld, conditioned or
delayed, is obtained with respect to the same.




     “Prudent Lender Standard” shall, with respect to any matter, be deemed to have been met if the
matter in question (i) prior to a Securitization, is reasonably acceptable to Lender and (ii) after
a Securitization, would be acceptable to a prudent lender of securitized commercial mortgage loans.



     “Qualified Insurer” shall have the meaning set forth in Section 7.1 hereof.



     “Qualified Manager” shall have the meaning set forth in the Assignment of Management
Agreement.



     “Rating Agencies” shall mean each of S&P, Moody’s, Fitch, DBRS, and Realpoint, or any
successor thereto, or any other nationally-recognized statistical rating agency which has been
approved by Lender; provided, that, the foregoing shall only be deemed to be included within the
definition of “Rating Agencies” hereunder to the extent that the same have rated (or are reasonably
anticipated by Lender to rate) the Securities.



     “Rating Agency Confirmation” shall mean a written affirmation from each of the Rating Agencies
(obtained at Borrower’s sole cost and expense) that the credit rating of the Securities by such
Rating Agency immediately prior to the occurrence of the event with respect to which such Rating
Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the
occurrence of such event, which affirmation may be granted or withheld in such Rating Agency’s sole
and absolute discretion.



     “REA” shall mean, individually and/or collectively (as the context may require), each
reciprocal easement, covenant, condition and restriction agreement or similar agreement affecting
the Property (or any portion thereof) as more particularly described on Schedule IV hereto and any
future reciprocal easement or similar agreement affecting the Property (or any portion thereof)
entered into in accordance with the applicable terms and conditions hereof.



     “Realpoint” shall mean Realpoint LLC.



     “Registrar” shall have the meaning set forth in Section 11.7 hereof.



     “Registration Statement” shall have the meaning set forth in Section 11.2 hereof.



     “Reimbursements and Other Operating Income” shall mean all income, computed in accordance with
GAAP (or such other basis of accounting acceptable to Lender and consistently applied), derived
from the ownership and operation of the Property from whatever source, including, but not limited
to, common area maintenance, real estate tax recoveries, utility recoveries, other miscellaneous
expense recoveries, other required pass-throughs, percentage rent, rent concessions or credits, if
any, business interruption or other loss of income or rental insurance proceeds, and other
miscellaneous income, but excluding Gross Rents, sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, interest income from any source
other than the escrow accounts and/or reserve accounts required pursuant to this Agreement or the
other Loan Documents, insurance proceeds



12









 




(other than business interruption or other loss of income or rental insurance), Awards,
unforfeited security deposits, utility and other similar deposits, income from Tenants not paying
rent, income from Tenants in bankruptcy, non-recurring or extraordinary income, including, without
limitation lease termination payments, and any disbursements to Borrower from the Reserve Funds.




     “REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of
Section 860D of the IRS Code that holds any interest in all or any portion of the Loan (including,
without limitation, the Note).



     “Rent Loss Proceeds” shall have the meaning set forth in Section 7.1 hereof.



     “Rent Roll” shall have the meaning set forth in Section 3.17 hereof.



     “Rents” shall have the meaning set forth in the Security Instrument.



     “Replacements” for any period shall mean either (i) amounts expended for any of those certain
replacements and/or alterations to the Property set forth on Schedule II attached hereto or (ii) if
no such replacements and/or alterations are specified on such Schedule II, amounts expended for
replacements and/or alterations to the Property and required to be capitalized according to GAAP
(or such other basis of accounting acceptable to Lender and consistently applied) and reasonably
approved by Lender.



     “Reporting Failure” shall have the meaning set forth in Section 4.12 hereof.



     “Required Financial Item” shall have the meaning set forth in Section 4.12 hereof.



     “Reserve Funds” shall mean the Minimed TI Funds and any other escrow funds established by this
Agreement or the other Loan Documents.



     “Responsible Officer” means with respect to a Person, the chairman of the board, president,
chief operating officer, chief financial officer, treasurer or vice president of such Person (or of
the manager, general partner or similar authorized party of such Person, as applicable) or such
other similar officer of such Person reasonably acceptable to Lender and appropriately authorized
by the applicable Person in a manner reasonably acceptable to Lender.



     “Restoration” shall have the meaning set forth in Section 7.2 hereof.



     “Restoration Retainage” shall have the meaning set forth in Section 7.4 hereof.



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



     “Restricted Party” shall have the meaning set forth in Section 6.1 hereof.



     “Sale or Pledge” shall have the meaning set forth in Section 6.1 hereof.



     “Scheduled Defeasance Payments” shall mean scheduled payments of interest and principal under
the Note for all Monthly Payment Dates occurring after the Total Defeasance



13









 




Date and up to and including the Open Period Start Date (including the outstanding principal
balance on the Note as of the Open Period Start Date, but excluding any Monthly Payment Date after
the Total Defeasance Date for which Borrower is required to pay the principal and interest due on
such Monthly Payment Date on the Total Defeasance Date as contemplated by Section 2.8(a)(i)(B)(1)
herein.




     “Secondary Market Transaction” shall have the meaning set forth in Section 11.1 hereof.



     “Securities” shall have the meaning set forth in Section 11.1 hereof.



     “Securities Act” shall have the meaning set forth in Section 11.2 hereof.



     “Securitization” shall have the meaning set forth in Section 11.1 hereof.



     “Security Agreement” shall mean a security agreement in form and substance that would be
satisfactory to a prudent lender pursuant to which Borrower grants Lender a perfected, first
priority security interest in the Defeasance Collateral Account and the Total Defeasance
Collateral.



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



     “Servicer” shall have the meaning set forth in Section 11.4 hereof.



     “Severed Loan Documents” shall have the meaning set forth in Article 10.



     “Single Purpose Entity” shall mean an entity which satisfies all of the requirements of
Section 5.1 hereof and whose structure and organizational and governing documents are otherwise in
form and substance acceptable to Lender and the Rating Agencies.



     “SPE Component Entity” shall have the meaning set forth in Section 5.1(b) hereof.



     “Special Member” shall have the meaning set forth in Section 5.1(c) hereof.



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



     “State” shall mean the state in which the Property is located.



     “Successor Borrower” shall have the meaning set forth in Section 2.8 hereof.



     “Survival Cap” shall have the meaning set forth in Section 12.5 hereof.



     “Taxes” shall mean all taxes, assessments, water rates, sewer rents, business improvement
district or other similar assessments and other governmental impositions, now or hereafter levied
or assessed or imposed against the Property or any part thereof.



14









 





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



     “Title Insurance Policy” shall mean that certain ALTA mortgagee title insurance policy issued
with respect to the Property and insuring the lien of the Security Instrument.



     “Total Defeasance Collateral” shall mean U.S. Obligations, which provide payments (i) on or
prior to, but as close as possible to, the Business Day immediately preceding all Monthly Payment
Dates and other scheduled payment dates, if any, under the Note after the Total Defeasance Date and
up to and including the Open Period Start Date (but excluding any Monthly Payment Date after the
Total Defeasance Date for which Borrower is required to pay the principal and interest due on such
Monthly Payment Date on the Total Defeasance Date as contemplated by Section 2.8(a)(i)(B)(1)
herein), and (ii) in amounts equal to or greater than the Scheduled Defeasance Payments relating to
such Monthly Payment Dates and other scheduled payment dates.



     “Total Defeasance Date” shall have the meaning set forth in Section 2.8 hereof.



     “Total Defeasance Event” shall have the meaning set forth in Section 2.8 hereof.



     “Treasury Rate” shall mean, as of the date of determination, the yield, calculated by Lender
by linear interpolation (rounded to the nearest one-thousandth of one percent (i.e., 0.001%)) of
the yields of non-inflation adjusted non-callable United States Treasury obligations with terms
(one longer and one shorter) most nearly approximating the period from such date of determination
to the Maturity Date, as determined by Lender on the basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading U.S. Governmental Security/Treasury Constant
Maturities, or another recognized source of financial market information selected by Lender.
Lender’s determination of the Treasury Rate shall be final absent manifest error.



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



     “Underwritable Cash Flow” shall mean an amount calculated by Lender on a monthly basis equal
to the projected annualized Gross Rents plus the Reimbursements and Other Operating Income (as
adjusted by the Vacancy Deduction), less the trailing twelve (12) months Operating Expenses, each
of which shall be subject to adjustment for items of a non-recurring nature. Lender’s review of
Borrower’s calculation of Underwritable Cash Flow (including determination of items that do not
qualify as Reimbursements and Other Operating Income or Operating Expenses) shall be performed by
Lender in good faith and shall be conclusive and binding on Borrower absent manifest error.



     “Underwriter Group” shall have the meaning set forth in Section 11.2 hereof.



     “Updated Information” shall have the meaning set forth in Section 11.1 hereof.



     “U.S. Obligations” shall mean (i) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged and which are not subject to prepayment, call
or early redemption, (ii) other non-callable “government securities” within the meaning of



15









 




Section 2(a)(16) of the Investment Company Act of 1940, as amended which (a) will not result
in a reduction, downgrade or withdrawal of the ratings for the certificates or any class thereof
issued in connection with a Securitization, (b) are then outstanding and (c) are then being
generally accepted by the Rating Agencies without any reduction, downgrade or withdrawal of the
ratings for the certificates or any class thereof issued in connection with a Securitization or
(iii) other non-callable instruments, which (w) if a Securitization has occurred, will not cause
the REMIC Trust formed pursuant to such Securitization to fail to maintain its status as a “real
estate mortgage investment conduit” within the meaning of Section 860D of the Code, (x) will not
result in a reduction, downgrade or withdrawal of the ratings for the certificates or any class
thereof issued in connection with a certificate, (y) are then outstanding and (z) are then being
generally accepted by the Rating Agencies without any reduction, downgrade or withdrawal of the
ratings for the certificates or any class thereof issued in connection with a Securitization.




     “Vacancy Deduction” shall be determined by multiplying Gross Rent and Reimbursements and Other
Operating Income by the greatest of (i) the actual vacancy at the Property at the time of
determination and (ii) an imputed vacancy rate of one percent (1%).



     “Wells” shall have the meaning set forth in Section 11.2 hereof.



     “Wells Group” shall have the meaning set forth in Section 11.2 hereof.



     “Work Charge” shall have the meaning set forth in Section 4.16(a) hereof.



     “Yield Maintenance Premium” shall mean an amount equal to the greater of the following two
amounts: (a) an amount equal to 3% of the amount prepaid; or (b) an amount equal to (i) the amount,
if any, by which the sum of the present values as of the prepayment date of all unpaid principal
and interest payments required hereunder, calculated by discounting such payments from the
respective dates each such payment was due hereunder (or, with respect to the payment required on
the Maturity Date, from the Open Period Start Date) back to the prepayment date at a discount rate
equal to the Periodic Treasury Yield (defined below) exceeds the outstanding principal balance of
the Loan as of the prepayment date, multiplied by (ii) a fraction whose numerator is the amount
prepaid and whose denominator is the outstanding principal balance of the Loan as of the prepayment
date. For purposes of the foregoing, “Periodic Treasury Yield” shall mean (y) the annual yield to
maturity of the actively traded non-callable United States Treasury fixed interest rate security
(other than any such security which can be surrendered at the option of the holder at face value in
payment of federal estate tax or which was issued at a substantial discount) that has a maturity
closest to (whether before, on or after) the Open Period Start Date (or if two or more such
securities have maturity dates equally close to the Open Period Start Date, the average annual
yield to maturity of all such securities), as reported in The Wall Street Journal or other
authoritative publication or news retrieval service on the fifth Business Day preceding the
prepayment date, divided by (z) 12. Lender’s calculation of the Yield Maintenance Premium, and all
component calculations, shall be conclusive and binding on Borrower absent manifest error.



     Section 1.2 Principles of Construction.



     All references to sections, exhibits and schedules are to sections, exhibits and schedules in
or to this Agreement unless otherwise specified. All uses of the word “including” shall mean



16









 




“including, without limitation” unless the context shall indicate otherwise. Unless otherwise
specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so defined.




ARTICLE 2




GENERAL TERMS



     Section 2.1 The Loan. Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.



     Section 2.2 Disbursement to Borrower. Borrower may request and receive only one borrowing
hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the
Loan may not be re-borrowed.



     Section 2.3 The Note and the other Loan Documents. The Loan shall be evidenced by the Note
and this Agreement and secured by this Agreement, the Security Instrument and the other Loan
Documents.



     Section 2.4 Intentionally Omitted.



     Section 2.5 Interest Rate.



          (a) Generally, interest on the outstanding principal balance of the Loan shall accrue from the
Closing Date up to but excluding the Maturity Date at the Interest Rate.




          (b) Intentionally Omitted.




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




          (d) Interest Calculation. Interest on the outstanding principal balance of the Loan
shall accrue at the Interest Rate calculated on an Actual/360 Basis. Borrower acknowledges that
interest calculated on an Actual/360 Basis exceeds interest calculated on a 30/360 Basis and,
therefore: (i) a greater portion of each monthly installment of principal (if applicable) and
interest will be applied to interest using the Actual/360 Basis than would be the case if interest
accrued on a 30/360 Basis and (ii) the unpaid principal balance of the Loan on the Maturity Date
will be greater using the Actual/360 Basis than would be the case if interest accrued on a 30/360
Basis.




          (e) Usury Savings. The term “Maximum Rate” shall mean the highest lawful rate of
interest applicable to the Note. In determining the Maximum Rate, due regard shall be given to all
payments, fees, charges, deposits, balances and agreements which may




17









 




constitute interest or be deducted from principal when calculating interest. If Chapter 303
of the Finance Code, Vernon’s Texas Civil Statutes, is deemed (by any court of competent
jurisdiction) to be applicable to the Note, and applicable state or federal law does not permit a
higher interest rate, the “weekly ceiling” (as defined in Chapter 303 of the Finance Code, Vernon’s
Texas Civil Statutes) shall be the interest rate ceiling applicable to the Note and shall be the
basis for determining the Maximum Rate. If applicable state or federal law allows a higher
interest rate or federal law preempts the state law limiting the rate of interest, then the
foregoing interest rate ceiling shall not be applicable to the Note. If the Maximum Rate is
increased by statute or other governmental action subsequent to the date of the Note, then the new
Maximum Rate shall be applicable to the Note from the effective date thereof, unless otherwise
prohibited by applicable law.




     Interest on the unpaid principal balance of the Note shall be computed on the basis set forth
in this Article 2 (the “Stated Rate”), but in no event shall the Stated Rate be greater than the
Maximum Rate described immediately above.



     It is expressly stipulated and agreed to be the intent of the undersigned and holder of the
Note (together with its successors and assigns, the “Noteholder”) at all times to comply with
applicable law governing the Maximum Rate or amount of interest payable on or in connection with
the Note and the Loan (or applicable United States federal law to the extent that it permits the
Noteholder to contract for, charge, take, reserve or receive a greater amount of interest than
under any such applicable State law). If the applicable law is ever judicially interpreted so as
to render usurious any amount called for under the Note, this Agreement or any other Loan Document,
or contracted for, charged, taken, reserved or received with respect to the Loan, or if
acceleration of the maturity of the Note or if any prepayment by the undersigned results in the
undersigned having paid any interest in excess of that permitted by law, then it is the
undersigned’s and the Noteholder’s express intent that all excess amounts theretofore collected by
the Noteholder be credited on the principal balance of the Note without any prepayment premium (or,
if the Note has been or would thereby be paid in full, refunded to the undersigned), and the
provisions of the Note, this Agreement and the other Loan Documents immediately be deemed reformed
and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of
the execution of any new documents, so as to comply with applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder. The right to
accelerate maturity of the Note does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and the Noteholder does not intend to collect
any unearned interest in the event of acceleration. All sums paid or owed to be paid to the
Noteholder for the use, forbearance or detention of the indebtedness evidence hereby shall, to the
extent permitted by applicable law be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the rate or amount of interest on account
of such indebtedness does not exceed the Maximum Rate. Notwithstanding any provisions contained in
the Note, this Agreement or in any of the other Loan Documents that permit the compounding of
interest (including, without limitation, any provision by which any accrued interest is added to
the principal amount of the Note), if and to the extent the laws of the State of Texas are deemed
to apply to the aforesaid provisions (by any court of competent jurisdiction), the total amount of
interest that the undersigned is obligated to pay and the Noteholder is entitled to receive with
respect to the Note shall not exceed the amount calculated on a simple (i.e., non-compounded)
interest basis at the Maximum Rate on principal amounts actually advanced to or for the account of
the undersigned, including all current and



18









 




prior advances and any advances made pursuant to the Security Instrument or other Loan
Documents (such as for the payment of taxes, insurance premiums, repairs and other expenses or
costs).




     Section 2.6 Loan Payments.



          (a) Payment Before Maturity. Borrower shall make a payment to Lender of interest only
on the Closing Date for the period from the Closing Date through the last day of the month in which
the Closing Date occurs (unless the Closing Date is the first day of a calendar month, in which
case no such separate payment of interest shall be due). Borrower shall make a payment to Lender
of interest only in the amount of the Monthly Debt Service Payment Amount on the Monthly Payment
Date occurring in August, 2011 and on each Monthly Payment Date thereafter to and including the
Maturity Date. Each payment shall be applied first to accrued and unpaid interest and the balance,
if any, to principal.




          (b) Intentionally Omitted.




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




          (d) Late Payment Charge. If any principal, interest or any other sum due under the
Loan Documents, other than the payment of principal due on the Maturity Date, is not paid by
Borrower on the date on which it is due, Borrower shall pay to Lender promptly following demand
therefor an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum
amount permitted by Applicable Law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Security Instrument and the other Loan
Documents.




          (e) Method and Place of Payment.




          (i) Except as otherwise specifically provided herein, all payments and prepayments under this
Agreement and the Note shall be made to Lender not later than 11:00 A.M., California time, on the
date when due and shall be made in lawful money of the United States of America in immediately
available funds at Lender’s office, and any funds received by Lender after such time shall, for all
purposes hereof, be deemed to have been paid on the next succeeding Business Day.




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




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




     Section 2.7 Prepayments.



19









 





          (a) Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan
in whole or in part. On and after the Monthly Payment Date occurring three (3) months prior to the
Maturity Date (the “Open Period Start Date”), provided no Event of Default has occurred and is
continuing, Borrower may, at its option and upon not less than thirty (30) days prior revocable
notice (the “Prepayment Notice”) to Lender (or such shorter period of time as may be permitted by
Lender in its sole discretion), prepay the Debt in whole but not in part, on any date without
payment of the Yield Maintenance Premium. Any prepayment received by Lender on a date other than a
Monthly Payment Date shall include interest which would have accrued thereon to the next Monthly
Payment Date (such amounts, the “Interest Shortfall”). BORROWER HEREBY AGREES THAT IN THE EVENT
BORROWER DELIVERS A PREPAYMENT NOTICE AND FAILS TO PREPAY THE LOAN IN ACCORDANCE WITH THE
PREPAYMENT NOTICE AND THE TERMS OF THIS SECTION 2.7 (A “PREPAYMENT FAILURE”), BORROWER SHALL
INDEMNIFY LENDER FROM AND AGAINST, AND SHALL BE RESPONSIBLE FOR, ALL LOSSES (INCLUDING ANY BREAKAGE
COSTS) INCURRED BY LENDER WITH RESPECT TO ANY SUCH PREPAYMENT FAILURE, PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO LENDER, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE, ILLEGAL ACTS, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH PERSON.




          (b) Mandatory Prepayments. On each date on which Lender actually receives a
distribution of Net Proceeds, and if such Net Proceeds are not made available to Borrower for
Restoration, Borrower shall prepay the outstanding principal balance of the Note in an amount equal
to one hundred percent (100%) of such Net Proceeds together with any applicable Interest Shortfall.
No Yield Maintenance Premium shall be due in connection with any prepayment made pursuant to this
Section 2.7(b).




          (c) Prepayments After Default. If during the continuance of an Event of Default (and
prior to the Open Period Start Date), payment of all or any part of the principal of the Loan is
tendered by Borrower, a purchaser at foreclosure or any other Person, such tender shall be deemed
an attempt to circumvent the prohibition against prepayment prior to the Open Period Start Date as
set forth herein and Borrower, such purchaser at foreclosure or other Person shall pay (i) the
Yield Maintenance Premium and (ii) Interest Shortfall, in addition to the outstanding principal
balance, all accrued and unpaid interest and other amounts payable under the Loan Documents.
Borrower acknowledges that (i) a prepayment will cause damage to Lender; (ii) the Yield Maintenance
Premium is intended to compensate Lender for the loss of its investment and the expense incurred
and time and effort associated with making the Loan, which will not be fully repaid if the Loan is
prepaid; (iii) it will be extremely difficult and impractical to ascertain the extent of Lender’s
damages caused by a prepayment after an acceleration or any other prepayment not permitted by the
Loan Documents; and (iv) the Yield Maintenance Premium represents Lender’s and Borrower’s
reasonable estimate of Lender’s damages from the prepayment and is not a penalty.




     Section 2.8 Defeasance.



          (a) Total Defeasance.







20









 








          (i) Provided no Event of Default shall have occurred and remain uncured, Borrower shall have
the right at any time after the Defeasance Lockout Release Date and prior to the Open Period Start
Date to voluntarily defease the entire Loan and obtain a release of the lien of the Security
Instrument by providing Lender with the Total Defeasance Collateral (hereinafter, a “Total
Defeasance Event”), subject to the satisfaction of the following conditions precedent:





	 	(A)	 	Borrower shall provide Lender not less than forty-five (45)
days notice (or such shorter period of time if permitted by Lender in its sole
discretion) but not more than ninety (90) days notice specifying a date (the
“Total Defeasance Date”) on which the Total Defeasance Event is to occur;
	 
	 	(B)	 	Borrower shall pay to Lender (1) all payments of principal and
interest due and payable on the Loan to and including the Total Defeasance Date
(provided that, if such Total Defeasance Date is not a Monthly Payment Date,
Borrower shall also pay to Lender all payments of principal and interest due on
the Loan to and including the next occurring Monthly Payment Date); (2) all
other sums, if any, then due and payable under the Note, this Agreement, the
Security Instrument and the other Loan Documents through and including the
Total Defeasance Date (or, if the Total Defeasance Date is not a Monthly
Payment Date, the next occurring Monthly Payment Date); (3) all reasonable
escrow, closing, recording, legal, appraisal, Rating Agency and other fees,
costs and expenses paid or incurred by Lender or its agents in connection with
the Total Defeasance Event, the release of the lien of Security Instrument on
the Property, the review of the proposed Total Defeasance Collateral and the
preparation of the Security Agreement and related documentation; and (4) any
revenue, documentary stamp, intangible or other taxes, charges or fees due in
connection with the transfer or assumption of the Note and/or the Total
Defeasance Event.
	 
	 	(C)	 	Borrower shall deposit the Total Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Section 2.8(c) hereof;
	 
	 	(D)	 	Borrower shall execute and deliver to Lender a Security
Agreement in respect of the Defeasance Collateral Account and the Total
Defeasance Collateral;
	 
	 	(E)	 	Borrower shall deliver to Lender an opinion of counsel for
Borrower that is standard in commercial lending transactions and subject only
to customary qualifications, assumptions and exceptions opining, among other
things, that (1) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Total Defeasance
Collateral; (2) if a Securitization has occurred (a) the REMIC Trust formed
pursuant to such Securitization and/or any subsequent or prior Securitization
of the Loan or any portion thereof or interest therein will each not fail to
maintain their respective status as a “real estate




21









 






	 	 	 	mortgage investment conduit” within the meaning of Section 860D of the IRS
Code as a result of a Total Defeasance Event pursuant to this Section 2.8
and (b) the Total Defeasance Event would not (x) constitute a “significant
modification” of the Loan within the meaning of Treasury Regulation Section
1.1001-3 or (y) cause the Loan to fail to be a “qualified mortgage” within
the meaning of Section 860G(a)(3)(A) of the IRS Code; and (3) the Total
Defeasance Event will not result in a deemed exchange for purposes of the
IRS Code and will not adversely affect the status of the Note as
indebtedness for federal income tax purposes;
	 
	 	(F)	 	Borrower shall deliver to Lender a Rating Agency Confirmation
as to the Total Defeasance Event;
	 
	 	(G)	 	Borrower shall deliver an Officer’s Certificate certifying that
the requirements set forth in this Section 2.8 have been satisfied;
	 
	 	(H)	 	Borrower shall deliver a certificate of a “big four” or other
nationally recognized public accounting firm acceptable to Lender certifying
that the Total Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments; and
	 
	 	(I)	 	Borrower shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request.





          (ii) If Borrower has elected to defease the Note and the requirements of this Section 2.8 have
been satisfied, the Property shall be released from the lien of the Security Instrument and the
Total Defeasance Collateral pledged pursuant to the Security Agreement shall be the sole source of
collateral securing the Note. In connection with the release of the lien, Borrower shall submit to
Lender, not less than fifteen (15) Business Days prior to the Total Defeasance Date (or such
shorter time as is acceptable to Lender in its sole discretion), (A) a release of lien (and related
Loan Documents) for execution by Lender, which release shall be in a form appropriate in the
jurisdiction in which the Property is located and shall contain standard provisions protecting the
rights of the releasing lender with respect to payment of the Debt, and (B) a release of the
Guaranty, except that (1) such release shall only be with respect to matters that solely arise from
and after the date of such Total Defeasance Event, and (2) there shall be no release of those
continuing obligations which expressly survive pursuant to the terms of the Guaranty, the
Environmental Indemnity and Section 11.2 and Articles 12 and 13 hereof. In addition, Borrower
shall provide all other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release. Borrower shall pay all costs, taxes and expenses associated with the
release of the lien of the Security Instrument, including Lender’s reasonable attorneys’ fees.
Except as set forth in this Article 2, no repayment, prepayment or defeasance of all or any portion
of the Note shall cause, give rise to a right to require, or otherwise result in, the release of
the lien of the Security Instrument.




