Exhibit
10.8




 





 


LOAN AGREEMENT


 


Dated as of December 8, 2006


 


Between


 


ART
MORTGAGE BORROWER PROPCO 2006-3 L.P.


 


and


ART
MORTGAGE BORROWER OPCO 2006-3 L.P.,


collectively, as Borrower


 


and


 


CITIGROUP
GLOBAL MARKETS REALTY CORP.,


as Lender




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  I.

  	
  DEFINITIONS;
  PRINCIPLES OF CONSTRUCTION

  	
  1

  
	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
  Principles
  of Construction

  	
  22

  
	
   

  	
   

  	
   

  
	
  II.

  	
  THE
  LOAN

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  The
  Loan

  	
  22

  
	
  Section 2.2

  	
  Interest
  Rate

  	
  22

  
	
  Section 2.3

  	
  Loan
  Payments

  	
  23

  
	
  Section 2.4

  	
  Prepayments

  	
  24

  
	
  Section 2.5

  	
  Defeasance

  	
  29

  
	
   

  	
   

  	
   

  
	
  III.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  35

  
	
   

  	
   

  
	
  Section 3.1

  	
  Borrower
  Representations

  	
  35

  
	
  Section 3.2

  	
  Survival
  of Representations

  	
  48

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  BORROWER
  COVENANTS

  	
  48

  
	
   

  	
   

  
	
  Section 4.1

  	
  Borrower
  Affirmative Covenants

  	
  48

  
	
  Section 4.2

  	
  Borrower
  Negative Covenants

  	
  57

  
	
   

  	
   

  	
   

  
	
  V.

  	
  INSURANCE,
  CASUALTY AND CONDEMNATION

  	
  59

  
	
   

  	
   

  
	
  Section 5.1

  	
  Insurance

  	
  59

  
	
  Section 5.2

  	
  Casualty
  and Condemnation

  	
  65

  
	
  Section 5.3

  	
  Delivery
  of Net Proceeds

  	
  66

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  RESERVE
  FUNDS

  	
  69

  
	
   

  	
   

  
	
  Section 6.1

  	
  Required
  Repairs

  	
  69

  
	
  Section 6.2

  	
  Tax
  Funds

  	
  71

  
	
  Section 6.3

  	
  Insurance
  Funds

  	
  72

  
	
  Section 6.4

  	
  Capital
  Expenditure Funds

  	
  73

  
	
  Section 6.5

  	
  Borrower
  Cash Collateral Funds

  	
  75

  
	
  Section 6.6

  	
  Intentionally
  Omitted

  	
  75

  
	
  Section 6.7

  	
  Intentionally
  Omitted

  	
  75

  
	
  Section 6.8

  	
  Application
  of Reserve Funds

  	
  75

  
	
  Section 6.9

  	
  Security
  Interest in Reserve Funds

  	
  75

  
	
  Section 6.10

  	
  Intentionally
  Omitted

  	
  76

  
				



 


i

















 


TABLE
OF CONTENTS


(continued)


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 6.11

  	
  Provisions
  Regarding Letters of Credit

  	
  76

  
	
  Section 6.12

  	
  Guaranty
  or Letter of Credit in Lieu of Cash Deposit

  	
  77

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  PROPERTY
  MANAGEMENT

  	
  78

  
	
   

  	
   

  
	
  Section 7.1

  	
  The
  Management Agreement

  	
  78

  
	
  Section 7.2

  	
  Prohibition
  Against Termination or Modification

  	
  78

  
	
  Section 7.3

  	
  Replacement
  of Manager

  	
  79

  
	
  Section 7.4

  	
  The
  Cash Management Agency Agreement

  	
  79

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  PERMITTED
  TRANSFERS

  	
  79

  
	
   

  	
   

  
	
  Section 8.1

  	
  Permitted
  Transfer of Property

  	
  79

  
	
  Section 8.2

  	
  Permitted
  Transfers of Interest in Borrower

  	
  81

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  SALE
  AND SECURITIZATION OF MORTGAGE

  	
  82

  
	
   

  	
   

  
	
  Section 9.1

  	
  Sale
  of Mortgage and Securitization; Loan Components; Mezzanine Loans

  	
  82

  
	
  Section 9.2

  	
  Securitization
  Indemnification

  	
  84

  
	
   

  	
   

  	
   

  
	
  X.

  	
  DEFAULTS

  	
  86

  
	
   

  	
   

  
	
  Section 10.1

  	
  Event
  of Default

  	
  86

  
	
  Section 10.2

  	
  Remedies

  	
  89

  
	
  Section 10.3

  	
  Right
  to Cure Defaults

  	
  90

  
	
  Section 10.4

  	
  Remedies
  Cumulative

  	
  91

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  MISCELLANEOUS

  	
  91

  
	
   

  	
   

  
	
  Section 11.1

  	
  Successors
  and Assigns

  	
  91

  
	
  Section 11.2

  	
  Lender’s
  Discretion

  	
  91

  
	
  Section 11.3

  	
  Governing
  Law

  	
  91

  
	
  Section 11.4

  	
  Modification,
  Waiver in Writing

  	
  93

  
	
  Section 11.5

  	
  Delay
  Not a Waiver

  	
  93

  
	
  Section 11.6

  	
  Notices

  	
  93

  
	
  Section 11.7

  	
  Trial
  by Jury

  	
  95

  
	
  Section 11.8

  	
  Headings

  	
  95

  
	
  Section 11.9

  	
  Severability

  	
  95

  
	
  Section 11.10

  	
  Preferences

  	
  95

  
				



 


ii

















 


TABLE
OF CONTENTS


(continued)


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 11.11

  	
  Waiver
  of Notice

  	
  95

  
	
  Section 11.12

  	
  Remedies
  of Borrower

  	
  96

  
	
  Section 11.13

  	
  Expenses;
  Indemnity

  	
  96

  
	
  Section 11.14

  	
  Schedules
  Incorporated

  	
  97

  
	
  Section 11.15

  	
  Offsets,
  Counterclaims and Defenses

  	
  97

  
	
  Section 11.16

  	
  No
  Joint Venture or Partnership; No Third Party Beneficiaries

  	
  97

  
	
  Section 11.17

  	
  Publicity

  	
  97

  
	
  Section 11.18

  	
  Waiver
  of Marshalling of Assets

  	
  98

  
	
  Section 11.19

  	
  Waiver
  of Offsets/Defenses/Counterclaims

  	
  98

  
	
  Section 11.20

  	
  Conflict;
  Construction of Documents; Reliance

  	
  98

  
	
  Section 11.21

  	
  Brokers
  and Financial Advisors

  	
  98

  
	
  Section 11.22

  	
  Exculpation

  	
  99

  
	
  Section 11.23

  	
  Prior
  Agreements

  	
  100

  
	
  Section 11.24

  	
  Servicer

  	
  100

  
	
  Section 11.25

  	
  Joint
  and Several Liability

  	
  101

  
	
  Section 11.26

  	
  Creation
  of Security Interest

  	
  101

  
	
  Section 11.27

  	
  Assignments
  and Participations

  	
  102

  
	
  Section 11.28

  	
  Intentionally
  Omitted

  	
  103

  
	
  Section 11.29

  	
  Substitution

  	
  103

  
	
  Section 11.30

  	
  Partial Release — Expansion

  	
  109

  



 


SCHEDULES


 


	
  Schedule
  I

  	
  -

  	
  Major Customer List

  
	
  Schedule
  II

  	
  -

  	
  Required Repairs

  
	
  Schedule
  III

  	
  -

  	
  Organizational Chart

  
	
  Schedule
  IV

  	
  -

  	
  Form of Subordination, Non-Disturbance and
  Attornment Agreement

  
	
  Schedule
  V

  	
  -

  	
  Reserved

  
	
  Schedule
  VI

  	
  -

  	
  List of Properties, Allocated Loan Amounts,
  Allocated Capital

  
	
   

  	
  -

  	
  Expenditure Amounts and Title

  
	
  Schedule
  VII

  	
  -

  	
  Proposed Annual Budget

  
	
  Schedule
  VIII

  	
  -

  	
  Leases with Major Tenants

  
	
  Schedule
  IX

  	
  -

  	
  List of Properties with no Certificate of
  Occupancy

  
	
  Schedule
  X

  	
  -

  	
  Reserved

  
	
  Schedule
  XI

  	
  -

  	
  Excluded Lender Transferees

  



 


iii

















 


TABLE
OF CONTENTS


(continued)


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  Schedule
  XII

  	
  -

  	
  Form of Alteration Guaranty

  	
   

  
	
  Schedule 3.1

  	
  -

  	
  Disclosure Schedule

  	
   

  



 


iv














 


LOAN
AGREEMENT


 


THIS LOAN
AGREEMENT, dated as of December 8, 2006 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”),
between CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation, having an address
at 388 Greenwich Street, New York, New York 10013 (“Lender”), and ART MORTGAGE BORROWER
PROPCO 2006-3 L.P., a
Delaware limited partnership (“Propco Borrower”), and ART MORTGAGE BORROWER OPCO 2006-3 L.P., a
Delaware limited partnership (“Opco Borrower”, and together with Propco
Borrower, individually or collectively, as the context may require, “Borrower”),
each having an address at 10 Glenlake Parkway, Suite 800, Atlanta, Georgia
30328.


 


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


 


W I T N E S S E T H:


 


WHEREAS, Borrower
desires to obtain the Loan (as hereinafter defined) from Lender; and


 


WHEREAS, 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 (as hereinafter defined).


 


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


 


I.              DEFINITIONS;
PRINCIPLES OF CONSTRUCTION


 


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


 


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


 


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


 


“Agent” shall mean
U.S. Bank National Association or any successor Eligible Institution thereto
acting as Agent under the Cash Management Agreement.


 


1

















 


“Allocated Capital
Expenditure Amount” shall mean the portion of the Capital Expenditure
Maximum Amount allocated to each Individual Property, as set forth on Schedule
VI.


 


“Allocated Loan Amount”
shall mean the portion of the Loan allocated to each Individual Property, as
set forth on Schedule VI as the same may be reduced pursuant to Section 2.4.2.


 


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


 


“Alteration” shall
mean any demolition, alteration, installation, improvement or decoration of or
to any Improvements at any Individual Property or any part thereof (it being
agreed that any expansion of the Improvements at any Individual Property shall
not be deemed to be an “Alteration” hereunder so long as such expansion is
undertaken and completed in accordance with Legal Requirements and this
definition shall specifically exclude Required Repairs).


 


“Alteration Collateral”
shall have the meaning set forth in Section 4.1.10(a).


 


“Alteration Guaranty”
shall have the meaning set forth in Section 4.1.10(a).


 


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


 


“Alteration Threshold”
shall mean the lesser of (i) five percent (5%) of the aggregate outstanding principal amount of the Loan
with respect to all Alterations at any time to all of the Properties or, (ii) with
respect to any affected Individual Property, fifteen percent (15%) of the
Allocated Loan Amount for such Individual Property.


 


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


 


“Applicable Interest Rate”
shall mean 5.464% per annum.


 


“Appraisal” shall
mean an M.A.I. appraisal of the Property in its then “as is” condition,
prepared not more than ninety (90) days (or such longer period as shall be
acceptable to Lender) prior to the date delivered to Lender or Servicer in
connection with the relevant event or approval; which appraisal (i) shall
meet the minimum appraisal standards for national banks promulgated by the
Comptroller of the Currency pursuant to Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, as amended (FIRREA), and (ii) otherwise
shall be in both form and substance (including with respect to methods,
procedures and scope of services) reasonably satisfactory to Lender.


 


“Approved Annual Budget”
shall have the meaning set forth in Section 4.1.6(e).


 


“Assignment of  Leases”
shall mean, with respect to each Individual Property, that certain first
priority Assignment of Leases and Rents, dated as of the date hereof, from
Propco 


 


2

















 


Borrower,
as assignor, to Lender, as assignee, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.


 


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


 


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


 


“Bankruptcy  Action”
shall have the meaning set forth in Section 3.1.24(y).


 


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


 


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


 


“Borrower” shall
mean, individually or collectively as the context may require, Propco Borrower
and/or Opco Borrower.


 


“Borrower Cash Collateral
Funds” shall have the meaning set forth in Section 6.5.1.


 


“Borrower Excess Cash
Flow” shall have the meaning set forth in the Cash Management Agreement.


 


“Borrower GP” shall
have the meaning set forth in Section 3.1.24(z).


 


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


 


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


 


“Capital Expenditure
Maximum Amount” shall mean, as of any date, an amount equal to Four Million
and No/l00 Dollars ($4,000,000) less the Allocated Capital Expenditure Amount
of each Individual Property previously released from the lien of the Mortgage
(or, in lieu of such release, which Mortgage is assigned by Lender) pursuant to
Section 2.4 or Section 2.5, and less the Allocated
Capital Expenditure Amount of a Substituted Property pursuant to Section 11.29,
but plus the Allocated Capital Expenditure Amount of a Substitute Property
pursuant to Section 11.29, subject in all cases to a maximum
aggregate of $4,000,000.


 


3

















 


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


 


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


 


“Cash Management Agency
Agreement” shall mean, collectively, (i) that certain Cash Management
Agency Agreement, dated as of the date hereof, between Propco Borrower and
Guarantor, (ii) that certain Cash Management Sub-Agency Agreement dated as
of the date hereof between Guarantor and Logistics and (iii) that certain
Administrative Services and Cost Allocation Agreement dated as of the date
hereof between Opco Borrower and Logistics, in each case as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance with the terms of this Agreement.


 


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


 


“Cash Trap Event”
shall mean, on the relevant date, the fact that the Debt Service Coverage Ratio
for the Property determined by Lender as of the end of each fiscal quarter (based
on Borrower’s Fiscal Year) on a trailing twelve (12) month basis is less than
1.20 to 1.00.


 


“Cash Trap Period”
shall mean a period commencing on the first (1st) Business Day after a Cash Trap Event has
occurred to the first (1st) Business Day after the related Cash Trap Event has not existed for a
period of two (2) consecutive fiscal quarters.


 


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


 


“Casualty Consultant”
shall mean an independent architect selected by Lender.


 


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


 


“CEI” shall mean
Crescent Real Estate Equities Company, a Texas real estate investment trust,
and its permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of CEI, subject to any terms, covenants and/or
conditions of this Agreement.


 


“Closing Date” shall
mean the date hereof.


 


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


 


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


 


4

















 


“Confidential” shall
mean that, prior to the occurrence of an Event of Default or special servicing
of the Loan for any reason whatsoever, such information shall not be
disseminated by Lender to the general public unless such information is already
in the public domain or unless Lender is otherwise required by law, legal
requirement or order, writ, subpoena or other directive of any Governmental
Authority.  Notwithstanding the
foregoing, Lender shall not be restricted or prohibited in any manner
whatsoever from providing such information to its consultants, attorneys or
accountants, the Servicer, any Rating Agencies or any potential participants or
assignees (other than any Excluded Lender Transferee) of all or any portion of
the Loan or in connection with a Securitization of all or any portion of the
Loan.


 


“CRE” shall mean
Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership, and its permitted successors by merger, consolidation or transfer
of all or substantially all of the assets of CRE, subject to any terms,
covenants and/or conditions of this Agreement.


 


“Debt” shall mean the
outstanding principal amount of the Loan together with all interest accrued and
unpaid thereon and all other sums (including, without limitation, any Yield
Maintenance Premium) due to Lender in respect of the Loan under the Note, this
Agreement, the Mortgage, the Environmental Indemnity or any other Loan
Document.


 


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


 


“Debt Service Coverage
Ratio” shall mean, as of any date of calculation, the ratio of (i) Underwritable
Cash Flow for the twelve (12) calendar month period immediately preceding such
date to (ii) the projected Debt Service that would be due for the twelve
(12) calendar month period immediately following such date based upon an
assumed loan constant for such period equal to seven percent (7.00%) per annum.
For illustration purposes, if the loan amount is $325,000,000, the projected
debt service would be $22,750,000.


 


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


 


“Default Rate” shall
mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law, or (ii) three percent (3%) above
the Applicable Interest Rate.


 


“Defeasance Collateral”
shall mean the Total Defeasance Collateral or the Partial Defeasance Collateral
as the context may require.


 


“Defeasance Collateral
Account” shall have the meaning set forth in Section 2.5.3.


 


“Defeasance Date”
shall mean the Total Defeasance Date or the Partial Defeasance Date as the
context may require.


 


5

















 


“Defeasance Event”
shall the Total Defeasance Event or the Partial Defeasance Event as the context
may require.


 


“Defeasance Security
Agreement” shall mean a security agreement in form and substance that would
be reasonably satisfactory to a reasonably prudent lender originating
commercial loans for securitization similar to the Loan pursuant to which
Borrower grants Lender a perfected, first priority security interest in the
Defeasance Collateral Account and the Defeasance Collateral.


 


“Defeased Note” shall
have the meaning set forth in Section 2.5.2(a)(iv).


 


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


 


“Disqualified Transferee”
shall mean any Person that (i) has (within the past seven (7) years)
defaulted, or is now in default, beyond any applicable cure period, of its
material obligations, under any written agreement with Lender, any affiliate of
Lender, any financial institution or other Person providing or arranging
financing; (ii) has been convicted in a criminal proceeding for a felony
or a crime involving moral turpitude or that is an organized crime figure or is
reputed (as determined by Lender in its sole discretion) to have substantial
business or other affiliations with an organized crime figure; (iii) has
at any time filed a voluntary petition under the Bankruptcy Code or any other federal
or state bankruptcy or insolvency law; (iv) as to which an involuntary
petition has at any time been filed under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (v) has
at any time filed an answer consenting to or acquiescing in any involuntary
petition filed against it by any other person under the Bankruptcy Code or any
other federal or state bankruptcy or insolvency law; (vi) has at any time
consented to or acquiesced in or joined in an application for the appointment
of a custodian, receiver, trustee or examiner for itself or any of its
property; (vii) has at any time made a general assignment for the benefit
of creditors, or has at any time admitted its insolvency or inability to pay its
debts as they become due; or (viii) has been found by a court of competent
jurisdiction or other governmental authority in a comparable proceeding to have
violated any federal or state securities laws or regulations promulgated
thereunder.


 


“Downgrade Event”
shall have the meaning set forth in Section 10.1 (a)(xvi).


 


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


 


“Eligible Institution”
shall mean a federal or state chartered depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short-term unsecured 


 


6

















 


debt
obligations or commercial paper of which are rated at least “A-1” (or the
equivalent) by S&P, Moody’s and Fitch in the case of accounts in which
funds are held for thirty (30) days or less or, in the case of accounts in
which funds are held for more than thirty (30) days, the long-term unsecured
debt obligations of which are rated at least “AA-” (or the equivalent) by
S&P, Fitch and Moody’s.


 


“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.


 


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


 


“ERISA” shall have
the meaning set forth in Section 3.1.8.


 


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


 


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


 


“Excess Alteration Amount”
shall have the meaning set forth in Section 4.1.10(a).


 


“Excluded Lender
Transferee” shall mean any Person listed on Schedule XI and its Affiliates.


 


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


 


“Expansion Date”
shall have the meaning set forth in Section 11.30(a)(i).


 


“Expansion Parcel”
shall mean an unimproved area or areas of any Individual Property on which
Rents are not payable and Improvements (other than utilities and the like that
are permitted pursuant to a recorded agreement) are not situated, which area or
areas are not necessary for the use and operation of the remainder of such
Individual Property (except to the extent such use or operation is permitted
pursuant to a separate agreement), are designated by Borrower for expansion or
any other reasonable business purpose in order to service any customer or prospective
customer of Borrower or any Affiliate of Borrower, the transfer and separate
development of which would not, in Borrower’s judgment (provided Borrower has
certified the same) materially adversely affect the value of the remaining
portion of such Individual Property or the Underwritable Cash Flow from the
remaining portion of such Individual Property (taking into account, to the
extent applicable, any potential loss of revenue resulting if the transfer and
development of the Expansion Parcel were not to occur).


 


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


 


7

















 


“Fitch” shall mean
Fitch, Inc.


 


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


 


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


 


“Gross Revenue” shall
mean all revenue, derived from the ownership and operation of the Property from
whatever source, including, but not limited to, Rents, but excluding receipts,
revenues and other income generated from transportation operations conducted or
performed by Borrower or any of its Affiliates from or with respect to any one
or more Individual Properties, sales, use and occupancy or other taxes on
receipts required to be accounted for by the owner or operator of the Property to
any Governmental Authority, non-recurring revenues as reasonably determined by
Lender, proceeds from the sale or refinancing of any Individual Property,
security deposits (except to the extent determined by Lender to be properly
utilized to offset a loss of Rent), refunds and uncollectible accounts,
proceeds of casualty insurance and Awards (other than business interruption or
other loss of income insurance related to business interruption or loss of
income for the period in question), and any disbursements to Borrower or any
operator of the Property from the Reserve Funds or any other fund established
by the Loan Documents.


 


“Guarantor” shall
mean Americold Realty Trust, a Maryland real estate investment trust, and its
permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of Americold Realty Trust, subject to any
terms, covenants and/or conditions of this Agreement.


 


“Guaranty” shall mean
that certain Recourse Guaranty dated as of the date hereof executed by the
Guarantor in connection with the Loan for the benefit of Lender.


 


“Improvements” with
respect to each Individual Property, shall have the meaning set forth in the
granting clause of the applicable Mortgage.


 


“Indebtedness” shall
mean, for any Person, without duplication: (i) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for
the deferred purchase price of property for which such Person or its assets is
liable, (ii) all unfunded amounts under a loan agreement, letter of
credit, or other credit facility for which such Person would be liable if such
amounts were advanced thereunder, (iii) all amounts required to be paid by
such Person as a guaranteed payment to partners 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, 


 


8

















 


caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.


 


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


 


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


 


“Individual Loan-to-Value
Ratio” shall mean, with respect to an Individual Property, as of any date
of determination, a ratio (as reasonably determined by Lender), (x) the
numerator of which is equal to the Allocated Loan Amount for such Individual
Property, and (y) the denominator of which is equal to the “as-is” fair
market value of such Individual Property, determined with respect to the
Closing Date by the Appraisals delivered to Lender on or prior to the date
hereof, and with respect to future dates, on the basis of Lender’s reasonable
determination of the fair market value of such Individual Property, or, if
Borrower disputes Lender’s valuation or otherwise elects to deliver an
Appraisal, on the basis of an Appraisal commissioned by the Lender and at Borrower’s
expense.


 


“Individual Property”
shall mean the parcel of real property located at each address listed on Schedule
VI other than any Release Property or Expansion Parcel released pursuant to
Section 2.4, 2.5 or 11.30, the Improvements thereon
and all personal property owned by Borrower and encumbered by a Mortgage,
together with all of Borrower’s rights pertaining to such property and
Improvements, all as more particularly described in the Granting Clauses of the
applicable Mortgage.


 


“Insolvency Opinion”
shall mean that certain bankruptcy nonconsolidation opinion letter dated the
date hereof delivered by Arnall Golden Gregory LLP in connection with the Loan.


 


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


 


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


 


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


 


“Lease” shall mean
any lease, sublease or subsublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect)
pursuant to which any Person is granted a possessory interest in, or right to use or
occupy all or any portion of any space in any Individual Property, and every
modification, amendment or other agreement relating to such lease, sublease,
subsublease, or other agreement entered into in connection with such lease,
sublease, subsublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto. As used herein and in the
other Loan Documents, the term “Lease” shall be deemed to include any Warehouse
Agreements.


 


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


 


9

















 


injunctions
of Governmental Authorities affecting Borrower, Manager or any Individual
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 the Borrower or any Individual Property or any part thereof,
including, without limitation, any which may (i) require repairs,
modifications or alterations in or to any Individual Property or any part
thereof, or (ii) in any way limit the use and enjoyment thereof.


 


“Lender” shall mean
Citigroup Global Markets Realty Corp., a New York corporation, together with
its successors, assigns, and, subject to and for the purposes set forth in Section 11.27,
Participants.