          (b) Intentionally Omitted.




          (c) On or before the date on which Borrower delivers the Total Defeasance Collateral, Borrower
or Successor Borrower (as applicable) shall open at any Eligible Institution






22









 







an Eligible Account (the “Defeasance Collateral Account”). The Defeasance Collateral Account
shall contain only (i) Total Defeasance Collateral and (ii) cash from interest and principal paid
on the Total Defeasance Collateral. All cash from interest and principal payments paid on the
Total Defeasance Collateral shall be paid over to Lender on each Monthly Payment Date and applied
first to accrued and unpaid interest and then to principal. Any cash from interest and principal
paid on the Total Defeasance Collateral not needed to pay the Scheduled Defeasance Payments shall
be paid to Borrower or Successor Borrower (as applicable). Borrower or Successor Borrower (as
applicable) shall cause the Eligible Institution at which the Total Defeasance Collateral is
deposited to enter into an agreement with Borrower or Successor Borrower (as applicable) and
Lender, satisfactory to Lender in its sole discretion, pursuant to which such Eligible Institution
shall agree to hold and distribute the Total Defeasance Collateral in accordance with this
Agreement. Borrower or Successor Borrower (as applicable) shall be the owner of the Defeasance
Collateral Account and shall report all income accrued on Total Defeasance Collateral for federal,
state and local income tax purposes in its income tax return. Borrower shall prepay all cost and
expenses associated with opening and maintaining the Defeasance Collateral Account. Lender shall
not in any way be liable by reason of any insufficiency in the Defeasance Collateral Account.




          (d) In connection with a Total Defeasance Event under this Section 2.8, Borrower shall
transfer and assign all obligations, rights and duties under and to the Note and the Security
Agreement, together with the Total Defeasance Collateral to a newly-created successor entity, which
entity shall be a Single Purpose Entity and which entity shall be designated or established by
Lender, at Lender’s option (the “Successor Borrower”). Lender shall also have the right to
purchase on behalf of Borrower, or cause to be purchased on behalf of Borrower, the pledged Total
Defeasance Collateral. Such rights to designate or establish the Successor Borrower as provided
above or to purchase, or cause the purchase of, on behalf of Borrower the pledged Total Defeasance
Collateral as provided above may be exercised by Wells Fargo Bank, N.A. (“Wells Fargo”) in its sole
discretion and shall be retained by Wells Fargo as the original Lender herein (and any successor or
assign of Wells Fargo under a specific assignment of such retained rights separate and apart from a
Secondary Market Transaction related to all or any portion of the Loan), notwithstanding any
Secondary Market Transaction related to all or any portion of the Loan. Such Successor Borrower
shall assume the obligations under the Note and the Security Agreement and Borrower shall be
relieved of its obligations under the Loan Documents (other than those obligations which by their
terms survive a repayment, defeasance or other satisfaction of the Loan and/or a transfer of the
Property in connection with Lender’s exercise of its remedies under the Loan Documents). Borrower
shall pay $1,000 to any such Successor Borrower as consideration for assuming the obligations under
the Note and the Security Agreement. Borrower shall pay all reasonable costs and expenses incurred
by Lender, including the cost of establishing the Successor Borrower and Lender’s reasonable
attorney’s fees and expenses, incurred in connection therewith.




          (e) Notwithstanding anything to the contrary contained in this Section 2.8, the parties hereto
hereby acknowledge and agree that after the Securitization of the Loan (or any portion thereof or
interest therein), with respect to any Lender approval or similar discretionary rights over any
matters contained in this Section (any such matter, a “Defeasance Approval Item”), such rights
shall be construed such that Lender shall only be permitted to withhold its consent or approval
with respect to any Defeasance Approval Item if the same fails to meet the Prudent Lender Standard.







23









 








     Section 2.9 Intentionally Omitted.



     Section 2.10 Release.



     Upon payment in full of the Debt, and satisfaction of all the covenants, warranties,
undertakings and agreements made in this Agreement and the other Loan Documents (including, without
limitation, repayment in full of the principal, interest and other amounts owing under the Note),
and all obligations, if any, of Lender for future advances have been terminated, then, and in that
event only, Lender shall release upon Borrower’s request and at Borrower’s cost and expense,
without representation or warranty, the Property or that portion thereof then held hereunder. The
recitals of any matters or facts in any release executed hereunder shall be conclusive proof of the
truthfulness thereof. To the extent permitted by law, the release may describe the grantee as “the
person or persons legally entitled thereto”. Lender shall not have any duty to determine the
rights of persons claiming to be rightful grantees of any release. When the Property has been
fully released, the last such release shall operate as a reassignment of all future rents, issues
and profits of the Property to the person or persons legally entitled thereto.



ARTICLE 3




REPRESENTATIONS AND WARRANTIES



     Borrower represents and warrants as of the Closing Date that:



     Section 3.1 Legal Status and Authority. Borrower (a) is duly organized, validly existing and
in good standing under the laws of its state of formation; (b) is duly qualified to transact
business and is in good standing in the State; and (c) has all necessary approvals, governmental
and otherwise, and full power and authority to own, operate and lease the Property. Borrower has
full power, authority and legal right to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the
terms of this Agreement, the Note, the Security Instrument and the other Loan Documents on
Borrower’s part to be performed and the Loan is permitted under the Cole Corporate Income Trust,
Inc. Investment and Borrowing Policies dated as of January 18, 2011.



     Section 3.2 Validity of Documents. (a) The execution, delivery and performance of this
Agreement, the Note, the Security Instrument and the other Loan Documents by Borrower and its
applicable Affiliates and the borrowing evidenced by the Note and this Agreement (i) are within the
power and authority of such parties; (ii) have been authorized by all requisite organizational
action of such parties; (iii) have received all necessary approvals and consents, corporate,
governmental or otherwise, required of such parties; (iv) will not violate, conflict with, result
in a breach of or constitute (with notice or lapse of time, or both) a material default under any
provision of law, any order or judgment of any court or Governmental Authority, any license,
certificate or other approval required to operate the Property or any portion thereof, Borrower’s
organizational documents, or any indenture, agreement or other instrument to which Borrower is a
party or by which it or any of its assets or the Property is or may be bound or affected,
including, without limitation, the Management Agreement; (v) will not result in the creation or
imposition of any lien, charge or encumbrance whatsoever upon any of its assets, except the lien
and security interest created hereby and by the other Loan Documents; and (vi)



24









 




will not require any authorization or license from, or any filing with, any Governmental
Authority (except for the recordation of the Security Instrument in appropriate land records in the
State and except for Uniform Commercial Code filings relating to the security interest created
hereby), (b) this Agreement, the Note, the Security Instrument and the other Loan Documents have
been duly executed and delivered by Borrower through the undersigned authorized representative of
Borrower and (c) this Agreement, the Note, the Security Instrument and the other Loan Documents
constitute the legal, valid and binding obligations of Borrower. The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor, to Borrower’s knowledge, would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (except
as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Creditors Rights Laws, and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law)), and Borrower has not asserted
any right of rescission, set-off, counterclaim or defense with respect thereto.




     Section 3.3 Litigation. There is no action, suit or proceeding, judicial, administrative or
otherwise (including any condemnation or similar proceeding), pending or, to Borrower’s knowledge,
threatened or contemplated against Borrower or Guarantor or against or affecting Borrower’s
interest in the Property or any portion thereof that has not been disclosed to Lender by Borrower
in writing in connection with the closing of the Loan, is not fully covered by insurance or, if
determined adversely to Borrower, would have a Material Adverse Effect.



     Section 3.4 Agreements. Borrower is not a party to any agreement or instrument or subject to
any restriction which would have a Material Adverse Effect. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or by which Borrower
or the Property (or any portion thereof) is bound. Borrower has no material financial obligation
under any agreement or instrument to which Borrower is a party or by which Borrower or the Property
(or any portion thereof) is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Property, including, without limitation, obligations under the
Leases and the Management Agreement, and (b) obligations under this Agreement, the Security
Instrument, the Note and the other Loan Documents. There is no agreement or instrument to which
Borrower is a party or by which Borrower is bound that would require the subordination in right of
payment of any of Borrower’s obligations hereunder or under the Note to an obligation owed to
another party.



     Section 3.5 Financial Condition.



          (a) Borrower is solvent, and no proceeding under Creditors Rights Laws with respect to
Borrower has been initiated and Borrower has received reasonably equivalent value for the granting
of the Security Instrument.




          (b) No petition in bankruptcy has been filed by or against Borrower or Guarantor in the last
ten (10) years, and neither Borrower nor Guarantor in the last ten (10) years has ever made any
assignment for the benefit of creditors or taken advantage of any Creditors Rights Laws.







25









 








          (c) Borrower is not contemplating either the filing of a petition by it under any Creditors
Rights Laws or the liquidation of its assets or property, and Borrower does not have any knowledge
of any Person contemplating the filing of any such petition against it.




     Section 3.6 Disclosure. To Borrower’s knowledge, Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could cause any representation
or warranty made herein to be materially misleading.



     Section 3.7 No Plan Assets. As of the date hereof and throughout the term of the Loan (a)
Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA,
subject to Title I of ERISA, (b) Borrower is not and will not be a “governmental plan” within the
meaning of Section 3(32) of ERISA, (c) transactions by or with Borrower are not and will not be
subject to any state statute regulating investments of, or fiduciary obligations with respect to,
governmental plans; and (d) none of the assets of Borrower constitutes or will constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.



     Section 3.8 Not a Foreign Person. Borrower is not a “foreign person” within the meaning of §
1445(f)(3) of the IRS Code.



     Section 3.9 Business Purposes. The Loan is solely for the business purpose of Borrower, and
is not for personal, family, household, or agricultural purposes.



     Section 3.10 Borrower Information. Borrower’s principal place of business and its chief
executive office as of the date hereof is 2555 E. Camelback Road, Suite 400, Phoenix, Arizona
85016. Borrower’s mailing address, as set forth in the opening paragraph hereof or as changed in
accordance with the provisions hereof, is true and correct. Borrower is not subject to back-up
withholding taxes.



     Section 3.11 Status of Property.



          (a) To Borrower’s knowledge, Borrower has obtained all necessary certificates, licenses and
other approvals, governmental and otherwise, necessary for the operation of the Property and the
conduct of its business and all required zoning, building code, land use, environmental and other
similar permits or approvals, all of which are in full force and effect as of the date hereof and
not presently subject to revocation, suspension, forfeiture or modification.




          (b) To Borrower’s knowledge, the Property and the present and contemplated use and occupancy
thereof are in material compliance with all applicable zoning ordinances, building codes, land use
laws, Environmental Laws and other similar Applicable Law.




          (c) The Property is served by all utilities required for the current or contemplated use
thereof. All utility service is provided by public utilities and the Property has accepted or is
equipped to accept such utility service.




          (d) The Property is served by public water and sewer systems.







26









 








          (e) All public roads and streets necessary for service of and access to the Property for the
current or contemplated use thereof have been completed, are serviceable and are physically and
legally open for use by the public. The Property has either direct access to such public roads or
streets or access to such public roads or streets by virtue of a perpetual easement or similar
agreement inuring in favor of Borrower and any subsequent owners of the Property.




          (f) The Property is free from damage caused by fire or other casualty. Except for any matters
disclosed in the property condition report delivered to Lender with respect to the Property, to
Borrower’s knowledge, the Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good condition, order and
repair in all material respects; there exists no structural or other material defects or damages in
the Property, whether latent or otherwise, and Borrower has not received notice from any insurance
company or bonding company of any defects or inadequacies in the Property, or any part thereof,
which would adversely affect the insurability of the same or cause the imposition of extraordinary
premiums or charges thereon or of any termination or threatened termination of any policy of
insurance or bond.




          (g) To Borrower’s knowledge, all costs and expenses of any and all labor, materials, supplies
and equipment used in the construction of the Improvements have been paid in full, other than costs
and expenses for the Mandatory Expansion Space. To Borrower’s knowledge, there are no mechanics’
or similar liens or claims which have been filed for work, labor or material (and no rights are
outstanding that under Applicable Law could give rise to any such liens other than rights relating
to the Mandatory Expansion Space) affecting the Property which are or may be prior to or equal to
the lien of the Security Instrument.




          (h) Borrower has paid in full for, and is the owner of, all furnishings, fixtures and
equipment (other than Tenants’ property) used in connection with the operation of the Property,
free and clear of any and all security interests, liens or encumbrances, except the lien and
security interest created by this Agreement, the Note, the Security Instrument and the other Loan
Documents.




          (i) To Borrower’s knowledge, all liquid and solid waste disposal, septic and sewer systems
located on the Property are in a good and safe condition and repair and in compliance with all
Applicable Law.




          (j) No portion of the Improvements is located in an area identified by the Federal Emergency
Management Agency or any successor thereto as an area having special flood hazards pursuant to the
Flood Insurance Acts or, if any portion of the Improvements is located within such area, Borrower
has obtained and will maintain the insurance prescribed in Section 7.1(a) hereof. To Borrower’s
knowledge, no part of the Property consists of or is classified as wetlands, tidelands or swamp and
overflow lands.




          (k) Except as may be shown on the survey of the Property delivered to Lender in connection
with the Loan, all the Improvements lie within the boundaries of the Land and any building
restriction lines applicable to the Land.







27









 








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




     Section 3.12 Financial Information. All financial data, including, without limitation, the
balance sheets, statements of cash flow, statements of income and operating expense and rent rolls,
that have been delivered to Lender in respect of Borrower, Guarantor and/or the Property (a) are
true, complete and correct in all material respects, (b) accurately represent the financial
condition of Borrower, Guarantor or the Property, as applicable, as of the date of such reports,
and (c) to the extent prepared or audited by an independent certified public accounting firm, have
been prepared in accordance with GAAP (or such other basis of accounting acceptable to Lender and
consistently applied) throughout the periods covered, except as disclosed therein. Except for the
Permitted Encumbrances (but subject to Section 5.1(a)(vii)), Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower and reasonably
likely to have a Material Adverse Effect, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Borrower or Guarantor from that set
forth in said financial statements.



     Section 3.13 Condemnation. No Condemnation or other proceeding has been commenced or, to
Borrower’s knowledge, is threatened or contemplated with respect to all or any portion of the
Property or for the relocation of the access to the Property.



     Section 3.14 Separate Lots. The Property is assessed for real estate tax purposes as one or
more wholly independent tax lot or lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or improvements is assessed and taxed
together with the Property or any portion thereof.



     Section 3.15 Insurance. Borrower has obtained and has delivered to Lender certified copies or
certificates of all Policies reflecting the insurance coverages, amounts and other requirements set
forth in this Agreement. There are no present claims of any material nature under any of the
Policies, and to Borrower’s knowledge, no Person, including Borrower, has done, by act or omission,
anything which would impair the coverage of any of the Policies.



     Section 3.16 Use of Property. The Property is used exclusively as an office building and
other appurtenant and related uses.



     Section 3.17 Leases and Rent Roll. Except as disclosed in the rent roll for the Property
delivered to and approved by Lender (the “Rent Roll”) and the aging report and Tenant estoppels
delivered to and approved by Lender, (a) Borrower is the sole owner of the entire lessor’s interest
in the Leases; (b) the Leases are in full force and effect; (c) all of the Leases are arms-length
agreements with bona fide, independent third parties; (d) to Borrower’s knowledge, no party under
any Lease is in default; (e) all Rents due have been paid in full and no Tenant is in arrears in
its payment of Rent; (f) none of the Rents reserved in the Leases have been assigned or otherwise
pledged or hypothecated, except pursuant to the Loan Documents; (g) none of the Rents have been
collected for more than one (1) month in advance (except a security deposit



28









 




shall not be deemed rent collected in advance); (h) the premises demised under the Leases have
been completed (other than work described in the Fifth Amendment to Lease or relating to the
Mandatory Expansion Space) and the Tenants under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis; (i) to Borrower’s knowledge, there exist no offsets
or defenses to the payment of any portion of the Rents and Borrower has no monetary obligation to
any Tenant under any Lease; (j) Borrower has received no notice from any Tenant challenging the
validity or enforceability of any Lease; (k) there are no agreements between Borrower or Manager
with the Tenants under the Leases with respect to the Property, other than as expressly set forth
in each Lease; (l) the Leases are valid and enforceable against Borrower and, to Borrower’s
knowledge, the Tenants set forth therein; (m) no Lease contains an option to purchase, right of
first refusal to purchase, right of first refusal to lease additional space at the Property, or any
other similar provision that is still in effect; (n) to Borrower’s knowledge, no person or entity
has any possessory interest in, or right to occupy, the Property except under and pursuant to a
Lease; (o) [Intentionally Omitted]; (p) all security deposits relating to the Leases reflected on
the Rent Roll have been collected by Borrower; (q) no brokerage commissions or finders fees are due
and payable regarding any Lease; (r) each Tenant is in actual, physical occupancy of the premises
demised under its Lease; and (s) no Tenant is, to Borrower’s knowledge, a debtor in any state or
federal bankruptcy or insolvency proceeding.




     Section 3.18 Filing and Recording Taxes. All mortgage, mortgage recording, stamp, intangible
or other similar tax required to be paid by any Person under Applicable Law currently in effect in
connection with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of this Agreement, the Security Instrument, the Note and the other Loan
Documents, including, without limitation, the Security Instrument, have been paid or will be paid,
and, under current Applicable Law, the Security Instrument is enforceable in accordance with its
terms by Lender (or any subsequent holder thereof), except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Creditors Rights Laws, and by
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).



     Section 3.19 Management Agreement. The Management Agreement is in full force and effect and
there is no default thereunder by any party thereto and, to Borrower’s knowledge, no event has
occurred that, with the passage of time and/or the giving of notice would constitute a default
thereunder. As of the date hereof, no management fees under the Management Agreement are
delinquent.



     Section 3.20 Illegal Activity/Forfeiture.



          (a) To Borrower’s knowledge, no portion of the Property has been or will be purchased,
improved, equipped or furnished with proceeds of any illegal activity and to Borrower’s knowledge,
there are no illegal activities or activities relating to controlled substances at the Property.




          (b) There has not been and shall never be committed by Borrower or, to Borrower’s knowledge,
any other person in occupancy of or involved with the operation or use of the Property any act or
omission affording the federal government or any state or local government the right of forfeiture
as against the Property or any part thereof or any monies paid in performance of Borrower’s
obligations under this Agreement, the Note, the Security






29









 







Instrument or the other Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of forfeiture.




     Section 3.21 Taxes. Borrower has filed all federal, state, county, municipal, and city
income, personal property and other tax returns required to have been filed by it and has paid all
taxes and related liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. Borrower knows of no basis for any additional assessment in respect of
any such taxes and related liabilities for prior years.



     Section 3.22 Permitted Encumbrances. To Borrower’s knowledge, none of the Permitted
Encumbrances, individually or in the aggregate, materially interferes with the benefits of the
security intended to be provided by this Agreement, the Security Instrument, the Note and the other
Loan Documents, materially and adversely affects the value or marketability of the Property or any
portion thereof, materially and adversely impairs the use or the operation of the Property or
impairs Borrower’s ability to pay its obligations in a timely manner.



     Section 3.23 Third Party Representations. Each of the representations and the warranties made
by Guarantor in the other Loan Documents (if any) are true, complete and correct in all material
respects.



     Section 3.24 Intentionally Omitted.



     Section 3.25 Federal Reserve Regulations. No part of the proceeds of the Loan will be used
for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Applicable Law or by the terms and conditions of this Agreement, the
Security Instrument, the Note or the other Loan Documents.



     Section 3.26 Investment Company Act. Borrower is not (a) an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940,
as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to borrow money.



     Section 3.27 Fraudulent Conveyance. Borrower (a) has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and (b) received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving
effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately
following the execution and delivery of the Loan Documents, exceed Borrower’s total liabilities,
including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The
fair saleable value of Borrower’s assets is and will, immediately following the execution and
delivery of the Loan Documents, be greater than Borrower’s probable liabilities, including the
maximum amount of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower’s assets do not and, immediately following the execution and delivery of the
Loan Documents will not, constitute unreasonably small capital to carry out its



30









 




business as conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of Borrower).




     Section 3.28 Embargoed Person. To Borrower’s knowledge, as of the date hereof and at all
times throughout the term of the Loan, including after giving effect to any transfers of interests
permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower,
Operating Partnership or Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or country which is a sanctioned person, entity or country under
U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder (including regulations administered by the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of the Treasury and the Specially Designated
Nationals List maintained by OFAC) with the result that the investment in Borrower and/or
Guarantor, as applicable (whether directly or indirectly), is prohibited by Applicable Law or the
Loan made by Lender is in violation of Applicable Law (“Embargoed Person”); (b) unless expressly
waived in writing by Lender, no Embargoed Person has any interest of any nature whatsoever in
Borrower, Operating Partnership or Guarantor, as applicable, with the result that the investment in
Borrower, Operating Partnership and/or Guarantor, as applicable (whether directly or indirectly),
is prohibited by Applicable Law or the Loan is in violation of Applicable Law; and (c) to the best
knowledge of Borrower, none of the funds of Borrower, Operating Partnership or Guarantor, as
applicable, have been derived from any unlawful activity with the result that the investment in
Borrower, Operating Partnership and/or Guarantor, as applicable (whether directly or indirectly),
is prohibited by Applicable Law or the Loan is in violation of Applicable Law. With respect to
parties owning direct or indirect interests in Operating Partnership or Guarantor, Lender
acknowledges that Borrower has relied exclusively on its U.S. broker-dealer network to implement
the normal and customary investor screening practices mandated by applicable law and FINRA
regulations in making the foregoing representation. Borrower covenants and agrees that in the
event Borrower receives any notice that Borrower, Operating Partnership or Guarantor (or any of
their respective beneficial owners, affiliates or participants) or any Person that has an interest
in the Property is designated as an Embargoed Person, Borrower shall immediately notify Lender in
writing. At Lender’s option, it shall be an Event of Default hereunder if Borrower, Guarantor,
Operating Partnership or any other party to the Loan (other than Lender, any Affiliate of Lender or
any party acting on behalf of Lender) is designated as an Embargoed Person.



     Section 3.29 Patriot Act. All capitalized words and phrases and all defined terms used in the
USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders,
rules and regulations of the United States government and its various executive departments,
agencies and offices related to the subject matter of the Patriot Act (collectively referred to in
this Section only as the “Patriot Act”) are incorporated into this Section. Borrower hereby
represents and warrants that Borrower, Operating Partnership and Guarantor and each and every
Person that is an Affiliate of Borrower, Operating Partnership and/or Guarantor is: (i) in full
compliance with all applicable requirements of the Patriot Act and any regulations issued
thereunder; (ii) operated under policies, procedures and practices, if applicable, that are in
compliance with the Patriot Act and available to Lender for Lender’s review and inspection during
normal business hours and upon reasonable prior notice; (iii) not in



31









 




receipt of any notice from the Secretary of State or the Attorney General of the United States
or any other department, agency or office of the United States claiming a violation or possible
violation of the Patriot Act; (iv) not a person who has been determined by competent authority to
be subject to any of the prohibitions contained in the Patriot Act; and (v) not owned or controlled
by or now acting and or will in the future act for or on behalf of any person who has been
determined to be subject to the prohibitions contained in the Patriot Act. With respect to parties
owning direct or indirect interests in Operating Partnership or Guarantor, Lender acknowledges that
Borrower has relied exclusively on its U.S. broker-dealer network to implement the normal and
customary investor screening practices mandated by Applicable Law and FINRA regulations in making
the foregoing representation. Borrower covenants and agrees that in the event Borrower receives
any notice that Borrower, Operating Partnership or Guarantor (or any of their respective beneficial
owners, affiliates or participants) or any Person that has an interest in the Property is indicted,
arraigned, or custodially detained on charges involving money laundering or predicate crimes to
money laundering, Borrower shall immediately notify Lender. At Lender’s option, it shall be an
Event of Default hereunder if Borrower, Guarantor, Operating Partnership or any other party to the
Loan (other than Lender, any Affiliate of Lender or any party acting on behalf of Lender) is
indicted, arraigned or custodially detained on charges involving money laundering or predicate
crimes to money laundering.




     Section 3.30 Organizational Chart. The organizational chart attached as Schedule III hereto,
relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and
as of the date hereof.



     Section 3.31 Bank Holding Company. Borrower is not a “bank holding company” or a direct or
indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956,
as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.



     Section 3.32 No Breach of Fiduciary Duty. No Person that is currently an Affiliate of
Borrower has breached any fiduciary duty owed by such Person to any other Person now or previously
an Affiliate of Borrower.



     Section 3.33 Property Document Representations. To Borrower’s knowledge, each REA is in full
force and effect and neither Borrower nor, to Borrower’s knowledge, any other party to any REA, is
in material default thereunder, and to Borrower’s knowledge, there are no conditions which, with
the passage of time or the giving of notice, or both, would constitute a default thereunder. To
Borrower’s knowledge, except as set forth on Schedule IV hereto, no REA has been modified, amended
or supplemented.



     Section 3.34 No Change in Facts or Circumstances.



     All information submitted by Borrower or Guarantor to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection with the Loan or in
satisfaction of the terms thereof and all statements of fact made by Borrower and/or Guarantor in
this Agreement or in the other Loan Documents, are accurate, complete and correct in all material
respects. There has been no material adverse change in any condition, fact, circumstance or event
that would make any such information inaccurate, incomplete or otherwise misleading in any material
respect or that would otherwise have a Material Adverse Effect.



32









 





     Section 3.35 Guarantor Representations. Borrower hereby represents and warrants that, as of
the date hereof and continuing thereafter for the term of the Loan, the representations and
warranties set forth in Sections 3.1 through 3.8, 3.12, 3.18, 3.21, 3.23, 3.27, 3.28, 3.29, 3.32,
and 3.34 above are true and correct with respect to Guarantor, as the same is applicable to
Guarantor. For such purpose, wherever the term “Borrower” is used in each of the foregoing
Subsections it shall be deemed to be “Guarantor”, with respect to such party.



     Borrower agrees that, unless expressly provided otherwise, all of the representations and
warranties of Borrower set forth in this Article 3 and elsewhere in this Agreement and the other
Loan Documents shall survive for so long as any portion of the Debt remains owing to Lender. All
representations, warranties, covenants and agreements made in this Agreement and in the other Loan
Documents shall be deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.



ARTICLE 4




BORROWER COVENANTS



     From the date hereof and until payment and performance in full of all obligations of Borrower
under this Agreement, the Security Instrument, the Note and the other Loan Documents or the earlier
release of the lien of the Security Instrument (and all related obligations) in accordance with the
terms of this Agreement, the Security Instrument, the Note and the other Loan Documents, Borrower
hereby covenants and agrees with Lender that:



     Section 4.1 Existence. Borrower will continuously maintain (a) its existence and shall not
dissolve or permit its dissolution, (b) its rights to do business in the applicable State, and (c)
its franchises and trade names, if any.



     Section 4.2 Applicable Law.



          (a) Borrower shall promptly comply and shall cause the Property to comply in all material
respects with all Applicable Law affecting the Borrower and the Property, or the use thereof,
including, without limitation, all Environmental Laws, and Applicable Law relating to OFAC,
Embargoed Persons and the Patriot Act.




          (b) Borrower shall from time to time, upon Lender’s request, provide Lender with evidence
reasonably satisfactory to Lender that the Property complies with all Applicable Law or is exempt
from compliance with Applicable Law.




          (c) Borrower shall give prompt notice to Lender of the receipt by Borrower of any notice
related to a violation of any Applicable Law and upon learning of the commencement of any
proceedings or investigations which relate to compliance with Applicable Law.




          (d) After prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the validity of any Applicable Law, the applicability of any Applicable Law to Borrower
or the Property or any alleged violation of any Applicable Law, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any instrument to which Borrower




33









 




is subject and shall not constitute a default thereunder and such proceeding shall be
permitted by and conducted in accordance with all Applicable Law; (iii) neither the Property nor
any part thereof or interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost; (iv) Borrower shall promptly upon final determination thereof comply with any
such Applicable Law determined to be valid or applicable or cure any violation of any Applicable
Law; (v) such proceeding shall suspend the enforcement of the contested Applicable Law against
Borrower or the Property; and (vi) Borrower shall furnish such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure compliance with such Applicable
Law, together with all interest and penalties payable in connection therewith. Lender may apply
any such security or part thereof, as necessary to cause compliance with such Applicable Law at any
time when, in the reasonable judgment of Lender, the validity, applicability or violation of such
Applicable Law is finally established or the Property (or any part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost.




     Notwithstanding the foregoing provisions of this Section 4.2(d), to the extent any Lease with
a Tenant remains in effect and such Tenant remains liable for the obligations under its Lease, such
Tenant shall have the right to exercise any contest rights explicitly set forth in such Lease in
accordance with the express terms thereof and, to the extent such rights conflict or are
inconsistent with the provisions of this Section 4.2(d), the provisions set forth in such Lease
shall govern and control. Borrower agrees to notify Lender in writing in the event that a Tenant
under any Lease exercises its right to contest thereunder and agrees to deliver to Lender any
correspondence received or delivered by Borrower pursuant to such Lease as it relates to such
Tenant’s right to contest.



     Section 4.3 Maintenance and Use of Property. Borrower shall use commercially reasonable
efforts to cause the Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or altered (except for
normal replacement of the Personal Property or as otherwise permitted pursuant to Section 4.21
hereof) without the consent of Lender, such consent not to be unreasonably withheld, conditioned or
delayed. Subject to the terms and conditions of, and the rights of Tenants under the Leases,
Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed
by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding
of the character referred to in Section 3.13 hereof and shall complete and pay for any structure at
any time in the process of construction or repair on the Land. Without the consent of Lender, not
to be unreasonably withheld, conditioned or delayed, Borrower shall not initiate, join in,
acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other
public or private restriction, limiting or defining the uses which may be made of the Property or
any part thereof. If under applicable zoning provisions the use of all or any portion of the
Property is or shall become a nonconforming use, Borrower will not cause or permit the
nonconforming use to be discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender, not to be unreasonably withheld, conditioned or delayed.



     Section 4.4 Waste. Borrower shall not, and shall use commercially reasonable efforts to cause
each Tenant occupying the Property (or any portion thereof) to not, commit or suffer any waste of
the Property or make any change in the use of the Property which will in any way materially
increase the risk of fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or give cause for cancellation of any Policy, or do or permit



34









 




to be done thereon anything that may in any way impair the value of the Property or the
security for the Loan. Borrower will not, without the prior written consent of Lender, permit any
drilling or exploration for or extraction, removal, or production of any minerals from the surface
or the subsurface of the Property, regardless of the depth thereof or the method of mining or
extraction thereof.




     Section 4.5 Taxes and Other Charges.



          (a) Borrower shall pay, or cause to be paid, all Taxes and Other Charges now or hereafter
levied or assessed or imposed against the Property or any part thereof prior to delinquency.
Borrower shall furnish to Lender receipts for the payment of the Taxes and the Other Charges or
other evidence satisfactory to Lender that the Taxes and Other Charges have been so paid or are not
then delinquent no later than five (5) Business Days prior to the date on which the Taxes and/or
Other Charges would otherwise be delinquent if not paid (provided, however, that if the Tenant
under a Lease is required to pay such Taxes or Other Charges directly to the applicable
Governmental Authority and Borrower timely requests and diligently pursues evidence of such
payment, and further provided that no enforcement action has been commenced by the applicable
Governmental Authority resulting from Tenant’s failure to pay Taxes or Other Charges, then Borrower
shall have an additional thirty (30) day period to provide such evidence to Lender). Borrower
shall not suffer any lien or charge whatsoever which may be or become a lien or charge against the
Property (or any portion thereof), other than Permitted Encumbrances. Borrower shall promptly
cause to be paid and discharged any lien or charge whatsoever which may be or become a lien or
charge against the Property (or any portion thereof), and shall promptly pay, or cause to be paid,
for all utility services provided to the Property (or any portion thereof).




          (b) After prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder and such proceeding shall
be permitted by and conducted in accordance with all Applicable Law; (iii) neither the Property nor
any part thereof or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof pay the amount of
any such Taxes or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the collection of such contested
Taxes or Other Charges from the Property; and (vi) Borrower shall furnish such security as may be
reasonably required in the proceeding, or deliver to Lender such reserve deposits as may be
reasonably requested by Lender, to insure the payment of any such Taxes or Other Charges, together
with all interest and penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of
Lender, the entitlement of such claimant is established or the Property (or part thereof or
interest therein) shall be in danger of being sold, forfeited, terminated, canceled or lost or
there shall be any danger of the lien of the Security Instrument being primed by any related lien.







35









 








     Notwithstanding the foregoing provisions of this Section 4.5(b), to the extent the Lease with
a Tenant remains in effect and such Tenant remains liable for the obligations under its Lease, such
Tenant shall have the right to exercise any contest rights explicitly set forth in such Lease in
accordance with the express terms thereof and, to the extent such rights conflict or are
inconsistent with the provisions of this Section 4.5(b), the provisions set forth in such Lease
shall govern and control. Borrower agrees to notify Lender in writing in the event that a Tenant
under any Lease exercises its right to contest thereunder and agrees to deliver to Lender any
correspondence received or delivered by Borrower pursuant to such Lease as it relates to such
Tenant’s right to contest.



     Section 4.6 Litigation. Borrower shall give prompt written notice to Lender upon learning of
any litigation or governmental proceedings pending or threatened in writing against Borrower, any
Tenant or the Property, which might have a Material Adverse Effect.



     Section 4.7 Access to Property. Subject to the terms and conditions of, and the rights of
Tenants under the Leases, Borrower shall permit agents, representatives and employees of Lender to
inspect the Property or any part thereof at reasonable hours upon reasonable advance notice. Any
such inspection shall be at the expense of Lender unless an Event of Default is continuing, in
which event, the cost of such inspection shall be paid by Borrower.



     Section 4.8 Notice of Default. Borrower shall promptly advise Lender of any material adverse
change in Borrower’s and/or Guarantor’s condition (financial or otherwise) or of the occurrence of
any Default or Event of Default of which Borrower has knowledge.



     Section 4.9 Cooperate in Legal Proceedings. Except with respect to any claim by Borrower
against Lender, Borrower shall cooperate fully with Lender with respect to any proceedings before
any court, board or other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the Note, the Security Instrument or the
other Loan Documents and, in connection therewith, permit Lender, at Lender’s election, to
participate in any such proceedings.



     Section 4.10 Performance by Borrower. Borrower shall in a timely manner observe, perform and
fulfill, in all material respects, each and every covenant, term and provision to be observed and
performed by Borrower under this Agreement, the Security Instrument, the Note and the other Loan
Documents and any other agreement or instrument affecting or pertaining to the Property and any
amendments, modifications of changes thereto.



     Section 4.11 Awards. Subject to the terms and conditions of the Leases, Borrower shall
cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds
lawfully or equitably payable to Borrower in connection with the Property, and Lender shall be
reimbursed for any reasonable expenses incurred in connection therewith (including reasonable,
actual attorneys’ fees and disbursements, and the payment by Lender of the actual expense of an
appraisal on behalf of Borrower in case of a Casualty or Condemnation affecting the Property or any
part thereof) out of such Awards or Insurance Proceeds.



     Section 4.12 Books and Records.



36









 





          (a) Borrower shall keep adequate books and records of account in accordance with GAAP (or such
other basis of accounting acceptable to Lender in its reasonable discretion and consistently
applied), and furnish to Lender:




          (i) quarterly (and prior to a Securitization, monthly, except for the last month of a quarter)
certified rent rolls (in the form approved by Lender in connection with the closing of the Loan)
and tenant sales reports (if applicable), each signed and dated by a Responsible Officer of
Borrower, within thirty (30) days after the end of each calendar month (except for the last month
of a quarter) or forty-five (45) days after the end of each calendar quarter, as applicable;




          (ii) quarterly (and prior to a Securitization, monthly, except for the last month of a
quarter) operating statements of the Property, prepared and certified by a Responsible Officer of
Borrower in the form reasonably required by Lender, detailing the revenues received, the expenses
incurred and the components of Underwritable Cash Flow before and after Debt Service for the period
of calculation and containing appropriate year-to-date information, within thirty (30) days after
the end of each calendar month (except for the last month of a quarter) or forty-five (45) days
after the end of each calendar quarter, as applicable;




          (iii) an annual balance sheet, profit and loss statement, statement of cash flow, and
statement of change in financial position of Borrower, prepared and certified by a Responsible
Officer of Borrower within ninety (90) days after the close of each fiscal year of Borrower;




          (iv) an annual operating statement of the Property certified by a Responsible Officer of
Borrower in the form reasonably required by Lender, detailing the revenues received, the expenses
incurred and the components of Underwritable Cash Flow before and after Debt Service for the period
of calculation and containing appropriate year-to-date information, within ninety (90) days after
the close of each fiscal year of Borrower;




          (v) by no later than January 15 of each calendar year, an annual operating budget for such
calendar year presented on a monthly basis consistent with the annual operating statement described
above for the Property, including cash flow projections for the upcoming year and all proposed
capital replacements and improvements, which such budget shall not take effect until approved by
Lender (each such annual budget, individually and/or collectively (as the context may require), an
“Annual Budget”). Lender’s failure to approve such Annual Budget within thirty (30) days after
Lender’s receipt of an Annual Budget shall be deemed to constitute Lender’s approval of such Annual
Budget, provided that said written request to Lender conspicuously states in 12 point or larger
bold type “PURSUANT TO SECTION 4.12(a)(v) OF THE LOAN AGREEMENT, BORROWER’S REQUEST FOR APPROVAL OF
THE ANNUAL BUDGET SHALL BE DEEMED APPROVED IF LENDER DOES NOT DECLINE APPROVAL IN WRITING OR
REQUEST ADDITIONAL INFORMATION IN WRITING WITHIN THIRTY (30) DAYS OF THIS LETTER.”;




          (vi) [intentionally omitted];




          (vii) [intentionally omitted]; and




          (viii) the Officer’s Certificate required pursuant to Section 5.3 hereof.








37









 








          (b) Upon reasonable request from Lender, Borrower shall furnish in a timely manner to Lender:




          (i) a property management report for the Property, showing deposits received from tenants and
any other information requested by Lender, in reasonable detail and certified by a Responsible
Officer of Borrower to be true and complete, but no more frequently than quarterly; and




          (ii) an accounting of all security deposits held in connection with any Lease of any part of
the Property, including the name and identification number of the accounts in which such security
deposits are held, the name and address of the financial institutions in which such security
deposits are held and the name of the person to contact at such financial institution, along with
any authority or release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions.




          (c) Within ten (10) Business Days of Lender’s request, Borrower shall furnish Lender (and
shall cause Guarantor to furnish to Lender) with such other additional financial or management
information (including State and Federal tax returns) as may, from time to time, be reasonably
required by Lender in form and substance satisfactory to Lender. Borrower shall furnish to Lender
and its agents convenient facilities for the examination and audit of any such books and records at
any reasonable time from time to time during business hours upon reasonable advance notice.




          (d) Borrower agrees that all Required Financial Items (defined below) to be delivered to
Lender pursuant to this Section 4.12 shall: (i) be complete and correct in all material respects;
(ii) present fairly the financial condition of the party as of the applicable date of such
certification; (iii) disclose all liabilities that are required to be reflected or reserved
against; and (iv) be prepared (A) in electronic formats, and if requested by Lender, also delivered
in hardcopy form, and (B) in accordance with GAAP (or such other basis of accounting acceptable to
Lender and consistently applied). Borrower shall be deemed to warrant and represent that, as of the
date of delivery of any such financial statement, there has been no material adverse change in
financial condition, nor have any assets or properties been sold, transferred, assigned, mortgaged,
pledged or encumbered since the date of such financial statement except as disclosed by Borrower in
a writing delivered to Lender. Borrower agrees that all Required Financial Items shall not contain
any misrepresentation or omission of a material fact.




          (e) Borrower acknowledges the importance to Lender of the timely delivery of each of the items
required by this Section 4.12 (each, a “Required Financial Item” and, collectively, the “Required
Financial Items”). In the event Borrower fails to deliver to Lender any of the Required Financial
Items within ten (10) Business Days after Lender’s delivery of notice to Borrower of Borrower’s
failure to deliver the Required Financial Items (each such event, a “Reporting Failure”), in
addition to constituting an Event of Default hereunder and without limiting Lender’s other rights
and remedies with respect to the occurrence of such an Event of Default, Borrower shall pay upon
demand to Lender the sum of $1,000.00 per occurrence for each Reporting Failure. It shall
constitute a further Event of Default hereunder if any such payment is not received by Lender
within thirty (30) days of the date on which such payment is so demanded and Lender shall be
entitled to the exercise of all of its rights and remedies provided hereunder.




38









 





     Section 4.13 Estoppel Certificates.



          (a) After request by Lender, Borrower, within ten (10) Business Days of such request, shall
furnish Lender or any proposed assignee with a statement, duly acknowledged and certified, setting
forth (i) the original principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, (iv) the terms of payment and maturity date of the Note,
(v) the date installments of interest and/or principal were last paid, (vi) that, except as
provided in such statement, no Event of Default exists, (vii) that this Agreement, the Note, the
Security Instrument and the other Loan Documents are valid, legal and binding obligations and have
not been modified or if modified, giving particulars of such modification, (viii) whether any
offsets or defenses exist against the obligations secured hereby and, if any are alleged to exist,
a detailed description thereof, (ix) that, to Borrower’s knowledge, all Leases are in full force
and effect and have not been modified (or if modified, setting forth all modifications), (x) the
date to which the Rents thereunder have been paid pursuant to the Leases, (xi) whether or not, to
Borrower’s knowledge after due inquiry of the Manager, any of the lessees under the Leases are in
default under the Leases, and, if any of the lessees are in default, setting forth the specific
nature of all such defaults, (xii) the amount of security deposits held by Borrower under each
Lease and that such amounts are consistent with the amounts required under each Lease, and (xiii)
as to any other matters reasonably requested by Lender and reasonably related to the Leases, the
obligations created and evidenced hereby and by the Security Instrument or the Property. It being
understood that Lender shall not exercise its right pursuant to this subsection, more than two (2)
times during each calendar year unless there is an Event of Default.




          (b) Borrower shall use commercially reasonable efforts to deliver to Lender, promptly upon
request, duly executed estoppel certificates from any one or more Tenants as required by Lender
attesting to such facts regarding the Lease as Lender may require, including, but not limited to,
attestations that each Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been paid more than one month in
advance, except as security, and that the lessee claims no defense or offset against the full and
timely performance of its obligations under the Lease. It being understood that, notwithstanding
anything to the contrary in this subsection (b), (1) to the extent that a particular Lease provides
for a specific form of estoppel or limits the matters to which a particular Tenant is required to
certify, Lender shall accept such estoppel set forth in or contemplated by the Lease to satisfy
this subsection (b) and (2) Lender shall not exercise its right, pursuant to this subsection, more
than two (2) times during each calendar year unless there is an Event of Default.




          (c) In connection with the Securitization of the Loan (or any portion thereof or interest
therein), at Lender’s request, Borrower shall provide an estoppel certificate to any Investor or
any prospective Investor in such form, substance and detail as Lender, such Investor or prospective
Investor may reasonably require.




          (d) Borrower shall use commercially reasonable efforts to deliver to Lender, upon request,
estoppel certificates from each party under the Property Documents in form and substance reasonably
acceptable to Lender. It being understood that, notwithstanding anything to the contrary in this
subsection (d), (1) to the extent that a particular Property Document provides for a specific form
of estoppel, Lender shall accept such estoppel to satisfy this




39









 




subsection (d) and (2) Lender shall not exercise its right, pursuant to this subsection, more
than two (2) times during each calendar year unless there is an Event of Default.




     Section 4.14 Leases and Rents.



          (a) All Leases and renewals of Leases (provided, however, that any renewal of existing Leases
shall be subject to the terms of such Lease) executed after the date hereof shall (i) provide for
rental rates reasonably comparable to existing local market rates for similar properties, (ii) be
on commercially reasonable terms with unaffiliated, third parties (unless otherwise consented to by
Lender), (iii) provide that such Lease is subordinate to the Security Instrument and that the
lessee will attorn to Lender and any purchaser at a foreclosure sale, (iv) not contain any terms
which would have a Material Adverse Effect and (v) with respect to any Major Lease, shall be
subject to Lender’s prior written approval as provided herein. Borrower shall not, without the
prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or
delayed, enter into, enter into any agreement with respect to (including, without limitation, any
non-disturbance agreement), renew, extend, amend, modify, permit any assignment of, waive any
provisions of, release any party to, terminate, exercise any recapture rights with respect to,
reduce rents under, accept a surrender of space under, or shorten the term of, in each case, any
Major Lease; provided, however, that (x) such consent shall not be required to the extent that the
Major Lease provides for an extension or renewal that may be exercised in the Tenant’s discretion,
and (y) Lender hereby consents to the Fifth Amendment to Lease. Lender shall execute and deliver a
Subordination Non-Disturbance and Attornment Agreement on Lender’s then current standard form (or
such other reasonable form requested by such Tenants and reasonably approved by Lender) to Tenants
under future Major Leases approved by Lender (as set forth above) promptly upon request with such
commercially reasonable changes as may be requested by Tenants, from time to time, as are
reasonably acceptable to Lender.




          (b) Borrower (i) shall observe and perform in all material respects, the obligations imposed
upon the lessor under the Leases in a commercially reasonable manner; (ii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the lessee thereunder to be
observed or performed in a commercially reasonable manner, provided, however, (A) Borrower shall
deliver written notice of Borrower’s anticipated enforcement action with respect to any Major Lease
not less than ten (10) Business Days prior to the taking of such enforcement action, and (B)
Borrower shall not terminate or accept a surrender of a Major Lease without Lender’s prior
approval, such consent not to be unreasonably withheld, conditioned or delayed; (iii) shall not
collect any of the Rents more than one (1) month in advance (other than security deposits); (iv)
shall not execute any assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); and (v) shall hold all security deposits under all Leases in
accordance with Applicable Law. Upon request, Borrower shall furnish Lender with executed copies
of all Leases.




          (c) Notwithstanding anything contained herein to the contrary, Borrower shall not willfully
withhold from Lender any information regarding renewal, extension, amendment, modification, waiver
of provisions of, termination, rental reduction of, surrender of space of, or shortening of the
term of, any Major Lease during the term of the Loan. Borrower further agrees to provide Lender
with written notice of a Tenant “going dark” under such Tenant’s Lease within five (5) Business
Days after Borrower learns that such Tenant “goes dark”.







40









 








          (d) Borrower shall notify Lender in writing, within two (2) Business Days following receipt
thereof, of Borrower’s receipt of any termination fee or payment (“Lease Event Payment”) paid by
any Tenant under any Lease in consideration of any termination, modification or amendment or
settlement of any Lease or any release or discharge of any Tenant under any Lease from any
obligation thereunder (a “Lease Event”). Borrower further covenants and agrees that (i) except as
provided in clause (ii)(A) below, Borrower shall hold any such Lease Event Payment in trust for the
benefit of Lender and (ii) (A) in the event such Lease Event Payment is less than $50,000, such
Lease Event Payment shall be payable to Borrower or (B) in the event such Lease Event Payment
equals or exceeds $50,000, such Lease Event Payment shall be placed by Borrower in reserve with
Lender, to be disbursed by Lender for tenant improvement and leasing commission costs with respect
to the Property and/or for payment of the Debt (without any Yield Maintenance Premium being due in
connection therewith) or otherwise in connection with the Loan and/or the Property, as so
determined by Lender, in its sole discretion.




          (e) If Borrower shall materially default in the performance or observance of any term,
covenant or condition of any Lease and shall fail to cure the same prior to the expiration of any
applicable cure period provided thereunder, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be appropriate to
cause all of the terms, covenants and conditions of such Lease on the part of Borrower to be
performed or observed on behalf of Borrower, to the end that the rights of Borrower in, to and
under such Lease shall be kept unimpaired and free from default. If any party to any Lease shall
deliver to Lender a copy of any notice of default under such Lease, such notice shall constitute
full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in
reliance thereon.




     Section 4.15 Management Agreement.



          (a) Borrower shall (i) diligently perform, observe and enforce all of the terms, covenants and
conditions of the Management Agreement on the part of Borrower to be performed, observed and
enforced to the end that all things shall be done which are necessary to keep unimpaired the rights
of Borrower under the Management Agreement and (ii) promptly notify Lender of the giving of any
notice to Borrower of any default by Borrower in the performance or observance of any of the terms,
covenants or conditions of the Management Agreement on the part of Borrower to be performed and
observed and deliver to Lender a true copy of each such notice. Without Lender’s prior written
consent, such consent not to be unreasonably withheld, conditioned or delayed, Borrower shall not
surrender the Management Agreement, consent to the assignment by Manager of its interest under the
Management Agreement, or terminate or cancel the Management Agreement, or modify, change,
supplement, alter or amend the Management Agreement, in any respect, either orally or in writing,
and Borrower hereby assigns to Lender as further security for the payment of the Debt and for the
performance and observance of the terms, covenants and conditions of this Agreement, all the
rights, privileges and prerogatives of Borrower to surrender the Management Agreement or to
terminate, cancel, modify, change, supplement, alter or amend the Management Agreement in any
respect, and any such surrender of the Management Agreement or termination, cancellation,
modification, change, supplement, alteration or amendment of the Management Agreement without the
consents required pursuant to this Section 4.15(a) shall be void and of no force and effect;
provided that, Borrower shall not be required to obtain Lender’s consent with respect to any
non-material changes, supplements, alterations or amendments to the Management






41









 







Agreement. If Borrower shall default in the performance or observance of any material term,
covenant or condition of the Management Agreement on the part of Borrower to be performed or
observed, then, without limiting the generality of the other provisions of this Agreement, and
without waiving or releasing Borrower from any of its obligations hereunder, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act or take any action
as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement
on the part of Borrower to be performed or observed to be promptly performed or observed on behalf
of Borrower, to the end that the rights of Borrower in, to and under the Management Agreement shall
be kept unimpaired and free from default. Lender and any person designated by Lender shall have,
and are hereby granted, subject to the terms and conditions of, and the rights of Tenants under the
Leases, the right to enter upon the Property at any time and from time to time for the purpose of
taking any such action. If Manager shall deliver to Lender a copy of any notice sent to Borrower
of default under the Management Agreement, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender in good faith, in reliance thereon. Borrower
shall notify Lender if Manager sub-contracts to a third party or an affiliate any or all of its
management responsibilities under the Management Agreement. Borrower shall, from time to time, use
its commercially reasonable efforts to obtain from Manager under the Management Agreement such
certificates of estoppel with respect to compliance by Borrower with the terms of the Management
Agreement as may be reasonably requested by Lender. Borrower shall exercise each individual
option, if any, to extend or renew the term of the Management Agreement upon demand by Lender made
at any time within one (1) year of the last day upon which any such option may be exercised, and,
should Borrower so fail to exercise such option, Borrower hereby expressly authorizes and appoints
Lender its attorney-in-fact to exercise any such option in the name of and upon behalf of Borrower,
which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest.
Any sums expended by Lender pursuant to this paragraph shall bear interest at the Interest Rate
from the date such cost is incurred to the date of payment to Lender, shall be deemed to constitute
a portion of the Debt, shall be secured by the lien of the Security Instrument and the other Loan
Documents and shall be immediately due and payable upon demand by Lender therefor.