 


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


 


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


 


“Letter of Credit”
shall mean an irrevocable, unconditional, transferable, clean sight draft
letter of credit acceptable to Lender and the Rating Agencies in favor of
Lender and entitling Lender to draw thereon in New York, New York, issued by a
domestic Eligible Institution or the U.S. agency or branch of a foreign
Eligible Institution.  The Letter of
Credit shall have a term of at least one (1) year (or such shorter period
of time necessary for such Letter of Credit to have a term which does not
expire until at least thirty (30) days after the Maturity Date); provided, however,
that any such Letter of Credit which is in effect upon the Maturity Date shall
not expire until at least thirty (30) days after the Maturity Date.  If Borrower has not provided Lender with a
new Letter of Credit at least ten (10) Business Days prior to the
expiration of any Letter of Credit, then Lender shall have the right to
immediately draw down the same in full and hold the proceeds of such draw as
cash security in accordance with the applicable provisions hereof.  If at any time the bank issuing any such
Letter of Credit shall cease to be an Eligible Institution and Borrower does
not replace such Letter of Credit with a Letter of Credit issued by an
institution that is an Eligible Institution prior to the earlier to occur of (i) five (5) days after Borrower has knowledge of such event or (ii) five
(5) days after Lender has provided Borrower with notice thereof, then
Lender shall have the right immediately to draw down the same in full and hold
the proceeds of such draw in accordance with the applicable provisions hereof.


 


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


 


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


 


10














 


“Loan” shall mean the
loan in the original principal amount of Three Hundred Twenty Five Million and
No/100 Dollars ($325,000,000.00) made by Lender to Borrower pursuant to this
Agreement.


 


“Loan Documents”
shall mean, collectively, this Agreement, the Note, the Mortgage, the
Assignment of Leases, the Cash Management Agreement, the Environmental
Indemnity, the Guaranty, the Assignment of Management Agreement, the Security
Agreement and any other document pertaining to the Property as well as all
other documents now or hereafter executed and/or delivered 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, as of any date of determination, a ratio (as reasonably determined
by Lender), (x) the numerator of which is equal to (i) the
outstanding principal balance of the Loan, and (y) the denominator of
which is equal to the “as-is” fair market value of the Property, determined on
the basis of Lender’s reasonable determination of the fair market value of the
Property or, if Borrower disputes Lender’s valuation, on the basis of an
Appraisal commissioned by the Lender and at Borrower’s expense.


 


“Logistics” shall
mean AmeriCold Logistics LLC, a Delaware limited liability company, and its
permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of AmeriCold Logistics LLC, subject to any
terms, covenants and/or conditions of this Agreement.


 


“Major Customer List”
shall mean a list of those customers each of which, pursuant to one or more
Leases or Service Contracts for space at one or more of the Individual
Properties, is required to make aggregate annual payments to the Borrowers of
not less than $5,000,000.  The Major
Customer List as of the date hereof is attached hereto as Schedule I.


 


“Major Lease” shall
mean any Lease covering all or substantially all of the Property.


 


“Major Tenant” shall
mean (i) any Tenant occupying all or substantially all of any Individual Property
pursuant to a Lease (other than any month-to-month Lease) and (ii) any
Tenant under any Lease listed on Schedule VIII.


 


“Management Agreement”
shall mean (a) that certain Management Agreement, dated as of the date
hereof, between Propco Borrower and Manager, as the same may be amended or
otherwise modified from time to time in accordance with the terms of this
Agreement, or (b) if the context requires, a replacement management
agreement entered into by and between Borrower and a Qualified Manager in
accordance with the terms of this Agreement.


 


“Manager” shall mean (a) ART
Manager L.L.C. or (b) if the context requires, any other Qualified Manager
which becomes manager of the Property in accordance with the terms of this
Agreement.


 


“Material Adverse Effect”
shall mean any event or condition that has a material and adverse effect, in
each case, taken as a whole on (a) the business operations, economic
performance, assets, financial condition, equity, contingent liabilities,
prospects, material


 


11

















 


agreements
or results of operations of Borrower, Guarantor or the Property, (b)the ability
of Borrower or Guarantor to perform, in all material respects, its respective
obligations under the Loan Documents, (c) the enforceability or validity
of any Loan Document, the perfection or priority of any Lien created under any
Loan Document or the remedies of Lender under any Loan Document, (d) the
value of, or cash flow (other than cash flow from transportation operations
conducted or performed by Borrower or any of its Affiliates from or with
respect to any one or more Individual Properties) from, the Property or the
operations thereof or (e) the value of the Loan.


 


“Material Agreements”
means each contract and agreement relating to the ownership, management,
development, use, operation, leasing, maintenance, repair or improvement of any
one (1) or more Individual Properties, other than the Management Agreement
and the Leases, under which there is an obligation of Borrower to pay more than
One Million and No/100 Dollars ($1,000,000.00) per annum.


 


“Maturity Date” shall
mean January 1, 2014 or such other date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.


 


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


 


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


 


“Monthly Debt Service
Payment Amount” shall mean, with respect to any Monthly Payment Date, the
interest amount determined in accordance with Section 2.2.2 of this
Agreement.


 


“Monthly Payment Date”
shall mean the first (1st) Business Day of each calendar month during the term of the Loan, and if
such day is not a Business Day, then the immediately succeeding Business Day,
commencing on February 1, 2007, and continuing to and including the
Maturity Date.


 


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


 


“Mortgage” shall
mean, with respect to each Individual Property, that certain first priority
Mortgage, Deed of Trust or Deed to Secure Debt, dated as of the date hereof,
executed and delivered by Propco Borrower and encumbering the applicable
Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.


 


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


 


12

















 


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


 


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


 


“Note” shall mean
that certain Promissory Note dated as of the date hereof made by Borrower in
the original principal amount of Three Hundred Twenty-Five Million and No/100
Dollars ($325,000,000.00), and, if applicable, the Defeased Note and the
Undefeased Note, in each case as the same may be amended, restated, replaced,
supplemented, increased, extended, consolidated or otherwise modified from time
to time.


 


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


 


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


 


“Opco Borrower” shall
mean ART Mortgage Borrower Opco 2006-3 L.P., a Delaware limited partnership,
and its successors by merger, consolidation or transfer of all or substantially
all of the assets of such Person (except to the extent that any such merger,
consolidation or transfer may be prohibited hereunder).


 


“Opco Borrower GP”
shall have the meaning set forth in Section 3.1 .24(z).


 


“Operating Agreements”
shall mean any covenants, restrictions or agreements of record relating to the
construction, operation or use of the Property.


 


“Operating Expenses”
shall mean all costs and expenses incurred by or on behalf of Borrower relating
to the operation, maintenance and management of the Property, including,
without limitation, utilities, repairs and maintenance, insurance, property
taxes and assessments, advertising expenses, payroll and related taxes, lease
payments (for leases treated as operating leases in accordance with GAAP), the
greater of actual management salaries and other compensation and related taxes
and 2% of Gross Revenues but excluding actual Capital Expenditures, lease
payments (for leases treated as capital leases in accordance with GAAP),
depreciation, amortization, obligations to post security to secure workers’
compensation obligations, deposits required to be made to the Reserve Funds,
sales, use and occupancy or other taxes on receipts required to be accounted
for by the owner or operator of the Property to any Governmental Authority,
interest expense and income tax expense; provided, however
such costs and expenses shall be subject to adjustment by Lender in its
reasonable discretion to normalize such costs and expenses. Notwithstanding the
foregoing, “Operating Expenses” shall exclude all costs and expenses incurred
in connection with transportation operations conducted or performed by Borrower
or any of its Affiliates from or with respect to any one or more Individual
Properties.


 


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


 


13

















 


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


 


“Partial 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, under the Defeased Note after the Defeasance
Date and up to and including the Monthly Payment Date which Borrower shall
specify occurring concurrently with or after the Permitted Prepayment Date, and
(ii) in amounts equal to or greater than the Scheduled Defeasance Payments
relating to such Monthly Payment Dates.


 


“Partial Defeasance Date”
shall have the meaning set forth in Section 2.5.2(a)(i).


 


“Partial Defeasance Event”
shall have the meaning set forth in Section 2.5.2(a).


 


“Participant” shall
mean any Person that has purchased a participation in this Loan Agreement
pursuant to Section 11.27.


 


“Permitted Encumbrances”
shall mean, collectively, (i) the Liens and security interests created by
the Loan Documents, (ii) all Liens, encumbrances and other matters
disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes
imposed by any Governmental Authority not yet due or delinquent, (iv) mechanics’,
materialmen’ s or other similar Liens for delinquent Taxes being contested in
good faith if permitted by and in accordance with the terms and provisions of
the Loan Documents and (v) such other title and survey exceptions as
Lender has approved or may approve in writing in Lender’s sole discretion.


 


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


 


“Permitted Prepayment
Date” shall mean the Monthly Payment Date occurring in September 2013.


 


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


 


“Physical Conditions
Report” shall mean, with respect to each Individual Property, a report
prepared by a company satisfactory to Lender regarding the physical condition
of such Individual Property, satisfactory in form and substance to Lender in
its sole discretion, which report shall, among other things, (i) confirm
that the applicable Individual Property and its use comply, in all material
respects, with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws) and (ii) include a copy
of a final certificate of occupancy with respect to all Improvements.


 


“Plan Assets Regulation”
shall have the meaning specified in Section 3.1.8.


 


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


 


14

















 


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


 


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


 


“primary Servicer”
shall have the meaning set forth in Section 11.24(d).


 


“Propco Borrower”
shall mean ART Mortgage Borrower Propco 2006-3 L.P., a Delaware limited
partnership, and its successors by merger, consolidation or transfer of all or
substantially all of the assets of such Person (except to the extent that any
such merger, consolidation or transfer may be prohibited hereunder).


 


“Propco Borrower GP”
shall have the meaning set forth in Section 3.1.24(z).


 


“Property” shall
mean, collectively, the Individual Properties.


 


“Public Company”
shall mean a Person whose stock or ownership interests are publicly traded on
the New York Stock Exchange or other nationally recognized stock exchange.


 


“Qualified Appraiser”
means any member of the American Institute of Real Estate Appraisers selected
by Borrower and reasonably acceptable to the Lender.


 


“Qualified Transferee”
shall mean any one of the following Persons:


 


(i)            a corporation, partnership or
limited liability company acceptable to Lender in its sole discretion;


 


(ii)           a pension fund, pension trust or
pension account that immediately prior to such transfer owns, directly or
indirectly, total real estate assets of at least $1,000,000,000;


 


(iii)          a pension fund advisor who (a) immediately
prior to such transfer, controls, directly or indirectly, at least
$1,000,000,000 of real estate assets and (b) is acting on behalf of one or
more pension funds that, in the aggregate, satisfy the-requirements of clause (ii) of
this definition;


 


(iv)          an insurance company which is subject
to -supervision by the insurance commissioner, or a similar official or agency,
of a state or territory of the United States (including the District of
Columbia) (a) with a net worth, determined under GAAP as of a date no more
than six (6) months prior to the date of the transfer of at least
$500,000,000 and (b) who, immediately prior to such transfer, controls,
directly or indirectly, real estate assets of at least $1,000,000,000;


 


15

















 


(v)           a corporation organized under the
banking laws of the United States or any state or territory of the United
States (including the District of Columbia) (a) with a combined capital
and surplus of at least $500,000,000 and (b) who, immediately prior to
such transfer, controls, directly or indirectly, real estate assets of at least
$1,000,000,000; or


 


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


 


provided, in each case, that such Person (a) qualifies as
a bankruptcy remote entity under criteria established by the Rating Agencies
and (b) has delivered to Lender a non-consolidation opinion reasonably
acceptable to Lender and acceptable the Rating Agencies in their sole
discretion.


 


“Qualified Manager”
shall mean (a) ART Manager L.L.C., (b) any other Affiliate of
Borrower, (c) any other Person as to which Borrower shall have obtained a
Rating Agency Confirmation or (d) any Person designated by Lender, provided
that in the case of (a), (b) and (c) Lender has not
required Borrower to replace such Person (or any Affiliate of such Person) as
Manager pursuant to Section 7.3.


 


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


 


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


 


“Register” shall have
the meaning set forth in Section 11.27(e).


 


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


 


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


 


“Regulation D” shall
mean Regulation D of the Board of Governors of the Federal Reserve System from
time to time in effect, including any successor or other Regulation or official
interpretation of said Board of Governors relating to reserve requirements
applicable to member banks of the Federal Reserve System.


 


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


 


“Related Persons”
shall have the meaning set forth in Section 8.1.


 


16

















 


“Related Property”
shall mean a parcel of real property, together with improvements thereon and
personal property related thereto, that is “related”, within the meaning of the
definition of Significant Obligor, to one or more Individual Properties.


 


“Release Amount”
shall mean, in connection with the release of any Individual Property from the
Lien of the Mortgage (or, in lieu of such release, the assignment of the
Mortgage encumbering any Individual Property), (a) one hundred five
percent (105%) of the Allocated Loan Amount of the applicable Individual
Property, which, when taken together with the Allocated Loan Amount of each
Individual Property previously released from the Lien of the Mortgage (or, with
respect to which Individual Property, Lender previously assigned the applicable
Mortgage), is less than or equal to the Tranche I Release Percentage Threshold
Amount, (b) one hundred ten percent (110%) of the Allocated Loan Amount of
the applicable Individual Property, which, when taken together with the
Allocated Loan Amount of each Individual Property previously released from the
Lien of the Mortgage (or, with respect to which Individual Property, Lender
previously assigned the applicable Mortgage), is greater than the Tranche I
Release Percentage Threshold Amount and less than or equal to the Tranche II
Release Percentage Threshold Amount, or (c) one hundred fifteen percent
(115%) of the Allocated Loan Amount of the applicable Individual Property,
which, when taken together with the Allocated Loan Amount of each Individual
Property previously released from the Lien of the Mortgage (or, with respect to
which Individual Property, Lender previously assigned the applicable Mortgage),
equals an amount which is greater than the Tranche II Release Percentage
Threshold Amount; provided that, in each case, the Release Amount shall
not be greater than the amount of the Debt outstanding on the date the
applicable Individual Property is released from the Lien of the Mortgage (or,
in lieu of such release, the applicable Mortgage is assigned) in accordance
with the terms of this Agreement and the other Loan Documents.


 


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


 


“Release Property”
shall mean any Individual Property (other than a Substituted Property) with
respect to which the Lien of the related Mortgage has been released (or
assigned) by Lender in accordance with the terms of this Agreement.


 


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


 


“Rents” shall mean
all rents, moneys payable as damages or in lieu of rent, revenues, deposits
(including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower, Manager or any of their agents or employees
from any and all sources arising from or attributable to the Property.
Notwithstanding the foregoing, “Rents” shall exclude all receipts, revenues and
other income generated from transportation operations conducted or performed by
Borrower or any of its Affiliates from or with respect to any one or more
Individual Properties.


 


17

















 


“Required Repair Funds”
shall have the meaning set forth in Section 6.1.1.


 


“Required Repairs” shall
have the meaning set forth in Section 6.1.1.


 


“Reserve Funds” shall
mean, collectively, the Capital Expenditure Funds, the Insurance Funds, the
Required Repair Funds, if any, the Tax Funds and the Borrower Cash Collateral
Funds.


 


“Reserve Guaranty”
shall have the meaning set forth in Section 6.12(a).


 


“Resizing Event”
shall have the meaning set forth in Section 9.1(c).


 


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


 


“Restoration Threshold”
shall mean, with respect to each Individual Property, five percent (5%) of the
Allocated Loan Amount for each such Individual Property.


 


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


 


“Scheduled Defeasance
Payments” shall mean scheduled payments of interest and principal under the
Note in the case of a Total Defeasance Event and under the Defeased Note in the
case of a Partial Defeasance Event for all Monthly Payment Dates occurring
after the Defeasance Date and up to and including the Monthly Payment Date
referred to in clause (i) of the definition of Partial Defeasance
Collateral or Total Defeasance Collateral, as applicable (including, in the
case of a total defeasance, the outstanding principal balance on the Note as of
such Monthly Payment Date and, in the case of a partial defeasance, the
outstanding principal balance on the Defeased Note as of such Monthly Payment
Date).


 


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


 


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


 


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


 


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


 


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


 


“Service Contract”
shall have the meaning set forth in Section 5.3.2(i).


 


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


 


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


 


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


 


18

















 


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


 


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


 


“State” shall mean,
with respect to any Individual Property, the State or Commonwealth in which
such Individual Property or any part thereof is located.


 


“Substitute Allocated
Loan Amount” shall have the meaning set forth in Section 11.29.


 


“Substitute Property”
and “Substitute Properties” shall have the respective meanings set forth
in Section 11.29.


 


“Substituted Property”
shall have the meaning set forth in Section 11.29.


 


“Successor Borrower”
shall have the meaning set forth in Section 2.5.4.


 


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


 


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


 


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


 


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


 


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


 


“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 under the Note after the Defeasance Date
and up to and including the Monthly Payment Date which Borrower shall specify
occurring concurrently with or after the Permitted Prepayment Date, and (ii) in
amounts equal to or greater than the Scheduled Defeasance Payments relating to
such Monthly Payment Dates.


 


“Total Defeasance Date”
shall have the meaning set forth in Section 2.5.1(a).


 


“Total Defeasance Event”
shall have the meaning set forth in Section 2.5.1(a).


 


19














 


“Tranche I Release
Percentage Threshold Amount” shall mean the product of the original
principal amount of the Loan and twelve and one-half percent (12.5%).


 


“Tranche II Release
Percentage Threshold Amount” shall mean the product -of the original
principal amount of the Loan and twenty-five percent (25%).


 


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


 


“Transferee” shall
mean a Person to whom a Transfer is being effected.


 


“Treasury Rate” shall
mean, as of the Business Day immediately prior to the Prepayment Date, 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 noncallable United States Treasury obligations with
terms (one longer and one shorter) most nearly approximating the period from
such date of determination to the Permitted Prepayment 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.


 


“TRIA” shall mean the
Terrorism Risk Insurance Act of 2002, as heretofore amended and as the same may
be further amended or otherwise modified; provided that it provides
substantially the same benefits to insurance companies and insureds as are
provided by TRIA as in effect on the Closing Date.


 


“Trigger Event” shall
mean, on the relevant date, the fact that the Debt Service Coverage Ratio for
the Property determined by Lender as of the end of each fiscal quarter (based
on Borrower’s Fiscal Year) on a trailing twelve (12) month basis is less than
1.30 to 1.00.


 


“Trigger Period”
shall mean a period commencing on the first (1st) Business Day after a Trigger Event has occurred to the first (1st) Business Day after the
related Trigger Event has not existed for a period of two (2) consecutive
fiscal quarters.


 


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


 


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


 


“Underwritable Cash Flow”
shall mean the excess of Gross Revenue over Operating Expenses.


 


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


 


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


 


“U.S. Obligations”
shall mean (i) direct full faith and credit obligations of the United States
of America and (ii) other “government securities” within the meaning of
section


 


20

















 


1.860G-2(a)(8)(i) of
the Treasury Regulations that are acceptable to the Rating Agencies and in each
case that are not subject to prepayment, call or early redemption.


 


“VNO” shall mean
Vomado Realty Trust, a Maryland real estate investment trust, and its permitted
successors by merger, consolidation or transfer of all or substantially all of
the assets of VNO, subject to any terms, covenants and/or conditions of this
Agreement.


 


“VRLP” shall mean
Vornado Realty L.P., a Delaware limited partnership, and its permitted
successors by merger, consolidation or transfer of all or substantially all of
the assets of VRLP, subject to any terms, covenants and/or conditions of this
Agreement.


 


“Warehouse Agreements”
shall mean warehousing agreements, logistics and services agreements,
distribution agreements, handling agreements and other similar agreements in
connection with the use of one or more Individual Properties as a dry and/or
cold storage warehousing facility and for such other uses as may be necessary
or incidental to such use (including, without limitation, the provision of
distribution services), in each case, to the extent (but only to the extent)
the same are for goods stored or services rendered at an Individual Property
(excluding transportation services), together with any and all amendments and
modifications to such agreements.


 


“YAA” shall mean
Yucaipa American Alliance Fund I, LP, a Delaware limited partnership, and its
permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of YAA, subject to any terms, covenants and/or
conditions of this Agreement.


 


“YAP” shall mean Yucaipa
American Alliance (Parallel) Fund I, LP, a Delaware limited partnership, and
its permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of YAP, subject to any terms, covenants and/or
conditions of this Agreement.


 


“YCI” shall mean
Yucaipa Corporate Initiatives Fund I, LP, a Delaware limited partnership, and
its permitted successors by merger, consolidation or transfer of all or
substantially all of the assets of YCI, subject to any terms, covenants and/or conditions
of this Agreement.


 


“Yield Maintenance
Premium” shall mean an amount equal to the greater of:  (a) one percent (1%) of the principal
amount of the Loan being prepaid or (b) the present value as of the
Prepayment Date of the Calculated Payments from the Prepayment Date through the
Permitted Prepayment Date determined by discounting such payments at the
Discount Rate.  As used in this
definition, the term “Calculated Payments” shall mean the monthly
payments of interest only which would be due based on the principal amount of
the Loan being prepaid on the Prepayment Date and assuming an interest rate per
annum equal to the difference (if such difference is greater than zero) between
(i) the Applicable Interest Rate and (ii) the Yield Maintenance Treasury
Rate.  As used in this definition, the
term “Discount Rate” shall mean the rate which, when compounded monthly,
is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually.  As used in this
definition, the term “Yield Maintenance Treasury Rate” shall mean the
yield calculated by Lender by the linear interpolation of the


 


21

















 


yields,
as reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant Maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury Constant
Maturities with maturity dates (one longer or one shorter) most nearly
approximating the Permitted Prepayment Date. In the event Release H.15 is no
longer published, Lender shall select a comparable publication to determine the
Yield Maintenance Treasury Rate.  In no
event, however, shall Lender be required to reinvest any prepayment proceeds in
U.S. Treasury obligations or otherwise.


 


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


 


II.            THE
LOAN


 


Section 2.1            The Loan.


 


2.1.1            Agreement to Lend and Borrow.  Subject to and upon the terms and conditions set forth
herein, Lender shall make the Loan to Borrower and Borrower shall accept the
Loan from Lender on the Closing Date.


 


2.1.2            Single Disbursement to Borrower.  Borrower shall 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 reborrowed.


 


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


 


2.1.4            Use of Proceeds. 
Borrower shall use proceeds of the Loan to (i) pay and discharge
any existing loans relating to the Property, (ii) pay all past due Basic
Carrying Costs, if any, in respect of the Property, (iii) deposit the
Reserve Funds (to the extent required hereunder and not previously deposited), (iv) pay
costs and expenses incurred in connection with the closing of the Loan, (v) fund
any working capital requirements of the Property, (vi) distribute to its
parent entities and (vii) retain and/or distribute the balance, if any.


 


Section 2.2            Interest Rate.


 


2.2.1            Applicable Interest Rate. Except as herein provided with respect
to interest accruing at the Default Rate, interest on the principal balance of
the Loan outstanding from time to time shall accrue from the Closing Date up
to, but excluding, the Maturity Date at the Applicable Interest Rate.


 


2.2.2            Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a
daily rate based on a three hundred sixty (360)


 


22

















 


day year (that is, the
Applicable Interest Rate or the Default Rate, as then applicable, expressed as
an annual rate divided by 360) by (c) the outstanding principal balance.
The accrual period for calculating interest due on each Monthly Payment Date
shall be the calendar month immediately prior to such Monthly Payment Date.
Notwithstanding the foregoing, prior to a Securitization of the Loan, Lender
shall have the right to adjust the interest accrual period; provided
that, after giving effect to such adjustment, Borrower shall not be obligated
hereunder or under any other Loan Document to pay interest on any prepaid or
repaid principal of the Loan for any period from and after the Monthly Payment
Date concurrent with or subsequent to such prepayment or repayment. If
requested by Lender, Borrower shall promptly execute an amendment to this
Agreement and any other Loan Documents to evidence such change.


 


2.2.3            Intentionally Omitted.


 


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


 


Section 2.3            Loan Payments.


 


2.3.1            Payment Before Maturity Date. 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. 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 February 2007
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 to principal.


 


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


 


2.3.3            Interest Rate and Payment after
Default. 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 shall accrue
interest at the Default Rate, calculated from the date the Event


 


23

















 


of Default occurred. If
all or any part of the principal amount of the Loan is prepaid upon
acceleration of the Loan following the occurrence of an Event of Default,
Borrower shall be required to pay Lender, in addition to all other amounts then
payable hereunder (including, without limitation, (i) in the event that
such prepayment is received on a Monthly Payment Date, interest which has
accrued on such amount through such Monthly Payment Date, or (ii) in the event that  such prepayment is received on a date
other than a Monthly Payment Date, interest which would have accrued on such
amount through the last day of the month in which such prepayment occurs).