          (b) Without limitation of the foregoing, if the Management Agreement is terminated pursuant to
the Assignment of Management Agreement or for any other reason, then Lender, at its option, may
require Borrower to engage, in accordance with the terms and conditions set forth in the Assignment
of Management Agreement, a new manager (the “New Manager”) to manage the Property, which such New
Manager shall be a Qualified Manager. New Manager shall be engaged by Borrower pursuant to a
written management agreement that complies with the terms hereof and of the Assignment of
Management Agreement and is otherwise satisfactory to Lender in all respects. New Manager and
Borrower shall execute an Assignment of Management Agreement in the form then used by Lender.
Without limitation of the foregoing, if required by Lender, Borrower shall, as a condition
precedent to Borrower’s engagement of such New Manager, obtain a Rating Agency Confirmation with
respect to such New Manager and new management agreement.




          (c) The parties hereto agree that, from and after the effective date of the Prime Management
Agreement, Cole Realty Advisors, Inc. shall be an Affiliated Manager. Notwithstanding anything to
the contrary set forth in Section 4.15(a) above, Borrower may, without Lender’s consent, terminate
the Management Agreement provided the Property remains managed at all times by a Qualified Manager
and the provisions of Section 4.15(b) are otherwise






42









 







satisfied. Further, from and after the effective date of the Prime Management Agreement, in
the event that Cole Realty Advisors, Inc. is no longer an Affiliated Manager, then Borrower and/or
Guarantor shall replace Manager with a Qualified Manager and otherwise satisfy the provisions of
Section 4.15(b).




     Section 4.16 Payment for Labor and Materials.



          (a) Subject to Section 4.16(b), Borrower will promptly pay, or cause to be paid pursuant to
the terms of any applicable Lease, when due all bills and costs for labor, materials, and
specifically fabricated materials incurred by Borrower in connection with the Property (any such
bills and costs, a “Work Charge”) and never permit to exist in respect of the Property or any part
thereof any lien or security interest, even though inferior to the liens and the security interests
hereof, and in any event never permit to be created or exist in respect of the Property or any part
thereof any other or additional lien or security interest other than the liens or security
interests created hereby and by the Security Instrument, except for the Permitted Encumbrances.




          (b) After prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the validity of any Work Charge, the applicability of any Work Charge to Borrower or to
the Property or any alleged non-payment of any Work Charge and defer paying the same, provided that
(i) no Event of Default has occurred and is continuing; (ii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall be conducted in
accordance with all Applicable Law; (iii) neither the Property nor any part thereof or interest
therein will be in imminent and/or present danger of being sold, forfeited, terminated, cancelled
or lost; (iv) Borrower shall promptly upon final determination thereof pay (or cause to be paid)
any such contested Work Charge determined to be valid, applicable or unpaid; (v) such proceeding
shall suspend the collection of such contested Work Charge from the Property or Borrower shall have
paid the same (or shall have caused the same to be paid) under protest; and (vi) Borrower shall
furnish (or cause to be furnished) such security as may be required in the proceeding, or as may be
reasonably requested by Lender, to insure payment of such Work Charge, together with all interest
and penalties payable in connection therewith. Lender may apply any such security or part thereof,
as necessary to pay for such Work Charge at any time when, in the reasonable judgment of Lender,
the validity, applicability or non-payment of such Work Charge is finally established or the
Property (or any part thereof or interest therein) shall be in imminent and/or present danger of
being sold, forfeited, terminated, cancelled or lost.




     Notwithstanding the foregoing provisions of this Section 4.16(b), to the extent the Lease with
a Tenant remains in effect and such Tenant remains liable for the obligations under its Lease, such
Tenant shall have the right to exercise any contest rights explicitly set forth in such Lease in
accordance with the express terms thereof and, to the extent such rights conflict or are
inconsistent with the provisions of this Section 4.16(b), the provisions set forth in such Lease
shall govern and control. Borrower agrees to notify Lender in writing in the event that a Tenant
under any Lease exercises its right to contest thereunder and agrees to deliver to Lender any
correspondence received or delivered by Borrower pursuant to such Lease as it relates to such
Tenant’s right to contest.



43









 





     Section 4.17 Performance of Other Agreements. Borrower shall observe and perform in all
material respects each and every term to be observed or performed by Borrower pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Property, or given by
Borrower to Lender for the purpose of further securing the Debt and any amendments, modifications
or changes thereto.



     Section 4.18 Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any
material claim or debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.



     Section 4.19 ERISA




          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights hereunder or under
the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.




          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan as requested by Lender in its reasonable
discretion, that (i) Borrower is not an “employee benefit plan” as defined in Section 3(3) of
ERISA, or other retirement arrangement, which is subject to Title I of ERISA or Section 4975 of the
IRS Code, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) Borrower is
not subject to state statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is true:





	 	(A)	 	Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. § 2510.3 101(b)(2);
	 
	 	(B)	 	Less than 25 percent of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning
of 29 C.F.R.§ 2510.3 101(f)(2), as modified by § 3(42) of ERISA, disregarding
the value of any equity interests in Borrower held by (I) a Person (other than
a benefit plan investor) who has discretionary authority or control with
respect to the assets of Borrower, (II) any Person who provides investment
advice for a fee (direct or indirect) with respect to the assets of Borrower,
or (III) any affiliate of a Person described in the immediately preceding
clause (I) or (II);
	 
	 	(C)	 	Borrower qualifies as an “operating company” or a “real estate
operating company” within the meaning of 29 C.F.R § 2510.3 101(c) or (e) or an
investment company registered under The Investment Company Act of 1940; or
	 
	 	(D)	 	The assets of Borrower are not otherwise “plan assets” of one
or more “employee benefit plans” (as defined in Section 3(3) of ERISA) subject
to Title I of ERISA, within the meaning of 29 C.F.R. § 2510.3-101.




44









 











     Section 4.20 No Joint Assessment. Borrower shall not suffer, permit or initiate the joint
assessment of the Property with (a) any other real property constituting a tax lot separate from
the Property, or (b) any portion of the Property which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the real property portion of the
Property.



     Section 4.21 Alterations. Lender’s prior approval shall be required in connection with any
alterations to any Improvements (a) that may have a Material Adverse Effect, (b) the cost of which
(including any related alteration, improvement or replacement) is reasonably anticipated to exceed
the Alteration Threshold or (c) that are structural in nature; provided, however, that with respect
to items (a) and (b) above, such approval may be granted or withheld in Lender’s reasonable
discretion, and with respect to item (c) above, such approval may be granted or withheld in
Lender’s sole discretion. If the total unpaid amounts incurred and to be incurred with respect to
any alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower
shall promptly deliver to Lender as security for the payment of such amounts (the “Alteration
Security”) and as additional security for Borrower’s obligations under the Loan Documents any of
the following as determined by Borrower: (i) cash, (ii) U.S. Obligations, (iii) other securities
acceptable to Lender, (provided that Lender shall have received a Rating Agency Confirmation as to
the form and issuer of same), or (iv) a completion bond (provided that Lender shall have received a
Rating Agency Confirmation as to the form and issuer of same). Such security shall be in an amount
equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements over the Alteration Threshold. Notwithstanding the immediately
preceding sentence to the contrary, in the event a Lease permits the Tenant thereunder to perform
alterations without Borrower’s consent or approval (or if the Tenant has obtained such consent or
approval from Borrower prior to the Closing Date and Borrower has advised Lender in writing of such
approval) and without any requirement to deliver any Alteration Security as required hereunder, and
such Tenant maintains a long term unsecured debt rating of “BBB-” or better by S&P (or an
equivalent rating by the other Rating Agencies), then such Alteration Security shall not be
required hereunder. All alterations by Borrower to any Improvements shall be made lien-free and in
a good and workmanlike manner in accordance with all Applicable Laws.



     Notwithstanding the foregoing provisions of this Section 4.21, (i) Lender hereby approves the
alterations contemplated by the Fifth Amendment to Lease, provided same are completed in accordance
with the terms and conditions thereof, and (ii) to the extent the Lease with a Tenant remains in
effect and such Tenant remains liable for the obligations under its Lease, such Tenant shall have
the right to perform any alterations explicitly set forth in such Lease (which do not require
Borrower’s consent or for which such consent was obtained from Borrower prior to the Closing Date
and Borrower has advised Lender in writing of such consent) in accordance with the express terms
thereof and, to the extent such rights conflict or are inconsistent with the provisions of this
Section 4.21, the provisions set forth in such Lease shall govern and control.



     Section 4.22 REA Covenants. Borrower agrees that without the prior consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed, Borrower will not enter into
any new Property Document or execute modifications to any existing Property Document if such new
Property Document or such modifications will have a Material Adverse



45









 




Effect. Borrower shall enforce, shall comply with, and shall use commercially reasonable
efforts to cause each of the parties to each Property Document to comply with all of the terms and
conditions contained in such Property Document in all material respects.




ARTICLE 5




ENTITY COVENANTS



     Section 5.1 Single Purpose Entity/Separateness.



          (a) Borrower has not and will not:




          (i) engage in any business or activity other than the acquisition, ownership, improvement,
operation, management, leasing and maintenance of the Property, and activities incidental thereto;




          (ii) acquire or own any assets other than (A) the Property, (B) such incidental Personal
Property as may be necessary for the ownership, leasing, maintenance and operation of the Property,
and (C) cash and U.S. Obligations;




          (iii) merge into or consolidate with any Person, or, to the fullest extent permitted by
applicable law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose
of all or substantially all of its assets or change its legal structure;




          (iv) fail to observe all organizational formalities, or fail to preserve its existence as an
entity duly organized, validly existing and in good standing (if applicable) under the Applicable
Law of the jurisdiction of its organization or formation, or amend, modify, terminate or fail to
comply with the provisions of its organizational documents;




          (v) own any subsidiary, or make any investment in, any Person;




          (vi) commingle its assets with the assets of any other Person;




          (vii) incur any Indebtedness, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) the Debt, (B) trade and operational indebtedness
incurred in the ordinary course of business with trade creditors, provided such indebtedness is (1)
unsecured, (2) not evidenced by a note, (3) on commercially reasonable terms and conditions, and
(4) due not more than sixty (60) days past the date incurred and paid on or prior to such date, (C)
Indebtedness associated with Permitted Encumbrances, and/or (D) Permitted Equipment Leases;
provided however, the aggregate amount of the indebtedness described in (B), (C) and (D) shall not
exceed at any time two percent (2%) of the outstanding principal amount of the Debt. From and
after the date hereof, no Indebtedness other than the Debt may be secured (subordinate or pari
passu) by the Property;




          (viii) fail to maintain all of its books, records, financial statements and bank accounts
separate from those of its affiliates and any constituent party. Borrower’s assets have not and
will not be listed as assets on the financial statement of any other Person; provided, however,
that Borrower’s assets may be included in a consolidated financial statement of its affiliates
provided that such assets shall be listed on Borrower’s own separate balance sheet.




46









 




Borrower has maintained and will maintain its books, records, resolutions and agreements as
official records;




          (ix) enter into any contract or agreement with any general partner, member, shareholder,
principal or affiliate, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arm’s-length basis with unaffiliated
third parties;




          (x) maintain its assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any other Person;




          (xi) assume or guaranty the debts of any other Person, hold itself out to be responsible for
the debts of any other Person, or otherwise pledge its assets for the benefit of any other Person
or hold out its credit as being available to satisfy the obligations of any other Person, other
than with respect to any asset pledges that have been released on or prior to the date hereof;




          (xii) make any loans or advances to any Person;




          (xiii) fail to file its own tax returns (to the extent that Borrower is required to file its
own tax returns under Applicable Law);




          (xiv) fail either to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name or fail to correct any
known misunderstanding regarding its separate identity;




          (xv) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations (to the
extent there exists sufficient cash flow from the Property to do so);




          (xvi) without the unanimous written consent of all of its partners or members, as applicable,
and the consent of each Independent Director (regardless of whether such Independent Director is
engaged at the Borrower or SPE Component Entity level), (a) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (b) seek
or consent to the appointment of a receiver, liquidator or any similar official, (c) take any
action that might cause such entity to become insolvent, or (d) make an assignment for the benefit
of creditors;




          (xvii) fail to allocate shared expenses (including, without limitation, shared office space)
or fail to use separate invoices and checks;




          (xviii) fail to pay its own liabilities (including, without limitation, salaries of its own
employees) from its own funds or fail to maintain a sufficient number of employees in light of its
contemplated business operations (in each case to the extent there exists sufficient cash flow from
the Property to do so); or




          (xix) acquire obligations or securities of its partners, members, shareholders or other
affiliates, as applicable.




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          (b) If Borrower is a limited partnership or a limited liability company (other than an
Acceptable Delaware LLC), each general partner or managing member (each, an “SPE Component Entity”)
shall be a corporation or an Acceptable Delaware LLC (I) whose sole asset is its interest in
Borrower; (II) which has not been and shall not be permitted to engage in any business or activity
other than owning an interest in Borrower; (III) which has not been and shall not be permitted to
incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation)
separate and apart from debt of Borrower solely in its capacity as general partner of Borrower; and
(IV) which has and will at all times own at least a 0.5% direct equity ownership interest in
Borrower (or a 0.1% direct equity ownership interest if Borrower is a Delaware limited
partnership). Each such SPE Component Entity will at all times comply, and will cause Borrower to
comply, with each of the representations, warranties, and covenants contained in this Article 5 (to
the extent applicable) as if such representation, warranty or covenant was made directly by such
SPE Component Entity. Upon the withdrawal or the disassociation of an SPE Component Entity from
Borrower, Borrower shall immediately appoint a new SPE Component Entity whose articles of
incorporation or organization are substantially similar to those of such SPE Component Entity.




          (c) In the event Borrower or the SPE Component Entity is an Acceptable Delaware LLC, the
limited liability company agreement of Borrower or the SPE Component Entity (as applicable) (the
“LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last
remaining member of Borrower or the SPE Component Entity (as applicable) (“Member”) to cease to be
the member of Borrower or the SPE Component Entity (as applicable) (other than (A) upon an
assignment by Member of all of its limited liability company interest in Borrower or the SPE
Component Entity (as applicable) and the admission of the transferee in accordance with the Loan
Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an
additional member of Borrower or the SPE Component Entity (as applicable) in accordance with the
terms of the Loan Documents and the LLC Agreement), any Person acting as a springing member of
Borrower or the SPE Component Entity (as applicable) shall, without any action of any other Person
and simultaneously with the Member ceasing to be the member of Borrower or the SPE Component Entity
(as applicable) automatically be admitted to Borrower or the SPE Component Entity (as applicable)
as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the SPE
Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from
Borrower or the SPE Component Entity (as applicable) or transfer its rights as Special Member
unless (A) a successor Special Member has been admitted to Borrower or the SPE Component Entity (as
applicable) as a Special Member in accordance with requirements of Delaware law and (B) after
giving effect to such resignation or transfer, there remains at least one (1) Independent Director
of the SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The
LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a
member of Borrower or the SPE Component Entity (as applicable) upon the admission to Borrower or
the SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall
be a member of Borrower or the SPE Component Entity (as applicable) that has no interest in the
profits, losses and capital of Borrower or the SPE Component Entity (as applicable) and has no
right to receive any distributions of the assets of Borrower or the SPE Component Entity (as
applicable), (iii) pursuant to the applicable provisions of the limited liability company act of
the State of Delaware (the “Act”), Special Member shall not be required to make any capital
contributions to Borrower or the SPE Component Entity (as applicable) and shall not receive a
limited liability






48









 







company interest in Borrower or the SPE Component Entity (as applicable), (iv) Special Member,
in its capacity as Special Member, may not bind Borrower or the SPE Component Entity (as
applicable) and (v) except as required by any mandatory provision of the Act, Special Member, in
its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any
action by, or matter relating to, Borrower or the SPE Component Entity (as applicable) including,
without limitation, the merger, consolidation or conversion of Borrower or the SPE Component Entity
(as applicable). In order to implement the admission to Borrower or the SPE Component Entity (as
applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement.
Prior to its admission to Borrower or the SPE Component Entity (as applicable) as Special Member,
Special Member shall not be a member of Borrower or the SPE Component Entity (as applicable).




          (d) The LLC Agreement shall further provide that, (i) upon the occurrence of any event that
causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable)
to the fullest extent permitted by law, the personal representative of Member shall, within ninety
(90) days after the occurrence of the event that terminated the continued membership of Member in
Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or
the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or
its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE
Component Entity (as applicable) effective as of the occurrence of the event that terminated the
continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any
action initiated by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower or the SPE Component
Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the
SPE Component Entity (as applicable) shall continue without dissolution, and (iii) each of Member
and Special Member waives any right it might have to agree in writing to dissolve Borrower or the
SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought
against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event
that causes Member or Special Member to cease to be a member of Borrower or the SPE Component
Entity (as applicable).




     Section 5.2 Independent Director.



          (a) The organizational documents of Borrower (to the extent Borrower is a corporation or an
Acceptable Delaware LLC) or the SPE Component Entity, as applicable, shall provide that at all
times there shall be at least one duly appointed independent directors of such entity (each, an
“Independent Director”) reasonably satisfactory to Lender who each shall (I) not have been at the
time of each such individual’s initial appointment, and shall not have been at any time during the
preceding five years, and shall not be at any time while serving as Independent Director, either
(i) a shareholder (or other equity owner) of, or an officer, director (other than in its capacity
as Independent Director), partner, member or employee of, Borrower or any of its respective
shareholders, partners, members, subsidiaries or affiliates, (ii) a customer of, or supplier to, or
other Person who derives any of its purchases or revenues from its activities with, Borrower or any
of its respective shareholders, partners, members, subsidiaries or affiliates (other than in its
capacity as an Independent Director), (iii) a Person who Controls or is under common Control with
any such shareholder, officer, director, partner, member, employee supplier, customer or other
Person, or (iv) a member of the immediate family of any such






49









 







shareholder, officer, director, partner, member, employee, supplier, customer or other Person
and (II) be employed by, in good standing with and engaged by Borrower in connection with, in each
case, an Approved ID Provider.




          (b) The organizational documents of Borrower or the SPE Component Entity (as applicable) shall
further provide that the (I) the board of directors or managers of Borrower or the SPE Component
Entity as applicable, and the constituent members of such entities (the “Constituent Members”)
shall not take any action which, under the terms of any organizational documents of Borrower or the
SPE Component Entity as applicable requires the unanimous vote of (1) the board of directors or
managers of Borrower or the SPE Component Entity as applicable, or (2) the Constituent Members,
unless at the time of such action there shall be at least one Independent Director engaged as
provided by the terms hereof; (II) to the fullest extent permitted by applicable law, any
resignation, removal or replacement of any Independent Director shall not be effective without two
(2) Business Days prior written notice to Lender accompanied by evidence that the replacement
Independent Director satisfies the applicable terms and conditions hereof and of the applicable
organizational documents; (III) to the fullest extent permitted by applicable law, including
Section 18-1101(c) of the Act and notwithstanding any duty otherwise existing at law or in equity,
the Independent Director shall consider only the interests of the Constituent Members and Borrower
and any SPE Component Entity (including Borrower’s and any SPE Component Entity’s respective
creditors) in acting or otherwise voting on the matters provided for herein and in Borrower’s and
SPE Component Entity’s organizational documents (which such fiduciary duties to the Constituent
Members and Borrower and any SPE Component Entity (including Borrower’s and any SPE Component
Entity’s respective creditors), in each case, shall be deemed to apply solely to the extent of
their respective economic interests in Borrower or SPE Component Entity (as applicable) exclusive
of (x) all other interests (including, without limitation, all other interests of the Constituent
Members), (y) the interests of other affiliates of the Constituent Members, Borrower and SPE
Component Entity and (z) the interests of any group of affiliates of which the Constituent Members,
Borrower or SPE Component Entity is a part); (IV) other than as provided in subsection (III) above,
the Independent Director shall not have any fiduciary duties to any Constituent Members, any
directors of Borrower or SPE Component Entity or any other Person; (V) the foregoing shall not
eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and
(VI) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act, an
Independent Director shall not be liable to Borrower, any SPE Component Entity, any Constituent
Member or any other Person for breach of contract or breach of duties (including fiduciary duties),
unless the Independent Director acted in bad faith or engaged in willful misconduct or any act or
omission by Independent Director constituted a bad faith violation of the implied contractual
covenant of good faith and fair dealing.




     Section 5.3 Compliance Certificate. Not later than ninety (90) days after and as of the end
of each fiscal year and at any other time upon request from Lender, Borrower shall provide an
Officer’s Certificate certifying as to Borrower’s continued compliance with the terms of this
Article 5 and the terms concerning Cash Management as set forth in Article 9 hereof. Additionally,
Borrower shall provide Lender with such other evidence of Borrower’s compliance with this Article 5
and Article 9 hereof, as Lender may reasonably request from time to time.



50









 





     Section 5.4 Change of Name, Identity or Structure. Except as expressly permitted pursuant to
Section 6.3 hereof, Borrower shall not change (or permit to be changed) Borrower’s or the SPE
Component Entity’s (a) name, (b) identity (including its trade name or names), (c) state in which
its principal place of business is located as set forth on the first page of this Agreement or, (d)
if not an individual, Borrower’s or the SPE Component Entity’s corporate, partnership or other
structure, without notifying Lender of such change in writing at least thirty (30) days prior to
the effective date of such change and, in the case of a change in Borrower’s or the SPE Component
Entity’s structure, without first obtaining the prior written consent of Lender, such consent not
to be unreasonably withheld, conditioned or delayed. Borrower shall execute and deliver to Lender,
prior to or contemporaneously with the effective date of any such change, any financing statement
or financing statement change required by Lender to establish or maintain the validity, perfection
and priority of the security interest granted herein. At the request of Lender, Borrower shall
execute a certificate in form satisfactory to Lender listing the trade names under which Borrower
or the SPE Component Entity intends to operate the Property, and representing and warranting that
Borrower or the SPE Component Entity does business under no other trade name with respect to the
Property.



     Section 5.5 Business and Operations. Borrower will continue to engage in the businesses now
conducted by it as and to the extent the same are necessary for the ownership, maintenance,
management and operation of the Property. Borrower will qualify to do business and will remain in
good standing under the laws of the jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.



ARTICLE 6




NO SALE OR ENCUMBRANCE



     Section 6.1 Transfer Definitions. For purposes of this Article 6, “Restricted Party” shall
mean Borrower, Operating Partnership, any SPE Component Entity and Guarantor; and a “Sale or
Pledge” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or
disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) of a legal or beneficial interest
(other than Permitted Encumbrances).



     Section 6.2 No Sale/Encumbrance.



          (a) Without the prior written consent of Lender, Borrower shall not cause or permit (i) a Sale
or Pledge of the Property or any part thereof or any legal or beneficial interest therein, (ii) a
Sale or Pledge of an interest in any Restricted Party or (iii) any change in Control of Borrower,
Operating Partnership or Guarantor, or any change in control of the day-to-day operations of the
Property, other than pursuant to Leases of space in the Improvements to Tenants in accordance with
the provisions of Section 4.14 (collectively, a “Prohibited Transfer”).




          (b) A Prohibited Transfer shall include, but not be limited to, (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid
in installments; (ii) an agreement by Borrower leasing all or a substantial part






51









 







of the Property for other than actual occupancy by a Tenant thereunder or a sale, assignment
or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest
in and to (A) any Leases or any Rents or (B) the Property Documents; (iii) any action instituted by
(or at the behest of) Borrower or its affiliates or consented to or acquiesced in by Borrower or
its affiliates which results in a Property Document Event; (iv) if a Restricted Party is a
corporation, any merger, consolidation or Sale or Pledge of such corporation’s stock or the
creation or issuance of new stock in one or a series of transactions (other than in connection with
any secondary offering of shares in Guarantor in accordance with Section 6.3 below); (v) if a
Restricted Party is a limited or general partnership or joint venture, any merger or consolidation
or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the
partnership interest of any general or limited partner or any profits or proceeds relating to such
partnership interests or the creation or issuance of new limited partnership interests, except as
set forth in this Article 6; (vi) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the membership interest of
any member or any profits or proceeds relating to such membership interest; (vii) if a Restricted
Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial
interests; (viii) any Sale or Pledge which causes Mezzanine Borrower to no longer own 100% of the
legal and/or beneficial ownership interest in Borrower; (ix) any Sale or Pledge which causes
Operating Partnership to no longer own 100% of the legal and/or beneficial ownership interest in
Mezzanine Borrower; and (x) any Sale or Pledge which causes Guarantor to no longer (1) own at least
99.9% of the legal and/or beneficial ownership interest in Operating Partnership, except as set
forth in this Article 6, (2) Control Borrower and (3) Control the day-to-day operation of the
Property.