 


2.3.4            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 such that
the same would constitute an Event of Default hereunder, Borrower shall pay to
Lender upon demand 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 Mortgage and the other Loan
Documents.


 


2.3.5            Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M., New York
City time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender’s office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day. Notwithstanding
the foregoing, amounts due for the payment of Debt Service under the Loan
Documents shall be deemed paid so long as there are sufficient sums on deposit
in the Deposit Account (as defined in the Cash Management Agreement) for payment
of such amounts and Lender’s access to such funds has not been inhibited or
prevented in any manner whatsoever due to circumstances or events which are
directly or indirectly caused by or otherwise relate to any actions or
omissions of Borrower or any of its Affiliates.


 


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


 


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


 


Section 2.4            Prepayments.


 


2.4.1            Voluntary Prepayments. (a) On and after the Permitted
Prepayment Date, Borrower may, at its option, prepay the Debt in whole but not
in part on any Business Day without payment of any Yield Maintenance Premium,
provided, the following conditions are satisfied:


 


24

















 


(ii)           Borrower shall provide prior written
notice to Lender specifying the date upon which the prepayment is to be made,
which notice shall be delivered to Lender not less than five (5) Business Days prior to such
Prepayment Date (or such shorter period of time as may be permitted by Lender
in its sole discretion). Borrower’s notice of prepayment shall create an
obligation of Borrower to prepay the Loan or a portion thereof as set forth
therein, but may be rescinded by a written notice to Lender prior to the
applicable Prepayment Date. Borrower agrees to indemnify Lender and to hold Lender
harmless from and against any and all costs and expenses Lender sustains or
incurs as a consequence of any such rescission of a notice of prepayment; and


 


(iii)          If such prepayment is made on a day
other than a Monthly Payment Date, then in connection with such prepayment
Borrower shall pay to Lender, simultaneously with such prepayment, all interest
on the principal balance of this Note then being prepaid which would have
accrued through the last day of the month in which such prepayment occurs. Any prepayment
received by Lender on a date other than a Monthly Payment Date shall be held by
Lender (and the interest shall accrue for the benefit of Borrower) as
collateral security for the Loan and shall be applied to the Debt on the next
Monthly Payment Date.


 


(b)           Upon payment in full of all principal
and interest due on the Loan and all other amounts due and payable under the
Note and the other Loan Documents in accordance with the terms and provisions
of the Loan Documents, upon the written request of Borrower, Lender shall (i) release
the Lien of the Mortgages and all other security interests granted herein and
under the other Loan Documents pursuant to an instrument or other document in
form and substance reasonably satisfactory to Lender or (ii)(A) assign, or
sever into two (2) or more separate loans and assign, the Mortgages and
the other Loan Documents to any Person designated by Borrower, which assignment
and severance documents shall be in recordable form, (B) deliver to or as
directed by Borrower the original executed Note and all originally executed
other notes which may have been consolidated, amended and/or restated in.
connection with the execution of the Note or, with respect to any note where
the original has been lost, destroyed or mutilated, a lost note affidavit for
the benefit of the assignee lender and the title insurance company insuring the
Mortgages, as assigned, in form sufficient to permit such title insurance
company to insure the lien of the Mortgages as assigned to and held by the assignee
without exception for any matter relating to the lost, destroyed or mutilated
note; provided that in no event shall Lender be required to deliver any
indemnity with respect thereto, (C) execute and deliver an allonge with
respect to the Note and any other note(s) described in the clause (B) above,
(D) deliver the original recorded copies of the Mortgages in Lender’s
possession or, at Borrower’s sole cost and expense, certified copies of record,
and (E) execute and deliver such other instruments of conveyance,
assignment, termination, severance and release (including appropriate UCC
statements) in recordable form as may reasonably be requested by Borrower to
evidence such assignment and/or severance, provided, in each case, without
covenant, recourse, representation (other than representations that such
assignment has been duly authorized and that Lender has not otherwise assigned
or encumbered the Mortgages or the other Loan Documents except as expressly
contemplated therein) or warranty by Lender and notwithstanding anything to the
contrary contained herein, pursuant to instruments or other documents in form
and substance reasonably satisfactory to Lender. Concurrently with the payment
to Lender of all principal and interest on, and all other amounts due and
payable under the Note and the other Loan Documents, and whether or not
Borrower shall request a release or an assignment as set


 


25

















 


forth in this Section 2.4.1(b),
Lender shall deliver to Borrower (1) a payoff letter in customary form, (2) all
original insurance policies relating to the Property held by or on behalf of
Lender, (3) any amounts held in escrow or in any reserve account pursuant
to the Loan Documents or otherwise, (4) any other collateral that may have
been delivered to Lender in connection with the Loan, and (5) a termination (subject to
customary “clawback” provisions) of any guaranties delivered to Lender in
connection with the Loan (except to the extent of any obligations thereunder that
are expressly-intended to survive pursuant to the terms thereof), duly executed
by Lender, in each case with respect to clause (1) or (5), in form and
substance reasonably satisfactory to Lender. In connection with any transaction
contemplated by this Section 2.4.1(b), Borrower shall submit to
Lender for its review, not less than ten (10) Business Days prior to the
date of any release or assignment of the Mortgages or the payment in full of
the Debt (or such shorter period of time as may be permitted by Lender in its
sole discretion), all instruments and documents to be executed by Lender (other
than a payoff letter under clause (1) above). All reasonable out-of-pocket
costs and expenses incurred by Lender pursuant to this Section 2.4.1(b) shall
be paid by Borrower (other than any costs and expenses incurred by Lender in
connection with the preparation and delivery of a lost note affidavit in
accordance with clause (ii)(B) above or a payoff letter as contemplated by
clause (1) above and provided that in no event shall Borrower be required
to pay any fee or premium in connection herewith).


 


(c)           Following either the occurrence and
during the continuance of (x) a Default (other than a monetary Default)
for which Lender has given written notice to Borrower or (y) an Event of
Default which, in either case, cannot be cured despite Borrower’s commercially
reasonable efforts (but which Default or Event of Default would be cured or
eliminated by the release of any Individual Property (or, in lieu of such
release, an assignment of the Mortgage encumbering such Individual Property)),
Borrower shall have the right, prior to the Release Date, to prepay a portion
of the Debt and obtain the release of such affected Individual Property from
the Lien of the applicable Mortgage (or, in lieu of such release, obtain an
assignment of the Mortgage encumbering such Individual Property), provided the
following conditions are satisfied:


 


(i)            Borrower shall provide prior written
notice to Lender specifying the date upon which the prepayment is to be made,
which notice shall be delivered to Lender not less than ten (10) Business
Days prior to such Prepayment Date (or such shorter period of time as may be
permitted by Lender in its sole discretion). Borrower’s notice of prepayment
shall create an obligation of Borrower to prepay the Loan or a portion thereof
as set forth therein, but may be rescinded by a written notice to Lender prior
to the applicable Prepayment Date. Borrower agrees to indemnify Lender and to
hold Lender harmless from and against any and all costs and expenses Lender
sustains or incurs as a consequence of any such rescission of a notice of
prepayment;


 


(ii)           If such prepayment is made on a day
other than a Monthly Payment Date, then in connection with such prepayment Borrower
shall pay to Lender, simultaneously with such prepayment, all interest on the
principal balance of the Note then being prepaid which would have accrued
through the last day of the month in which such prepayment occurs. Any
prepayment received by Lender on a date other than a Monthly Payment Date shall
be held by Lender (and the interest shall accrue for the benefit of and shall
be payable to Borrower) as


 


26

















 


collateral security for
the Loan and shall be applied to the Debt on the next Monthly Payment Date;


 


(iii)          In connection with the release of any
Individual Property (or the assignment of the Mortgage encumbering such
Individual Property), Lender shall have received (A) payment of the
applicable Release Amount, (B) payment of the Yield Maintenance Premium
with respect to the portion of the Loan to be prepaid and (C) payment of
any other amounts then due and owing to Lender pursuant to this Agreement and
the other Loan Documents;


 


(iv)          Immediately after giving effect to
such prepayment and the release of the applicable Individual Property from the
Lien of the related Mortgage (or, in lieu of such release, the assignment of
the Mortgage encumbering such Individual Property), no Default or Event of Default
shall have occurred and be continuing (excluding any Default or Event of
Default arising from the released Individual Property);


 


(v)           In connection with the release of an
Individual Property pursuant to this Section 2.4.1(c), Borrower
shall submit to Lender for its review, not less than ten (10) Business
Days prior to the date of such release (or such shorter period of time as may
be permitted by Lender in its sole discretion), a partial release of the
applicable Mortgage and the related Loan Documents to be executed by Lender.
Such release shall be in a form appropriate for the jurisdiction in which such
Individual Property is located and otherwise reasonably acceptable to Lender;


 


(vi)          In lieu of a release of an Individual
Property in accordance with clause (v), upon Borrower’s written request not
less than ten (10) Business Days prior to the date of the proposed
assignment (or such shorter period of time as may be permitted by Lender in its
sole discretion), Lender shall (A) sever the Note and assign or endorse
over a severed note in the amount equal to the Release Amount for such
Individual Property and assign the applicable Mortgage to any Person designated
by Borrower, which assignment and severance documents shall be in recordable
form, (B) deliver to or as directed by Borrower the original executed
severed note, (C) deliver the original recorded copy of the applicable
Mortgage in Lender’s possession or, at Borrower’s sole cost and expense, a
certified copy of record, and (D) execute and deliver such other
instruments of conveyance, assignment, termination, severance and release
(including appropriate UCC statements) in recordable form as may reasonably be
requested by Borrower to evidence such assignment and/or severance, provided,
in each case, without covenant, recourse, representation (other than
representations that such assignment has been duly authorized and that Lender
has not otherwise assigned or encumbered the applicable Mortgage except as
expressly contemplated therein) or warranty by Lender and notwithstanding
anything to the contrary contained herein, pursuant to instruments or other
documents in form and substance reasonably satisfactory to Lender. Borrower
shall provide all other documentation Lender reasonably requires to be
delivered by Borrower in connection with such severance and assignment
(including, without limitation, a severed note in the amount equal to the
principal balance of the Loan after giving effect to such assignment), together
with an Officer’s Certificate certifying that such severance and assignment
will not impair or otherwise adversely affect the Liens, security interests and
other rights of Lender under the Loan Documents not being assigned (or as to
the parties to the Loan Documents and the Individual Properties subject to the
Loan Documents not being assigned). In connection with any transaction
contemplated by this Section


 


27

















 


2.4.1 (c)(vi), Borrower shall submit to Lender for its
review, not less than ten (10) Business Days prior to the date of any
assignment of a Mortgage (or such shorter period of time as may be permitted by
Lender in its sole discretion), all instruments and documents to be executed by
Lender;


 


(vii)         Simultaneously with the release (or
assignment), (A) Borrower shall convey its title to the applicable
Individual Property to a Person other than Borrower and (B) Borrower and
Manager shall execute an amendment to the Management Agreement effective as of
such release (or assignment) deleting the applicable Individual Property from
the list of properties managed thereunder;


 


(viii)        Borrower shall deliver an Officer’s
Certificate certifying that the requirements set forth in this Section 2.4.1(c) have
been satisfied; and


 


(ix)           All reasonable out-of-pocket costs
and expenses incurred by Lender pursuant to this Section 2.4.1(c) shall
be paid by Borrower.


 


2.4.2            Mandatory Prepayments. (a) On
each date on which
Lender actually receives a distribution of Net Proceeds, and if Lender
exercises its right provided for herein not to make such Net Proceeds available
to Borrower for a Restoration, one hundred percent (100%) of such Net Proceeds
shall be applied to the outstanding principal balance of the Loan, together
with interest accruing on such amount calculated through the next Monthly
Payment Date. Any prepayment received by Lender pursuant to this Section 2.4.2
on a date other than a Monthly Payment Date shall be held by Lender as
collateral security for the Loan in an interest bearing account, with such
interest accruing to the benefit of and payable to Borrower, and shall be
applied by Lender on the next Monthly Payment Date. The Allocated Loan Amount
of an applicable Individual Property shall be reduced by an amount equal to
such prepayment of principal upon such application of Net Proceeds pursuant to
this Section 2.4.2. Notwithstanding the foregoing and anything else
herein to the contrary, if in connection with any Casualty or Condemnation at
any Individual Property Lender exercises its right provided for herein not to
make the Net Proceeds available to Borrower for a Restoration, then at Borrower’s
option, Lender shall release the applicable Individual Property from the lien
of the Mortgage and related Loan Documents (or, in lieu of such release, the
assignment of the related Mortgage by Lender on substantially the same terms as
are provided in Section 2.4.1(c)), provided that (i) Borrower
shall pay Lender an amount which, when added to the amount of Net Proceeds
received in connection with such Casualty or Condemnation, equals the Allocated
Loan Amount of the Individual Property for which the Net Proceeds were obtained
together with interest on such amount calculated for the same periods as Net
Proceeds in the first sentence of this Section 2.4.2, (ii) no
Event of Default shall have occurred and be continuing (except for any Event of
Default which would be cured or eliminated by the release or assignment of the
Individual Property, (iii) Borrower shall provide to Lender a release of
the Mortgage as it relates to such Individual Property and related Loan
Documents in a form appropriate for the jurisdiction in which the applicable
Individual Property is located and reasonably satisfactory to Lender for
execution by Lender and (iv) simultaneously with the release, Borrower
shall convey fee simple title to the Release Property to a Person other than
Borrower.


 


28














 


(b)           Any prepayment of the Loan pursuant
to this Section 2.4.2 shall be without premium (including Yield
Maintenance Premium) or penalty of any kind.


 


2.4.3            Prepayments After
Default. Subject to the terms set forth in Section 2.4.1(c), if, after
an Event of Default, payment of all or any part of the principal of the Loan is
tendered by Borrower, a purchaser at foreclosure or any other Person, such
tender shall be deemed an attempt to circumvent the prohibition against
prepayment set forth in Section 2.4.1 and Borrower, such purchaser
at foreclosure or other Person shall pay, in addition to the outstanding
principal balance, all accrued and unpaid interest and other amounts payable
under the Loan Documents, an amount equal to the applicable Yield Maintenance Premium,
if any.


 


Section 2.5            Defeasance.


 


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


 


(i)            Borrower shall provide Lender not
less than ten (10) Business Days’ notice (or such shorter period of time
as may be permitted by Lender in its sole discretion) specifying a date (the “Total
Defeasance Date”) on which the Total Defeasance Event is to occur. Borrower’s
notice of defeasance shall create an obligation of Borrower to defease the
entire Loan as set forth therein, but may be rescinded by a written notice to
Lender prior to the applicable Total Defeasance Date. Borrower agrees to
indemnify Lender and to hold Lender harmless from and against any and all costs
and expenses Lender sustains or incurs as a consequence of any such rescission
of a notice of defeasance;


 


(ii)           Borrower shall pay to Lender (A) all
payments of principal and interest due on the Loan to and including the Total
Defeasance Date and (B) all other sums, then due under the Note, this
Agreement, the Mortgage and the other Loan Documents;


 


(iii)          Borrower shall deposit the Total
Defeasance Collateral into the Defeasance Collateral Account and otherwise
comply with the provisions of Sections 2.5.3 and 2.5.4 hereof;


 


(iv)          Borrower shall execute and deliver to
Lender a Defeasance Security Agreement in respect of the Defeasance Collateral
Account and the Total Defeasance Collateral;


 


(v)           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, (A) that Lender has a legal and
valid perfected first priority security interest in the Defeasance Collateral
Account and the Total Defeasance Collateral, (B) that, if a Securitization
has occurred, the REMIC Trust formed pursuant to such Securitization will not
fail to maintain its status as a “real estate mortgage investment conduit”
within the meaning of Section 860D of the Code as a result of a Total
Defeasance Event pursuant to this Section 2.5 (assuming a “startup
day” (within the meaning of Section 860G(a)(9) of the Code) that is
the earlier of the actual start-up date and the date


 


29

















 


specified in clause (a) of
the definition of “Release Date” contained herein), and (C) a
non-consolidation opinion with respect to the Successor Borrower;


 


(vi)          If a Securitization has occurred,
Borrower shall deliver to Lender a Rating Agency Confirmation as to the Total
Defeasance Event;


 


(vii)         Borrower shall deliver an Officer’s
Certificate certifying that the requirements set forth in this Section 2.5
have been satisfied;


 


(viii)        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;


 


(ix)           Intentionally omitted;


 


(x)            Borrower shall deliver such other
certificates, opinions, documents and instruments as Lender may reasonably
request; and


 


(xi)           Borrower shall pay all reasonable
out-of-pocket costs and expenses of Lender incurred in connection with the
Total Defeasance Event, including Lender’s reasonable attorneys’ fees and
expenses and Rating Agencies’ fees and expenses.


 


(b)           If Borrower has elected to defease
the entire Note and the requirements of this Section 2.5 have been
satisfied, the Property shall be released from the lien of the Mortgage and the
Total Defeasance Collateral pledged pursuant to the Defeasance 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 for its review,
not less than fifteen (15) days prior to the Defeasance Date (or such shorter
period of time as may be permitted by Lender in its sole discretion), a release
of Lien (and related Loan Documents) to be executed by Lender. Such release
shall be in a form appropriate in the applicable jurisdiction(s) in which
the Property is located and that contains standard provisions protecting the
rights of the releasing lender. In addition, Borrower shall provide all other
documentation that a reasonably prudent lender originating commercial loans for
securitization similar to the Loan would require to be delivered by Borrower in
connection with such release, together with an Officer’s Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements,
and (ii) will effect such release in accordance with the terms of this
Agreement. Borrower shall pay all costs, taxes and expenses associated with the
release of the lien of the Mortgage, including Lender’s reasonable attorneys’
fees. Except as set forth in Section 2.4 or this Section 2.5,
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 Mortgage on the Property.


 


(c)           If Borrower has elected to defease
the entire Note and the requirements of this Section 2.5 have been
satisfied, in lieu of the release of the Property in accordance with Section 2.5.1(b),
upon Borrower’s written request not less than fifteen (15) days prior to the
date of the proposed assignment (or such shorter period of time as may be
permitted by Lender in its sole discretion), Lender shall (i) assign, or
sever into two (2) or more separate loans and assign, the Mortgages and
the other Loan Documents to any Person designated by Borrower, which


 


30

















 


assignment and severance
documents shall be in recordable form, (ii) deliver to or as directed by
Borrower the original executed Note and all originally executed other notes
which may have been consolidated, amended and/or restated in connection with
the execution of the Note or, with respect to any note where the original has
been lost, destroyed or mutilated, a lost note affidavit for the benefit of the
assignee lender and the title insurance company insuring the Mortgages, as
assigned, in form sufficient to permit such title insurance company to insure
the lien of the Mortgages as assigned to and held by the assignee without
exception for any matter relating to the lost, destroyed or mutilated note;
provided that in no event shall Lender be required to deliver any indemnity
with respect thereto, (iii) execute and deliver an allonge with respect to
the Note and any other note(s) described in the clause (ii) above, (iv) deliver
the original recorded copies of the Mortgages in Lender’s possession or, at
Borrower’s sole cost and expense, certified copies of record, and (v) execute
and deliver such other instruments of conveyance, assignment, termination,
severance and release (including appropriate UCC statements) in recordable form
as may reasonably be requested by Borrower to evidence such assignment and/or
severance, provided, in each case, without covenant, recourse, representation
(other than representations that such assignment has been duly authorized and
that Lender has not otherwise assigned or encumbered the Mortgages or the other
Loan Documents except as expressly contemplated therein) or warranty by Lender
and notwithstanding anything to the contrary contained herein, pursuant to
instruments or other documents in form and substance reasonably satisfactory to
Lender. Concurrently with the delivery of the Total Defeasance Collateral to Lender,
and whether or not Borrower shall request a release or an assignment as set
forth in this Section 2.5.1, Lender shall deliver to Borrower (1) a
payoff letter in customary form, (2) all original insurance policies
relating to the Property held by or on behalf of Lender, (3) any amounts
held in escrow or in any reserve account pursuant to the Loan Documents or
otherwise, (4) any other collateral that may have been delivered to Lender
in connection with the Loan, and (5) a termination (subject to customary “clawback”
provisions) of any guaranties delivered to Lender in connection with the Loan
(except to the extent of any obligations thereunder that are expressly intended
to survive pursuant to the terms thereof), duly executed by Lender, in each
case with respect to clause (1) or (5),
in form and substance reasonably satisfactory to Lender. In connection
with any transaction contemplated by this Section 2.5.1(c),
Borrower shall submit to Lender for its review, not less than fifteen (15) days
prior to the Defeasance Date (or such shorter period of time as may be
permitted by Lender in its sole discretion), all instruments and documents to
be executed by Lender (other than a payoff letter under clause (1) above).
All reasonable out-of-pocket costs and expenses incurred by Lender pursuant to
this Section 2.5.1(c) shall be paid by Borrower (other than
any costs and expenses incurred by Lender in connection with the preparation
and delivery of a lost note affidavit in accordance with clause (ii) above
or a payoff letter as contemplated by clause (I) above and provided
that in no event shall Borrower be required to pay any fee or premium to the
Lender or the Servicer in connection herewith).


 


2.5.2            Partial Defeasance. (a) Provided
no Event of Default
shall have occurred and remain uncured, Borrower shall have the right at any
time after the Release Date and prior to Permitted Prepayment Date to
voluntarily defease a portion of the Loan and obtain a release of the lien of
the Mortgage as to any Individual Property by providing Lender with the Partial
Defeasance Collateral (hereinafter, a “Partial Defeasance Event”) upon
satisfaction of the following conditions precedent:


 


31

















 


(i)            Borrower shall provide Lender not
less than fifteen (15) Business Days notice (or such shorter period of time as
may be permitted by Lender in its sole discretion) specifying a date (the “Partial
Defeasance Date”) on which the Partial Defeasance is to occur. Borrower’s
notice of defeasance shall create an obligation of Borrower to defease a
portion of the Loan as set forth therein, but may be rescinded by a written
notice to Lender prior to the applicable Partial Defeasance Date. Borrower
agrees to indemnify Lender and to hold Lender harmless from and against any and
all costs and expenses Lender sustains or incurs as a consequence of any such
rescission of a notice of defeasance;


 


(ii)           Borrower shall pay to Lender (A) all
payments of principal and interest due on the Loan to and including the Partial
Defeasance Date and (B) all other sums then due under the Note, this
Agreement, the Mortgage and the other Loan Documents;


 


(iii)          Borrower shall deposit the Partial
Defeasance Collateral into the Defeasance Collateral Account and otherwise
comply with the provisions of Sections 2.5.3 and 2.5.4 hereof,


 


(iv)          Borrower shall prepare all necessary
documents to modify this Agreement and to amend and restate the Note and issue
two substitute notes, one note having an aggregate principal balance equal to
Release Amount for the subject Individual Property (collectively, the “Defeased
Note”), and the other note having a principal balance equal to the excess
of (A) the original principal amount of the Loan, over (B) the amount
of the Defeased Note (collectively, the “Undefeased Note”). The Defeased
Note and Undefeased Note shall have identical terms as the Note except for the
principal balance. The Defeased Note and the Undefeased Note shall not be cross
defaulted or cross collateralized unless the Rating Agencies shall require
otherwise. A Defeased Note may not be the subject of any further defeasance
(but may be prepaid on the same terms as the Note);


 


(v)           Borrower shall execute and deliver to
Lender a Defeasance Security Agreement in respect of the Defeasance Collateral
Account and the Partial Defeasance Collateral;


 


(vi)          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, (A) that Lender has a legal and
valid perfected first priority security interest in the Defeasance Collateral
Account and the Partial Defeasance Collateral, (B) that, if a
Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a
result of the Partial Defeasance Event pursuant to this Section 2.5.2
(assuming a “startup day” (within the meaning of Section 860G(a)(9) of
the Code) that is the earlier of the actual start-up date and the date
specified in clause (a) of the definition of “Release Date” contained
herein), and (C) a non-consolidation opinion with respect to the Successor
Borrower;


 


(vii)         Borrower shall deliver to Lender a
Rating Agency Confirmation as to the Partial Defeasance Event;


 


32

















 


(viii)        Borrower shall deliver to Lender a
certificate of a “big four” or other nationally recognized public accounting
firm acceptable to Lender certifying that the Partial Defeasance Collateral
will generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments;


 


(ix)           Borrower shall deliver to Lender an
Officer’s Certificate certifying that the requirements set forth in this Section 2.5.2(a) have
been satisfied;


 


(x)            After giving effect to the release
of any Individual Properties (including the amount prepaid in Section 2.5.2(a)(ii) above
and including any amount so paid in excess of 100% of the Allocated Loan Amount
for any such Release Properties), the Debt Service Coverage Ratio for the Loan
for the- Individual Properties (excluding the Released Property) shall not be
less than the greater of (i) the Debt Service Coverage Ratio as of the
Closing Date for the Property as of the Closing Date and (ii) the Debt
Service Coverage Ratio for the trailing twelve (12) full calendar months as of
the date immediately preceding the release of the Release Properties for the Property
as of such date; provided that, in order to meet the Debt Service
Coverage Ratio Test set forth in this clause (x), Borrower may defease a
portion of the Loan in excess of the Release Amounts of the affected Individual
Properties;


 


(xi)           Borrower shall continue to comply
with the terms and provisions of Section 3.1.24


 


(xii)          Borrower shall pay all reasonable
out-of-pocket costs and expenses of Lender incurred in connection with the
Partial Defeasance Event, including Lender’s reasonable attorneys’ fees and
expenses, the Rating Agencies’ fees and expenses and any fees assessed by the
Servicer in connection with such Partial Defeasance Event.


 


(b)           If Borrower has elected to make a
partial defeasance and the requirements of this Section 2.5 have
been satisfied, the Individual Property shall be released from the lien of the
Mortgage. In connection with the release of the Lien, Borrower shall submit to
Lender for its review, not less than fifteen (15) days prior to the Partial
Defeasance Date (or such shorter period of time as may be permitted by Lender
in its sole discretion), a release of Lien (and related Loan Documents) to be
executed by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Property is located and that contains standard
provisions protecting the rights of the releasing lender. In addition, Borrower
shall provide all other documentation that a reasonably prudent lender
originating commercial loans for securitization similar to the Loan would
reasonably require to be delivered by Borrower in connection with such release,
together with an Officer’s Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such
release in accordance with the terms of this Agreement. Borrower shall pay all
taxes and all reasonable costs and expenses associated with the release of the
lien of the Mortgage, including Lender’s reasonable attorneys’ fees. Borrower
shall cause title to the Individual Property so released from the lien of the
Mortgage to be transferred to and held by a Person other than Borrower. Except
as set forth in Section 2.4 or this Section 2.5, 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 Mortgage from the Property or any part thereof.


 


33

















 


(c)           If Borrower has elected to make a
partial defeasance and the requirements of this Section 2.5 have
been satisfied, in lieu of the release of the Individual Property in accordance
with Section 2.5.2(b), upon Borrower’s written request not less
than fifteen (15) days prior to the date of the proposed assignment (or such
shorter period of time as may be permitted by Lender in its sole discretion),
Lender shall (i) sever the Note and assign or endorse over a severed note
in the amount equal to the Release Amount for such Individual Property and
assign the applicable Mortgage to any Person designated by Borrower, which
assignment and severance documents shall be in recordable form, (ii) deliver
to or as directed by Borrower the original executed severed note, (iii) deliver
the original recorded copy of the applicable Mortgage in Lender’s possession or,
at Borrower’s sole cost and expense, a certified copy of record, and (iv) execute
and deliver such other instruments of conveyance, assignment, termination,
severance and release (including appropriate UCC statements) in recordable form
as may reasonably be requested by Borrower to evidence such assignment and/or
severance, provided, in each case, without covenant, recourse,
representation (other than representations that such assignment has been duly
authorized and that Lender has not otherwise assigned or encumbered the
applicable Mortgage except as. expressly contemplated therein) or warranty by
Lender and notwithstanding anything to the contrary contained herein, pursuant
to instruments or other documents in form and substance reasonably satisfactory
to Lender. In connection with any transaction contemplated by this Section 2.5.2(c),
Borrower shall submit to Lender for its review, not less than fifteen (15) days
prior to the date of any assignment of a Mortgage (or such shorter period of
time as may be permitted by Lender in its sole discretion), all instruments and
documents to be executed by Lender. In addition, Borrower shall provide all
other documentation Lender reasonably requires to be delivered by Borrower in
connection with such severance and assignment (including, without limitation, a
severed note in the amount equal to the principal balance of the Loan after
giving effect to such assignment), together with an Officer’s Certificate
certifying that such severance and assignment will not impair or otherwise
adversely affect the Liens, security interests and other rights of Lender under
the Loan Documents not being assigned (or as to the parties to the Loan
Documents and the Individual Properties subject to the Loan Documents not being
assigned). All reasonable out-of-pocket costs and expenses incurred by Lender
pursuant to this Section 2.5.2(c) shall be paid by Borrower; provided
that in no event shall Borrower be required to pay any fee or premium to the Lender or the
Servicer in connection therewith..


 


2.5.3            Defeasance Collateral
Account. On or before the date on which Borrower delivers the Total
Defeasance Collateral or Partial Defeasance Collateral, Borrower shall open at
any Eligible Institution the defeasance collateral account (the “Defeasance
Collateral Account”) which shall at all times be an Eligible Account. The
Defeasance Collateral Account shall contain only (a) Total Defeasance
Collateral or the applicable Partial Defeasance Collateral, and (b) cash
from interest and principal paid on the Total Defeasance Collateral or the
applicable Partial Defeasance Collateral. All cash from interest and principal
payments paid on the Total Defeasance Collateral or Partial 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. Following
the payment of all Scheduled Defeasance Payments, any cash from interest and
principal paid on the Total Defeasance Collateral or Partial Defeasance
Collateral in excess of the amounts necessary to pay the Scheduled Defeasance
Payments shall be paid to Borrower or, if there is a Successor Borrower, to
Successor Borrower. Borrower shall cause the Eligible Institution at which the
Total Defeasance Collateral or Partial Defeasance Collateral is deposited


 


34

















 


to enter into an
agreement with Borrower or Successor Borrower, as applicable, and Lender,
satisfactory to Lender in its reasonable discretion, pursuant to which such
Eligible Institution shall agree to hold and distribute the Total Defeasance
Collateral or Partial 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 or Partial Defeasance Collateral for federal, state and
local income tax purposes in its income tax return. Borrower shall prepay or
cause to be prepaid all costs 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. At
Borrower’s election, different Defeasance Collateral Accounts may be
established for each defeasance consummated pursuant to Section 2.5.1
or Section 2.5.2.


 


2.5.4            Successor Borrower. In connection with a Defeasance Event
under this Section 2.5, Borrower shall, if required by the Rating Agencies
or if Borrower elects to do so, establish or designate a successor entity (the “Successor
Borrower”) which shall be a single purpose bankruptcy remote entity and
which shall be approved by the Rating Agencies. Any such Successor Borrower
may, at Borrower’s option, be an Affiliate of Borrower. Borrower shall transfer
and assign all obligations, rights and duties under and to the Note or the
Defeased Note, as applicable, together with the Total Defeasance Collateral or
Partial Defeasance Collateral, as applicable, to such Successor Borrower. Such
Successor Borrower shall assume the obligations under the Note or the Defeased
Note, as applicable, and the Defeasance Security Agreement and Borrower shall
be relieved of its obligations under such documents except to the extent of any
cross-collateralization required hereunder. Borrower shall pay all reasonable
out-of-pocket costs and expenses incurred by Lender, including Lender’s
attorney’s fees and expenses, incurred in connection therewith.


 


III.           REPRESENTATIONS
AND WARRANTIES


 


Section 3.1            Borrower Representations. Borrower represents and warrants as of the date
hereof, except as described on Schedule 3.1 attached hereto, that:


 


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


 


(b)           Borrower’s exact legal name is
correctly set forth in the first paragraph of this Agreement. Borrower is an organization
of the type specified
in the first paragraph of this Agreement. Borrower is incorporated or organized
under the laws of the state specified in the first paragraph of this Agreement.
Borrower’s principal place of business and chief executive office, and the
place where Borrower keeps its books and records, including recorded data of
any kind or nature, regardless of the medium of recording, including software,
writings, plans,


 


35

















 


specifications and
schematics will be the address of Borrower set forth in the first paragraph of
this Agreement (unless Borrower notifies Lender in writing at least thirty (30)
days prior to the date of such change). Propco Borrower’s organizational
identification number, if any, assigned by the state of its incorporation or
organization is 4246414. Propco Borrower’s federal tax identification number is
20-588 1295. Opco Borrower’s organizational identification number, if any,
assigned by the state of its incorporation or organization is 4246416. Opco
Borrower’s federal tax identification number is 20-588 1246. Borrower is not
subject to back-up withholding taxes.


 


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


 


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


 


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


 


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


 


3.1.6            Consents. No consent, approval, authorization or
order of any court or Governmental Authority is required for the execution,
delivery and performance by Borrower of, or compliance by Borrower with, this
Agreement or the consummation of the transactions contemplated hereby, other
than those which have been obtained by Borrower.


 


3.1.7            Title. (a) Borrower
has good, marketable and
insurable fee simple title to the real property comprising part of each
Individual Property and good title to the balance of each Individual Property
owned by it, free and clear of all Liens whatsoever except the Permitted
Encumbrances. The Mortgage, when properly recorded in the appropriate records,
together with any Uniform Commercial Code financing statements required to be
filed in connection


 


36

















 


therewith, will create (i) a
valid, first priority, perfected lien on the Property, subject only to
Permitted Encumbrances and (ii) perfected security interests in and to,
and perfected collateral assignments of, all personalty comprising the Property
(including the Leases), all in accordance with the terms thereof, in each case
subject only to any Permitted Encumbrances. Except as indicated on the Title
Insurance Policy for each Individual Property if insured over by the title
company issuing the Title Insurance Policy for each Individual Property or
those that are contested in accordance with the terms of this Agreement, there
are no mechanics’, materialman’s or other similar liens or claims which have
been filed for work, labor or materials affecting the Property which are or may
be liens prior to, or equal or coordinate with, the lien of the Mortgage. To
Borrower’s knowledge, none of the Permitted Encumbrances, individually or in
the aggregate, materially interfere with the benefits of the security intended
to be provided by the Mortgage and this Loan Agreement, materially and adversely
affect the value of the Property in light of the manner in which the same is
currently being used, impair the use or operations of the Property or impair
Borrower’s ability to pay its obligations in a timely manner.


 


(b)           The Security Agreement, together with
any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create a valid perfected lien and security interest
in, and a perfected collateral assignment of, all personalty of Opco Borrower,
all in accordance with the terms thereof, subject only to any Permitted
Encumbrances.


 


3.1.8            No Plan Assets. As of the date hereof and throughout the term
of the Loan (a) Borrower is not and will not be an “employee benefit plan,”
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), whether or not subject to Title I of ERISA,
or a “plan” as defined in Section 4975 of the Code, (b)none of the assets
of Borrower constitutes or will constitute “plan assets” of one or more such plans
within the meaning of U.S. Department of Labor Regulation 29 C.F.R. Section 2510.3101
(the “Plan Assets Regulation”) and (c) transactions by or with
Borrower are not and will not be prohibited transactions under ERISA.


 


3.1.9            Compliance. Borrower and each
Individual Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes and Prescribed Laws. To Borrower’s knowledge, Borrower is
not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority, the violation of which would materially adversely
affect the condition (financial or otherwise) or business of Borrower. To
Borrower’s knowledge, Borrower has not committed any act which may give any
Governmental Authority the right to cause Borrower to forfeit the Property or
any part thereof or any monies paid in performance of Borrower’s obligations
under any of the Loan Documents. With respect to those Individual Properties
listed on Schedule IX, Borrower hereby represents that no certificate of
occupancy is available or required in order for each such Individual Property
to be in compliance with local zoning rules and regulations in the
jurisdiction where each such Individual Property is located.


 


3.1.10         Financial Information. All financial
data taken as a whole, including, without limitation, the statements of cash flow and
income and operating expense, that have been delivered to Lender in respect of
the Property (other than financial forecasts) fairly present in all material
respects the financial condition of the Property as of the date of such
reports; the


 


37

















 


financial forecasts
delivered to Lender were prepared in good faith by Borrower for its own use in
the ordinary course of business. Borrower does not have any contingent
liabilities other than its liabilities under the Loan Documents, liabilities
for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or
the operation thereof, except as referred to or reflected in said financial
statements. Since the date of the financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower or the Property from that set forth in said financial statements.


 


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


 


3.1.12         Utilities and Public Access. Each Individual Property has rights of access to
public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service such Individual Property for its intended uses.
All roads necessary for the current utilization of the Property for its current
purpose have been dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of the
Property.


 


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


 


3.1.14         Assessments. To Borrower’s
knowledge, there are
no pending or proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor are there any contemplated
improvements to any Individual Property that may result in such special or
other assessments which, in any such case, would have a material adverse effect
on Borrower’s ability to perform its obligations under the Loan Documents.


 


3.1.15         Enforceability. The Loan Documents are not subject to
any right of rescission, set-off, counterclaim or defense by Borrower,
including the defense of usury, nor would the operation of any of the terms of
the Loan Documents, or the exercise of any right thereunder, render the Loan
Documents unenforceable, and Borrower has not asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.


 


3.1.16         Assignment of Leases. The Assignment of Leases creates a valid
assignment of, or a valid security interest in, certain rights under the
Leases, subject only to a license granted to Borrower to exercise certain
rights and to perform certain obligations of the lessor under the Leases, including
the right to operate the Property. No Person other than Lender or Borrower has
any interest in or assignment of the Leases or any portion of the Rents due and
payable or to become due and payable thereunder.


 


3.1.17         Insurance. Borrower has obtained and has delivered
to Lender acceptable evidence of the existence of all of the Policies, with all
premiums due and payable


 


38














 


prepaid thereunder,
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. No Person, including Borrower, has done, by act or omission,
anything which would impair the coverage of any of the Policies.


 


3.1.18         Licenses. All permits and approvals, including
without limitation, certificates of occupancy required by any Governmental
Authority for the use, occupancy and operation of the Property in the manner in
which the Property is currently being used, occupied and operated have been
obtained and are in full force and effect except for such permits and approvals
the absence of which would not result in a material adverse effect on the
financial condition of Borrower or the Individual Property for which Borrower
failed to obtain such permit or approval.


 


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


 


3.1.20         Physical Condition. To Borrower’s knowledge and except as set
forth in the applicable Physical Conditions Report, each Individual 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 any Individual Property,
whether latent or otherwise, and Borrower has not received notice from any
insurance company or bonding company of any defects or inadequacies in any
Individual Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy
of insurance or bond.


 


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


 


3.1.22         Leases. Borrower
represents and
warrants to Lender with respect to the Leases that: (a) the “Major Customer
List” attached hereto as Schedule I is. true, complete and correct in
all material respects, (b)the Leases identified on Schedule I are in
full force and effect and there are no material defaults thereunder by either
party, (c) Borrower has delivered to Lender copies of all Leases with terms in
excess of one (1) year or which generate revenue in excess of Five Hundred
Thousand and No/100 Dollars ($500,000.00) annually, (d) there are no Leases
which contain rights or options of the Tenant thereunder to purchase all or any
part of the Property or require the Borrower to purchase any of the Improvements  other than as set forth on Schedule I, (e) the
copies of the Leases delivered to Lender are true and complete, and there are
no oral agreements with respect thereto, (f) no Rent (including security
deposits) has been paid 


 


39

















 


more than one (1) month
in advance of its due date, (g) all alterations or improvements at each
Individual Property to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable Tenant, (h) any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any Tenant has
already been received by such Tenant and (i) all security deposits are being
held in accordance with Legal Requirements.


 


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


 


3.1.24         Single Purpose. Borrower hereby represents and warrants
to, and covenants with, Lender that as of the date hereof and until such time
as the Debt shall be paid in full:


 


(a)           (1) Propco Borrower does not own and
will not own any asset or property other than (i) the Property, and (ii) incidental
personal property necessary for the ownership or operation of the Property and (2)
Opco Borrower does not own and will not own any asset or property other than
the personalty and other assets owned by it necessary for the operation of the
Property.


 


(b)           (1) Propco Borrower will not engage
in any business other than the ownership, management and operation of the
Property and (2) Opco Borrower will not engage in any business other than the
management and operation of the Property, and each Borrower will conduct and
operate its business as presently conducted and operated.


 


(c)           Borrower will not enter into any
contract or agreement with any Affiliate of Borrower, any constituent party of
Borrower or any Affiliate of any constituent party, except upon terms and
conditions that are commercially reasonable (taking into account all facts and
be available on an arm’s-length basis with third parties other than any such
party or a capital contribution or distribution.


 


(d)           Borrower has not incurred and will
not incur any Indebtedness other than (i) the Debt, (ii). unsecured trade
payables and operational debt not evidenced by a note and (iii) Indebtedness
incurred in the financing of equipment and other personal property used on the
Property; provided that any Indebtedness incurred pursuant to subclauses
(ii) and (iii) shall be (x) not in excess of 5% of the outstanding principal amount of the Loan in the
aggregate, (y) paid not more than sixty (60) days from the date incurred as to
the matters in subclause (ii) above and not more than sixty (60) days from the
date due as to the matters in subclause (iii) above and (z)


 


40

















 


incurred in the ordinary
course of business. No Indebtedness other than the Debt may be secured
(subordinate or pari passu) by the Property other than
Indebtedness of the type described in and subject to the requirements of clause
(iii) of this clause (d).


 


(e)           Except as expressly contemplated by
the Loan Documents with respect to the other Borrower, Borrower has not made
and will not make any loans or advances to any third party (including any
Affiliate or constituent party), and shall not acquire obligations or
securities of any of its Affiliates.


 


(f)            Borrower is and will remain solvent
and Borrower will pay all of its debts and liabilities (including, as
applicable, a fairly allocated portion of shared personnel and overhead
expenses) only from its own assets and as the same shall become due.


 


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


 


(h)           Borrower will maintain all of its
books, records, financial statements (it being acknowledged that the agent
under the Cash Management Agency Agreement shall be continuously able to produce
separate balance sheets of the Borrowers) and (except as contemplated in the
Cash Management Agency Agreement) bank accounts separate from those of its
Affiliates and from those of any other Person. Borrower’s assets 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 (i) appropriate notation shall be made on
such consolidated financial statements (and/or in Annual Reports on Form 10-K
filed with U.S. Securities and Exchange Commission in which such financial
statements are contained) to indicate the separateness of Borrower and such
Affiliates and to indicate that Borrower’s assets and credit are not available
to satisfy the debts and other obligations of such Affiliates or any other
Person and (ii) such assets are continuously able to be listed on Borrower’s
own separate balance sheet. Borrower will file its own tax returns (to the
extent Borrower is required to file tax returns). Borrower shall maintain its
books, records, resolutions and agreements as official records.


 


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


 


41

















 


Agency Agreement, in
which event, such counterparty shall nevertheless identify the Borrower as the
party on whose behalf the payment or communication is being made).


 


(j)            Borrower will maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.


 


(k)           Neither Borrower nor any constituent
party will seek or effect the liquidation, dissolution, winding up,
consolidation or merger, in whole or in part, of Borrower.


 


(l)            Except as expressly contemplated by
the Loan Documents and the Cash Management Agency Agreement, Borrower will not
commingle the funds or other assets of Borrower with those of any Affiliate or
constituent party or any other Person, and will hold all of its assets in its
own name.


 


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


 


(n)           Except as expressly contemplated by
the Loan Documents with respect to the other Borrower, Borrower will not
guarantee or become obligated for the debts of any other Person and does not
and will not hold itself out to be responsible for or have its credit available
to satisfy or hold out its credit as being available to satisfy the debts or
obligations of any other Person.


 


(o)           (i) If Borrower is a limited
partnership or a limited liability company, (other than a single member limited
liability company that satisfies all of the requirements of Section 3.1.24(o)(ii)),
each general partner or managing member (each, an “SPC Party”) of
Borrower shall be a corporation or single member limited liability company that
satisfies all of the requirements of Section 3.1.24(o)(ii) whose sole
asset is a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is
an entity formed under the laws of Delaware) and each such SPC Party will at
all times comply with each of the representations, warranties, and covenants
contained in this Section 3.1.24 as if such representation, warranty or
covenant was made directly by such SPC Party (substituting the term “SPC Party”
for the term “Borrower” throughout) and will cause Borrower to comply with this
Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon
the withdrawal or the disassociation of an SPC Party from Borrower, Borrower
shall immediately appoint a new SPC Party whose constituent documents are
substantially similar to those of the withdrawing or disassociating SPC Party
and deliver a new non-consolidation opinion to the Rating Agency or Rating
Agencies, as applicable, with respect to the new SPC Party and its equity
owners. If Borrower is a limited partnership, Borrower shall have at least one
general partner. If Borrower is a limited liability company (other than a
single-member limited liability company that satisfies all of the requirements
of Section 3.l.24(o)(ii)), Borrower shall have at least one (1) managing
member. An SPC Party shall be organized for the sole purpose of owning a
direct interest in the Borrower, shall own no other interests in any entity,
and shall not incur indebtedness except as it may be liable for the debts of
the Borrower in its capacity as general partner of the Borrower.


 


42

















 


(ii)           If Borrower is a single member
limited liability company (“single member limited liability company”
meaning a limited liability company having only one equity member), Borrower
shall be a limited liability company organized under the laws of Delaware and
shall have either (A) two (2) non-equity members or (B) at least two springing
members, one of which, upon the dissolution of such sole member or the
withdrawal or the disassociation of the sole member from Borrower, shall
immediately become the sole member of Borrower, and the other of which shall
become the sole member of Borrower if the first such springing member no longer
is available to serve as such sole member.


 


(p)           Borrower or its SPC Party shall at
all times cause there to be at least two duly appointed Independent Directors,
who are provided by a nationally recognized company that provides professional
independent directors, of each SPC Party and of Borrower if Borrower is a
single member limited liability company. As used herein, “Independent
Director” shall mean a natural person serving as a director of a
corporation or manager of a limited liability company who is not at the time of
initial appointment, or at any time while serving, and has not been at any time
during the preceding five (5) years: (a) a stockholder or director (with the
exception of serving as the Independent Director of Borrower or any SPC Party
that is an SPC Party or managing member of Borrower), trustee, officer,
employee, partner, member, attorney or counsel of SPC Party, Borrower or any
affiliate of either of them; (b) a creditor, customer, supplier or other person
who derives any of its purchases or revenues from its activities with SPC
Party, Borrower or any affiliate of either of them; (c) a person or other
entity controlling or under common control with any Person excluded from
serving as Independent Director under subparagraph (a) or (b); or (d) a member
of the immediate family of any Person excluded from serving as Independent
Director under subparagraph (a) or (b). As used in this definition, the term “affiliate”
means any person controlling, under common control with, or controlled by the person
in question; and the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a person or entity, whether through ownership of
voting securities, by contract or otherwise. A natural person who satisfies the
foregoing definition other than subparagraph (b) shall not be disqualified from
serving as an Independent Director if such individual has been provided by a
nationally-recognized company that provides professional independent directors.
A natural person who otherwise satisfies the foregoing definition except for
being the Independent Director of a “special purpose entity” affiliated with
Borrower or SPC Party shall not be disqualified from serving as an Independent
Director of Borrower or SPC Party if such “special purpose entity” does not own
a direct or indirect equity interest in Borrower or in any co-borrower of
Borrower and if such individual is an
independent director provided by a nationally-recognized company that
provides professional independent directors. For purposes of this paragraph, a “special
purpose entity” is an entity, whose organizational documents contain
restrictions on its activities substantially similar to those set forth in Section
3.1.24 of this Agreement.


 


(q)           Borrower shall not cause or permit
the board of directors, trustees or managers of any SPC Party or of Borrower to
take any action which, under the terms of any certificate of incorporation,
bylaws or any voting trust agreement with respect to any common stock or under
any organizational document of Borrower or SPC Party, requires the vote or
consent of such Independent Directors unless at the time of such action there
shall be at least two Independent Directors then serving in such capacity who
have provide the required vote or consent.


 


43

















 


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


 


(s)           Borrower will not permit any
Affiliate or constituent party independent access to its bank accounts (subject
to the requirements hereof, and except with respect to the agency relationships
contemplated by the Cash Management Agency Agreement and the Cash Management
Agreement).