          (c) Notwithstanding the restrictions contained in Sections 6.1 and 6.2 hereof or in Article 5
of the Security Instrument or any provisions of the Loan Documents to the contrary, each of the
following shall not be (and shall not be deemed to be) a Prohibited Transfer and shall be permitted
without Lender’s consent: (i) the Sale or Pledge of an interest in Borrower pursuant to the
Mezzanine Pledge and Security Agreement, (ii) the foreclosure by Mezzanine Lender under the
Mezzanine Loan of the interests pledged under the Mezzanine Pledge and Security Agreement, subject
in all respects to the Mezzanine Intercreditor Agreement, and (iii) after the Mezzanine Loan has
been paid in full, the transfer of Mezzanine Borrower’s membership interest in Borrower to
Operating Partnership (and any amendments to Borrower’s limited liability company agreement solely
to reflect such transfer).




     Section 6.3 Permitted Transfers of Equity Interests. (a) For the avoidance of doubt and
notwithstanding the restrictions contained in Sections 6.1 and 6.2 hereof or in Article 5 of the
Security Instrument, the following transfers shall not be Prohibited Transfers and shall be
permitted without Lender’s consent: the sale, transfer or issuance of shares in Guarantor to third
party investors (each, a “Cole Investor”) through licensed U.S. broker-dealers in accordance with
Applicable Law or the subsequent Sale or Pledge (for estate planning purposes or otherwise) of such
shares by any such respective or individual Cole Investor to such other third parties (provided no
Person, together with any Affiliates of such Person, owns or holds a security interest in, or
pledge of, more than forty-nine percent (49%) of the legal and/or beneficial interests in
Guarantor); provided, however, with respect to such transfers:



52









 





          (i) no such transfers shall result in a change in Control of Guarantor;




          (ii) after giving effect to such transfers, (A) Guarantor shall own at least a fifty-one
percent (51%) direct or indirect legal and beneficial ownership interest in Borrower, any SPE
Component Entity and Operating Partnership; (B) Guarantor shall Control each Borrower, any SPE
Component Entity and Operating Partnership; and (C) Guarantor shall control the day-to-day
operation of the Property; and




          (iii) the Property shall continue to be managed by Affiliated Manager or a Qualified Manager
in accordance with Section 4.15 hereof.




          (b) For the avoidance of doubt and notwithstanding the restrictions contained in Section 6.1
and 6.2 hereof or in Article 5 of the Security Instrument, the following transfers shall not be
Prohibited Transfers and shall be permitted without Lender’s consent: (1) the transfer (but not the
pledge), in one or a series of transactions, of not more than forty-nine percent (49%) of the
limited partnership interests, non-managing membership interests or shares (as the case may be) in
Operating Partnership, Borrower, any SPE Component Entity or Guarantor, and (2) the issuance of
limited partnership interests in Operating Partnership in connection with the purchase by Operating
Partnership of additional assets (i.e., an UPREIT transaction); provided, however, with respect to
such transfers:




          (i) Lender shall receive not less than thirty (30) days prior written notice of such
transfers;




          (ii) no such transfers shall result in a change in Control of Guarantor;




          (iii) after giving effect to such transfers, (A) Guarantor shall own at least a fifty-one
percent (51%) direct or indirect legal and beneficial ownership interest in Borrower, any SPE
Component Entity and Operating Partnership; (B) Guarantor shall Control each Borrower, any SPE
Component Entity and Operating Partnership; and (C) Guarantor shall control the day-to-day
operation of the Property;




          (iv) the Property shall continue to be managed by Affiliated Manager or a Qualified Manager in
accordance with Section 4.15 hereof;




          (v) in the case of the transfer of any direct equity ownership interests in any Borrower, such
transfers shall be conditioned upon continued compliance with the relevant provisions of Article 5
hereof;




          (vi) such transfers shall be conditioned upon Borrower’s and Guarantor’s ability to, after
giving effect to the equity transfer in question, (A) remake the representations contained herein
relating to ERISA matters, the Patriot Act, OFAC and matters concerning Embargoed Persons (and,
upon Lender’s request, Borrower and Guarantor shall deliver to Lender (1) an Officer’s Certificate
containing such updated representations effective as of the date of the consummation of the
applicable equity transfer, and (2) searches, acceptable to Lender, for any entity or individual
owning, directly or indirectly, 20% or more of the interests in the Borrower as a result of such
transfer), and (B) continue to comply with the covenants contained herein relating to ERISA
matters, the Patriot Act, OFAC and matters concerning Embargoed Persons;




53









 








          (vii) intentionally omitted; and




          (viii) such transfers shall not trigger any right of first refusal, option to purchase or
default under the Property Documents.




     Section 6.4 Permitted Property Transfers (Assumptions). Notwithstanding the foregoing
provisions of this Article 6, at any time other than the sixty (60) days prior to and following any
Secondary Market Transaction, Lender shall not unreasonably withhold consent to the two (2) time
transfer of the Property in its entirety to, and the related assumptions of the Loan by, any Person
(a “Transferee”) provided that, with respect to each such transfer, each of the following terms and
conditions are satisfied:



          (a) no Event of Default has occurred and is continuing;




          (b) Borrower shall have delivered written notice to Lender of the terms of such prospective
transfer not less than sixty (60) days before the date on which such transfer is scheduled to close
and, concurrently therewith or promptly thereafter, all such information concerning the proposed
Transferee as Lender shall reasonably require. Lender shall have the right to approve or
disapprove the proposed transfer based on its then current underwriting and credit requirements for
similar loans secured by similar properties which loans are sold in the secondary market, such
approval not to be unreasonably withheld. In determining whether to give or withhold its approval
of the proposed transfer, Lender shall consider the experience and track record of Transferee and
its principals in owning and operating facilities similar to the Property, the financial strength
of Transferee and its principals, the general business standing of Transferee and its principals
and Transferee’s and its principals’ relationships and experience with contractors, vendors,
tenants, lenders and other business entities; provided, however, that, notwithstanding Lender’s
agreement to consider the foregoing factors in determining whether to give or withhold such
approval, such approval shall be given or withheld based on what Lender determines to be
commercially reasonable and, if given, may be given subject to such conditions as Lender may deem
reasonably appropriate;




          (c) Borrower shall have paid to Lender, concurrently with the closing of such prospective
transfer, (i) a non-refundable assumption fee in an amount equal to the greater of (y) one percent
(1%) of the then outstanding principal balance of the Loan or (z) $15,000, (ii) all out-of-pocket
costs and expenses, including reasonable attorneys’ fees, incurred by Lender in connection
therewith and (iii) all reasonable fees, costs and expenses of all third parties and the Rating
Agencies incurred in connection therewith;




          (d) Transferee assumes and agrees to pay the Debt as and when due subject to the provisions of
Article 13 hereof and, prior to or concurrently with the closing of such transfer, Transferee and
its constituent partners, members, shareholders, affiliates or sponsors as Lender may require,
shall execute, without any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption and an Affiliate of Transferee
reasonably acceptable to Lender shall execute a recourse guaranty and an environmental indemnity in
form and substance identical to the Guaranty and Environmental Indemnity, respectively, with such
changes to each of the foregoing as may be reasonably required by Lender;







54









 








          (e) Borrower and Transferee, without any cost to Lender, shall furnish any information
requested by Lender for the preparation of, and shall authorize Lender to file, new financing
statements and financing statement amendments and other documents to the fullest extent permitted
by Applicable Law, and shall execute any additional documents reasonably requested by Lender;




          (f) Borrower shall have delivered to Lender, without any cost or expense to Lender, such
endorsements to Lender’s Title Insurance Policy insuring that fee simple or leasehold title to the
Property, as applicable, is vested in Transferee (subject to Permitted Encumbrances), hazard
insurance endorsements or certificates and other similar materials as Lender may reasonably deem
necessary at the time of the transfer, all in form and substance reasonably satisfactory to Lender;




          (g) Transferee shall have furnished to Lender all appropriate papers evidencing Transferee’s
organization and good standing, and the qualification of the signers to execute the assumption of
the Debt, which papers shall include certified copies of all documents relating to the organization
and formation of Transferee and of the entities, if any, which are partners or members of
Transferee. Transferee and, in the event that Transferee is not an Acceptable Delaware LLC, such
constituent partners, members or shareholders of Transferee (as the case may be), as Lender shall
require, shall comply with the covenants set forth in Article 5 hereof;




          (h) Unless Transferee will, with Lender’s consent, self-manage the Properties, Transferee
shall assume the obligations of Borrower under any Management Agreement or provide a new management
agreement with a new manager which meets with the requirements of the Assignment of Management
Agreement and Section 4.15 hereof and assign to Lender as additional security such new management
agreement;




          (i) Transferee shall furnish to Lender an opinion of counsel satisfactory to Lender and its
counsel (A) that the assumption of the Debt has been duly authorized, executed and delivered, and
that the assumption agreement and the other Loan Documents are valid, binding and enforceable
against Transferee in accordance with their terms, (B) that Transferee and any entity which is a
controlling stockholder, member or general partner of Transferee, have been duly organized, and are
in existence and good standing, (C) that the transfer will not constitute a “significant
modification” of the Loan under Section 1001 of the IRS Code or otherwise cause a tax to be imposed
on a “prohibited transaction” by any REMIC Trust and (D) with respect to such other matters as
Lender may reasonably request;




          (j) if required by Lender, Lender shall have received a Rating Agency Confirmation with
respect to such transfer;




          (k) Transferee shall deposit with Lender such new or increased Reserve Funds as Lender may
require, including, without limitation, new or increased Reserve Funds for taxes, insurance, tenant
improvements and leasing commissions, capital expenditures and immediate repairs, and the amendment
of the Loan Documents to require the Transferee to make monthly deposits of such new or increased
Reserve Funds for such purposes thereafter;







55









 








          (l) Lender shall have received evidence reasonably acceptable to Lender that a Property
Document Event will not occur as a result of the proposed transfer; and




          (m) Borrower’s obligations under the contract of sale pursuant to which the transfer is
proposed to occur shall expressly be subject to the satisfaction of the applicable terms and
conditions of this Section 6.4.




     Notwithstanding the foregoing or anything herein to the contrary, Borrower may not exercise
its rights pursuant to this Section 6.4 during the period that commences on the date that is sixty
(60) days prior to the date of any intended Securitization of the Loan and ending on the date that
is sixty (60) days after the date of such Securitization of the Loan.



     Section 6.5 Lender’s Rights. Except in connection with a transfer under Section 6.4 (for
which the provisions of Section 6.4 shall control), Lender reserves the right to condition the
consent to a Prohibited Transfer requested hereunder upon (a) a modification of the terms hereof
and an assumption of this Agreement and the other Loan Documents as so modified, (b) payment of a
transfer fee of 1% of the outstanding principal balance of the Loan and all of Lender’s reasonable
expenses incurred in connection with such Prohibited Transfer, (c) to the extent required by
Lender, receipt of a Rating Agency Confirmation with respect to the Prohibited Transfer, (d) the
proposed transferee’s continued compliance with the covenants set forth in this Agreement,
including, without limitation, the covenants in Article 5, and/or (e) such other conditions and/or
legal opinions as Lender shall determine in its sole discretion to be in the interest of Lender.
All reasonable expenses incurred by Lender shall be payable by Borrower whether or not Lender
consents to the Prohibited Transfer. Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Prohibited Transfer without Lender’s consent. This provision
shall apply to every Prohibited Transfer, whether or not Lender has consented to any previous
Prohibited Transfer.



ARTICLE 7




INSURANCE; CASUALTY; CONDEMNATION; RESTORATION



     Section 7.1 Insurance.



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




          (i) insurance with respect to the Improvements and the Personal Property at the Property
insuring against any peril now or hereafter included within the classification “Special Cause of
Loss” or “Special Perils” (which shall not exclude fire, lightning, windstorm, hail, explosion,
riot, riot attending a strike, civil commotion, aircraft, vehicles and smoke), in each case (A) in
an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Agreement shall
mean actual replacement value exclusive of costs of excavations, foundations, underground utilities
and footings with a waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance provisions; (C)
providing for no deductible in excess of $25,000, excluding windstorm and earthquake insurance
which may have a deductible of 5% of the “Full






56









 







Replacement Cost”; (D) at all times insuring against at least those hazards that are commonly
insured against under a “special causes of loss” form of policy, as the same shall exist on the
date hereof, and together with any increase in the scope of coverage provided under such form after
the date hereof; and (E) providing coverage for contingent liability from Operation of Building
Laws, Demolition Costs and Increased Cost of Construction Endorsements together with an “Ordinance
or Law Coverage” or “Enforcement” endorsement. The Full Replacement Cost shall be redetermined
from time to time (but not more frequently than once in any twelve (12) calendar months) at the
request of Lender by an appraiser or contractor designated and paid by Borrower and approved by
Lender, or by an engineer or appraiser in the regular employ of the insurer. After the first
appraisal, additional appraisals may be based on construction cost indices customarily employed in
the trade. No omission on the part of Lender to request any such ascertainment shall relieve
Borrower of any of its obligations under this Subsection;




          (ii) commercial general liability insurance against all claims for personal injury, bodily
injury, death or property damage occurring upon, in or about the Property, including “Dram Shop” or
other liquor liability coverage if alcoholic beverages are sold from or may be consumed at the
Property, such insurance (A) to be on the so-called “occurrence” form with a general aggregate
limit of not less than $2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed by Lender in writing by
reason of changed economic conditions making such protection inadequate; and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and completed operations on an “if
any” basis; (3) independent contractors; (4) blanket contractual liability for all written and oral
contracts; and (5) contractual liability covering the indemnities contained in Articles 12 and 13
hereof to the extent the same is available;




          (iii) loss of rents and/or business interruption insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in Subsections
7.1(a)(i), (iv) and (vi) through (viii); (C) in an amount equal to 100% of the projected gross
income from the Property (on an actual loss sustained basis) for a period continuing until the
Restoration of the Property is completed; the amount of such business interruption/loss of rents
insurance shall be determined prior to the Closing Date and at least once each year thereafter
based on the greatest of: (x) Borrower’s reasonable estimate of the gross income from the Property
and (y) the highest gross income received from the Property during the term of the Loan for any
full calendar year prior to the date the amount of such insurance is being determined, in each case
for the succeeding twelve (12) month period and (D) containing an extended period of indemnity
endorsement which provides that after the physical loss to the Improvements and the Personal
Property has been repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from
the date that the Property is repaired or replaced and operations are resumed, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such period. The net
amount of the loss of rents and/or business interruption insurance proceeds, after deduction of
reasonable costs and expenses (including, but not limited to, reasonable attorneys’ fees), if any,
in collecting such insurance proceeds (the “Rent Loss Proceeds”) shall be held by Lender and shall
be applied to the obligations secured hereunder from time to time due and payable hereunder and
under the Note; provided, however, that (I) nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured hereunder on the respective dates of
payment provided for in the Note except to the extent such amounts are actually paid out of the
Rent Loss Proceeds and (II) in the event






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the Rent Loss Proceeds are paid in a lump sum in advance and Borrower is entitled to
disbursement of such Rent Loss Proceeds in accordance with the terms hereof, Lender or Servicer
shall hold such Rent Loss Proceeds in a segregated interest-bearing Eligible Account and Lender or
Servicer shall estimate the number of months required for Borrower to restore the damage caused by
the applicable Casualty, shall divide the applicable aggregate Rent Loss Proceeds by such number of
months and shall disburse such monthly installment of Rent Loss Proceeds from such Eligible
Account;




          (iv) at all times during which structural construction, repairs or alterations are being made
with respect to the Improvements (A) owner’s contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in Subsection 7.1(a)(i) written in a
so-called builder’s risk completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to Subsection 7.1(a)(i), (3) including permission to occupy the Property,
and (4) with an agreed amount endorsement waiving co-insurance provisions;




          (v) workers’ compensation, subject to the statutory limits of the state in which the Property
is located, and employer’s liability insurance with a limit of at least $1,000,000 per accident and
per disease per employee, and $1,000,000 for disease aggregate in respect of any work or operations
on or about the Property, or in connection with the Property or its operation (if applicable);




          (vi) comprehensive boiler and machinery insurance covering all mechanical and electrical
equipment in such amounts as shall be reasonably be required by Lender, and, if pressure vessels
and boilers are in operation, amounts of insurance must be on terms consistent with the commercial
property insurance policy required under Subsection 7.1(a)(i) above or in such other amount as
shall be reasonably required by Lender;




          (vii) if any portion of the Improvements is at any time located in an area identified by the
Secretary of Housing and Urban Development or any successor thereto as an area having special flood
hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, or any successor
law (the “Flood Insurance Acts”), flood hazard insurance in an amount equal to the lesser of (A)
the amount of the Loan, and (B) the maximum limit of coverage available for the Property under the
Flood Insurance Acts plus excess flood insurance in amounts reasonably acceptable to Lender;
provided, that, the insurance provided pursuant to this clause (vii) shall be on terms consistent
with the “All Risk” insurance policy required in Section 7.1(a)(i) above;




          (viii) earthquake, sinkhole and mine subsidence insurance, if required, in amounts equal to
one time (1x) the probable maximum loss of the Property as determined by Lender in its sole
discretion and in form and substance satisfactory to Lender, provided that the insurance pursuant
to this Subsection (viii) shall be on terms consistent with the all risk insurance policy required
under Section 7.1(a)(i), inclusive of loss of rents and/or business interruption insurance required
pursuant to Subsection 7.1(a)(iii) above;




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          (ix) umbrella liability insurance in an amount not less than $13,000,000.00 per occurrence on
terms consistent with the commercial general liability insurance policy required under subsection
(ii) above;




          (x) a blanket fidelity bond against losses resulting from dishonest or fraudulent acts
committed by (A) Borrower’s personnel; (B) any employees of outside firms that provide appraisal,
legal, data processing or other services for Borrower or (C) temporary contract employees or
student interns;




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




          (xii) such insurance as may be required of Borrower pursuant to the terms of the Property
Documents, if any; and




          (xiii) such other insurance and in such amounts as Lender from time to time may reasonably
request against such other insurable hazards which at the time are commonly insured against for
property similar to the Property located in or around the region in which the Property is located.




          (b) All insurance provided for in Subsection 7.1(a) hereof shall be obtained under valid and
enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from
time to time after the date hereof, in such amounts as may be satisfactory to Lender, issued by
financially sound and responsible insurance companies authorized to do business in the state in
which the Property is located and approved by Lender. The insurance companies must have a general
policy rating of A or better and a financial class of X or better by A.M. Best Company, Inc., and a
claims paying ability/financial strength rating of “A-” or better by S&P or an equivalent rating by
another Rating Agency (each such insurer shall be referred to below as a “Qualified Insurer”). Not
less than fifteen (15) days prior to the expiration dates of the Policies theretofore furnished to
Lender pursuant to Subsection 7.1(a), Borrower shall deliver to Lender evidence satisfactory to
Lender that such Policies have been renewed or replaced. Within fifteen (15) days after the
expiration date of each Policy theretofore furnished to Lender, Borrower shall deliver standard
Insurance Services Organization Accord certificates of insurance reasonably acceptable to Lender.
Not less than fifteen (15) days prior to the delinquency of payment of the premiums due under the
Policies (the “Insurance Premiums”), Borrower shall deliver to Lender evidence of such payment.




          (c) Except to the extent required pursuant to Section 7.1(a) hereof, Borrower shall not obtain
(or permit to be obtained) (i) any umbrella or blanket liability or casualty Policy unless, in each
case, such Policy is approved in advance in writing by Lender and Lender’s interest is included
therein as provided in this Agreement and such Policy is issued by a Qualified Insurer, or (ii)
separate insurance concurrent in form or contributing in the event of loss with that required in
Subsection 7.1(a) to be furnished by, or which may be reasonably required to be furnished by,
Borrower. In the event Borrower obtains (or causes to be obtained) separate insurance or an
umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause certified
copies of each Policy to be delivered as required in Subsection 7.1(a). Any blanket insurance
Policy remains subject to review and approval by Lender based on the




59









 




schedule of locations and values. Any blanket insurance Policy shall provide the same
protection as would a separate Policy insuring only the Property in compliance with the provisions
of Section 7.1(a).




          (d) All Policies of insurance provided for or contemplated by Subsection 7.1(a), except for
the Policy referenced in Subsection 7.1(a)(v), shall name Lender and Borrower as the insured or
additional insured, as their respective interests may appear, and in the case of property damage,
rent loss, business interruption, boiler and machinery, earthquake and flood insurance, shall
contain a so-called standard noncontributing mortgagee clause (or its equivalent) in favor of
Lender providing that the loss thereunder shall be payable to Lender.




          (e) All Policies of insurance provided for in Subsection 7.1(a) shall contain clauses or
endorsements to the effect that:




          (i) no (A) act, failure to act, violation of warranties, declarations or conditions, or
negligence by Borrower, or anyone acting for Borrower, or by any Tenant under any Lease or other
occupant, (B) [Intentionally Omitted], (C) exercise by Lender of any of its rights or remedies
hereunder or under any other Loan Document, or (D) failure to comply with the provisions of any
Policy which might otherwise result in a forfeiture of the insurance or any part thereof, shall in
any way affect the validity or enforceability of the insurance insofar as Lender is concerned;




          (ii) the Policy shall not be materially changed (other than to increase the coverage provided
thereby), terminated or cancelled without at least 30 days’ written notice to Lender and any other
party named therein as an insured;




          (iii) each Policy shall provide that (A) the issuers thereof shall give written notice to
Lender if the Policy has not been renewed ten (10) days prior to its expiration and (B) Lender is
permitted to make payments to effect the continuation of such Policy upon notice of cancellation
due to non-payment of Insurance Premiums;




          (iv) Lender shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder; and




          (v) Except as provided in Section 7.1(j) below, the Policies shall not exclude coverage for
acts of terror or similar acts of sabotage.




          (f) [Intentionally Omitted].




          (g) If at any time Lender is not in receipt of written evidence that all insurance required
hereunder is in full force and effect, Lender shall have the right, after five (5) Business Days
prior notice to Borrower (unless Lender has a reasonable belief that one or more of the Policies is
not in full force and effect or will expire in less than five (5) Business Days), to take such
action as Lender deems necessary to protect its interest in the Property, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate, and all expenses incurred by Lender in connection with such action or in obtaining
such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until
paid shall be secured by the Security Instrument and shall bear interest at the Default Rate. In
the event Lender obtains insurance coverage on behalf of Borrower pursuant to this subsection




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(g), Borrower shall be permitted to cancel such insurance coverages provided Borrower has
delivered to Lender evidence of Borrower’s compliance with this Article 7, which such evidence
shall be subject to Lender’s prior written approval (not to be unreasonably withheld, conditioned
or delayed).




          (h) In the event of a foreclosure of the Security Instrument or other transfer of title to the
Property in extinguishment in whole or in part of the Debt, all right, title and interest of
Borrower in and to the Policies then in force concerning the Property (other than (i) those
Policies that are not solely covering the Property, (ii) liability Policies or (iii) Policies
maintained by a Tenant) and all proceeds payable thereunder shall thereupon vest exclusively in
Lender or the purchaser at such foreclosure or other transferee in the event of such other transfer
of title.




          (i) As an alternative to the Policies required to be maintained pursuant to the preceding
provisions of this Section 7.1, Borrower will not be in default under this Section 7.1 if Borrower
maintains (or causes to be maintained) Policies which (i) have coverages, deductibles and/or other
related provisions other than those specified above and/or (ii) are provided by insurance companies
not meeting the credit ratings requirements set forth above (any such Policy, a “Non-Conforming
Policy”), provided, that, prior to obtaining such Non-Conforming Policies (or permitting such
Non-Conforming Policies to be obtained), Borrower shall have (1) received Lender’s prior written
consent thereto and (2) if required by Lender, confirmed that Lender has received a Rating Agency
Confirmation with respect to any such Non-Conforming Policy.




          (j) Borrower hereby represents that, as of the date hereof, none of the insurance policies
required in this Section 7.1 which require coverage for terrorism, except those required under
clauses (viii), (x) and (xi) of Section 7.1(a) (such insurance policies, the “Applicable Policies”)
exclude coverage for Acts of Terror (defined below). Notwithstanding anything to the contrary
contained herein, in the event that, after the date hereof, any Applicable Policy (other than those
required under clauses (viii), (x) and (xi) of Section 7.1(a)) excludes coverage for Acts of
Terror, Borrower shall obtain and maintain (or cause to be obtained and maintained) coverage for
such excluded Acts of Terror (the “Terrorism Coverage”), which such Terrorism Coverage shall comply
with each of the applicable requirements for Policies set forth above (including, without
limitation, those relating to deductibles); provided, that, Lender, at Lender’s option, may
reasonably require Borrower to obtain or cause to be obtained the Terrorism Coverage with higher
deductibles than set forth above. Notwithstanding the foregoing, in no event shall Borrower be
required to pay annual premiums in excess of the TC Cap (defined below) in order to obtain the
Terrorism Coverage (but Borrower shall be obligated to purchase such portion of the Terrorism
Coverage as is obtainable by payment of annual premiums equal to the TC Cap). As used above, “Acts
of Terror” shall mean acts of terror or similar acts of sabotage; provided, that, for so long as
the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance
Program Authorization Act of 2007 (as the same may be further modified, amended, or extended,
“TRIA”) (i) remains in full force and effect and (ii) continues to cover both foreign and domestic
acts of terror, the provisions of TRIA shall determine what is deemed to be included within this
definition of “Acts of Terror”. As used above, “TC Cap” shall mean two times the amount of the
Insurance Premiums that are payable at such time in respect of the casualty and business
interruption/rental loss insurance required hereunder (without giving effect to the cost of
terrorism and earthquake components of such casualty and business interruption/rental loss
insurance).







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          (k) TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE NOTICE. (A)
BORROWER IS REQUIRED TO: (I) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT SPECIFIED IN
THE LOAN DOCUMENTS; (II) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS
IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (III) NAME LENDER AS THE PERSON TO
BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS AS AND TO THE EXTENT REQUIRED IN THE LOAN
DOCUMENTS; (B) BORROWER MUST, IF REQUIRED BY LENDER PURSUANT TO THE LOAN DOCUMENTS, DELIVER TO
LENDER A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS; AND (C) IF BORROWER FAILS TO MEET
ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B), LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE
ON BEHALF OF BORROWER AT BORROWER’S EXPENSE AS AND TO EXTENT EXPLICITLY PERMITTED BY THE LOAN
DOCUMENTS.




          (l) Lender hereby agrees that the Policies maintained by Borrower as of the date hereof
(including any Non-Conforming Policies) are acceptable and satisfy the requirements set forth in
this Article 7.




     Section 7.2 Casualty. If the Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty (a “Casualty”), Borrower shall give prompt notice of such damage to Lender
(provided that such notice shall not be required if the estimated cost to restore are less than
$100,000.00) and shall promptly commence and diligently prosecute the completion of the repair and
restoration of the Property as nearly as possible to the condition the Property was in immediately
prior to such Casualty, with such alterations as may be reasonably approved by Lender (a
“Restoration”) and otherwise in accordance with Section 7.4. Borrower shall pay, or cause to be
paid, all costs of such Restoration whether or not such costs are covered by insurance. Lender
may, but shall not be obligated to make proof of loss if not made promptly by Borrower.



     Section 7.3 Condemnation. Borrower shall promptly give Lender notice of the actual or
threatened commencement of any proceeding for the Condemnation of the Property (or any portion
thereof) of which Borrower has actual knowledge and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Lender may participate in any such proceedings,
and Borrower shall from time to time deliver to Lender all instruments requested by it to permit
such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at
the time and in the manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and applied by Lender, after
the deduction of reasonable expenses of collection, to the reduction or discharge of the Debt.
Lender shall not be limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided herein or in the
Note. If any portion (but less than all) of the Property is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the Property and
otherwise comply with the provisions of Section



62









 




7.4. If the Property (or any portion thereof) is sold, through foreclosure or otherwise,
prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award,
or a portion thereof sufficient to pay the Debt.




     Section 7.4 Restoration. The following provisions shall apply in connection with the
Restoration of the Property:



          (a) If the Net Proceeds shall be less than the Restoration Threshold and the costs of
completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in
Section 7.4(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in accordance with the
terms of this Agreement.




          (b) If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of
completing the Restoration are equal to or greater than the Restoration Threshold, Lender shall
make the Net Proceeds available for the Restoration in accordance with the provisions of this
Section 7.4.




          (i) The Net Proceeds shall be made available for Restoration provided that each of the
following conditions are met:





	 	(A)	 	no Event of Default shall have occurred and be continuing;
	 
	 	(B)	 	(1) in the event the Net Proceeds are insurance proceeds, less
than thirty percent (30%) of each of (i) fair market value of the Property as
reasonably determined by Lender, and (ii) rentable area of the Property has
been damaged, destroyed or rendered unusable as a result of a Casualty or (2)
in the event the Net Proceeds are condemnation proceeds, less than fifteen
percent (15%) of each of (i) the fair market value of the Property as
reasonably determined by Lender and (ii) rentable area of the Property is
taken, such land is located along the perimeter or periphery of the Property,
no material portion of the Improvements is located on such land and such taking
does not materially impair the existing access to the Property;
	 
	 	(C)	 	Leases demising in the aggregate a percentage amount equal to
or greater than seventy-five percent (75%) of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect
as of the date of the occurrence of such Casualty or Condemnation, whichever
the case may be, shall remain in full force and effect during and after the
completion of the Restoration, notwithstanding the occurrence of any such
Casualty or Condemnation, whichever the case may be, and Borrower furnishes to
Lender evidence satisfactory to Lender that all Tenants under Major Leases
shall continue to operate their respective space at the Property after the
completion of the Restoration;




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	 	(D)	 	Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than thirty (30) days after the issuance of
a building permit with respect thereto) and shall diligently pursue the same to
satisfactory completion in compliance with all Applicable Laws, including,
without limitation, all applicable Environmental Laws;
	 
	 	(E)	 	Lender shall be satisfied that any operating deficits which
will be incurred with respect to the Property as a result of the occurrence of
any such Casualty or Condemnation will be covered out of (1) the Net Proceeds,
(2) the insurance coverage referred to in Section 7.1(a)(iii) above, or (3) by
other funds of Borrower;
	 
	 	(F)	 	Lender shall be satisfied that, upon the completion of the
Restoration, the Underwritable Cash Flow of the Property will be sufficient to
cover all carrying costs and operating expenses of the Property;
	 
	 	(G)	 	Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months prior to the
Maturity Date, (2) the expiration of the insurance coverage referred to in
Section 7.1(a)(iii) above, or (3) such time as may be required under applicable
zoning law, ordinance, rule or regulation in order to repair and restore the
Property to the condition it was in immediately prior to such Casualty or
Condemnation;
	 
	 	(H)	 	Borrower shall execute and deliver to Lender a completion
guaranty in form and substance satisfactory to Lender and its counsel pursuant
to the provisions of which Borrower shall guaranty to Lender the lien-free
completion by Borrower of the Restoration in accordance with the provisions of
this Subsection 7.4(b);
	 
	 	(I)	 	the Property and the use thereof after the Restoration will be
in material compliance with and permitted under the Property Documents and all
Applicable Law;
	 
	 	(J)	 	the Property Documents will remain in full force and effect
during and after the Restoration and a Property Document Event shall not occur
as a result of the applicable Casualty, Condemnation and/or Restoration; and
	 
	 	(K)	 	the Restoration shall be done and completed in a reasonably
expeditious and diligent fashion and in material compliance with the Property
Documents and all Applicable Law.





          (ii) The Net Proceeds shall be held by Lender in an interest-bearing account (bearing interest
at a rate established by Lender, which may or may not be the highest rate then available) and,
until disbursed in accordance with the provisions of this Section 7.4(b), shall constitute
additional security for the Debt and other obligations under this Agreement, the Security
Instrument, the Note and the other Loan Documents. The Net Proceeds (other than the Rent Loss
Proceeds) shall be disbursed by Lender to, or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence satisfactory to Lender that






64









 







(A) all materials installed and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection with the related Restoration item
have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or
materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender
by the title company issuing the Title Insurance Policy.




          (iii) All plans and specifications required in connection with the Restoration shall be
subject to prior review and acceptance in all respects by Lender and by an independent consulting
engineer selected by Lender (the “Casualty Consultant”), such acceptance not to be unreasonably
withheld, conditioned or delayed. Lender shall have the use of the plans and specifications and
all permits, licenses and approvals required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors and materialmen engaged in the Restoration shall be
subject to prior review and acceptance by Lender and the Casualty Consultant, such acceptance not
to be unreasonably withheld, conditioned or delayed. All reasonable costs and expenses incurred by
Lender in connection with making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s reasonable
fees, shall be paid by Borrower. Borrower shall have the right to settle all claims under the
Policies (subject to Lender’s approval of the final settlement, which approval shall not be
unreasonably withheld, conditioned or delayed), provided that (a) no Event of Default exists, (b)
Borrower promptly and with commercially reasonable diligence negotiates a settlement of any such
claims and (c) the insurer with respect to the Policy under which such claim is brought has not
raised any act of the insured as a defense to the payment of such claim. If an Event of Default
exists, Lender shall, at its election, have the exclusive right to settle or adjust any claims made
under the Policies in the event of a Casualty.




          (iv) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess
of an amount equal to the costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, minus the Restoration Retainage. The
term “Restoration Retainage” as used in this Subsection 7.4(b) shall mean an amount equal to 10% of
the costs actually incurred for work in place as part of the Restoration, as certified by the
Casualty Consultant, until such time as the Casualty Consultant certifies to Lender that Net
Proceeds representing 50% of the required Restoration have been disbursed. There shall be no
Restoration Retainage with respect to costs actually incurred by Borrower for work in place in
completing the last 50% of the required Restoration. The Restoration Retainage shall in no event,
and notwithstanding anything to the contrary set forth above in this Subsection 7.4(b), be less
than the amount actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Restoration Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been completed in accordance with the
provisions of this Subsection 7.4(b) and that all approvals necessary for the re-occupancy and use
of the Property have been obtained from all appropriate governmental and quasi-governmental
authorities, and Lender receives evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Restoration Retainage, provided, however,
that Lender will release the portion of the Restoration Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the






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contractor, subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or
materialman’s contract, and the contractor, subcontractor or materialman delivers the lien waivers
and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as
may be reasonably requested by Lender or by the title company insuring the lien of the Security
Instrument. If required by Lender, the release of any such portion of the Restoration Retainage
shall be approved by the surety company, if any, which has issued a payment or performance bond
with respect to the contractor, subcontractor or materialman.




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




          (vi) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the
reasonable opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be
made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section
7.4(b) shall constitute additional security for the Debt and other obligations under this
Agreement, the Security Instrument, the Note and the other Loan Documents.




          (vii) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net
Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the provisions of this Section 7.4(b), and
the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower within ten (10)
Business Days thereafter, provided no Event of Default shall have occurred and shall be continuing
under this Agreement, the Security Instrument, the Note or any of the other Loan Documents.




          (c) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be
returned to Borrower as excess Net Proceeds pursuant to Subsection 7.4(b)(vii) shall be retained
and applied by Lender toward the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Lender in its discretion shall deem proper. If Lender shall
receive and retain Net Proceeds, the lien of the Security Instrument shall be reduced only by the
amount thereof received and retained by Lender and actually applied by Lender in reduction of the
Debt.




          (d) Notwithstanding the foregoing provisions of this Section 7.4, if the Loan is included in a
REMIC Trust and, immediately following a release of any portion of the Property following a
Condemnation or, if applicable, a Casualty, the Loan-to-Value Ratio of the remaining portion of the
Property is greater than 125% (such value to be determined, in Lender’s sole discretion, by any
commercially reasonable method permitted to a REMIC Trust), the principal balance of the Loan must
be paid down by Borrower by the least of the following amounts, unless the Lender receives an
opinion of counsel that the Securitization will not fail to




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maintain its status as a REMIC Trust as a result of the related release of lien: (i) the Net
Proceeds, (ii) the fair market value of the released portion of the Property at the time of the
release, or (iii) an amount such that the Loan-to-Value Ratio of the Loan (as so determined by
Lender) does not increase after the release. Unless Lender determines, in its sole discretion,
that applicable REMIC requirements or regulations require a different valuation method, Lender
shall determine the Loan-to-Value Ratio of the remaining portion of the Property by capitalizing
net operating income for the Property for such period using a capitalization rate or range of
capitalization rates, in its sole discretion, that Lender has no reason to believe is incorrect.




          (e) Notwithstanding the foregoing provisions of this Article 7, to the extent any Lease
remains in effect and the Tenant thereunder remains liable for the obligations under such Lease,
the restoration of the Property and disposition of any amounts, awards or payments payable with
respect to any Casualty or Condemnation relating to the Property shall be governed by the
applicable Lease. Borrower agrees to notify Lender in writing in the event that a Tenant under any
Lease exercises any right relating to any Casualty or Condemnation thereunder and agrees to deliver
to Lender any correspondence received or delivered by Borrower pursuant to such Lease as it relates
to any Casualty or Condemnation.




ARTICLE 8




RESERVE FUNDS



     Section 8.1 Intentionally Omitted.



     Section 8.2 Intentionally Omitted.



     Section 8.3 Intentionally Omitted.



     Section 8.4 Minimed TI Reserve.



          (a) On the Closing Date, Borrower shall deposit with Lender the sum of One Million Twelve
Thousand Four Hundred Eighty and No/100 Dollars ($1,012,480.00) (the “Minimed TI Funds”). The
Minimed TI Funds shall be applied toward Borrower’s obligation to pay Minimed the Construction
Allowance under the Minimed Lease.




          (b) Lender shall disburse the Minimed TI Funds to Borrower upon satisfaction of the following
conditions: (i) no Event of Default shall exist; and (ii) Borrower shall certify to Lender in
writing that Minimed has satisfied in all material respects all of the conditions to disbursement
of the Construction Allowance, as required under Section B.3. of Exhibit D to the Minimed Lease.




     Section 8.5 The Accounts Generally.



          (a) Borrower grants to Lender a first-priority perfected security interest in each of the
Reserve Funds and all sums now or hereafter deposited in the Reserve Funds as additional security
for payment of the Debt. Until expended or applied in accordance herewith, the Reserve Funds shall
constitute additional security for the Debt. The provisions of this Section 8.5 are intended to
give Lender and/or Servicer “control” of the Reserve Funds within the meaning of the UCC. Borrower
acknowledges and agrees that the Reserve Funds are subject






67









 







to the sole dominion, control and discretion of Lender, its authorized agents or designees,
subject to the terms hereof, and Borrower shall have no right of withdrawal with respect to any
Reserve Funds except with the prior written consent of Lender or as otherwise provided herein. The
Reserve Funds shall not constitute trust funds and may be commingled with other monies held by
Lender.




          (b) Borrower shall not, without obtaining the prior written consent of Lender and except
pursuant to the Mezzanine Loan Agreement, further pledge, assign or grant any security interest in
the Reserve Funds or permit any lien to attach thereto, or any levy to be made thereon, or any
UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with
respect thereto. Lender shall have the right to file a financing statement or statements under the
UCC in connection with any of the Reserve Funds with respect thereto in the form required to
properly perfect Lender’s security interest therein. Borrower agrees that at any time and from
time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be reasonably necessary or
desirable, or that Lender may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its
rights and remedies hereunder with respect to any Reserve Funds.




          (c) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
upon the occurrence and during the continuance of an Event of Default, without notice from Lender
or Servicer (i) Borrower shall have no rights in respect of the Reserve Funds and (ii) Lender shall
have all rights and remedies with respect to the Accounts and the amounts on deposit therein and
the Reserve Funds as described in this Agreement, the Cash Management Agreement and in the Security
Instrument, in addition to all of the rights and remedies available to a secured party under the
UCC, and, notwithstanding anything to the contrary contained in this Agreement, the Cash Management
Agreement or in the Security Instrument, may apply the Reserve Funds as Lender determines in its
sole discretion including, but not limited to, payment of the Debt.




          (d) The insufficiency of Reserve Funds on deposit with Lender shall not absolve Borrower of
the obligation to make any payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.




          (e) BORROWER SHALL INDEMNIFY LENDER AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND ALL
ACTIONS, SUITS, CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS AND COSTS AND EXPENSES
(INCLUDING LITIGATION COSTS AND REASONABLE ATTORNEYS FEES AND EXPENSES) ARISING FROM OR IN ANY WAY
CONNECTED WITH THE RESERVE FUNDS, THE SUMS DEPOSITED THEREIN OR THE PERFORMANCE OF THE OBLIGATIONS
FOR WHICH THE RESERVE FUNDS WERE ESTABLISHED, EXCEPT TO THE EXTENT ARISING FROM THE GROSS
NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF LENDER, ITS AGENTS OR EMPLOYEES. BORROWER SHALL
ASSIGN TO LENDER ALL RIGHTS AND CLAIMS BORROWER MAY HAVE AGAINST ALL PERSONS SUPPLYING LABOR,
MATERIALS OR OTHER SERVICES WHICH ARE TO BE PAID FROM OR SECURED BY THE RESERVE FUNDS; PROVIDED,
HOWEVER,




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THAT LENDER MAY NOT PURSUE ANY SUCH RIGHT OR CLAIM UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND
REMAINS UNCURED.




          (f) Borrower and Lender shall maintain each applicable Account as an Eligible Account, except
as otherwise expressly agreed to in writing by Lender. In the event that Lender no longer
satisfies the criteria for an Eligible Institution, Borrower shall cooperate with Lender in
transferring the applicable Accounts to an institution that satisfies such criteria. Borrower
hereby grants Lender power of attorney (irrevocable for so long as the Loan is outstanding) with
respect to any such transfers and the establishment of accounts with a successor institution.




          (g) Interest accrued, if any, on the Reserve Funds, other than on the Minimed TI Funds, shall
not be required to be remitted to any Account and may instead be retained by Lender. The Minimed
TI Funds shall be held in an interest-bearing account. In no event shall Lender or any Servicer be
required to select any particular interest-bearing account or the account that yields the highest
rate of interest, provided that selection of the account shall be consistent with the general
standards at the time being utilized by Lender or such Servicer, as applicable, in establishing
similar accounts for loans of comparable type. All such interest that so becomes part of the
Minimed TI Funds shall be disbursed in accordance with the disbursement procedures contained herein
applicable to Minimed TI Funds; provided, however, that Lender may, at its election, retain any
such interest for its own account during the occurrence and continuance of an Event of Default.




          (h) Intentionally Omitted.




          (i) Borrower acknowledges and agrees that it solely shall be, and shall at all times remain,
liable to Lender or Servicer for all reasonable fees, charges, costs and expenses in connection
with the Reserve Funds, this Agreement and the enforcement hereof, including, without limitation,
any reasonable monthly or annual fees or charges as may be assessed by Lender or Servicer in
connection with the administration of the Accounts and the Reserve Funds and the reasonable fees
and expenses of legal counsel to Lender and Servicer as reasonably needed to enforce, protect or
preserve the rights and remedies of Lender and/or Servicer under this Agreement.




ARTICLE 9




CASH MANAGEMENT AGREEMENT



     Section 9.1 Cash Management Agreement. Borrower shall enter into the Cash Management
Agreement on the date hereof which shall govern the collection, holding and disbursement of Rents
and any other income from the Property.



     Section 9.2 Cash Flow Sweep. In the event of a Cash Trap Event Period (as defined in the Cash
Management Agreement), all Excess Cash Flow (as defined in the Cash Management Agreement) shall be
deposited into the Excess Cash Flow Subaccount (as defined in the Cash Management Agreement), as
more particularly set forth in the Cash Management Agreement.



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ARTICLE 10




EVENTS OF DEFAULT; REMEDIES



     Section 10.1 Event of Default.



     The occurrence of any one or more of the following events shall constitute an “Event of
Default”:



          (a) if (A) any monthly Debt Service payment is not paid within five (5) days when due except
to the extent sums sufficient to pay monthly Debt Service have been deposited with Lender in
accordance with the terms of the Cash Management Agreement or the Deposit Account Agreement (as
defined in the Cash Management Agreement) and Lender’s access to such sums is not restricted or
constrained in any manner, (B) the payment due on the Maturity Date is not paid when due or (C) any
other portion of the Debt is not paid when due and such non-payment continues for five (5) days
following notice to Borrower that the same is due and payable;




          (b) if any of the Taxes or Other Charges is not paid prior to delinquency except to the extent
Borrower or Tenant is contesting such Taxes or Other Charges in accordance with the terms of
Section 4.5 hereof;




          (c) if the Policies are not kept in full force and effect or if evidence of the same is not
delivered to Lender as provided in Section 7.1 hereof and such failure to deliver evidence is not
cured within ten (10) Business Days after notice from Lender to Borrower of such failure;




          (d) if any of the covenants contained in Sections 5.1, 5.2, 5.4, 5.5 or Article 6 hereof are
breached or violated;




          (e) if any representation or warranty of, or with respect to, Borrower or Guarantor, made
herein, in the Guaranty or in the Environmental Indemnity or in any other guaranty, or in any
certificate, report, financial statement or other instrument or document furnished to Lender in
connection with the Loan shall have been false or misleading in any material adverse respect when
made;




          (f) if (i) Borrower, any SPE Component Entity or Guarantor shall commence any case, proceeding
or other action (A) under any Creditors Rights Laws seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Borrower or any managing member or
general partner of Borrower, any SPE Component Entity or Guarantor shall make a general assignment
for the benefit of its creditors; (ii) there shall be commenced against Borrower or any managing
member or general partner of Borrower, any SPE Component Entity or Guarantor any case, proceeding
or other action of a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of ninety (90) days; (iii) there shall be commenced against Borrower, any
SPE Component Entity or Guarantor any case, proceeding or other action seeking issuance of a
warrant of attachment, execution,






70









 







distraint or similar process against all or any substantial part of its assets which results
in the entry of any order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within ninety (90) days from the entry thereof; (iv) Borrower, any
SPE Component Entity or Guarantor shall take any action indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower,
any SPE Component Entity or Guarantor shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;




          (g) if Borrower shall be in default beyond applicable notice and grace periods under any other
mortgage, deed of trust, deed to secure debt or other security agreement covering Borrower’s
interest in any part of the Property whether it be superior or junior in lien to the Security
Instrument;




          (h) subject to Section 4.16(b) hereof, if the Property becomes subject to any mechanic’s,
materialman’s or other lien (other than a lien for any Taxes not then due and payable or a
Permitted Encumbrance) and the lien shall remain undischarged of record (by payment, bonding or
otherwise) for a period of sixty (60) days after Borrower obtains actual or constructive knowledge
thereof from any source whatsoever;




          (i) if any federal tax lien is filed against Borrower, any SPE Component Entity, Guarantor or
Borrower’s interest in the Property and same is not discharged of record (by payment, bonding or
otherwise) within sixty (60) days after Borrower obtains actual or constructive knowledge thereof
from any source whatsoever;




          (j) [Intentionally omitted];




          (k) if any default occurs under any guaranty or indemnity executed by Borrower and/or
Guarantor in connection herewith (including, without limitation, the Environmental Indemnity and/or
the Guaranty) and such default continues after the expiration of applicable grace periods, if any;




          (l) intentionally omitted;




          (m) if Borrower shall fail to deliver to Lender any Required Financial Item when required
under Section 4.12 and such failure is not cured within ten (10) Business Days after notice from
Lender of such failure;




          (n) if Borrower defaults under the Management Agreement in any material respect beyond the
expiration of applicable notice and grace periods, if any, thereunder or if the Management
Agreement is canceled, terminated or surrendered or expires pursuant to its terms, unless in such
case Borrower shall enter into a new management agreement with a Qualified Manager in accordance
with the applicable terms and provisions hereof;




          (o) if any representation and/or covenant herein relating to ERISA matters is breached in any
material respect;




          (p) if a Property Document Event occurs and the same is not remedied within ten (10) Business
Days after notice from Lender, in the case of any event which can be remedied by the payment of a
sum of money or (ii) for thirty (30) days after notice from Lender, in the




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case of any other event, provided that if such event cannot reasonably be remedied within such
thirty (30) day period and Borrower shall have commenced such remedy within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to complete the same, such thirty (30)
day period shall be extended for so long as it shall require Borrower in the exercise of due
diligence to complete the same, it being agreed that no such extension shall be for a period in
excess of ninety (90) days;




          (q) intentionally omitted;




          (r) if Borrower shall continue to be in default under any term, covenant or condition of this
Agreement not specified in subsections (a) through (p) above or not otherwise specifically
specified as an Event of Default herein, (i) for more than ten (10) Business Days after notice from
Lender, in the case of any default which can be cured by the payment of a sum of money or (ii) for
thirty (30) days after notice from Lender, in the case of any other default, provided that if such
default cannot reasonably be cured within such thirty (30) day period and Borrower shall have
commenced to cure such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long
as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed
that no such extension shall be for a period in excess of ninety (90) days; and/or




          (s) if there shall be a default under any of the other Loan Documents beyond any applicable
notice and cure periods contained in such Loan Documents or to the extent there is no applicable
notice and cure with respect to such default set forth in such other Loan Documents, then (i) for
more than ten (10) Business Days after notice from Lender, in the case of any default which can be
cured by the payment of a sum of money or (ii) for thirty (30) days after notice from Lender, in
the case of any other default, provided that if such default cannot reasonably be cured within such
thirty (30) day period and Borrower shall have commenced to cure such default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be for a period in
excess of ninety (90) days.




     Section 10.2 Remedies.



          (a) Subject to the terms of Article 13 hereof, upon the occurrence and during the continuance
of an Event of Default (other than an Event of Default described in Section 10.1(f) above with
respect to Borrower and any SPE Component Entity only) and at any time thereafter Lender may, in
addition to any other rights or remedies available to it pursuant to this Agreement, the Security
Instrument, the Note and the other Loan Documents or at law or in equity, take such action, without
notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower
and in the Property, including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies provided in this
Agreement, the Security Instrument, the Note and the other Loan Documents against Borrower and the
Property, including, without limitation, all rights or remedies available at law or in equity. Upon
any Event of Default described in Section 10.1(f) above (with respect to Borrower and any SPE
Component Entity only), the Debt and all other obligations of Borrower under this Agreement, the
Security Instrument, the Note and the other






72









 







Loan Documents shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein
or in the Security Instrument, the Note and the other Loan Documents to the contrary
notwithstanding.