 


(t)            Borrower will pay the salaries of
its own employees (if any) from its own funds and maintain a sufficient number
of employees in light of its contemplated business operations; provided, however,
that zero employees may be sufficient for such operations given the services
provided to Borrower by other entities and that Borrower may lease employees on
a full or part-time basis pursuant to arms length terms.


 


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


 


(v)           Borrower will not buy or hold
indebtedness issued by any other Person (other than cash and investment grade
securities).


 


(w)          Except as expressly contemplated by
the Loan Documents with respect to the other Borrower, Borrower will not pledge
its assets to secure the obligations of any other Person.


 


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


 


(y)           Borrower will not engage in any
Bankruptcy Action without the written consent of two Independent Directors of
Borrower or SPC Party. As used herein, “Bankruptcy Action” shall mean, with
respect to any Person, to institute proceedings to have such Person be
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against such
Person or file a petition seeking, or consent to, reorganization or relief-with
respect to such Person under any applicable federal or state law relating to
bankruptcy or insolvency, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of such
Person or a substantial part of its property, or make any assignment for the
benefit of creditors of such Person, or admit in writing such Person’s inability
to pay its debts generally as they become due, or take action in furtherance of
any such action.


 


(z)            Neither (a) ART Mortgage Borrower
Propco GP 2006-3 LLC, a Delaware limited liability company (the “Propco
Borrower GP”), the general partner of Propco Borrower, nor (b) ART Mortgage Borrower Opco GP 2006-3 LLC,
a Delaware limited liability company (the “Opco Borrower GP”, and
together with PropCo Borrower GP, individually or collectively,


 


44

















 


as the context may
require, “Borrower GP”), the general partner of Opco Borrower, will own
any asset or property other than (A) its respective general partnership
interest in Propco Borrower or Opco Borrower, as the case may be, and (B) incidental
personal property necessary for the ownership of such interest or operation of
Propco Borrower or Opco Borrower, as applicable.


 


(aa)         Neither Borrower GP will engage in any
business other than being and acting as general partner of Propco Borrower or
Opco Borrower, as the case may be, and will conduct and operate its business as
presently conducted.


 


(bb)         Neither Borrower GP has incurred or
will incur any Indebtedness except as it may be liable for the debts of Propco
Borrower or Opco Borrower, as the case may be, in its capacity as general
partner of the Propco Borrower or Opco Borrower, as the case may be.


 


(cc)         Except as it is liable in its capacity
as general partner of Propco Borrower or Opco Borrower, as the case may be,
neither Borrower GP will guarantee or become obligated for the debts of any
other Person and does not and will not hold itself out to be responsible for or
have its credit available to satisfy or hold its credit as being available to
satisfy the debts or obligations of any other Person.


 


(dd)         Neither Borrower GP will form, acquire
or hold any subsidiary or own any equity interest in any other entity other
than Propco Borrower or Opco Borrower, as the case may be.


 


3.1.25         Tax Filings. To the extent required, Borrower timely
has filed (or has obtained effective extensions for filing) all federal, state
and local tax returns required to be filed and has paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower.


 


3.1.26         Solvency. Borrower (a) has
not entered into the transaction or any Loan Document with the actual intent to hinder,
delay, or defraud any creditor and (b) has 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 making of the Loan, exceed Borrower’s total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities.
The fair saleable value of Borrower’s assets is and will, immediately following
the making of the Loan, be greater than Borrower’s probable liabilities,
including the maximum amount of its contingent liabilities on its debts as such
debts become absolute and matured. Borrower’s assets do not and, immediately
following the making of the Loan will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
Borrower does not intend to, and does not believe that it will, incur
Indebtedness and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such Indebtedness and liabilities as
they mature (taking into account the timing and amounts of cash to be received
by Borrower and the amounts to be payable on or in respect of obligations of
Borrower).


 


3.1.27         Federal Reserve Regulations. No part of the proceeds of the Loan will
be used by Borrower 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


 


45

















 


other purpose which would
be inconsistent with such Regulation U or any other Regulations of such Board
of Governors, or for any purposes prohibited by Legal Requirements or by the
terms and conditions of this Agreement or the other Loan Documents.


 


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


 


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


 


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


 


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


 


3.1.32         Intentionally Omitted.


 


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


 


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


 


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


 


3.1.36         Intentionally Omitted.


 


3.1.37         No Change in Facts or Circumstances;
Disclosure.
To Borrower’s knowledge, there has been no material adverse change in any
condition, fact, circumstance or event that would make the financial
statements, reports, certificates or other documents submitted in connection
with the Loan inaccurate, incomplete or otherwise misleading in any


 


46

















 


material respect or that
otherwise materially and adversely affects the business operations or the
financial condition of Borrower or the Property.


 


3.1.38         Property Management. (a) Each agreement comprising the Cash
Management Agency Agreement is in full force and effect and there is no default
by any party thereto and no event has occurred that, with the passage of time
and/or the giving of notice, would constitute a default thereunder.


 


(b)           The Management Agreement is in full
force and effect and there is no default by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice, would
constitute a default thereunder.


 


3.1.39     Perfection of Accounts. Borrower hereby represents and
warrants to


 


Lender
that:


 


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


 


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


 


(c)           Pursuant and subject to the terms
hereof, Agent has agreed to comply with all instructions originated by Lender,
without further consent by Borrower, directing disposition of the Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including
proceeds of sales and other dispositions), whether accounts, general
intangibles, chattel paper, deposit accounts, instruments, documents or
securities; and


 


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


 


3.1.40         Agreements. 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 is bound which default is reasonably likely to
materially and adversely effect Borrower or its business, properties or assets,
operations or financial condition, financial or otherwise.


 


3.1.41         Intentionally Omitted.


 


3.1.42         SPE Separateness Covenants. Borrower hereby represents that it has
complied with the separateness covenants contained in its organizational
documents since its formation and in place from time to time.


 


47

















 


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


 


IV.           BORROWER COVENANTS


 


Section 4.1            Borrower Affirmative Covenants. Borrower hereby covenants


 


and
agrees with Lender that:


 


4.1.1            Existence; Compliance
with Legal Requirements. Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with all
Legal Requirements applicable to it and the Property, including, without
limitation, Prescribed Laws.


 


4.1.2            Taxes and Other Charges. Borrower shall
pay all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Property or any part
thereof as the same become due and payable; provided,  however,
Borrower’s obligation to directly pay Taxes shall, during the continuance of a
Trigger Period, be suspended for so long as Borrower complies with the terms
and provisions of Section 6.2 hereof. Borrower shall furnish to Lender
receipts for the payment of the Taxes and the Other Charges prior to the date
the same shall become delinquent; provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 6.2 hereof. Borrower shall not
permit or suffer and shall promptly discharge any lien or charge against the
Property (but subject to the foregoing provisions of this Section 4.1.2).
After prior notice to Lender (unless subclause (v)(y) of this Section 4.1.2
is applicable), Borrower, at its own expense, may contest by appropriate legal
proceeding, conducted in good faith and with due diligence, the amount or validity
of any Taxes or Other Charges, provided that (i) no Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with all applicable statutes, laws and ordinances; (iii)
neither the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost during the pendency of
such contest; (iv) unless subclause (v)(y) of this Section 4.1.2 is
applicable, 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) either (x) such
proceeding shall suspend the collection of Taxes or Other Charges from the
Property or (y) Borrower shall have paid or discharged by bond or otherwise all
of the Taxes or Other Charges under protest; and (vi) unless subclause (v)(y) of
this Section 4.1.2 is applicable, Borrower shall have furnished such
security (if any) as may be required in the proceeding, or as may be reasonably
requested by Lender to insure the payment of any contested Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant
is established.


 


48














 


4.1.3            Litigation. Borrower shall give
prompt notice to Lender of any litigation or governmental proceedings pending or
threatened against Borrower which is not covered by insurance and could
reasonably be expected to materially adversely affect the Property or Borrower’s
ability to perform its obligations hereunder or under the other Loan Documents.


 


4.1.4            Access to Property. Borrower shall permit agents,
representatives and employees of Lender, at Lender’s sole cost and expense
(unless an Event of Default shall have occurred and be continuing, in which
case such inspection shall be at Borrower’s sole cost and expense), to inspect
the Property or any part thereof at reasonable hours upon reasonable advance
notice subject to the terms of the Leases, and provided such entry and
inspection shall not unreasonably interfere with the usual operation and
conduct of business at the Property or the use and enjoyment of the Property by
Borrower or its tenants, customers and guests.


 


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


 


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


 


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


 


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


 


(b)           Borrower shall furnish Lender
annually, within one hundred twenty (120) days following the end of each Fiscal
Year, a complete copy of Guarantor’s annual- financial statements audited by a “Big
Four” accounting firm or other independent certified public accountant
acceptable to Lender prepared in accordance with GAAP, which audited financial
statements shall include a balance sheet for Guarantor and shall be
supplemented by schedules covering the Property which include statements of
income and expense for the Property and the so-called “key performance
indicators” utilized by Borrower (which shall be prepared in a manner
consistent with Borrower’s then-current practices). Such schedules shall set
forth gross revenue and operating expenses for the Property. Guarantor’s annual
financial statements (as supplemented pursuant to the preceding sentence) shall
be accompanied by (x) a certificate executed by the chief financial
officer (or its equivalent) of Guarantor stating that such annual financial
statement presents fairly the financial condition and the results of operations
of Guarantor and (y) a certificate executed by the chief financial officer
(or its equivalent) of


 


49

















 


Borrower stating that the
schedules attached to such annual financial statement presents fairly the
financial operating condition and the results of operations of Borrower and the
Property. Together with such annual financial statements, Borrower shall
furnish to Lender an Officer’s Certificate certifying as of the date thereof
whether to the best of Borrower’s knowledge there exists an event or
circumstance which constitutes a Default or Event of Default by Borrower under
the Loan Documents and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.


 


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


 


(i)            quarterly and year-to-date
statements of income and expense prepared for such quarter with respect to the
Property;


 


(ii)           a calculation reflecting the Debt
Service Coverage Ratio as of the last day of such quarter;


 


(iii)          a “Major Customer List” for the
Property, and such other reasonable information requested by Lender with
respect to such “Major Customers” and listing all newly-leased space or
customers at each Individual Property and such information as Lender may
reasonably request regarding same;


 


(iv)          from and after the occurrence of an
Event of Default or special servicing of the Loan for any reason whatsoever, a
reconciliation of the budgeted income and expenses and the actual income and
expenses for such quarter and year-to-date for the Property, prepared by Borrower
in a manner consistent with its past practices; and


 


(v)           any notice received from a Tenant
threatening non-payment of an amount of Rent that is material in light of the
Underwritable Cash Flow of the Individual Property to which such threatened non-payment
relates or other default, alleging- or acknowledging a default by landlord,
requesting a termination of a Lease or a material modification of any Lease or
notifying Borrower of the exercise or non-exercise of any material option
provided for in such Tenant’s Lease, or any other similar material
correspondence received by Borrower from Tenants during the subject fiscal
quarter, in each case only if the same is material in light of the
Underwritable Cash Flow of the Individual Property to which it relates.


 


(d)           Intentionally Omitted.


 


(e)           Borrower shall submit the Annual
Budget to Lender within thirty (30) days following the commencement of each
Fiscal Year (or as soon thereafter as the Board of Trustees of Guarantor has
approved the same). During the continuation of a Cash Trap Period or an Event
of Default only, discretionary operating and capital expense items contained in
said Annual Budget (and no other matters contained therein) shall be subject to
Lender’s approval (such approval not to be unreasonably withheld, conditioned
or delayed). Each Annual Budget


 


50

















 


shall set forth in
reasonable detail budgeted monthly operating income and monthly operating and
capital expenses and other cash expenses for the Property. If Lender’s approval
is required hereunder, (i) in the event Lender objects to any
discretionary operating and capital expense item contained in a proposed Annual
Budget, Lender shall advise Borrower of such objections in writing within ten (10) Business
Days after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections), and Borrower shall revise such Annual Budget
within five (5) Business
Days after receipt of such notice and resubmit the same to Lender; and (ii) Lender
shall advise Borrower in writing of any reasonable objections to any
discretionary operating and capital expense items contained in such revised
Annual Budget within five (5) Business Days after receipt thereof (and
deliver to Borrower a reasonably detailed description of such objections), and
Borrower shall revise such Annual Budget in accordance with the process
described in this Section until Lender approves all of the discretionary
operating and capital expense items contained in such Annual Budget. Each
Annual Budget which contains discretionary operating and capital expense items
approved or deemed approved by Lender in accordance with the terms hereof shall
be referred to herein as an “Approved Annual Budget”. If Lender’s
approval is required hereunder, until such time that Lender approves all of the
discretionary operating and capital expense items contained in such proposed
Annual Budget, with respect to any discretionary operating and capital expense
items contained therein, an increase in an amount equal to the increase in the
Consumer Price Index for All Urban Consumers since the most recently Approved
Annual Budget shall be permitted with respect to such discretionary operating
and capital expense items. Any proposed Annual Budget submitted for Lender’s
approval of the discretionary operating and capital expense items contained
therein pursuant to this Section 4.1.6(e) which
states at the top of such submittal “THIS
ANNUAL BUDGET IS BEING SUBMITTED FOR APPROVAL OF THE DISCRETIONARY OPERATING
AND CAPITAL EXPENSE ITEMS CONTAINED THEREIN PURSUANT TO SECTION 4.1.6(e) OF
THE LOAN AGREEMENT. THE OPERATING AND CAPITAL EXPENSE DISCRETIONARY ITEMS
CONTAINED IN THIS - ANNUAL BUDGET SHALL BE
DEEMED APPROVED BY LENDER IF LENDER DOES NOT NOTIFY BORROWER IN WRITING OF ITS
DISAPPROVAL, TOGETHER WITH THE GROUNDS FOR SUCH DISAPPROVAL, WITHIN TEN (10) BUSINESS
DAYS,” shall be
deemed approved if Lender shall have not notified Borrower in writing of its
disapproval (together with a reasonably detailed statement of the grounds of
such disapproval) within ten (10) Business Days after Borrower has
submitted such Annual Budget in such manner to Lender. Any revised proposed
Annual Budget resubmitted for Lender’s approval of the discretionary operating
and capital expense items contained therein pursuant to this Section 4.1.6(e) due
to Lender’s reasonable objections to any discretionary operating and capital
expense items contained in an Annual Budget previously submitted to Lender
pursuant to this Section 4.1.6(e) which states at the top of such submittal “THIS ANNUAL BUDGET IS BEING RESUBMITTED FOR APPROVAL OF THE
DISCRETIONARY OPERATING AND CAPITAL EXPENSE ITEMS CONTAINED THEREIN PURSUANT TO
SECTION 4.1.6(e) OF THE LOAN AGREEMENT. THE DISCRETIONARY OPERATING AND
CAPITAL EXPENSE ITEMS CONTAINED IN THIS
REVISED ANNUAL BUDGET SHALL BE
DEEMED APPROVED BY LENDER IF LENDER DOES NOT NOTIFY BORROWER IN WRITING OF ITS
DISAPPROVAL, TOGETHER WITH THE GROUNDS FOR SUCH DISAPPROVAL, WITHIN FIVE (5) BUSINESS
DAYS,” shall be deemed approved if Lender shall have not notified
Borrower in writing of its disapproval 


 


51

















 


(together with a
reasonably detailed statement of the grounds of such disapproval) within five (5) Business
Days after Borrower has submitted such revised Annual Budget in such manner to
Lender.


 


(f)            If, at the time one or more
Disclosure Documents are being prepared for a Securitization, Lender expects
that Borrower alone or Borrower and one or more Affiliates of Borrower
collectively, or the Property and Related Property collectively, will be a
Significant Obligor, Lender will so notify Borrower in writing and Borrower
shall furnish to Lender upon written request (i) the selected financial
data or, if applicable, Underwritable Cash Flow, required under Item 1112(b)(l) of
Regulation AB, if Lender expects that the principal amount of the Loan together
with any Related Loans as of the cut-off date for such Securitization may, or
if the principal amount of the Loan together with any Related Loans as of the
cut-off date for such Securitization and at any time during which the Loan and
any Related Loans are included in a Securitization does, equal or exceed ten
percent (10%) (but less than twenty percent (20%)) of the aggregate principal
amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization or (ii) the financial statements
required under Item 111 2(b)(2) of Regulation AB, if Lender expects that
the principal amount of the Loan together with any Related Loans as of the
cut-off date for such Securitization may, or if the principal amount of the
Loan together with any Related Loans as of the cut-off date for such
Securitization and at any time during which the Loan and any Related Loans are
included in a Securitization does, equal or exceed twenty percent (20%) of the
aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in the Securitization. Such financial data or
financial statements shall be furnished to Lender (A) within ten (10) Business
Days after notice from Lender in connection with the preparation of Disclosure
Documents for the Securitization, (B) not later than thirty (30) days
after the end of each fiscal quarter of Borrower and (C) not later than
seventy-five (75) days after the end of each fiscal year of Borrower; provided,
however, that Borrower shall not be obligated to furnish financial data
or financial statements pursuant to clauses (B) or (C) of this
sentence with respect to any period for which a filing pursuant to the Exchange
Act in connection with or relating to the Securitization is not required. If
requested by Lender, Borrower shall furnish to Lender financial data and/or
financial statements for any Tenant of any of the Individual Properties if
available to Borrower and Borrower is not restricted from disclosing the same
to Lender by such Tenant and if, in connection with a Securitization, Lender
expects there to be, with respect to such Tenant or group of affiliated
Tenants, a concentration within all of the mortgage loans included or expected
to be included, as applicable, in the Securitization such that such Tenant or
group of affiliated Tenants would constitute a Significant Obligor.


 


(g)           If requested by Lender, Borrower
shall provide such financial and other information as shall be required
pursuant to Regulation AB in connection with a Securitization.


 


(h)           All financial data and financial
statements provided by Borrower pursuant to Section 4.1.6(f) or
Section 4.1.6(g) shall meet the requirements of Regulation AB
and other applicable legal requirements, if required by Lender.


 


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


 


52

















 


4.1.8            Estoppel Statement. (a) After
request by Lender, Borrower shall within ten (10) Business Days furnish Lender with a
statement, duly acknowledged and certified, stating to the best of Borrower’s
knowledge (i) the unpaid principal amount of the Note, (ii) the
Applicable Interest Rate of the Note, (iii) the date installments of
interest and/or principal were last paid, (iv) any offsets or defenses to
the payment of the Debt, if any, and (v) that this Agreement and the other
Loan Documents have not been modified or if modified, giving particulars of
such modification.


 


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


 


4.1.9            Leases. (a) All
Leases and all renewals of Leases executed after the date hereof shall (i) be on commercially
reasonable terms, (ii) provide that such Lease is subordinate to the
Mortgage and that the lessee will attorn to Lender and any purchaser at a
foreclosure sale (provided, however, that Borrower shall be
required only to use commercially reasonable efforts to obtain such
subordination and attornment provisions in the Warehouse Agreements) and (iii) not
contain any terms which would materially adversely affect Lender’s rights under
the Loan Documents. Any Major Leases and all renewals, amendments and
modifications thereof executed after the date hereof shall be subject to Lender’s
prior approval, which approval shall not be unreasonably withheld or delayed,
and subject to delivery by Borrower of a Rating Agency Confirmation with
respect to such Major Lease. Borrower shall pay all reasonable actual
out-of-pocket costs and expenses (including reasonable attorney’s fees but - excluding internal fees) incurred by
Lender or Servicer in connection with its review of a Major Lease, including,
without limitation, the fees and charges of the Rating Agencies. Lender shall
execute and deliver a Subordination Non-Disturbance and Attornment Agreement in
the form annexed as Schedule IV to the Tenant under any future Major
Lease approved by Lender or any other Lease entered into, subject to and in
accordance with this Section 4.1.9(a) promptly upon request
with such commercially reasonable changes as may be requested by the Tenant,
from time to time, and which are reasonably acceptable to Lender, provided
that Borrower shall pay all reasonable costs and expenses incurred by Lender in
connection with such Subordination Non-Disturbance and Attornment Agreement.


 


(b)           Borrower:


 


(i)            shall observe and perform, or cause
to be observed and performed, in a commercially reasonable manner the material
obligations imposed upon the lessor under Leases in which Borrower is the
lessor;


 


(ii)           shall enforce, or cause to be
enforced as against, the lessees, in a commercially reasonable manner the
material terms, covenants and conditions contained in the Leases under which
Borrower is the lessor, provided, however, Borrower shall
not terminate or accept a surrender of a Major Lease without Lender’s prior
approval (which approval may be conditioned upon receipt by Lender of a Rating
Agency Confirmation) and shall not terminate or


 


53

















 


accept a surrender of any
other Lease without Lender’s approval, unless such termination or surrender,
when taken together with any replacement Lease(s), will not have a material
adverse effect on the applicable Individual Property;


 


(iii)          shall not collect, or cause or permit
to be collected, any of the Rents more than one (1) month in advance and
shall not grant its approval of Manager’s collection of any of the Rents more
than one (1) month in advance (other than security deposits);


 


(iv)          shall not grant any assignment of
lessor’s interest in the Leases or the Rents (except as contemplated by the
Loan Documents);


 


(v)           intentionally omitted; and


 


(vi)          in its capacity as lessor, shall hold
all security deposits under all Leases in accordance with Legal Requirements
and upon request, shall furnish Lender with executed copies of all Leases.


 


(c)           Any proposed Lease, or any amendment,
modification or termination of a Lease, that in each case requires Lender’s
consent pursuant to this Section 4.1.9 which is, in each case,
accompanied by a summary of the material terms of such document(s) (including
any economic terms and any termination options) and which states at the top of
such submittal “THIS IS A REQUEST FOR
APPROVAL OF A LEASE, AMENDMENT, MODIFICATION OR TERMINATION OF A LEASE PURSUANT
TO SECTION 4.1.9 OF THE LOAN AGREEMENT. THIS LEASE, OR AN AMENDMENT,
MODIFICATION OR TERMINATION THEREOF SHALL BE DEEMED APPROVED BY LENDER IF
LENDER DOES NOT NOTIFY BORROWER IN WRITING OF ITS DISAPPROVAL, TOGETHER WITH
THE GROUNDS FOR SUCH DISAPPROVAL, WITHIN FIFTEEN (15) CALENDAR DAYS,” shall be
deemed approved if Lender shall have not notified Borrower in writing
of its disapproval (together with a statement of the grounds of such
disapproval) within fifteen (15) calendar days after Borrower has submitted
such Lease, or any such amendment, modification or termination of a Lease in
such manner to Lender.


 


(d)           Borrower shall use good faith efforts
to obtain, within sixty (60) days after Lender’s request therefor,
Subordination, Non-Disturbance and Attornment Agreements in the form annexed as
Schedule IV from all Major Tenants then in existence.