          (b) Upon the occurrence and during the continuance of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender against Borrower
under this Agreement, the Security Instrument, the Note or the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action
for the enforcement of its rights and remedies under this Agreement, the Security Instrument, the
Note or the other Loan Documents with respect to the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singularly, successively,
together or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by Applicable Law, without impairing or otherwise
affecting the other rights and remedies of Lender permitted by Applicable Law, equity or contract
or as set forth herein or in the Security Instrument, the Note or the other Loan Documents, subject
to the terms of Article 13 hereof. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or power may be exercised from time to
time and as often as may be deemed expedient. A waiver of one Default or Event of Default with
respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of
Default by Borrower or to impair any remedy, right or power consequent thereon.




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




          (d) Upon the occurrence and during the continuance of an Event of Default, Lender shall have
the right from time to time to sever the Note and the other Loan Documents into one or more
separate notes, security instruments and other security documents (the “Severed Loan Documents”) in
such denominations as Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender
from time to time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely
and irrevocably appoints Lender as its true






73









 







and lawful attorney, coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any
such documents under such power until five (5) days after notice has been given to Borrower by
Lender of Lender’s intent to exercise its rights under such power. Borrower shall not be obligated
to pay any costs or expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents and the Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date.




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




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




ARTICLE 11




SECONDARY MARKET



     Section 11.1 Securitization.



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







74









 








          (b) If requested by Lender, Borrower shall assist Lender in satisfying the market standards to
which Lender customarily adheres or which may be reasonably required in the marketplace or by the
Rating Agencies in connection with any Secondary Market Transactions, including, without
limitation, to:




          (i) (A) provide updated financial and other information with respect to the Property, the
business operated at the Property, Borrower, Guarantor, Operating Partnership and Manager, (B)
provide updated budgets relating to the Property and (C) provide updated appraisals, market
studies, environmental reviews (Phase I’s and, if appropriate, Phase II’s), property condition
reports and other due diligence investigations of the Property (the “Updated Information”),
together, if customary, with appropriate verification of the Updated Information through letters of
auditors or opinions of counsel reasonably acceptable to Lender and the Rating Agencies;




          (ii) provide opinions of counsel, which may be relied upon by Lender, the Rating Agencies and
their respective counsel, agents and representatives, as to matters of Delaware law relating to
limited liability companies, which counsel and opinions shall be reasonably satisfactory in form
and substance to Lender and the Rating Agencies;




          (iii) provide updated, as of the closing date of the Secondary Market Transaction,
representations and warranties made in the Loan Documents and such additional representations and
warranties as the Rating Agencies may reasonably require;




          (iv) provide such information, documents and agreements relating to the Property Documents as
Lender may reasonably request in connection with a Secondary Market Transaction; and




          (v) execute such amendments to the Loan Documents and Borrower or any SPE Component Entity’s
organizational documents as may be reasonably requested by Lender or requested by the Rating
Agencies or otherwise to effect the Securitization including, without limitation, bifurcation of
the Loan into two or more components and/or separate notes and/or creating a senior/subordinate
note structure (any of the foregoing, a “Loan Bifurcation”); provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or amendment would change
the interest rate, the stated maturity or the amortization of principal set forth in the Note,
except in connection with a Loan Bifurcation which may result in varying fixed interest rates, but
which shall have the same weighted average coupon of the original Note.




          (c) Borrower shall be responsible for any of Borrower’s out-of-pocket and internal costs and
expenses incurred in connection with Borrower’s compliance with this Section 11.1 (including,
without limitation, Borrower’s attorney’s fees and expenses), subject to an aggregate cap on such
costs and expenses of $10,000.00, and provided that Borrower shall not be required to reimburse
Lender for Lender’s costs and expenses in connection with this Section 11.1. Notwithstanding the
foregoing or anything herein to the contrary, Borrower shall pay for any costs and expenses with
respect to items which Borrower is otherwise required to deliver pursuant to the terms of the Loan
Documents.




     Section 11.2 Securitization Indemnification.



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




          (b) Borrower shall provide in connection with each of (i) a preliminary and a final private
placement memorandum or (ii) a preliminary and final prospectus or prospectus supplement, as
applicable, an agreement (A) certifying that Borrower has examined such Disclosure Documents
specified by Lender and that each such Disclosure Document, as it relates to Borrower, Borrower
Affiliates, the Property, Manager, Operating Partnership, Guarantor and all other aspects of the
Loan Documents, does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading, (B) SUBJECT TO THE TERMS OF ARTICLE 13 HEREOF,
INDEMNIFYING LENDER (AND FOR PURPOSES OF THIS SECTION 11.2, LENDER HEREUNDER SHALL INCLUDE ITS
OFFICERS AND DIRECTORS), THE AFFILIATE OF WELLS FARGO BANK, NATIONAL ASSOCIATION (“WELLS”) THAT HAS
FILED THE REGISTRATION STATEMENT RELATING TO THE SECURITIZATION (THE “REGISTRATION STATEMENT”),
EACH OF ITS DIRECTORS, EACH OF ITS OFFICERS WHO HAVE SIGNED THE REGISTRATION STATEMENT AND EACH
PERSON THAT CONTROLS THE AFFILIATE WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT OR
SECTION 20 OF THE EXCHANGE ACT (COLLECTIVELY, THE “WELLS GROUP”), AND WELLS, AND ANY OTHER
PLACEMENT AGENT OR UNDERWRITER WITH RESPECT TO THE SECURITIZATION, EACH OF THEIR RESPECTIVE
DIRECTORS AND EACH PERSON WHO CONTROLS WELLS OR ANY OTHER PLACEMENT AGENT OR UNDERWRITER WITHIN THE
MEANING OF SECTION 15 OF THE SECURITIES ACT AND SECTION 20 OF THE EXCHANGE ACT (COLLECTIVELY, THE
“UNDERWRITER GROUP”) FOR ANY LOSSES, CLAIMS, DAMAGES OR LIABILITIES (COLLECTIVELY, THE
“LIABILITIES”) TO WHICH LENDER, THE WELLS GROUP OR THE UNDERWRITER GROUP MAY BECOME SUBJECT INSOFAR
AS THE LIABILITIES ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT
OF ANY MATERIAL FACT CONTAINED IN SUCH SECTIONS OR ARISE OUT OF OR ARE BASED UPON THE OMISSION OR
ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED IN SUCH SECTIONS OR
NECESSARY IN ORDER TO MAKE THE STATEMENTS IN SUCH SECTIONS, IN LIGHT OF THE CIRCUMSTANCES UNDER
WHICH THEY WERE MADE, NOT MISLEADING and (C) agreeing to reimburse Lender, the Wells Group and/or
the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Wells
Group and the Underwriter Group in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under clauses (B) or (C) above
only to the extent that any such loss claim, damage or liability arises out of or is based upon any
such untrue statement or omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of Borrower in connection with the preparation of the
Disclosure Document or in






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connection with the underwriting or closing of the Loan, including, without limitation,
financial statements of Borrower, operating statements and rent rolls with respect to the Property
(the “Provided Information”). The indemnification provided for in clauses (B) and (C) above shall
be effective whether or not the indemnification agreement described above is provided; provided,
however, such indemnity shall be limited to the Provided Information and shall only be effective to
the extent that Lender accurately states the Provided Information in the applicable Disclosure
Document. The aforesaid indemnity will be in addition to any liability which Borrower may
otherwise have.




          (c) IN CONNECTION WITH EXCHANGE ACT FILINGS, SUBJECT TO THE TERMS OF ARTICLE 13 HEREOF,
BORROWER SHALL (I) INDEMNIFY LENDER, THE WELLS GROUP AND THE UNDERWRITER GROUP FOR LIABILITIES TO
WHICH LENDER, THE WELLS GROUP OR THE UNDERWRITER GROUP MAY BECOME SUBJECT INSOFAR AS THE
LIABILITIES ARISE OUT OF OR ARE BASED UPON THE OMISSION OR ALLEGED OMISSION TO STATE IN THE
PROVIDED INFORMATION A MATERIAL FACT REQUIRED TO BE STATED IN THE PROVIDED INFORMATION IN ORDER TO
MAKE THE STATEMENTS IN THE PROVIDED INFORMATION, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY
WERE MADE, NOT MISLEADING and (ii) reimburse Lender, the Wells Group or the Underwriter Group for
any legal or other expenses reasonably incurred by Lender, the Wells Group or the Underwriter Group
in connection with defending or investigating the Liabilities; provided, however, that Borrower’s
liability under clauses (i) and (ii) above shall be effective only to the extent that Lender
accurately sets forth the Provided Information in the applicable Disclosure Document. The
obligations of Borrower pursuant to this Section 11.2(c) shall be in addition to but not in
duplication of Section 11.2(b) above.




          (d) Promptly after receipt by an indemnified party under this Section 11.2 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 11.2, notify the indemnifying party in
writing of the commencement thereof, but the omission to so notify the indemnifying party will not
relieve the indemnifying party from any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party. In the event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and, to the extent that
it (or they) may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. After notice from the indemnifying
party to such indemnified party under this Section 11.2, such indemnified party shall pay for any
legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however, if the defendants
in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party at the cost of the indemnifying party. The indemnified party
shall instruct its counsel to maintain






77









 







reasonably detailed billing records for fees and disbursements for which such indemnified
party is seeking reimbursement hereunder and shall submit copies of such detailed billing records
to substantiate that such counsel’s fees and disbursements are solely related to the defense of a
claim for which the indemnifying party is required hereunder to indemnify such indemnified party.
The indemnifying party shall not be liable for the expenses of more than one separate counsel
unless an indemnified party shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those available to another indemnified
party.




          (e) In order to provide for just and equitable contribution in circumstances in which the
indemnity agreement provided for in Section 11.2(b) or (c) hereof is for any reason held to be
unenforceable as to an indemnified party in respect of any losses, claims, damages or liabilities
(or action in respect thereof) referred to therein which would otherwise be indemnifiable under
Section 11.2(b) or (c) hereof, the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages or liabilities (or
action in respect thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are entitled, the following
factors shall be considered: (i) Wells’ and Borrower’s relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the opportunity to correct
and prevent any statement or omission; and (iii) any other equitable considerations appropriate in
the circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita allocation.




          (f) SUBJECT TO THE TERMS OF ARTICLE 13 HEREOF, BORROWER SHALL JOINTLY AND SEVERALLY INDEMNIFY
LENDER AND ITS OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, REPRESENTATIVES, AGENTS AND AFFILIATES
AGAINST ANY LOSSES TO WHICH LENDER OR ITS OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES,
REPRESENTATIVES, AGENTS AND AFFILIATES, MAY BECOME SUBJECT IN CONNECTION WITH ANY INDEMNIFICATION
TO THE RATING AGENCIES IN CONNECTION WITH ISSUING, MONITORING OR MAINTAINING THE SECURITIES INSOFAR
AS THE LOSSES ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OF ANY MATERIAL FACT IN ANY
INFORMATION PROVIDED BY OR ON BEHALF OF BORROWER TO THE RATING AGENCIES (THE “COVERED RATING AGENCY
INFORMATION”) OR ARISE OUT OF OR ARE BASED UPON THE OMISSION TO STATE A MATERIAL FACT IN THE
COVERED RATING AGENCY INFORMATION REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE
STATEMENTS IN COVERED RATING AGENCY INFORMATION, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY
WERE MADE, NOT MISLEADING.




          (g) The liabilities and obligations of both Borrower and Lender under this Section 11.2 shall
survive the termination of this Agreement and the satisfaction and discharge of the Debt.







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     Section 11.3 Reserves/Escrows. In the event that Securities are issued in connection with the
Loan, all funds held by Lender in escrow or pursuant to reserves in accordance with this Agreement
and the other Loan Documents shall be deposited in “eligible accounts” at “eligible institutions”
and, to the extent applicable, invested in “permitted investments” as then defined and required by
the Rating Agencies.



     Section 11.4 Servicer. At the option of Lender, the Loan may be serviced by a
servicer/trustee selected by Lender (the “Servicer”) and Lender may delegate all or any portion of
its responsibilities under this Agreement and the other Loan Documents to such servicer/trustee
pursuant to a servicing agreement between Lender and such Servicer; provided that Borrower shall
not be responsible for paying Servicer any servicing fees due to Servicer under such servicing
agreement (except as otherwise expressly provided in this Agreement, including, without limitation,
Section 17.6 hereof).



     Section 11.5 Rating Agency Costs. In connection with any Rating Agency Confirmation or other
Rating Agency consent, approval or review required hereunder (other than the initial review of the
Loan by the Rating Agencies in connection with a Securitization), Borrower shall pay all of the
reasonable costs and expenses of Lender, Servicer and each Rating Agency in connection therewith,
and, if applicable, shall pay any reasonable fees imposed by any Rating Agency in connection
therewith.



     Section 11.6 Mezzanine Option. Lender shall have the option (the “Mezzanine Option”) at any
time to divide the Loan into two parts, a mortgage loan and a mezzanine loan, provided, that (i)
the total loan amounts for such mortgage loan and such mezzanine loan shall equal the then
outstanding amount of the Loan immediately prior to Lender’s exercise of the Mezzanine Option, and
(ii) the weighted average interest rate of such mortgage loan and mezzanine loan shall equal the
Interest Rate. Borrower shall, at Borrower’s sole cost and expense (subject to an aggregate cap on
such costs and expenses of $10,000.00), cooperate with Lender in Lender’s exercise of the Mezzanine
Option in good faith and in a timely manner, which such cooperation shall include, but not be
limited to, (i) executing such amendments to the Loan Documents and Borrower’s or any SPE Component
Entity’s organizational documents as may be reasonably requested by Lender or requested by the
Rating Agencies, (ii) creating one or more Single Purpose Entities (the “Additional Mezzanine
Borrower”), which such Additional Mezzanine Borrower shall (A) own, directly or indirectly, 100% of
the equity ownership interests in Borrower (the “Equity Collateral”), and (B) together with such
constituent equity owners of such Additional Mezzanine Borrower as may be designated by Lender,
execute such agreements, instruments and other documents as may be required by Lender in connection
with the mezzanine loan (including, without limitation, a promissory note evidencing the mezzanine
loan and a pledge and security agreement pledging the Equity Collateral to Lender as security for
the mezzanine loan); and (iii) delivering such opinions, title endorsements, UCC title insurance
policies and other materials as may be reasonably required by Lender or the Rating Agencies.



     Section 11.7 Conversion to Registered Form. At the request of Lender, Borrower shall appoint,
as its agent, a registrar and transfer agent (the “Registrar”) reasonably acceptable to Lender
which shall maintain, subject to such reasonable regulations as it shall provide, such books and
records as are necessary for the registration and transfer of the Note in a manner that shall cause
the Note to be considered to be in registered form for purposes of Section 163(f) of the IRS Code.
The option to convert the Note into registered form once exercised may not be



79









 




revoked. Any agreement setting out the rights and obligation of the Registrar shall be
subject to the reasonable approval of Lender. Borrower may revoke the appointment of any
particular person as Registrar, effective upon the effectiveness of the appointment of a
replacement Registrar. The Registrar shall not be entitled to any fee from Borrower or Lender or
any other lender in respect of transfers of the Note and other Loan Documents.




ARTICLE 12




INDEMNIFICATIONS



     Section 12.1 GENERAL INDEMNIFICATION. SUBJECT TO THE TERMS OF ARTICLE 13 HEREOF, BORROWER
SHALL, AT ITS SOLE COST AND EXPENSE, PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES IMPOSED UPON OR INCURRED BY OR ASSERTED
AGAINST ANY INDEMNIFIED PARTIES AND DIRECTLY ARISING OUT OF OR CAUSED BY ANY ONE OR MORE OF THE
FOLLOWING: (A) THE PURPOSE TO WHICH BORROWER APPLIES THE PROCEEDS OF THE LOAN; (B) THE FAILURE OF
BORROWER TO PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR PROPERTY DOCUMENT; (C) ANY FAILURE AT ANY TIME OF ANY OF BORROWER’S REPRESENTATIONS OR
WARRANTIES TO BE TRUE AND CORRECT; (D) ANY ACT OR OMISSION BY BORROWER, ANY AFFILIATE OF BORROWER,
ANY CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER PERSON WITH
RESPECT TO THE PROPERTY OR IMPROVEMENTS; (E) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF
OR DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE PROPERTY OR ANY PART THEREOF; (F) ANY USE,
NONUSE OR CONDITION IN, ON OR ABOUT THE PROPERTY OR ANY PART THEREOF; (G) PERFORMANCE OF ANY LABOR
OR SERVICES OR THE FURNISHING OF ANY MATERIALS OR OTHER PROPERTY IN RESPECT OF THE PROPERTY OR ANY
PART THEREOF; (H) ANY FAILURE OF THE PROPERTY OR ANY PART THEREOF TO BE IN COMPLIANCE WITH ANY
APPLICABLE LAW; (I) ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST LENDER
BY REASON OF ANY ALLEGED OBLIGATIONS OR UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE
TERMS, COVENANTS, OR AGREEMENTS CONTAINED IN ANY LEASE, UNLESS LENDER HAS TAKEN TITLE TO THE
PROPERTY, THE LENDER SHALL BE LIABLE FOR CLAIMS WHICH ARISE ON AND AFTER SUCH DATE OF TAKING TITLE;
(J) THE PAYMENT OF ANY COMMISSION, CHARGE OR BROKERAGE FEE TO ANYONE (OTHER THAN A BROKER OR OTHER
AGENT RETAINED BY LENDER) WHICH MAY BE PAYABLE IN CONNECTION WITH THE FUNDING OF THE LOAN EVIDENCED
BY THE NOTE AND SECURED BY THE SECURITY INSTRUMENT; AND/OR (K) THE HOLDING OR INVESTING OF THE
FUNDS ON DEPOSIT IN THE ACCOUNTS OR THE PERFORMANCE OF ANY WORK OR THE DISBURSEMENT OF FUNDS IN
EACH CASE IN CONNECTION WITH THE RESERVE FUNDS; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNIFIED PARTY, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE, ILLEGAL ACTS, BAD FAITH OR



80









 




WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. ANY AMOUNTS PAYABLE TO INDEMNIFIED PARTIES BY
REASON OF THE APPLICATION OF THIS SECTION 12.1 SHALL BECOME IMMEDIATELY DUE AND PAYABLE ON DEMAND
AND IF NOT PAID WITHIN FIVE (5) DAYS OF SUCH DEMAND THEREFOR, SHALL BEAR INTEREST AT THE DEFAULT
RATE.




     Section 12.2 MORTGAGE AND INTANGIBLE TAX AND TRANSFER TAX INDEMNIFICATION. SUBJECT TO THE
TERMS OF ARTICLE 13 HEREOF, BORROWER SHALL, AT ITS SOLE COST AND EXPENSE, PROTECT, DEFEND,
INDEMNIFY, RELEASE AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES
IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST ANY INDEMNIFIED PARTIES AND DIRECTLY OR INDIRECTLY
ARISING OUT OF OR IN ANY WAY RELATING TO (A) ANY TAX ON THE MAKING AND/OR RECORDING OF THE SECURITY
INSTRUMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, AND (B) ANY TRANSFER TAX INCURRED BY
INDEMNIFIED PARTIES IN CONNECTION WITH THE EXERCISE OF REMEDIES HEREUNDER.



     Section 12.3 ERISA INDEMNIFICATION. SUBJECT TO THE TERMS OF ARTICLE 13 HEREOF, BORROWER
SHALL, AT ITS SOLE COST AND EXPENSE, PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES INCURRED IN CORRECTING ANY PROHIBITED
TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL PROHIBITED
TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE DISCRETION) THAT
INDEMNIFIED PARTIES MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF A DEFAULT UNDER SECTIONS 3.7
OR 4.19 OF THIS AGREEMENT.



     Section 12.4 Duty to Defend, Legal Fees and Other Fees and Expenses. Upon written request by
any Indemnified Party, Borrower shall defend such Indemnified Party with respect to the matters set
forth in this Article 12 (if requested by any Indemnified Party, in the name of the Indemnified
Party) by attorneys and other professionals approved by the Indemnified Parties, such approval not
to be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, any
Indemnified Parties may, in their sole discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of the Indemnified Parties, their
attorneys shall control the resolution of any claim or proceeding against such Indemnified Parties.
Upon demand, Borrower shall pay or, in the sole discretion of the Indemnified Parties, reimburse,
the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in connection therewith.



     Section 12.5 Survival. The obligations and liabilities of Borrower under this Article 12
shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry
of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Security Instrument. Notwithstanding the foregoing, in the event (i) the Loan
is indefeasibly paid in full in the ordinary course, and (ii) no Event of Default exists and is
continuing under this Agreement or in any of the other Loan Documents, Borrower shall be



81









 




released from its obligations set forth herein on the sixth (6th) anniversary (the “Survival
Cap”) of the date on which item (i) above is satisfied (except with respect to any claims
previously tendered to Borrower hereunder but not fully resolved and indemnified, with respect to
which the obligations and liabilities of Borrower under this Article 12 shall continue to survive
until such claims are fully resolved and indemnified and shall not be subject to the Survival Cap).




     Section 12.6 Environmental Indemnity. Simultaneously herewith, Borrower and Guarantor have
executed and delivered the Environmental Indemnity to Lender, which Environmental Indemnity is not
secured by the Security Instrument.



ARTICLE 13




EXCULPATION



     Section 13.1 Exculpation.



          (a) Notwithstanding anything to the contrary herein or in any of the other Loan Documents but
subject to the qualifications below, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in the Note, this Agreement, the Security
Instrument or the other Loan Documents by any action or proceeding wherein a money judgment or any
deficiency judgment or other judgment establishing personal liability shall be sought against
Borrower or any principal, director, officer, employee, beneficiary, shareholder, partner, member,
manager, trustee, agent, or Affiliate of Borrower (but specifically excluding Guarantor subject to
the terms of the Guaranty) or any legal representatives, successors or assigns of any of the
foregoing (collectively, the “Exculpated Parties”), except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement, the Security
Instrument and the other Loan Documents, or in the Property, the Rents, or any other collateral
given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Security
Instrument and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment
against Borrower or any of the Exculpated Parties in any such action or proceeding under or by
reason of or under or in connection with the Note, this Agreement, the Security Instrument or the
other Loan Documents. The provisions of this Section shall not, however, (1) constitute a waiver,
release or impairment of any obligation evidenced or secured by any of the Loan Documents; (2)
impair the right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Security Instrument; (3) affect the validity or enforceability of
any separate written indemnity or guaranty (including, without limitation, the Guaranty) made in
connection with the Loan or any of the rights and remedies of Lender thereunder (including, without
limitation, Lender’s right to enforce said rights and remedies against Borrower and/or Guarantor
(as applicable) personally in such separate written indemnity or guaranty and without the effect of
the exculpatory provisions of this Article 13); (4) impair the right of Lender to obtain the
appointment of a receiver; (5) impair the enforcement of the assignment of leases and rents
contained in the Security Instrument; (6) [intentionally omitted]; (7) constitute a prohibition
against Lender seeking a deficiency judgment against Borrower in order to fully realize the
security granted by the






82









 







Security Instrument (but not to impose personal liability upon Borrower contrary to this
Section 13.1) or to commence any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Property; or (8) constitute a waiver of the right of Lender to
enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of
any Losses incurred by Lender (including attorneys’ fees and costs reasonably incurred) directly
arising out of or caused by the following:




          (i) fraud or willful misrepresentation by Borrower, any SPE Component Entity, any of the
Exculpated Parties or Guarantor in connection with the Loan;




          (ii) the gross negligence or willful misconduct of Borrower, any SPE Component Entity, any of
the Exculpated Parties or Guarantor;




          (iii) material physical waste to the Property (or any portion thereof) caused by the
intentional acts or intentional omissions of Borrower, any SPE Component Entity, any of the
Exculpated Parties or Guarantor and/or the removal or disposal of any portion of the Property by
Borrower, any SPE Component Entity, any of the Exculpated Parties or Guarantor after an Event of
Default;




          (iv) the misapplication, misappropriation or conversion by Borrower of (A) any insurance
proceeds paid by reason of any Casualty to the Property (or any portion thereof), or (B) any Awards
or other amounts received in connection with the Condemnation of all or a portion of the Property,
which such proceeds or Award are received by Borrower and not applied as required hereunder or
under the other Loan Documents;




          (v) the misapplication, misappropriation or conversion by Borrower of any Rents during the
continuance of an Event of Default, which are received by Borrower and not applied by Borrower to
the payment of either (i) normal and necessary Operating Expenses or (ii) the Debt;




          (vi) failure by Borrower to pay, or cause to be paid, prior to delinquency any Taxes or Other
Charges if non-payment of the same would create liens senior to the lien of the Security Instrument
on all or any portion of the Property;




          (vii) the failure of Borrower to deliver any security deposits, advance deposits or any other
deposits collected with respect to the Property to Lender, upon a foreclosure of the Property (or
any portion thereof) or action in lieu thereof, except to the extent any such security deposits
were applied in accordance with the terms and conditions of any of the Leases prior to the
occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof;




          (viii) the material breach of any representation, warranty, covenant or indemnification
provision in the Environmental Indemnity, this Agreement or in the Security Instrument concerning
environmental laws, hazardous substances and asbestos and any indemnification of Lender with
respect thereto in either document;




          (ix) Borrower’s failure to comply with the indemnification obligations in Sections 11.2 and
12.3 hereof;







83









 








          (x) the breach of any material representation, warranty or covenant contained in Article 5
hereof; and/or




          (xi) the seizure or forfeiture of the Property, or any portion thereof, or Borrower’s interest
therein, resulting from criminal wrongdoing by Borrower or Guarantor.




          (b) Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for
the full amount of the Debt or to require that all collateral shall continue to secure all of the
Debt owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrower in the event that: (i) Borrower or any SPE Component Entity files a voluntary
petition under the Bankruptcy Code or any other Creditors Rights Laws; (ii) an Affiliate, officer,
director, or representative which Controls, directly or indirectly, Borrower files, or joins in the
filing of, an involuntary petition against Borrower or any SPE Component Entity under the
Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower or any SPE Component Entity
from any Person; (iii) Borrower or any SPE Component Entity files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against it, by any other
Person under the Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against it; (iv) any Affiliate,
officer, director, or representative which Controls Borrower or any SPE Component Entity consents
to or acquiesces in or joins in an application for the appointment of a custodian, receiver,
trustee, or examiner for Borrower or any SPE Component Entity or any portion of the Property (other
than a receiver requested by Lender in connection with enforcement of its rights under the Loan
Documents); (v) Borrower or any SPE Component Entity makes an assignment for the benefit of
creditors, or admits, in writing or in any legal proceeding, its insolvency or inability to pay its
debts as they become due; (vi) [Intentionally omitted]; (vii) Borrower or any SPE Component Entity
(or any Restricted Party) contests or opposes any motion made by Lender to obtain relief from the
automatic stay or seeks to reinstate the automatic stay in the event of any federal or state
bankruptcy or insolvency proceeding involving the Guarantor or its Affiliates; (viii) Borrower (or
any Restricted Party) accepts from any Guarantor or Guarantor solicits or provides any
debtor-in-possession financing to Borrower in the event Borrower (or any Restricted Party) is the
subject of a bankruptcy or insolvency proceeding; or (ix) any covenant contained in Article 6
hereof is violated or breached.




     Section 13.2 Survival. The obligations and liabilities of Borrower under this Article 13
shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry
of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Security Instrument. Notwithstanding the foregoing, except with respect to the
Environmental Indemnity (for which the provisions of the Environmental Indemnity shall control), in
the event (i) the Loan is indefeasibly paid in full in the ordinary course, and (ii) no Event of
Default exists and is continuing under this Agreement or in any of the other Loan Documents,
Borrower shall be released from its obligations set forth in this Article 13 on the Survival Cap
(except with respect to any claims (1) under the Environmental Indemnity or (2) previously tendered
to Borrower hereunder but not fully resolved and indemnified, with respect to which the obligations
and liabilities of Borrower under this Article 13 shall continue to



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survive until such claims are fully resolved and indemnified and shall not be subject to the
Survival Cap).




ARTICLE 14




NOTICES



     Section 14.1 Notices. All notices or other written communications hereunder shall be deemed
to have been properly given (a) upon delivery, if delivered in person or by facsimile transmission
with receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (b) one
(1) Business Day after having been deposited for overnight delivery with any reputable overnight
courier service, or (c) three (3) Business Days after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:



	 	 	 	 	 

	 

	 	If to Borrower:
	 	c/o Cole Real Estate Investments
	 

	 	 	 	2555 East Camelback Road, Suite 400
	 

	 	 	 	Phoenix, Arizona 85016
	 

	 	 	 	Attention: General Counsel, Real Estate
	 

	 	 	 	Facsimile No.: 602-778-8780
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Kutak Rock LLP
	 

	 	 	 	8601 N. Scottsdale Road, Suite 300
	 

	 	 	 	Scottsdale, Arizona 85253
	 

	 	 	 	Attention: Mitch Padover, Esq.
	 

	 	 	 	Facsimile No.: 480-429-5001
	 
	 	 	 	 
	 

	 	If to Lender:
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 

	 	 	 	Wells Fargo Center
	 

	 	 	 	1901 Harrison Street, 2nd Floor
	 

	 	 	 	MAC A0227-020
	 

	 	 	 	Oakland, California 94612
	 

	 	 	 	Attention: Commercial Mortgage Servicing
	 

	 	 	 	Facsimile No.: 866-359-5352
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Sills Cummis & Gross, P.C.
	 

	 	 	 	One Riverfront Plaza
	 

	 	 	 	Newark, New Jersey 07102
	 

	 	 	 	Attention: Robert Hempstead, Esq.
	 

	 	 	 	Facsimile No.: 973-643-6500





or addressed as such party may from time to time designate by written notice to the other parties.




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



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ARTICLE 15




FURTHER ASSURANCES



     Section 15.1 Replacement Documents. Upon receipt of an affidavit reasonably acceptable to
Borrower of an officer of Lender as to the loss, theft, destruction or mutilation of the Note, this
Agreement or any of the other Loan Documents which is not of public record, and, in the case of any
such mutilation, upon surrender and cancellation of the Note, this Agreement or such other Loan
Document: (i) with respect to any Loan Document other than the Note, Borrower will issue, in lieu
thereof, a replacement thereof, dated the date of this Agreement or such other Loan Document, as
applicable, in the same principal amount thereof and otherwise of like tenor and (ii) with respect
to the Note, (a) Borrower will execute a reaffirmation of the Debt as evidenced by such Note
acknowledging that Lender has informed Borrower that the Note was lost, stolen, destroyed or
mutilated and that such Debt continues to be an obligation and liability of the Borrower as set
forth in the Note, a copy of which shall be attached to such reaffirmation and (b) if requested by
Lender, Borrower will execute a replacement note and Lender or Lender’s custodian (at Lender’s
option) shall provide to Borrower its then standard form of lost note affidavit and indemnity,
which such form shall be reasonably acceptable to Borrower.



     Section 15.2 Recording of Security Instrument, etc. Borrower forthwith upon the execution and
delivery of the Security Instrument and thereafter, from time to time, will cause the Security
Instrument and any of the other Loan Documents creating a lien or security interest or evidencing
the lien hereof upon the Property and each instrument of further assurance to be filed, registered
or recorded in such manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect and perfect the lien or security interest hereof
upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, the Security Instrument, this Agreement, the other
Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument
with respect to the Property and any instrument of further assurance, and any modification or
amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties,
imposts, assessments and charges arising out of or in connection with the execution and delivery of
the Security Instrument, any deed of trust or mortgage supplemental hereto, any security instrument
with respect to the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by Applicable Law so to do.



     Section 15.3 Further Acts, etc. Borrower will, at the reasonable cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every further acts, deeds,
conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and
assurances as Lender shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become
bound to convey or assign to Lender, or for carrying out the intention or facilitating the
performance of the terms of this Agreement or for filing, registering or recording the Security
Instrument, or for complying with all Applicable Law. Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby authorizes



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Lender to execute in the name of Borrower or without the signature of Borrower to the extent
Lender may lawfully do so, one or more financing statements to evidence more effectively the
security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of, during the continuance of an Event of
Default, exercising and perfecting any and all rights and remedies available to Lender at law and
in equity, including without limitation, such rights and remedies available to Lender pursuant to
this Section 15.3.




     Section 15.4 Changes in Tax, Debt, Credit and Documentary Stamp Laws.



          (a) If any law is enacted or adopted or amended after the date of this Agreement which deducts
the Debt from the value of the Property for the purpose of taxation and which imposes a tax, either
directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the
tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it
that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or
provide the basis for a defense of usury then Lender shall have the option by written notice of not
less than ninety (90) days to declare the Debt immediately due and payable.




          (b) Borrower will not claim or demand or be entitled to any credit or credits on account of
the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of the Security Instrument or
the Debt. If such claim, credit or deduction shall be required by Applicable Law, Lender shall
have the option, by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.




          (c) If at any time the United States of America, any State thereof or any subdivision of any
such State shall require revenue or other stamps to be affixed to the Note, the Security
Instrument, or any of the other Loan Documents or impose any other tax or charge on the same,
Borrower will pay for the same, with interest and penalties thereon, if any.




ARTICLE 16




WAIVERS



     Section 16.1 Remedies Cumulative; Waivers.



     Subject to the terms of Article 13 hereof, the rights, powers and remedies of Lender under
this Agreement shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement, the Security Instrument, the Note or
the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers
and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order
as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy, right or power or
shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from
time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default
with respect to Borrower shall not be construed to be a waiver



87









 




of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or
power consequent thereon.




     Section 16.2 Modification, Waiver in Writing.



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



     Section 16.3 Delay Not a Waiver.



     Neither any failure nor any delay on the part of Lender in insisting upon strict performance
of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege
under this Agreement, the Security Instrument, the Note or the other Loan Documents, or any other
instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the exercise of any other
right, power, remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the due date of any amount payable under this Agreement, the Security Instrument, the
Note or the other Loan Documents, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement, the Security
Instrument, the Note and the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.



     Section 16.4 Waiver of Trial by Jury.



     TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER, BY ACCEPTANCE OF THIS
AGREEMENT, HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT. TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS AGREEMENT, THE NOTE, THE
SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER OR BORROWER.



     Section 16.5 Waiver of Notice.



     Borrower shall not be entitled to any notices of any nature whatsoever from Lender except (a)
with respect to matters for which this Agreement specifically and expressly provides for the giving
of notice by Lender to Borrower and (b) with respect to matters for which Lender is required by
Applicable Law to give notice, and Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which (i) this Agreement does not specifically and
expressly provide for the giving of notice by Lender to Borrower and (ii) Lender is not required
under Applicable Law to give notice.



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     Section 16.6 Remedies of Borrower.



     In the event that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where by Applicable Law or under this
Agreement, the Security Instrument, the Note and the other Loan Documents, Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither
Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedies shall
be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties
hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall
be determined by an action seeking declaratory judgment. Lender agrees that, in such event, it
shall cooperate in expediting any action seeking injunctive relief or declaratory judgment.



     Section 16.7 Marshalling and Other Matters.



     Borrower hereby waives, to the extent permitted by Applicable Law, the benefit of all
appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in
force and all rights of marshalling in the event of any sale under the Security Instrument of the
Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of foreclosure of the Security
Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in
or title to the Property subsequent to the date of the Security Instrument and on behalf of all
persons to the extent permitted by Applicable Law.



     Section 16.8 Waiver of Statute of Limitations.



     To the extent permitted by Applicable Law, Borrower hereby expressly waives and releases to
the fullest extent permitted by Applicable Law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its obligations hereunder, under the Note,
Security Instrument or other Loan Documents.



     Section 16.9 Waiver of Counterclaim. Borrower hereby waives the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents.



     Section 16.10 Sole Discretion of Lender. Wherever pursuant to this Agreement (a) Lender
exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be
satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the
decision to approve or disapprove all decisions that arrangements or terms are satisfactory or not
satisfactory, and all other decisions and determinations made by Lender, shall be in the sole
discretion of Lender, except as may be otherwise expressly and specifically provided herein.



ARTICLE 17




MISCELLANEOUS



     Section 17.1 Survival. This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall survive the making
by Lender of the Loan and the execution and delivery to Lender of the Note, and shall



89









 




continue in full force and effect so long as all or any of the Debt is outstanding and unpaid
unless a longer period is expressly set forth in this Agreement, the Security Instrument, the Note
or the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower,
shall inure to the benefit of the legal representatives, successors and assigns of Lender.




     Section 17.2 Governing Law. This Agreement shall be governed, construed, applied and enforced
in accordance with the Applicable Laws of the State and Applicable Laws of the United States of
America.



     Section 17.3 Headings. The Article and/or Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this Agreement for any
other purpose.



     Section 17.4 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Applicable Law, but if any provision
of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.



     Section 17.5 Preferences. Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower
hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under any Creditors Rights
Laws, state or federal law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be
revived and continue in full force and effect, as if such payment or proceeds had not been received
by Lender.



     Section 17.6 Expenses. Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within ten (10) Business Days of receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable, actual attorneys’ fees and disbursements)
reasonably incurred by Lender in accordance with this Agreement in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement, the Security Instrument, the
Note and the other Loan Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions reasonably requested by Lender as to any legal matters arising under this
Agreement, the Security Instrument, the Note and the other Loan Documents with respect to the
Property); (ii) Borrower’s ongoing performance of and compliance with Borrower’s respective
agreements and covenants contained in this Agreement, the Security Instrument, the Note and the
other Loan Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and insurance requirements
and Borrower’s compliance with and cooperation under Section 11.1 hereof (subject to the cap set
forth therein); (iii) [Intentionally Omitted]; (iv) the negotiation, preparation, execution,
delivery and administration of any consents,



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amendments, waivers or other modifications to this Agreement, the Security Instrument, the
Note and the other Loan Documents and any other documents or matters requested by Borrower or
otherwise required hereunder; (v) securing Borrower’s compliance with any requests made pursuant to
the provisions of this Agreement; (vi) the filing and recording fees and expenses, title insurance
and reasonable fees and expenses of counsel for providing to Lender all reasonably required legal
opinions, and other similar expenses incurred in creating and perfecting the lien in favor of
Lender pursuant to this Agreement, the Security Instrument, the Note and the other Loan Documents;
(vii) subject to the terms of Article 13 hereof, enforcing or preserving any rights, in response to
third party claims or the prosecuting or defending of any action or proceeding or other litigation,
in each case against, under or affecting Borrower, this Agreement, the Security Instrument, the
Note, the other Loan Documents, the Property, or any other security given for the Loan; and (viii)
subject to the terms of Article 13 hereof, enforcing any obligations of or collecting any payments
due from Borrower under this Agreement, the Security Instrument, the Note and the other Loan
Documents or with respect to the Property or in connection with any “special servicing” of the Loan
or in connection with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy proceedings
(including, without limitation, loan servicing or special servicing fees, loan advances, and
“work-out” and/or liquidation fees relating thereto); provided, however, that Borrower shall not be
liable for the payment of any such costs and expenses to the extent the same arise by reason of the
gross negligence, illegal acts, fraud or willful misconduct of Lender. Borrower also acknowledges
and agrees that formal written appraisals of the Property by a licensed independent appraiser may
be required by Lender’s internal procedures and/or federal regulatory reporting requirements on an
annual and/or specialized basis and that Lender may, at its option, require inspection of the
Property by an independent supervising architect and/or cost engineering specialist at least
semiannually. If any of the services described above are provided by an employee of Lender,
Lender’s costs and expenses for such services shall be calculated in accordance with Lender’s
standard charge for such services. Notwithstanding the foregoing, Borrower shall not be required
to pay for more than one appraisal during the term of the Loan unless (x) an Event of Default
occurs and is continuing or (y) as otherwise required by law. In addition, if Borrower is
undertaking a Restoration or is performing any work at the Property that requires the obtaining of
a building permit, then Borrower shall pay the reasonable out-of-pocket costs of architect’s
engineers and other consultants retained by Lender to review the performance of such Restoration or
work. Any amounts payable to Lender pursuant to this Section 17.6 shall become immediately due and
payable upon written demand and, if the same is not paid within ten (10) Business Days from such
written demand, shall bear interest at the Interest Rate from the date which is ten (10) Business
Days from such written demand until the date such amounts have been paid.




     Section 17.7 Cost of Enforcement. In the event (a) that the Security Instrument is foreclosed
in whole or in part, (b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its
constituent Persons for the benefit of its creditors, or (c) Lender exercises any of its other
remedies under this Agreement, the Security Instrument, the Note and the other Loan Documents,
Borrower shall be chargeable with and agrees to pay all costs of collection and defense, including
reasonable attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in
connection with any appellate proceeding or post judgment action involved therein, together with
all required service or use taxes. Any amounts payable to Lender pursuant to this Section 17.7
shall become immediately due and payable upon written demand



91









 




and, if the same is not paid within ten (10) Business Days from such written demand, shall
bear interest at the Default Rate from the date which is ten (10) Business Days from such written
demand until the date such amounts have been paid.




     Section 17.8 Exhibits and Schedules Incorporated. The Exhibits and Schedules annexed hereto
are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in
the body hereof.



     Section 17.9 Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest in and to
this Agreement, the Security Instrument, the Note and the other Loan Documents shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated to such documents
which Borrower may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose or assert any such
unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.



     Section 17.10 No Joint Venture or Partnership; No Third Party Beneficiaries.



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




          (b) This Agreement, the Security Instrument, the Note and the other Loan Documents are solely
for the benefit of Lender and Borrower and nothing contained in this Agreement, the Security
Instrument, the Note or the other Loan Documents shall be deemed to confer upon anyone other than
Lender and Borrower any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations of Lender to make
the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance
with any or all thereof and no other Person shall under any circumstances be deemed to be a
beneficiary of such conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.




          (c) The general partners, members, principals and (if Borrower is a trust) beneficial owners
of Borrower are experienced in the ownership and operation of properties similar to the Property,
and Borrower and Lender are relying solely upon such expertise and business plan in connection with
the ownership and operation of the Property. Borrower is not relying on Lender’s expertise,
business acumen or advice in connection with the Property.




          (d) Notwithstanding anything to the contrary contained herein, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and
other documents.







92









 








          (e) By accepting or approving anything required to be observed, performed or fulfilled or to
be given to Lender pursuant to this Agreement, the Security Instrument, the Note or the other Loan
Documents, including, without limitation, any officer’s certificate, balance sheet, statement of
profit and loss or other financial statement, survey, appraisal, or insurance policy, Lender shall
not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or
affirmation with respect thereto by Lender.




          (f) Borrower recognizes and acknowledges that in accepting this Agreement, the Note, the
Security Instrument and the other Loan Documents, Lender is expressly and primarily relying on the
truth and accuracy of the representations and warranties set forth in Article 3 of this Agreement
without any obligation to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to the date hereof, that
the warranties and representations are a material inducement to Lender in making the Loan; and that
Lender would not be willing to make the Loan and accept this Agreement, the Note, the Security
Instrument and the other Loan Documents in the absence of the warranties and representations as set
forth in Article 3 of this Agreement.




     Section 17.11 Publicity; Confidentiality.



          (a) All news releases, publicity or advertising by Borrower or its Affiliates through any
media intended to reach the general public which refers to this Agreement, the Note, the Security
Instrument or the other Loan Documents or the financing evidenced by this Agreement, the Note, the
Security Instrument or the other Loan Documents, to Lender or any of its Affiliates shall be
subject to the prior written approval of Lender, not to be unreasonably withheld. All news
releases, publicity or advertising by Lender or any of its Affiliates through any media intended to
reach the general public which refers to this Agreement, the Note, the Security Instrument or the
other Loan Documents or the financing evidenced by this Agreement, the Note, the Security
Instrument or the other Loan Documents, Borrower, Guarantor or any of their Affiliates shall be
subject to the prior written approval of Borrower and/or Guarantor, as applicable, not to be
unreasonably withheld. Notwithstanding the foregoing, Borrower agrees that Lender or any of its
Affiliates may share additional information pertaining to the Loan in connection with the sale,
assignment or participation of any portion of Loan or if required by Applicable Law, any audit of
Lender or any of its Affiliates, or any applicable regulatory or judicial proceeding or litigation.




          (b) Except as otherwise provided by Applicable Law, Lender shall utilize all non public
information obtained pursuant to the requirements of this Agreement which has been identified as
confidential or proprietary by the Borrower in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and sound banking practices
but, notwithstanding the foregoing, may make disclosure: (a) to any of its Affiliates (provided any
such Affiliate shall agree to keep such information confidential in accordance with the terms of
this Section); (b) as requested by any bona fide assignee, participant, Investor, potential
investor, Rating Agency (which, for the purposes of this Section 17.11(b), shall include any
non-hired Rating Agency) or other transferee in connection with a Secondary Market Transaction
(provided they shall be notified of the confidential nature of the information); (c) as required or
requested by any Governmental Authority or representative






93









 







thereof or pursuant to legal process or in connection with any legal proceedings; (d) to
Lender’s independent auditors and other professional advisors (provided they shall be notified of
the confidential nature of the information); (e) if an Event of Default exists, to any other
Person, in connection with the exercise by Lender of rights hereunder or under any of the other
Loan Documents; and (f) to the extent such information (x) becomes publicly available other than as
a result of a breach of this Section or (y) becomes available to Lender on a nonconfidential basis
from a source other than the Borrower or any Affiliate that is not known by Lender to be subject to
a confidentiality restriction with respect thereto.




     Section 17.12 Conflict; Construction of Documents; Reliance. In the event of any conflict
between the provisions of this Agreement and the Security Instrument, the Note or any of the other
Loan Documents, the provisions of this Agreement shall control. Wherever the phrase “during the
continuance of an Event of Default” or the like appears herein or in any other Loan Document, such
phrase shall not mean or imply that Lender has any obligation to accept a cure of such Event of
Default. The parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of this Agreement, the Note, the Security
Instrument and the other Loan Documents and this Agreement, the Note, the Security Instrument and
the other Loan Documents shall not be subject to the principle of construing their meaning against
the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall
rely solely on its own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of
any rights or remedies available to it under this Agreement, the Note, the Security Instrument and
the other Loan Documents or any other agreements or instruments which govern the Loan by virtue of
the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense
or take any action on the basis of the foregoing with respect to Lender’s exercise of any such
rights or remedies. Borrower acknowledges that Lender engages in the business of real estate
financings and other real estate transactions and investments which may be viewed as adverse-to or
competitive with the business of Borrower or its Affiliates.



     Section 17.13 Entire Agreement. This Agreement, the Note, the Security Instrument and the
other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written between Borrower and Lender are superseded by the terms of this
Agreement, the Note, the Security Instrument and the other Loan Documents.



     Section 17.14 Liability. If Borrower consists of more than one person, the obligations and
liabilities of each such person hereunder shall be joint and several. This Agreement shall be
binding upon and inure to the benefit of Borrower and Lender and their respective successors and
assigns forever.



     Section 17.15 Duplicate Originals; Counterparts. This Agreement may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an original. The failure
of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the
other signatories from their obligations hereunder.



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     BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT AND AGREES TO ITS
TERMS. BORROWER FURTHER ACKNOWLEDGES THAT BORROWER HAS EITHER OBTAINED THE ADVICE OF COUNSEL IN
CONNECTION HEREWITH OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH ADVICE. THIS LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN BORROWER AND LENDER AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. ACCORDINGLY, THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



[NO FURTHER TEXT ON THIS PAGE]









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



	 	 	 	 	 
	 	BORROWER:


COLE OF SAN ANTONIO TX, LLC, a Delaware
 limited
liability company

 	 
	 	By:  	/s/     Todd J. Weiss
 	 
	 	Name:  	Todd J. Weiss 	 
	 	Title:  	Officer 	 
	 
	 	LENDER:

WELLS FARGO BANK, NATIONAL
 ASSOCIATION

 	 
	 	By:  	/s/     John G. Nicol
 	 
	 	Name:  	John G. Nicol 	 
	 	Title:  	Director 	 




 









 








SCHEDULE I




Intentionally Omitted








 









 








SCHEDULE II




Intentionally Omitted








 









 








SCHEDULE III




ORGANIZATIONAL CHART



(attached hereto)





 









 








SCHEDULE IV




Description of REA’s


1. Covenants, conditions or restrictions contained in the following documents:



Volume 9578, Page 183 and Volume 9609, Pages 145-146 of the Deed and Plat Records, Volume 2744,
Page 133, Volume 4216, Page 1899, Volume 11933, Page 1962, Volume 12222, Page 2304, Volume 12688,
Page 1609, Volume 12735, Page 518, Volume 12735, Page 676, Volume 14416, Page 1007 and Volume
14417, Page 873 of the Official Public Records of Real property, all of Bexar County, Texas. 

(TRACT
1)



Volume 4216, page 1899 and Volume 12735, Page 676 of the Official Public Records of Real Property
of Bexar County, Texas. (TRACT 2)



Volume 9568, pages 95-96, Volume 9568, Pages 102-103, Volume 9569, Pages 165-166, Volume 9570, Page
33, Volume 9570, Page 209, Volume 9571, Page 48, Volume 9571, Page 49, Volume 9571, Page 50-51,
Volume 9572, Page 109, Volume 9572, Page 110, Volume 9572, Page 114, Volume 9574, Page 110, Volume
9574, Page 111, Volume 9574, Page 112, Volume 9575, Pages 25-26, Volume 9577, Pages 80-81, Volume
9582, Page 122, Volume 9591, Page 74, Volume 9609, Pages 145-146, Volume 9611, Page 63 and Volume
9611, Page 113 of the Deed and Plat Records, Volume 4216, Page 1899, Volume 10869, Page 1495,
Volume 11933, Page 1962, Volume 12222 , Page 2304, Volume 12222, Page 2327, Volume 12269, Page 697,
Volume 12269, Page 707, Volume 12688, Page 1609, Volume 12688, Page 1710, Volume 12735, Page 518,
Volume 12735, Page 676, Volume 13394, Page 2302, Volume 14368, Page 1400, Volume 14416, Page 950,
Volume 14416, Page 1007 and Volume 14447, Page 2215 of the Official Public Records of Bexar County,
Texas. (TRACT 3)



2. Master Declaration dated January 31, 2006 recorded in Volume 11933, Page 1962 of the Official
Public Records of Real Property of Bexar County, Texas, and amended in Volume 12222, Page 2304,
Volume 12688, Page 1609, Volume 12735, Page 518 and Volume 14416, Page 1007 of the Official Public
Records of Real Property of Bexar County, Texas, and assigned in Volume 12269, Page 697, Volume
12269, Page 707 and Volume 13394, page 2302 of the Official Public Records of Real Property of
Bexar County, Texas. (TRACTS 1 and 3)





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