 


4.1.10         Alterations. (a) Lender’s
prior approval shall be required in connection
with any (i) Alterations
to any Improvements (except tenant improvements under any Lease approved by
Lender or Alterations required in order to comply with applicable Legal
Requirements) that would reasonably be expected to have a material adverse
effect on Borrower’s financial condition, the value of the Property or the
ongoing cash flow of the Property or (ii) any Alterations that are
structural in nature to any Improvements (except tenant improvements under any
Lease approved by Lender or Alterations required in order to comply with
applicable Legal Requirements), the aggregate cost of which (including any
related structural Alteration) is reasonably anticipated to exceed the
Alteration Threshold, which approval shall not be unreasonably withheld,
conditioned or delayed. If the total unpaid amounts incurred and to be incurred
with respect to such Alterations set forth in clause (i) and (ii) above


 


54

















 


(whether or not Lender’s
prior approval is required with respect to such Alterations), shall at any time
exceed the Alteration Threshold, Borrower shall promptly deliver to Lender, at
Borrower’s option, but subject to the next succeeding sentence, any one or more
of the following: (A) as security for the payment of such amounts and as
additional security for Borrower’s obligations under the Loan Documents any of
the following: (1) cash, (2) Letters of Credit, (3) U.S.
Obligations, (4) other securities acceptable to Lender, provided that
Lender shall have received a Rating Agency Confirmation as to the form and
issuer of same, or (5) a completion bond, provided that Lender shall have
received a Rating Agency Confirmation as to the form and issuer of same (any of
the foregoing, “Alteration Security”) and/or (B) a guaranty in the
form attached as Schedule XII from Guarantor or a Person with an
Investment Grade Rating reasonably acceptable to Lender containing the “Guaranteed
Obligations” as defined therein (each, an “Alteration Guaranty” any
Alteration Security and/or Alteration Guaranty so delivered are collectively,
the “Alteration Collateral”). The amount of the Alteration Security
together with the amount of the “Guaranteed Obligations” under any Alteration
Guaranty delivered pursuant to this Section 4.1.10 shall be in an
amount (the “Excess Alteration Amount”) equal to the excess of the total
unpaid amounts to be incurred with respect to such Alterations (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold, which required amount (y) shall be reduced as such
Alteration progresses in an amount which is commensurate with the amount
expended in connection with such Alteration and (z) in the case of any Capital
Expenditures, shall be reduced by the amount of any Capital Expenditure Funds
on deposit at the time such Alteration is commenced. If the Alteration Guaranty
delivered in accordance with this Section 4.1.10 is by Guarantor,
and the aggregate potential liability of Guarantor pursuant to such Alteration
Guaranty and any and all other guarantees and indemnities delivered by
Guarantor pursuant to this Agreement and the other Loan Documents (excluding
for these purposes the Guaranty) exceeds ten percent (10%) of the outstanding
principal amount of the Loan, then Borrower shall have delivered to Lender a
new non-consolidation opinion acceptable to the Rating Agencies which states
that the existence of such Alteration Guaranty does not alter any of the conclusions
contained in any non-consolidation opinion previously delivered to Lender in
connection with the Loan. If any other Person other than Guarantor delivers an
Alteration Guaranty in accordance with this Section 4.1.10,
Borrower shall have delivered to Lender a new non-consolidation opinion
acceptable to the Rating Agencies which states that the existence of such
Alteration Guaranty does not alter any of the conclusions contained in any
non-consolidation opinion previously delivered to Lender in connection with the
Loan and which includes an additional pairing between Borrower and such other
Person. Lender hereby agrees to accept on a several (but not joint) basis the
aggregate Alteration Collateral required pursuant to this Section 4.1.10
in such proportions as Borrower may specify. Any and all Alterations shall be
performed in compliance with all Legal Requirements in a manner that does not
significantly disrupt the business otherwise conducted at each Individual
Property. Upon completion of the Alterations to which any security delivered by
Borrower pursuant to this Section 4.1.10 relates, Lender shall
promptly return such excess security to Borrower.


 


(b)           Any proposed Alteration that requires
Lender’s consent pursuant to this Section 4.1.10 which is, in each
case, accompanied by a reasonably detailed description of the Alteration and
the plans and specifications therefor and which states at the top of such
submittal “THIS IS A REQUEST FOR APPROVAL OF
AN ALTERATION PURSUANT TO SECTION 4.1.10 OF THE LOAN AGREEMENT. THIS
ALTERATION SHALL BE


 


55

















 


DEEMED
APPROVED BY LENDER IF LENDER DOES NOT NOTIFY BORROWER IN WRITING OF ITS
DISAPPROVAL, TOGETHER WITH THE GROUNDS FOR SUCH DISAPPROVAL, WITHIN FIFTEEN
(15) BUSINESS DAYS,” shall be deemed approved if Lender shall have not notified Borrower in
writing of its disapproval (together with a reasonably detailed statement of
the grounds of such disapproval) within fifteen (15) Business Days after
Borrower has submitted such request for approval of a proposed Alteration in
such manner to Lender.


 


4.1.11         Intentionally Omitted.


 


4.1.12         Material Agreements. Borrower
shall, to the extent Borrower’s failure to so act would cause a material adverse effect upon
Borrower’ ability to perform its obligations under this Agreement or the other
Loan Documents, (a) promptly perform and/or observe all of the material
covenants and agreements required to be performed and observed by it under each
Material Agreement to which it is a party, and do all things necessary to
preserve and to keep unimpaired its rights thereunder unless the other party
thereunder is in default of its obligations to Borrower, (b) promptly
notify Lender in writing of the giving of any notice of any default by any
party under any Material Agreement of which it is aware and (c) promptly
enforce the performance and observance of all of the material covenants and
agreements required to be performed and/or observed by the other party under
each Material Agreement to which it is a party in a commercially reasonable
manner.


 


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


 


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


 


4.1.15         Business and Operations. Borrower will continue to engage in the
businesses currently conducted by it as and to the extent the same are
necessary for the ownership, operation and leasing of the Property. Borrower
will qualify to do business and will remain in good standing under the laws of
each jurisdiction as and to the extent the same are


 


56

















 


required for the
ownership, operation and leasing of the related Property. Borrower shall at all
times cause the Property to be maintained as cold and/or dry storage warehouse
facilities and uses incidental thereto.


 


4.1.16         Intentionally Omitted.


 


4.1.17         Intentionally Omitted.


 


4.1.18         Cash Management Agency Agreement. (a) Borrower
shall observe and
perform, and shall cause each party thereto to observe and perform, in a
commercially reasonable manner the material obligations imposed upon Borrower
or any other party thereto under each agreement comprising the Cash Management
Agency Agreement, except where the failure to so observe and perform would not
have a Material Adverse Effect.


 


(b)           Borrower shall enforce, as against
each counterparty thereto, its rights under each agreement comprising the Cash
Management Agency Agreement to which it is a party, in a commercially
reasonable manner, except where the failure to enforce such rights under the
Cash Management Agency Agreement would not have a Material Adverse Effect; provided, however,
that, Borrower shall not terminate or accept a surrender of, or cause or permit
the termination or surrender of any agreement comprising the Cash Management Agency
Agreement without Lender’s prior approval, except where the termination or
acceptance of a surrender of any such agreement comprising the Cash Management
Agency Agreement would not have a Material Adverse Effect.


 


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


 


4.2.1            Due on Sale and
Encumbrance; Transfers of Interests. Without the prior written consent of Lender, neither
Borrower nor any other Person having a direct or indirect ownership or
beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain,
encumber, pledge, assign or Transfer any interest, direct or indirect, in the
Borrower, the Property or any part thereof, whether voluntarily or
involuntarily, by operation of law or otherwise, in violation of the covenants
and conditions set forth in the Mortgage and this Agreement. 


 


4.2.2            Liens. Subject to Borrower’s right to contest
Taxes or Other Charges pursuant to this Agreement or any other Loan Documents,
Borrower shall not create, incur, assume or suffer to exist any Lien on any
portion of the Property except for Permitted Encumbrances.


 


4.2.3            Dissolution. Borrower shall not (i) engage in
any dissolution, liquidation or consolidation or merger with or into any other
business entity, (ii) engage in any business activity not related to the
ownership and operation of the Property or (iii) transfer, lease or sell,
in one transaction or any combination of transactions, all or substantially all
of the property or assets of Borrower except to the extent expressly permitted
by the Loan Documents.


 


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


 


57














 


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


 


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


 


4.2.7       Zoning. Except as would not have a material adverse effect on
Borrower’s ability to perform its obligations hereunder, Borrower shall not
initiate or consent to any zoning reclassification of any portion of any
Individual Property or seek any variance under any existing zoning ordinance or
use or permit the use of any portion of any Individual Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation,
without the prior consent of Lender.


 


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


 


4.2.9       No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of any Individual Property (i) with any other real
property constituting a tax lot separate from any Individual Property, and (ii) with
any portion of any Individual 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 any Individual Property.


 


4.2.10     Principal Place of Business. Borrower shall not change its principal
place of business from the address set forth on the first page of this
Agreement without first giving Lender ten (10) days’ prior notice.


 


4.2.11     ERISA. (a) Borrower shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA or Section 4975
of the Code.


 


(b)           Borrower shall deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not an “employee benefit plan” as defined in Section 3(3) of ERISA,
whether or not subject to Title I of ERISA, or a “plan” within the meaning of Section 4975
of the Code; and (B) one or more of the following circumstances is true:


 


(i)            Equity interests in Borrower are
publicly offered securities, within the meaning of the Plan Assets Regulation;


 


58

















 


(ii)           Less than twenty-five percent (25%)
of each outstanding class of equity interests in Borrower is held by “benefit
plan investors” within the meaning of the Plan Assets Regulation; or


 


(iii)          Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of the Plan
Assets Regulation.


 


4.2.12     Material Agreements. Except as would not have a material adverse effect on
Borrower’s ability to perform its obligations under this Agreement and the
other Loan Documents, Borrower shall not, without Lender’s prior written
consent: (a) enter into any Material Agreement, except on commercially
reasonable terms, (b) surrender or terminate any Material Agreement to
which it is a party other than in the ordinary course of Borrower’s business,
including where the same is being replaced or is no longer necessary (unless
the other party thereto is in material default and the termination of such
agreement would be commercially reasonable), (c) increase or consent to
the increase of the amount of any charges under any Material Agreement to which
it is a party, except as provided therein or on an arms’ length basis and
commercially reasonable terms; or (d) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under any Material Agreement to which it is a party in any material respect
other than in the ordinary course of Borrower’s business, except on an arm’s
length basis and commercially reasonable terms.


 


4.2.13     Intentionally Omitted.


 


4.2.14     Intentionally Omitted.


 


4.2.15     Intentionally Omitted.


 


4.2.16     Cash Management Agency Agreement. Borrower shall
not, without the prior
written consent of Lender, modify, supplement, restate, amend or waive any
provision of the Cash Management Agency Agreement in any manner whatsoever that
(a) reduces the amount payable by the counterparty thereto to Borrower
thereunder, (b) reduces or otherwise limits Borrower’s right to terminate
the Cash Management Agency Agreement or (c) would - cause or result in a Material Adverse
Effect. Nothing contained in this Agreement or any other Loan Document shall
constrain the termination of the Cash Management Agency Agreement so long as
such termination would not have a Material Adverse Effect.


 


V.            INSURANCE, CASUALTY AND CONDEMNATION


 


Section 5.1            Insurance.


 


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


 


(i)            all risk insurance on the
Improvements and the personal property at the Property, including contingent
liability from Operation of Building Laws, Demolition Costs and Increased Cost
of Construction Endorsements, in each case (A) in an amount equal to one
hundred percent (100%) of the “Full Replacement Cost,” which for purposes of
this Agreement 


 


59

















 


shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and personal property at the Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of Two
Hundred Fifty Thousand and No/100 Dollars ($250,000) (except with respect to
floods, wind and earthquakes, each of which shall be limited to 5% of the
insurable value per loss or at prevailing market deductibles,- with such
increase to be approved by Lender, such approval not to be unreasonably
withheld, delayed or conditioned) for all such insurance coverage; and (D) containing
an “Ordinance or Law Coverage” (sublimit of $10,000,000 for property damage and
$2,000,000 for business interruption in respect of the Property or such lesser
sublimits as may be commercially available as determined by Lender in its
reasonable discretion) or “Enforcement” endorsement if any of the Improvements
or the use of the Property shall at any time constitute legal non-conforming
structures or uses. In addition, Borrower shall obtain:  (y) if any portion of the Improvements
at any Individual Property is currently or at any time in the future located in
a federally designated “special flood hazard area,” flood hazard insurance in
an amount equal to the lesser of (1) the Allocated Loan Amount of such
Individual Property or (2) the maximum amount of such insurance available
under the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended; and (z) earthquake insurance in amounts and in form and substance
satisfactory to Lender in the event any Individual Property is located in an
area with a high degree of seismic activity, provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent
with the all risk insurance policy required under this subsection (i).


 


(ii)           commercial general liability
insurance against claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such insurance (A) to be
on the so-called “occurrence” form with a combined limit, including umbrella
coverage, of not less than Twenty-Five Million and No/100 Dollars
($25,000,000); (B) to continue at not less than the aforesaid limit until
required to be changed by Lender by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and
operations;  (2) products
and completed operations on an “if  any” basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts;
and (5) contractual
liability covering the indemnities contained in Article 9 of the Mortgage
to the extent the same is available, the terms of excess coverage to “follow
form” over the primary general liability insurance and the commercial motor
vehicle liability coverage required under clause (viii) below;


 


(iii)          business income insurance (A) with
loss payable to Lender; (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above for a period commencing
at the time of loss for such length of time as it takes to repair or replace with the exercise of due diligence
and dispatch, but in no event in an amount less than one year; and (C) containing
an extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income either returns to
the same level it was at prior to the loss, or the expiration of one hundred
twenty (120) days from the date that the affected Individual 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
amount of coverage required for business income insurance pursuant to this Section 5.1.1(a)(iii) shall
be included in the coverage 


 


60

















 


amounts specified in Section 5.1.1(a)(i) above.
All proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan Documents from time to time due
and payable hereunder and under the Note; provided, however,
that nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note and the other Loan
Documents except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;


 


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


 


(v)           workers’ compensation, subject to the
statutory limits of the state in which the Property is located, and employer’s
liability insurance with a limit of at least One Million and No/100 Dollars
($1,000,000) per accident and per disease per employee, and One Million and
No/100 Dollars ($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)          boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on terms
consistent with the commercial property insurance policy required under
subsection (i) above;


 


(vii)         Intentionally Omitted;


 


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


 


(ix)           Intentionally Omitted;


 


(x)            insurance against employee
dishonesty in an amount not less than Three Million and No/100 Dollars
($3,000,000) and with a deductible not greater than One Hundred Thousand and
No/100 Dollars ($100,000);


 


(xi)           (a) during any period of the
term of the Loan that TRIA is in effect, if “acts of terrorism” or other
similar acts or events are hereafter excluded from Borrower’s all risk
insurance policy (including business income), Borrower shall obtain an endorsement
to such policy insuring against all “certified acts of terrorism” as defined by
TRIA, in an amount equal to the Release Amount applicable to the Individual
Property with the highest then-outstanding Allocated Loan Amount. The
endorsement shall be in form and substance reasonably satisfactory to Lender
and shall meet Rating Agency criteria for securitized loans; or


 


61

















 


(b)           during any period of the term of the
Loan that TRIA is not in effect, or the endorsement referred to in (A) above
is not available, if “acts of terrorism” or other similar acts are hereafter
excluded from Borrower’s all risk insurance policy or business income insurance
coverage, Borrower shall obtain an endorsement to such policy, or a separate
policy from an insurance provider insuring against all such excluded acts or
events, to the extent such policy or endorsement is available, in an amount
determined by Lender in its reasonable discretion (but in no event greater than
the Release Amount applicable to the Individual Property with the highest
then-outstanding Allocated Loan Amount, plus required business income
coverage); provided, however, Borrower shall not be required
to pay annual premiums in excess of $250,000.00- for such coverage. The
endorsement or policy shall be in form and substance reasonably satisfactory to
Lender and shall meet Rating Agency criteria for securitized loans; and


 


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


 


(b)           All insurance provided for in Section 5.1.1(a) shall
be obtained under valid and enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”) and, to the extent not specified above, shall
be subject to the approval of Lender as to deductibles, loss payees and
insureds. Not less than ten (10) days prior to the expiration dates of the
Policies theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender.


 


(c)           Borrower shall have the right to effect the coverages
required hereunder under one or more blanket insurance Policies that cover the
Property as well as other properties of Borrower’s Affiliates, provided
that any blanket insurance Policy shall provide substantially the same
protection required hereunder in respect of the Property as would a separate
Policy insuring only the Property in compliance with the provisions of Section 5.1.1(a) taking
into account the geographic diversity of the Property.


 


(d)           All Policies of insurance provided for or contemplated
by Section 5.1.1(a) shall be primary coverage and, except for
the Policy referenced in Section 5.l.1(a)(v) and Section 5.1.1(a)(x),
shall name Borrower as the insured and Lender and its successors and/or assigns
as the additional insured, as its interests may appear, and in the case of
property damage, boiler and machinery, flood, earthquake and terrorism
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender. Borrower shall not procure or permit any of its constituent
entities to procure any other insurance coverage which would be on the same
level of payment as the Policies or would adversely impact in any way the
ability of Lender or Borrower to collect any proceeds under any of the
Policies.


 


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


 


62

















 


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


 


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


 


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


 


(f)            (i) 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, upon ten (10) days
prior written notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate and all premiums incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the Mortgage
and shall bear interest at the Default Rate.


 


(ii)           The following language applies solely
with respect to each of the Individual Properties located in the State of
Oregon, and shall be in lieu of the language contained in clause (i) of this Section 5.1(f): UNLESS BORROWER PROVIDES LENDER WITH EVIDENCE OF THE INSURANCE COVERAGE AS
REQUIRED BY THE LOAN DOCUMENTS, THE LENDER MAY PURCHASE SUCH INSURANCE
AT BORROWER’S EXPENSE TO PROTECT LENDER’S INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO
PROTECT BORROWER’S INTEREST. IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE
LENDER PURCHASES MAY NOT PAY ANY CLAIM BORROWER MAKES OR ANY CLAIM MADE AGAINST
BORROWER. BORROWER MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT
BORROWER HAS OBTAINED PROPERTY
COVERAGE ELSEWHERE.


 


BORROWER IS RESPONSIBLE FOR THE
REASONABLE COST OF ANY SUCH INSURANCE PURCHASED BY LENDER. THE COST OF THIS
INSURANCE MAY BE ADDED TO THE LOAN BALANCE. IF THIS COST IS ADDED TO THE
LOAN BALANCE, THE INTEREST RATE PAYABLE UNDER THE UNDERLYING LOAN WILL APPLY TO
THE ADDED AMOUNT. THE EFFECTIVE DATE OF THE COVERAGE MAY BE THE DATE
BORROWER’S PRIOR COVERAGE LAPSED OR THE DATE BORROWER FAILED TO PROVIDE PROOF
OF COVERAGE.


 


THE COVERAGE LENDER PURCHASES MAY BE
CONSIDERABLY MORE EXPENSIVE THAN INSURANCE BORROWER CAN OBTAIN ON BORROWER’S
OWN AND MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE COVERAGE 


 


63

















 


OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS
IMPOSED BY APPLICABLE LAW.


 


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


 


5.1.2       Insurance Company. The Policies
shall be issued by financially sound and responsible insurance companies permitted to do
business in the State in which each Individual Property is located. For so long
as five (5) or more insurance carriers are providing the Policies, at
least sixty percent (60%) of such coverage shall be provided by insurance
companies having a claims paying ability rating of “A-” or better by S&P
and a claims paying ability rating of “A:X” or better by A.M. Best with
the remaining forty percent (40%) of such coverage being provided by insurance
companies having a claims paying ability rating of “BBB-” or better by S&P;
provided, however, with respect to the first One Hundred
Million and No/100 Dollars ($100,000,000.00) of coverage under such Policies,
not more than twenty percent (20%) of such coverage shall be provided by
insurance companies with a claims paying ability rating lower than “A-” by
S&P (but in no event lower than “BBB-”
by S&P). In the event  that
four (4) or fewer insurance carriers are providing the Policies, at least
seventy-five percent (75%) of such coverage shall be provided by insurance
companies having a claims paying ability rating of “A-” or better by S&P
with the remaining twenty-five percent (25%) of such coverage being provided by
insurance companies having a claims paying ability rating of “BBB-” or better by S&P. If a Securitization occurs, (i) the
foregoing required insurance company rating by a  Rating Agency not rating any Securities shall be
disregarded and (ii) if the insurance company complies with the aforesaid
S&P required rating (and S&P is rating the Securities) and the other
Rating Agencies rating the Securities do not rate the insurance company, such
insurance company shall be deemed acceptable with respect to such Rating Agency
not rating such insurance company. Notwithstanding the foregoing, Borrower
shall be permitted to maintain the Policies with insurance companies which do
not meet the foregoing requirements (an “Otherwise Rated Insurer”),
provided Borrower obtains a “cut-through” endorsement (that is, an
endorsement which permits recovery against the provider of such endorsement)
with respect to any Otherwise Rated Insurer from an insurance company which
meets the claims paying ability ratings required above. Moreover, if Borrower
desires to maintain insurance required hereunder from an insurance company
which does not meet the claims paying ability ratings set forth herein but the
parent of such insurance company, which owns at least fifty-one percent (51%)
of such insurance company, maintains such ratings, Borrower may use such
insurance companies if approved by the Rating Agencies (such approval may be
conditioned on items required by the Rating Agencies including a requirement
that the parent guarantee the obligations of such insurance company).


 


5.1.3       Current Insurance. Lender hereby acknowledges that the
insurance coverages under the certificates of insurance delivered to Lender in
connection with the execution and delivery of this Agreement are currently
acceptable to Lender as of the date hereof for the periods covered under the
policies described in said certificates for purposes of this Section 5.1.


 


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Section 5.2            Casualty and Condemnation.


 


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


 


5.2.2       Condemnation. Borrower shall give Lender prompt notice of any actual
or threatened Condemnation by any Governmental Authority of all or any part of
any Individual Property and shall deliver to Lender a copy of any and all
papers served in connection with such proceedings. Provided no Event of Default
has occurred and is continuing, in the event of a Condemnation where the amount
of the taking does not exceed the Restoration Threshold, Borrower may settle
and compromise such Condemnation; provided that the same is effected in
a commercially reasonable and timely manner. In the event of a Condemnation
where the amount of the taking exceeds the Restoration Threshold or if an Event
of Default then exists, Borrower may settle and compromise the Condemnation
only with the consent of Lender (which consent shall not be unreasonably
withheld or delayed) and Lender shall have the opportunity to participate, at
Borrower’s cost, in any litigation and settlement discussions in respect
thereof and Borrower shall from time to time deliver to Lender all instruments
requested by Lender to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on
or defense of any such proceedings. Notwithstanding any Condemnation, Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Agreement. Lender shall not be limited to the
interest paid on the Award by any Governmental Authority but shall be entitled
to receive out of the Award interest at the rate or rates provided herein or in
the Note. If any Individual Property or any portion thereof is taken by any
Governmental Authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 5.3. If any Individual Property is sold by or
on behalf of Lender subsequent to acceleration, 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.


 


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5.2.3       Casualty  Proceeds. Notwithstanding the last sentence of Section 5.1.1
(a)(iii) and provided no Event of Default exists hereunder,
proceeds received by Lender on account of the business interruption insurance
specified in Section 5.1.l(a)(iii) above with respect to any
Casualty shall be deposited by Lender directly into the Deposit Account (as
defined in the Cash Management Agreement) but (a) only to the extent it
reflects a replacement for (i) lost Rents that would have been due under
Leases or Service Contracts existing on the date of such Casualty, and/or (ii) lost
Rents under Leases or Service Contracts that had not yet been executed and
delivered at the time of such Casualty which Borrower has proven to the
insurance company would have been due under such Leases (and then only to the
extent such proceeds disbursed by the insurance company reflect a replacement
for such past due Rents) and (b) only to the extent necessary to fully
make the disbursements required by Sections 3.3(a)(i) through (vi) of
the Cash Management Agreement. All other such proceeds shall be held by Lender
and disbursed in accordance with Section 5.3 hereof.


 


Section 5.3            Delivery of Net Proceeds.


 


5.3.1       Minor Casualty or Condemnation. If a Casualty
or Condemnation has
occurred to any Individual Property and the Net Proceeds shall be less than the
Restoration Threshold and the costs of completing the Restoration shall be less
than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to
Borrower. Promptly after receipt of the Net Proceeds, Borrower shall commence
and satisfactorily complete with due diligence the Restoration in accordance
with the terms of this Agreement. If any Net Proceeds are received by Borrower
and may be retained by Borrower pursuant to the terms hereof, such Net Proceeds
shall, until completion of the Restoration, be held in trust for Lender and
shall be segregated from other funds of Borrower to be used to pay for the cost
of Restoration in accordance with the terms hereof.


 


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


 


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


 


(ii)           (A) in the event the Net
Proceeds are insurance proceeds, less than forty percent (40%) of the total
floor area of the Improvements at such Individual Property has been damaged,
destroyed or rendered unusable as a result of such Casualty or (B) in the
event the Net Proceeds are an Award, less than fifteen percent (15%) of the
land constituting such Individual Property is taken, and such land is located
along the perimeter or periphery of such Individual Property, and no portion of
the Improvements is the subject of the Condemnation;


 


(iii)          The projected aggregate Gross Revenue
for the Property after completion of the Restoration (as reasonably determined
by Lender) shall not be reduced as a result of the occurrence of such Casualty
or Condemnation by more than twenty percent (20%) as compared 


 


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to the Gross Revenue received by Borrower during the
twelve (12) month period immediately preceding such Casualty or Condemnation.


 


(iv)          Borrower shall commence the
Restoration as soon as reasonably practicable and shall diligently pursue the
same to satisfactory completion;


 


(v)           Lender shall be satisfied that any
operating deficits and all payments of principal and interest under the Note will
be paid during the period required for Restoration from (A) the Net
Proceeds (including sums received from the proceeds of the coverage required
pursuant to Section 5.l.1(a)(iii)), or (B) other funds of
Borrower;


 


(vi)          Lender shall be satisfied that the
Restoration will be completed on or before the earliest to occur of (A) the
date six (6) months prior to the Maturity Date, (B) the earliest date
required for such completion under the terms of any Lease covering 25% or more of the applicable Individual Property
or (C) such time as may be required under applicable Legal Requirements in
order to repair and restore the Property to the condition it was in immediately
prior to such Casualty or to as nearly as possible the condition it was in
immediately prior to such Condemnation, as applicable;


 


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


 


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


 


(ix)           such Casualty or Condemnation, as
applicable, does not result in the loss of access to such Individual Property
or the related Improvements (except if the same is effectively replaced).


 


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


 


(c)           The Restoration shall be completed in
a first class workmanlike manner at least equivalent to the quality and
character of the original work in the Improvements (provided, however,
that in the case of a partial Condemnation, the Restoration shall be done to
the extent 


 


67

















 


reasonable practicable after taking into account the
consequences of such partial Condemnation), so that upon completion thereof,
the Individual Property shall be at least equal in value and general utility to
such Individual Property prior to the damage or destruction; it being
understood, however, that Borrower shall not be obligated to restore the
Individual Property to the precise condition of such Individual Property prior
to such Casualty provided the Individual Property is restored, to the extent
practicable, to be of at least equal value and of substantially the same
character as prior to the Casualty. Borrower shall restore all Improvements
such that when they are fully restored and/or repaired, such Improvements and
their contemplated use fully comply with all applicable material Legal
Requirements. All reasonable out-of-pocket costs and expenses incurred by
Lender in connection with recovering, holding and advancing the Net Proceeds
for the Restoration including, without limitation, reasonable attorneys’ fees
and disbursements and the Casualty Consultant’s fees and disbursements, shall
be paid by Borrower.


 


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


 


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


 


(f)            If at any time the Net Proceeds or
the undisbursed balance thereof shall not, in the reasonable opinion of Lender
be sufficient to pay in full the balance of the costs which 


 


68

















 


are reasonably 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 5.3.2 shall constitute
additional security for the Debt.


 


(g)           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 5.3.2,
and the receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall be
remitted by Lender to Borrower, provided no Event of Default shall have
occurred and shall be continuing under any of the Loan Documents.


 


(h)           Subject to Borrower’s rights pursuant
to Section 2.4.2, 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 Section 5.3.2(g) may 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 sole
discretion shall deem proper, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to Borrower for such purposes as Lender shall
designate.


 


(i)            Notwithstanding anything to the
contrary contained herein, from and after the occurrence of a Casualty or
Condemnation, if (1) any Lease of all or any portion of an Individual
Property covering at least 25% of the total square footage of such Individual
Property and/or any contract for services at an Individual Property (a “Service
Contract”) for which the payments thereunder constitute at least 25% of the
Gross Revenue generated by such Individual Property requires Borrower to
restore such Individual Property after such Casualty or Condemnation, (2) no
default (beyond any applicable notice and/or grace periods) shall have occurred
and be continuing under such Lease or Service Contract and (3) no Event of
Default shall have occurred and be continuing, then Lender shall disburse the
Net Proceeds or Award in accordance with the disbursement provisions specified
in Section 5.3.2(b)-(g) to Borrower (without Borrower having
to satisfy the conditions specified in Section 5.3.2(a)) to
facilitate Borrower’s compliance therewith.


 


VI.           RESERVE FUNDS


 


Section 6.1            Required Repairs.


 


6.1.1       Required Repairs and Deposit of Required Repair Funds. Borrower shall perform the repairs and the
remediations at the Property, as more particularly set forth on Schedule II
hereto (such repairs and remediations hereinafter collectively referred to as “Required
Repairs”). Borrower shall complete the Required Repairs at each Individual
Property by the required deadline for each repair or remediation as set forth
on Schedule II, subject to Excusable Delays. On the Closing Date, Borrower
shall deposit with Lender the amount for each 


 


69

















 


Individual Property set forth on such Schedule II
hereto multiplied by one hundred twenty-five percent (125%). Amounts deposited
pursuant to this Section 6.1.1, together with interest earned
thereon, are referred to as the “Required Repair Funds”.


 


6.1.2       Release of Required Repair Funds. (a) Lender shall direct Agent to
disburse Required Repair Funds only for Required Repairs.


 


(b)           Lender shall direct Agent to disburse
Required Repair Funds upon satisfaction by Borrower of each of the following
conditions: (i) Borrower shall submit a request for payment to Lender at
least ten (10) days prior to the date on which Borrower requests such
payment be made and specifies the Required Repairs to be paid, (ii) on the
date such request is received by Lender and on the date such payment is to -be
made, no Event of Default shall exist and remain uncured, (iii) Lender shall
have received a certificate from Borrower (A) stating that the items to be
funded by the requested disbursement are Required Repairs, (B) stating
that all Required Repairs at the Property to be funded by the requested
disbursement have been performed to date in a good and workmanlike manner and
in accordance with all applicable Legal Requirements, such certificate to be
accompanied by a copy of any license, permit or other approval required by any
Governmental Authority in connection with the Required Repairs, (C) identifying each Person that
supplied materials or labor in connection with the Required Repairs to be
funded by the requested disbursement, and (D) stating that each such
Person has been paid amounts then due or will be paid such amount upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment reasonably satisfactory to Lender, (iv) at Lender’s
option, a title search for the Individual Property at which such Required
Repairs are being performed indicating that such Individual Property is free
from all Liens, claims and other encumbrances not previously approved by
Lender, (v) at Lender’s option, if the cost of any individual Required
Repair exceeds $750,000, Lender shall have received a report satisfactory to
Lender in its reasonable discretion from an architect, engineer or consultant
approved (which approval shall not be unreasonably withheld, conditioned or
delayed) by Lender in respect of such architect’s, engineer’s or consultant’s
inspection of the Required Repairs, and (vi) Lender shall have received
such other evidence as Lender shall reasonably request that the portion of the
Required Repairs to be funded by the requested disbursement have been performed
to date and are paid for or will be paid upon such disbursement to Borrower.
Lender shall not be required to disburse Required Repair Funds more frequently
than once each calendar month, unless such requested disbursement is in an
amount greater than the Minimum Disbursement Amount (or a lesser amount if the
total amount of Required Repair Funds is less than the Minimum Disbursement
Amount, in which case only one disbursement of the amount remaining in the
account shall be made).


 


(c)           Nothing in this Section 6.1.2
shall (i) make Lender responsible for performing or completing the
Required Repairs; (ii) require Lender to expend funds in addition to the
Required Repair Funds to complete any Required Repairs; (iii) obligate
Lender to proceed with the Required Repairs; or (iv) obligate Lender to
demand from Borrower additional sums to complete any Required Repairs.


 


(d)           Borrower shall permit Lender and
Lender’s agents and representatives (including, without limitation, Lender’s
engineer, architect, inspector or consultant) or third parties to enter onto
the Property during normal business hours (subject to the rights of Tenants 


 


70

















 


under their Leases) to inspect the progress of any
Required Repairs and all materials being used in connection therewith and to
examine, if applicable, all plans and shop drawings relating to such Required
Repairs. Prior to the occurrence of an Event of Default such entry and
inspection shall be conducted in a manner that minimizes any interference with
Borrower’s business or the use and enjoyment -of the Property by Borrower,
Borrower’s tenants and Borrower’s tenants’ customers and guests. Borrower shall
cause all contractors and subcontractors to cooperate with Lender or Lender’s
representatives or such other Persons described above in connection with
inspections described in this Section 6.1.2(d).


 


(e)           If a disbursement for any single
Required Repair at an Individual Property will exceed $750,000, Lender may
require an inspection of the Property at Borrower’s expense prior to making a
disbursement of Required Repair Funds, and in connection therewith, such entry
and inspection shall be conducted in a manner that minimizes any interference
with Borrower’s business or the use and enjoyment of the Property by Borrower,
Borrower’s tenants and Borrower’s tenants’ customers and guests. Lender may
require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and may require a certificate of
completion by an independent qualified professional engineer, architect or
consultant acceptable to Lender prior to the disbursement of such Required
Repair Funds. Borrower shall pay the reasonable out-of-pocket expense of the
inspection as required hereunder, whether such inspection is conducted by
Lender or by an independent qualified professional engineer, architect or
consultant.


 


(f)            In the event Lender releases an
Individual Property (or assigns the Mortgage encumbering such Individual
Property) as a result of the exercise of Borrower’s rights under Section 2.4
or Section 2.5 hereof, Lender shall direct Agent, and Agent shall,
promptly following the release of the Lien of the Mortgage (or the assignment
of the Mortgage) with respect to such Individual Property, deliver, or cause
the delivery, to Borrower from the Required Repair Funds an amount equal to the
undisbursed portion of the Required Repair Funds deposited by Borrower with
respect to the Required Repairs to be performed on such Individual Property.


 


Section 6.2            Tax Funds.


 


6.2.1       Deposits of Tax Funds. Pursuant to the Cash Management
Agreement, upon the occurrence of (a) a Trigger Event and during the
continuance of a Trigger Period or (b) an Event of Default and during the
continuance thereof, there shall be deposited with Agent on each Monthly
Payment Date an amount equal to one-twelfth of the Taxes that Lender reasonably
estimates will be payable during the next ensuing twelve (12) months in order
to accumulate sufficient funds to pay all such Taxes at least ten (10) days
prior to their respective due dates. Amounts deposited pursuant to this Section 6.2.1,
together with interest earned thereon, are referred to herein as the “Tax
Funds”. If at any time Lender reasonably determines that the Tax Funds will
not be sufficient to pay the Taxes, Lender shall notify Borrower of such
determination and the monthly deposits for Taxes shall be increased by the
amount that Lender estimates is sufficient to make up the deficiency at least
fifteen (15) days prior to the respective due dates for the Taxes; provided
that if Borrower receives notice of any deficiency after the date that is
fifteen (15) days prior to the date that Taxes are due, Borrower will deposit
such amount within three (3) Business Days after its receipt of such
notice.


 


71

















 


6.2.2       Release of Tax Funds. Lender shall have the right to apply the
Tax Funds to payment of Taxes (and, at Borrower’s request, which shall be made
not later than ten (10) days prior to the date the applicable payment of
Taxes is due, Lender shall apply the Tax Funds to such payment of Taxes,
provided that no Event of Default has occurred and is continuing). In making
any payment relating to Taxes, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax, assessment, sale, forfeiture, tax lien or
title or claim thereof. If the amount of the Tax Funds shall exceed the amounts
due for Taxes, Lender shall, in its sole discretion, return any excess to
Borrower or credit such excess against future payments to be made to the Tax
Funds. Any Tax Funds remaining after the Debt has been paid in full shall be
returned to Borrower. In the event Lender releases an Individual Property (or
assigns the Mortgage encumbering such Individual Property) as a result of the
exercise of Borrower’s rights under Section 2.4 or Section 2.5
hereof, Lender shall direct Agent, and Agent shall, promptly following the
release of the Lien of the Mortgage (or the assignment of the Mortgage) with
respect to such Individual Property, deliver, or cause the delivery, to
Borrower from the Tax Funds an amount equal to the Tax Funds deposited by
Borrower into the Tax Account with respect to such Individual Property (to the
extent such Tax Funds are in excess of the Tax Funds that will be required to
be reserved in the Tax Account with respect to the Property (excluding such
Individual Property)).


 


Section 6.3            Insurance Funds.


 


6.3.1       Deposits of Insurance Funds. Pursuant to the Cash Management
Agreement, upon the occurrence of (a) a Trigger Event and during the
continuance of a Trigger Period or (b) an Event of Default and during the
continuance thereof, there shall be deposited with Agent on each Monthly
Payment Date an amount equal to one-twelfth of the Insurance Premiums that
Lender reasonably estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies. Amounts deposited pursuant to this Section 6.3.1
are referred to herein as the “Insurance Funds”. If at any time Lender
reasonably determines that the Insurance Funds will not be sufficient to pay
the Insurance Premiums, Lender shall notify Borrower of such determination and
the monthly deposits for Insurance Premiums shall be increased by the amount
that Lender estimates is sufficient to make up the deficiency at least thirty
(30) days prior to expiration of the Policies; provided that if Borrower
receives notice of any deficiency after the date that is thirty (30) days prior
to the expiration date of the Policies, Borrower will deposit such amount
within three (3) Business Days after its receipt of such notice.
Notwithstanding the foregoing provisions of this Section 6.3.1, if
insurance coverages required hereunder are effected under one or more blanket
insurance Policies in accordance with the terms set forth in Section 5.1.1(c),
Borrower shall not be required to make deposits under this Section 6.3.1,
provided that Borrower delivers to Lender certificates of insurance
evidencing such blanket insurance Policies, together with evidence reasonably
satisfactory to Lender that the premiums for such blanket insurance Policies
have been paid, and if such Policies are to expire within thirty (30) days,
that the premiums with respect to- such blanket Policies for the next
succeeding period have been paid.


 


6.3.2       Release of Insurance Funds. Lender shall have the right to apply the
Insurance Funds to payment of Insurance Premiums (and, at Borrower’s request,
which shall be 


 


72

















 


made not later than ten (10) days prior to the
date the applicable payment of Insurance Premiums is due, Lender shall apply
the Insurance Funds to such payment of Insurance Premiums, provided that
no Event of Default has occurred and is continuing). In making any payment
relating to Insurance Premiums, Lender may do so according to any bill,
statement or estimate procured from the insurer or its agent, without inquiry
into the accuracy of such bill, statement or estimate. If the amount of the Insurance
Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Insurance Funds. Any Insurance Funds
remaining after the Debt has been paid in full shall be returned to Borrower.
In the event Lender releases an Individual Property (or assigns the Mortgage
encumbering such Individual Property) as a result of the exercise of Borrower’s
rights under Section 2.4 or Section 2.5 hereof, Lender
shall direct Agent, and Agent shall, promptly following the release of the Lien
of the Mortgage (or the assignment of the Mortgage) with respect to such
Individual Property, deliver, or cause the delivery, to Borrower from the
Insurance Funds an amount equal to the Insurance Funds deposited by Borrower
into the Insurance Account with respect to such Individual Property (to the
extent such Insurance Funds are in excess of the Insurance Funds that will be
required to be reserved in the Insurance Account with respect to the Property
(excluding such Individual Property)).


 


Section 6.4            Capital Expenditure Funds.


 


6.4.1       Deposits of Capital Expenditure Funds. Pursuant to the
Cash Management
Agreement, upon (a) the occurrence of a Trigger Event and during the
continuance of a Trigger Period or (b) the occurrence of an Event of
Default and during the continuance thereof, Borrower shall deposit with Agent
on each Monthly Payment Date an amount equal to the lesser of (a) one-twelfth
of the product of $0.03 and the number of cubic feet of space at the Property
(it being agreed that, as of the date hereof there is 102,754,000 cubic feet of
space at the Property comprised of the number of cubic feet at each Individual
Property set forth on Schedule  VI) and (b) the amount
necessary to bring the amount of Capital Expenditure Funds in the Capital
Expenditure Account to the Capital Expenditure Maximum Amount, which amounts
shall be for Capital Expenditures. Amounts deposited pursuant to this Section 6.4.1,
together with interest earned thereon, are referred to herein as the “Capital
Expenditure Funds”.


 


6.4.2       Release of Capital Expenditure Funds. (a) Lender shall direct Agent to
disburse Capital Expenditure Funds only for Capital Expenditures Work.


 


(b)           Lender shall direct Agent to disburse
to Borrower the Capital Expenditure Funds upon satisfaction by Borrower of each
of the following conditions: (i) Borrower shall submit a request for
payment to Lender at least ten (10) days prior to the date on which
Borrower requests such payment be made and specifies the Capital Expenditures
Work to be paid, (ii) on the date such request is received by Lender and
on the date such payment is to be made, no Event of Default shall exist and
remain uncured, (iii) Lender shall have received a certificate from
Borrower (A) stating that the items to be funded by the requested
disbursement are Capital Expenditures Work, (B) stating that all Capital
Expenditures Work at the Property to be funded by the requested disbursement
have been performed to date in a good and workmanlike manner and in accordance
with all applicable Legal Requirements, such certificate to be accompanied by a
copy of any license, permit or other approval required by any Governmental
Authority in 


 


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connection with the Capital Expenditures Work, (C) identifying
each Person that supplied materials or labor in connection with the Capital
Expenditures Work to be funded by the requested disbursement, and (D) stating
that each such Person has been paid amounts then due or will be paid such
amount upon such disbursement, such certificate to be accompanied by lien
waivers or other evidence of payment reasonably satisfactory to Lender, (iv) at
Lender’s option, a title search for the Individual Property at which such
Capital Expenditures Work are being performed indicating that such Individual
Property is free from all Liens, claims and other encumbrances not previously
approved by Lender, (v) intentionally omitted, and (vi) Lender shall
have received such other evidence as Lender shall reasonably request that the
portion of the Capital Expenditures Work at the Property to be funded by the
requested disbursement have been performed to date and are paid for or will be
paid upon such disbursement to Borrower. Lender shall not be required to
disburse Capital Expenditure Funds more frequently than once each calendar
month, unless such requested disbursement is in an amount greater than the
Minimum Disbursement Amount (or a lesser amount if the total amount of Capital
Expenditure Funds is less than the Minimum Disbursement Amount, in which case
only one disbursement of the amount remaining in the account shall be made).


 


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


 


(d)           Borrower shall permit Lender and
Lender’s agents and representatives (including, without limitation, Lender’s
engineer, architect, or inspector) or third parties to enter onto the Property
during normal business hours (subject to the rights of Tenants under their
Leases) to inspect the progress of any Capital Expenditures Work and all
materials being used in connection therewith and to examine (if applicable) all
plans and shop drawings relating to such Capital Expenditures Work. Prior to
the occurrence of an Event of Default, such entry and inspection shall be
conducted in a manner that minimizes any interference with Borrower’s business
or the use and enjoyment of the Property by Borrower, Borrower’s tenants and
Borrower’s tenants’ customers and guests. 
Borrower shall cause all contractors and subcontractors to cooperate
with Lender or Lender’s representatives or such other Persons described above
in connection with inspections described in this Section 6.4.2(d).


 


(e)           If a disbursement with respect to any
Individual Property will exceed fifteen percent (15%) of the Allocated Loan
Amount for such Individual Property, Lender may require an inspection of such Individual
Property at Borrower’s expense prior to making a disbursement of Capital
Expenditure Funds in connection therewith. Such entry and inspection shall be
conducted in a manner that minimizes any interference with Borrower’s business
or the use and enjoyment of the affected Individual Property by Borrower,
Borrower’s tenants and Borrower’s tenants’ customers and guests. Lender may
require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and may require a certificate of
completion by an independent qualified professional architect, engineer or
consultant reasonably acceptable to Lender prior to the disbursement of such
Capital Expenditure Funds. Borrower shall pay the reasonable out-of-pocket expense
of the inspection as required 


 


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hereunder, whether such inspection is conducted by
Lender or by an independent qualified professional architect, engineer or
consultant.


 


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


 


(g)           In the event Lender releases an
Individual Property (or assigns the Mortgage encumbering such Individual
Property) as a result of the exercise of Borrower’s rights under Section 2.4, Section 2.5
or Section 11.29 hereof, Lender shall direct Agent, and Agent
shall, promptly following the release of the Lien of the Mortgage (or the
assignment of the Mortgage) with respect to such Individual Property, deliver,
or cause the delivery, to Borrower from the Capital Expenditure Funds an amount
equal to the Capital Expenditure Funds on deposit which are in excess of the
Capital Expenditure Maximum Amount (as reduced due to such release), and the
amount required to be deposited pursuant to Section 6.4.1 shall be
reduced proportionately to reflect the reduced cubic footage of such released
Individual Property.


 


Section 6.5            Borrower Cash Collateral Funds.


 


6.5.1       Deposits of Borrower Cash Collateral Funds. From and after the occurrence of a Cash Trap Event and during the
continuance of a Cash Trap Period, Borrower shall deposit with Agent all of the
Borrower Excess Cash Flow (the “Borrower Cash Collateral Funds”).


 


6.5.2       Release of Borrower Cash Collateral Funds. All Borrower Cash Collateral Funds on
deposit shall be released by Lender in accordance with the Cash Management
Agreement when Lender determines that a Cash Trap Period no longer exists.


 


Section 6.6            Intentionally Omitted.


 


Section 6.7            Intentionally Omitted.


 


Section 6.8            Application of Reserve Funds. Upon the occurrence and during the continuance
of an Event of Default, Lender, at its option, may withdraw the Reserve Funds
and apply the Reserve Funds to the items for which the Reserve Funds were
established or to payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion. Lender’s right to withdraw and
apply the Reserve Funds shall be in addition to all other rights and remedies
provided to Lender under the Loan Documents.


 


Section 6.9            Security Interest in Reserve Funds.


 


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


 


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Funds shall be under the sole dominion and control of
Lender, and Lender shall hold the Reserve Funds now or hereafter deposited in
the Accounts subject to the terms of this Agreement and the Cash Management
Agreement. Notwithstanding anything to the contrary contained herein or in the
Cash Management Agreement or any other Loan Document, Lender shall have no
security interest or Lien in any funds disbursed to Borrower in accordance with
the Cash Management Agreement following such disbursement.


 


6.9.2       Income Taxes. The Reserve Funds shall be held in an
interest-bearing account and invested in Permitted Investments in accordance
with the terms of the Cash Management Agreement. Borrower shall report on its
federal, state and local income tax returns all interest or income accrued on
the Reserve Funds.


 


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


 


Section 6.10         Intentionally Omitted.


 


Section 6.11         Provisions Regarding Letters of Credit.


 


6.11.1     Security for Debt. Each Letter of
Credit delivered under this Agreement shall be additional security for the payment of the
Debt. Upon the occurrence and during the continuance of an Event of Default,
Lender shall have the right, at its option, to draw on any Letter of Credit and
to apply all or any part thereof to the payment of the items for which such
Letter of Credit was established or to apply each such Letter of Credit to
payment of the Debt in such order, proportion or priority as Lender may
determine. Any such application to the Debt shall be subject to the terms set
forth in Section 2.3.3 and Section 2.4.3. On the
Maturity Date, any such Letter of Credit may be applied to reduce the Debt.


 


6.11.2     Additional Rights of Lender. In addition to any other right Lender may
have to draw upon a Letter of Credit pursuant to the terms and conditions of
this Agreement, Lender shall have the additional rights to draw in full any
Letter of Credit: (a) with respect to any evergreen Letter of Credit, if
Lender has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided at least
thirty (30) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (b)with respect to any Letter of Credit with a stated
expiration date, if Lender has not received a notice from the issuing bank that
it has renewed the Letter of Credit at least thirty (30) days prior to the date
on which such Letter of Credit is scheduled to expire and a substitute Letter
of Credit is not provided at least thirty (30) days prior to the date on which
the outstanding Letter of Credit is scheduled to expire; (c) upon receipt
of notice from the issuing bank that the Letter of Credit will be terminated
(except if the termination of such Letter of Credit is permitted pursuant to
the terms and conditions of this Agreement or a substitute Letter of Credit is
provided); or (d) if Lender has received notice that the bank issuing the
Letter of Credit shall cease to be an Eligible Institution, and Borrower shall
have failed to provide a replacement Letter of Credit within five (5) Business
Days thereof. Notwithstanding anything to the contrary contained in the above, 


 


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Lender is not obligated to draw any Letter of Credit
upon the happening of an event specified in (a), (b), (c) or (d) above
and shall not be liable for any losses sustained by Borrower due to the
insolvency of the bank issuing the Letter of Credit if Lender has not drawn the
Letter of Credit. If any Letter of Credit proceeds shall be disbursed to Lender
hereunder, Borrower shall thereafter be permitted to deliver to Lender, as a
replacement for such cash proceeds, either a Letter of Credit or Reserve
Guaranty in the amount of the cash proceeds then remaining after application in
accordance with the terms hereof, and Lender shall promptly disburse such
remaining cash proceeds to Borrower upon its receipt of such replacement Letter
of Credit or Reserve Guaranty.


 


Section 6.12         Guaranty or Letter of Credit in Lieu
of Cash Deposit. (a) In lieu of making cash deposits of Required Repair Funds,
Tax Funds, Insurance Funds and/or Capital Expenditure Funds, Borrower may
deliver to Lender one or more of the following: (i) a guaranty from
Guarantor in form and substance reasonably acceptable to Lender (a “Reserve
Guaranty”) or (ii) a Letter of Credit in accordance with the
provisions of this Section 6.12. Borrower shall be responsible for
the payment of all reasonable out-of-pocket costs and expenses incurred by the
Servicer in the administration of any Letter of Credit or Reserve Guaranty
delivered pursuant to this Section 6.12.


 


(b)           In the event Borrower elects to
deliver a Letter of Credit in lieu of making cash deposits of Required Repair
Funds, Tax Funds, Insurance Funds and/or Capital Expenditure Funds, the
aggregate amount of any Letter of Credit, Reserve Guaranty and/or cash on
deposit with respect to the Required Repair Funds, Tax Funds, Insurance Funds
and/or Capital Expenditure Funds shall at all times be at least equal to the
aggregate amount which Borrower is required to have on deposit in such Reserve
Fund(s) pursuant to this Agreement. The aggregate amount of any Letter of
Credit, Reserve Guaranty and/or cash on deposit with respect to the Tax Funds shall at all times be at least equal to the
aggregate which Borrower would be required to deposit in such
Reserve Fund over the next twelve (12) month period. The aggregate amount of
any Letter of Credit, Reserve Guaranty and/or cash on deposit with respect to
the Insurance Funds shall at all times be at
least equal to the aggregate which Borrower would be required to deposit
in such Reserve Fund over the next twelve (12) month period. In the event that
a Letter of Credit and/or Reserve Guaranty is delivered in lieu of any portion
of the Tax Funds or the Insurance Funds, Borrower shall be responsible for the
payment of Taxes or Insurance Premiums, as applicable, and Lender shall not be
responsible therefor.


 


(c)           Borrower shall give Lender no less
than thirty (30) days notice of Borrower’s election to deliver a Letter of
Credit pursuant to this Section 6.12 and Borrower shall pay to
Lender all of Lender’s reasonable out-of-pocket costs and expenses in
connection therewith. Borrower shall not be entitled to draw from any such
Letter of Credit. Upon thirty (30) days notice to Lender, Borrower may replace
a Letter of Credit theretofore delivered to Lender pursuant to this Section 6.12
with a cash deposit to the applicable Reserve Fund and/or with a Reserve
Guaranty. Prior to such replacement of a Letter of Credit, to the extent same
is not replaced with a Reserve Guaranty, Borrower shall deposit an amount equal
to the amount that would have accumulated in the applicable Reserve Fund and
not been disbursed in accordance with this Agreement if such Letter of Credit
had not been delivered.


 


(d)           Borrower shall provide Lender with
notice of any increases in the annual payments for Taxes and Insurance Premiums
thirty (30) days prior to the effective date of any 


 


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such increase and any applicable Letter of Credit
under this Section 6.12 shall be increased by such increased amount
at least ten (10) days prior to the effective date of such increase
(unless such increase is covered by cash or a Reserve Guaranty).


 


VII.         PROPERTY MANAGEMENT


 


Section 7.1            The Management Agreement. Borrower shall
cause any Manager to
manage the Property in accordance with the Management Agreement. Borrower shall
(i) diligently perform and observe all of the material terms, covenants
and conditions of the Management Agreement on the part of Borrower to be
performed and observed, (ii) promptly
notify Lender of any notice to Borrower of any default by Borrower in the
performance or observance of any of the terms, covenants or conditions of the
Management Agreement on the part of Borrower to be performed and observed, and (iii) if
Manager is not an Affiliate of Borrower, promptly deliver to Lender a copy of
each financial statement, business plan, capital expenditures plan, report and
estimate received by it under the Management Agreement. If Borrower shall
default in the performance or observance of any material term, covenant or condition of any
Management Agreement on the part of Borrower to be performed or observed, then,
without limiting Lender’s other rights or remedies under this Agreement or the
other Loan Documents, and without waiving or releasing Borrower from any of its
obligations hereunder or under the Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material- terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed or
observed.


 


Section 7.2            Prohibition Against Termination or
Modification.
Borrower shall not (i) surrender, terminate or cancel any Management
Agreement, unless (A) Borrower has advised Lender of its intention to
terminate the Manager, (B) the replacement manager has delivered to Lender
copies of an Assignment of Management Agreement and a cash management agreement
in substantially the form of the Cash Management Agreement in each case
executed by Borrower and replacement manager and (C) the replacement
manager is a Qualified Manager, (ii) modify any Management Agreement in
such a way that would have a material adverse effect on the use, operation or
value of the Property or the ability of Borrower to pay its obligations in
respect of the Loan, (iii) enter into any other agreement with any Person
for such Person to act as the manager or operator of the Property, except as
provided in this Section 7.2, or (iv) consent to the Transfer
by the Manager of its interest under the Management Agreement except as
provided in this Section 7.2, in each case without the express
consent of Lender, which consent shall not be unreasonably withheld; provided, however,
with respect to a new manager (other than a Qualified Manager), such consent
may be conditioned upon Borrower delivering a Rating Agency Confirmation as to
such new manager and management agreement. If at any time Lender consents to
the appointment of a new manager, or a new manager is appointed without Lender’s
consent being required, (a) such new manager and Borrower shall, as a
condition of Lender’s consent, if required, execute an Assignment of Management
Agreement and a cash management agreement in substantially the form of the Cash
Management Agreement and (b)if such new manager is an Affiliate of Borrower,
Borrower shall deliver a non-consolidation opinion acceptable to the Rating
Agencies.


 


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Section 7.3            Replacement of Manager. Lender shall
have the right to
require Borrower to replace any Manager with a Person which is not an Affiliate
of, but is chosen by, Borrower and approved by Lender (which approval, in the
case of a replacement due to the circumstances described in subsections (ii) and/or
(iii) of this Section 7.3, shall not be unreasonably withheld, conditioned or
delayed) upon the occurrence of any one or more of the following events:
(i) at any time following the acceleration of the Loan by Lender, (ii) if
Manager shall be in material default under the Management Agreement beyond any
applicable notice and cure period and/or (iii) if at any time the Manager
has engaged in gross negligence, fraud or willful misconduct.


 


Section 7.4            The Cash Management Agency
Agreement. Lender
shall have the right to require Borrower to terminate the Cash Management
Agency Agreement upon the occurrence of any one or more of the following
events: (i) at any time following the acceleration of the Loan by Lender, (ii) if
Borrower’s counterparty to the Cash Management Agency Agreement shall be in
material default thereunder beyond any applicable notice and cure period and/or
(iii) if at any time such counterparty has engaged in gross negligence,
fraud or willful misconduct.


 


VIII.        PERMITTED TRANSFERS


 


Section 8.1            Permitted Transfer of Property. The Loan may
not be assumed in
connection with a Transfer of the Property until the earlier of (i) the
date on which one or more Secondary Market Transactions have been effected
resulting in Citigroup Global Markets Realty Corp. or its Affiliates holding
none of the Loan, and (ii) the first anniversary of the date hereof.
Thereafter, Lender’s consent to a Transfer of the Property and assumption of
the Loan, or to a Transfer of all of the interests in Borrower, which Transfer
is otherwise prohibited hereunder, shall not be unreasonably withheld, provided
that the following requirements are satisfied:


 


(a)           Lender receives sixty (60) days prior
written notice of such Transfer;


 


(b)           no Event of Default has occurred and
is continuing and no Default or Event of Default shall occur as a result of
such Transfer;


 


(c)           Borrower shall pay Lender a transfer
fee which is payable to the Servicer equal to $25,000 at the time of such
Transfer; provided that no transfer fee shall be payable to the Lender
or the Servicer for the first such Transfer;


 


(d)           Borrower shall pay any and all
reasonable out-of-pocket costs incurred in connection with such Transfer
(including, without limitation, Lender’s reasonable counsel fees and
disbursements and all recording fees, title insurance premiums and mortgage and
intangible taxes and the fees and expenses of the Rating Agencies pursuant to
clause (I) below);


 


(e)           Transferee shall be a Qualified
Transferee;


 


(f)            Transferee must have demonstrated
expertise in owning and operating properties similar in location, size, class
and operation to the Property, which expertise shall be reasonably determined
by Lender;


 


79

















 


(g)           Intentionally Omitted;


 


(h)           If the Property is being transferred
and the Loan assumed, Transferee shall assume all of the obligations of
Borrower under the Loan Documents in a manner satisfactory to Lender in all
respects, including, without limitation, by entering into an assumption
agreement in form and substance reasonably satisfactory to Lender;


 


(i)            Transferee and the general partner
of Transferee (if Transferee is a limited partnership) or economic member of
Transferee (if Transferee is a limited liability company) must be able to
satisfy all the representations and covenants set forth in Section 3.1.8
(with respect to ERISA), Section 3.1.9 (with respect to Prescribed
Laws), Sections 4.1.1 (with respect to Prescribed Laws) and Section 4.2.11
(with respect to ERISA) of this Agreement;


 


(j)            Transferee and the general partner
of Transferee (if Transferee is a limited partnership) or economic member of
Transferee (if Transferee is a limited liability company) shall deliver all
organizational documentation reasonably requested by Lender, which shall be
reasonably satisfactory to Lender;


 


(k)           Borrower shall have delivered a
Rating Agency Confirmation with respect to Transferee and the Transfer;


 


(l)            Borrower or Transferee, at its sole
cost and expense, shall deliver to Lender a bankruptcy nonconsolidation opinion
letter reflecting such Transfer reasonably satisfactory in form and substance
to Lender and acceptable to the Rating Agencies;


 


(m)          (i) in the event Guarantor has
executed and delivered any guaranty in connection with the Loan, prior to any
release of Guarantor from its liabilities and obligations thereunder, one (1) or
more substitute guarantors reasonably acceptable to Lender and acceptable to
the Rating Agencies (A) shall have assumed all of the liabilities and
obligations of Guarantor under such guaranties or (B) shall execute and
deliver a replacement guaranty reasonably satisfactory to Lender and acceptable
to the Rating Agencies and (ii) prior to any release of Guarantor from its
liabilities and obligations under the Environmental Indemnity, one (1) or
more substitute indemnitors reasonably acceptable to Lender and acceptable to
the Rating Agencies (c) shall have assumed all of the liabilities and
obligations of Guarantor under the Environmental Indemnity or (B) shall
execute and deliver a replacement environmental indemnity reasonably
satisfactory to Lender and acceptable to the Rating Agencies;


 


(n)           Borrower shall deliver, at its sole
cost and expense, an endorsement to the Title Insurance Policies, insuring the
Mortgage, as modified by the assumption agreement, as a valid first lien on the
Property and naming the Transferee as owner of the Property, which endorsement
shall insure that, as of the date of the recording of the assumption agreement,
the Property shall not be subject to any additional exceptions or liens other
than those contained in the relevant Title Insurance Policy issued on the date
hereof and the Permitted Encumbrances relating thereto; and


 


(o)           each Individual Property shall be
managed by a Qualified Manager pursuant to a replacement management agreement
reasonably satisfactory to Lender.


 


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The consent of the Lender to
a Transfer may be conditioned on, among other things, whether or not the
Transferee, the controlling principals of Transferee and all other entities
which may be owned or controlled directly or indirectly by Transferee’s
controlling principals (such principal and other entities, collectively, the “Related
Persons”) are Disqualified Transferees as of the date of the Transfer (unless,
with respect to any entity, the controlling principals of Transferee did not
own or control such entity at the time there occurred with respect to such
entity the event giving rise to it being regarded as a Disqualified
Transferee).


 


Immediately upon a Transfer
to such Transferee and the satisfaction of all of the above requirements, the
named Borrower and Guarantor herein shall be released from all liability under
this Agreement, the Note, the Mortgage and the other Loan Documents accruing
after such Transfer. The foregoing release shall be effective upon the date of
such Transfer, but Lender agrees to provide written evidence thereof reasonably
requested by Borrower.


 


Notwithstanding the
foregoing, nothing contained in this Agreement or the other Loan Documents
shall in any way restrict or prohibit,  nor shall any notice to Lender or
consent of Lender be required in connection with, a Transfer effectuated in
compliance with the terms and provisions of clause (A) or clause (B) contained
in the last sentence of Section 8.2.


 


Section 8.2            Permitted Transfers of Interest in
Borrower. A Transfer of (but not a mortgage, pledge, hypothecation, encumbrance or
grant of a security interest in) a direct or indirect beneficial interest in
Borrower or any SPC Party of Borrower shall be permitted without Lender’s
consent if (a) Lender receives thirty (30) days prior written notice (or
such shorter period of time as may be permitted by Lender in its sole
discretion) thereof and, to the extent required to permit compliance by
Borrower’s affiliates with Regulation FD, agrees to regard and keep the same as
Confidential, (b) Transferee and its Related Persons must not be
Disqualified Transferees as of the date of the Transfer; provided, however,
that in the event that the Transferee or any of its Related Persons is a
Disqualified Transferee, Lender shall not unreasonably withhold its consent,
and may consider such fact in making its determination, but such fact shall not
constitute the sole factor or reason for withholding its consent, (c) immediately
prior to such Transfer, no Event of Default shall have occurred and be
continuing (other than an Event of Default which would be cured by such
Transfer), (d) subsequent to such Transfer, Borrower and each SPC Party
continue to satisfy the conditions of Section 3.1.24, (e) subsequent
to such Transfer, Guarantor owns directly or indirectly more than fifty percent
(50%) of Borrower and each SPC Party and controls Borrower and each SPC Party,
and (f) if (i) such Transfer causes Transferee to own, in the
aggregate with the ownership interests of its Affiliates, more than a 49%
interest in Borrower or any SPC Party (and Transferee together with its
Affiliates did not, prior to such Transfer, own more than a 49% interest in
Borrower or such SPC Party), or (ii) such Transfer, together with all
other Transfers of direct or indirect interest in Borrower or any SPC Party,
whether in a single Transfer or in a series of Transfers and whether or not
effected simultaneously, results in a transfer of more than 49% of the
aggregate ownership interests in Borrower or any SPC Party, an acceptable
non-consolidation opinion is delivered to Lender and to each of the Rating
Agencies concerning, as applicable, Borrower, each SPC Party, Transferee and/or
their respective owners. Notwithstanding the foregoing, nothing contained in
this Agreement or the other Loan Documents shall in any way restrict or
prohibit, nor shall any notice to Lender or consent of Lender or Rating Agency
Confirmation (except as expressly provided below) be required in connection
with (A) the transfer, mortgage, pledge, 


 


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hypothecation, encumbrance or issuance of any
ownership interests or securities in VNO, VRLP, CEI, CRE, YAA, YAP or YCI or
any Public Company (or of any Persons owning an interest in any of the
foregoing), (B) the merger or consolidation of VNO, VRLP, CEI, CRE, YAA,
YAP or YCI or any Public Company with or into any other Person (or of any
Persons owning an interest in any of the foregoing), or a sale or transfer of
all or substantially all of the assets of VNO, VRLP, CEI, CRE, YAA, YAP or YCI
or of any Public Company (or of any Persons owning an interest in any of the
foregoing), (C) the transfer, mortgage, pledge, hypothecation or
encumbrance of any ownership interests or securities in Guarantor between or
among VNO, VRLP, CEI, CRE, YAA, YAP and YCI (or one or more entities owned and
controlled by any one or more of the foregoing), (D) the issuance of any
ownership interests or securities in Guarantor so long as Guarantor (or its
permitted successor) or its direct or indirect owner is or, in connection with
such issuance, becomes, a Public Company, and (E) the merger or
consolidation of Guarantor or its direct or indirect owner with or into any
other Person, provided that the surviving entity of such merger or
consolidation or its direct or indirect owner is a Public Company; provided
further that, if, after giving effect to any transaction described under clause
(D) or (E), VNO, VRLP, CEI, CRE, YAA, YAP and/or YCI would own in the
aggregate, directly or indirectly, less than fifty-one percent (51%) interest
of Borrower or any SPC Party or would
not control Borrower and each SPC Party, Borrower shall have obtained a
Rating Agency Confirmation.


 


IX.           SALE AND SECURITIZATION OF MORTGAGE


 


Section 9.1            Sale of Mortgage and Securitization;
Loan Components; Mezzanine Loans. (a) Subject to the limitations in Section 11.27,
Lender shall have the right (i) to sell or otherwise transfer the Loan or
any portion thereof as a whole loan, (ii) to sell participation interests
in the Loan or (iii) to securitize the Loan or any portion thereof in a
single-asset securitization or a pooled-loan securitization. The transactions referred to in clauses (i), (ii) and (iii) shall
hereinafter be referred to collectively as “Secondary Market Transactions”
and the transactions referred to in clause (iii) shall hereinafter be
referred to as a “Securitization”. Any certificates, notes or other
securities issued in connection with a Securitization are hereinafter referred
to as “Securities”.


 


(b)           If requested by Lender, Borrower
shall use reasonable efforts to 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 and the 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 acceptable to 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 non-


 


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consolidation, fraudulent conveyance, and true sale or
any other opinion customary in Secondary Market Transactions or required by the
Rating Agencies with respect to the Property and Borrower and Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender and
satisfactory to the Rating Agencies;


 


(iii)          provide updated, as of the closing
date of the Secondary Market Transaction if such closing date is more than six (6) months
after the date hereof, representations and warranties made in the Loan
Documents and such additional representations and warranties as the Rating
Agencies may reasonably require, in each case, with such modifications as are
necessary to make such representations and
warranties true in all material respects; and


 


(iv)          execute amendments to the Loan
Documents and Borrower’s organizational documents reasonably requested by
Lender; provided, however, that Borrower shall not be
required to modify or amend (A) any Loan Document if such modification or
amendment would change the interest rate, the stated maturity or the
amortization of principal as set forth herein or in the Note, or (B) any
Loan Document or organizational document of Borrower if in the reasonable
judgment of Borrower the same would modify or amend any other material economic
term of the Loan, increase Borrower’s obligations or liabilities thereunder in
any material respect, adversely effect any right of Borrower under the Loan
Documents in any material respect or have a material adverse effect on the
manner in which Borrower operates its business.


 


(c)           Borrower covenants and agrees that, upon Lender’s
request, Borrower shall deliver one or more new component notes to replace the
original note or modify the original note to reflect multiple components of the
Loan or create one or more new mezzanine loans (including amending Borrower’s
organizational structure to provide for one or more new mezzanine borrowers)
(each a “Resizing Event”). Lender agrees that such new notes, modified
notes or mezzanine notes shall immediately after the Resizing Event have the
same initial weighted average interest rate as the original note immediately
prior to such Resizing Event. Such new notes, modified notes or mezzanine notes
may allocate principal and interest rates of the Loan between or among such new
components and/or mezzanine loans in a manner specified by Lender in its sole
discretion; provided that, unless an Event of Default has occurred and
is then continuing, all prepayments with respect to such new notes or modified
note or mezzanine notes shall be applied on a pro rata basis. In connection
with any Resizing Event, Borrower covenants and agrees to modify and amend the
Cash Management Agreement, and execute amendments to the Loan Documents and
Borrower’s organizational documents reasonably requested by Lender; provided,
however, that Borrower shall not be required to modify or amend any Loan
Document or organizational document of Borrower if in the reasonable judgment
of Borrower the same would increase Borrower’s monetary obligations, modify or
amend any other material economic term of the Loan, increase Borrower’s other
obligations or liabilities thereunder in any material respect, adversely affect
any right of Borrower under the Loan Documents in any material respect or have
a material adverse effect on the manner in which Borrower operates its
business.


 


(d)           Notwithstanding anything herein or in any other Loan
Document to the contrary, (i) all reasonable out-of-pocket costs and
expenses (other than the first $20,000 of legal fees) actually incurred by
Borrower or its Affiliates in connection with Borrower’s complying 


 


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with requests made under this Section 9.1
shall be paid by Lender and (ii) Lender shall pay all other costs and
expenses incurred by any other parties in connection with any action
contemplated by this Section 9.1.


 


(e)           Nothing contained in this Agreement or in the other
Loan Documents shall restrict Lender from requesting that Borrower deliver to
Lender information regarding tenants or customers at the Property and the
impact such tenants or customers have or may have on the Gross Revenue of the
Property; provided, however, that Borrower shall not be
required to deliver specific information concerning the specific pricing structure
applicable to any tenant or customer.


 


Section 9.2            Securitization Indemnification. (a) Borrower
understands that
information provided to Lender by Borrower and its agents, counsel and
representatives may be included in disclosure documents in connection with the
Securitization, including, without limitation, an offering circular, a
prospectus, prospectus supplement, private placement memorandum or other
offering document (each, an “Disclosure Document”) and may also be included in filings with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended
(the “Securities Act”), or the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”), and may be made available to investors or
prospective investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization.


 


(b)           Borrower shall provide in connection
with each of (i) a preliminary and a final private placement memorandum or
(ii) a preliminary and final prospectus or prospectus supplement, as
applicable, an agreement (the entering into of which shall be at no cost to
Borrower) (A) certifying that Borrower has examined those portions of such
Disclosure Documents specified by Lender for Borrower’s review pertaining to
Borrower, Borrower’s Affiliates, Manager or the Loan and that each such
Disclosure Document, as it relates to sections of the Disclosure Documents
specified with reasonable specificity by Lender relating to Borrower, Borrower’s
Affiliates, the Property, Manager and any material aspects of the Loan, does
not (except to the extent specified by Borrower if Borrower does not agree with
the statements therein) 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) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder
shall include its officers and directors), the Affiliate of Lender 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 “Lender Group”), and Lender, and any
other placement agent or underwriter with respect to the Securitization, each
of their respective directors and each Person who controls Lender 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, including
reasonable attorneys’ fees and disbursements, other than those arising out of
the gross negligence, willful misconduct or bad faith of any of the foregoing
proposed indemnitees (collectively, the “Liabilities”) to which Lender,
the Lender Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement of any material
fact contained in such sections or arise out of or are based upon the omission
to state therein a material fact 


 


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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 (except that (x) Borrower’s
obligation to indemnify in respect of any information contained in such
sections that is derived in part from information provided by Borrower and in
part from information provided by others unrelated to or not employed by
Borrower shall be limited to any untrue statement or omission of material fact
therein known to Borrower that results from an error in any information
provided (or which should have been provided) by Borrower which Borrower has
been given the opportunity to examine and reasonably and promptly approve
(Borrower hereby confirms that it has reviewed and approved each of the
appraisals, engineering, environmental and asbestos reports prepared by third
parties in connection with the Loan) and (y) Borrower shall have no
responsibility for the failure of any member of the Underwriting Group to
accurately transcribe written information supplied by Borrower or the refusal
of any member of the Underwriting Group to include any written information
supplied by Borrower after an explicit direction from Borrower to do so) and (C) agreeing
to reimburse Lender, the Lender Group and/or the Underwriter Group for any
legal or other expenses reasonably incurred by Lender, the Lender Group and the
Underwriter Group in connection with investigating or defending the Liabilities
to the extent that such legal or other expenses are incurred in connection with
matters for which Borrower has agreed to indemnify the Underwriter Group
herein; 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 connection with the
underwriting or closing of the Loan, including, without limitation, financial
statements of Borrower, operating statements and major customer lists with
respect to the Property and not subsequently retracted or modified in whole or
in part so as to eliminate the misstatement or omission in question prior to
any Securitization. This indemnity agreement will be in addition to any
liability which Borrower may otherwise have.


 


(c)           Intentionally Omitted.


 


(d)           Promptly after receipt by an
indemnified party under this Section 9.2 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 9.2,
notify the indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the indemnifying
party from any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to notify causes
prejudice to the indemnifying party. In the event that any action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled, jointly with any
other indemnifying party, to participate therein and, to the extent that it (or
they) may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this Section 9.2,
such indemnified party shall pay for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however,
if the defendants in any such action include both the 


 


85

















 


indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party at the cost of the indemnifying
party. The indemnifying party shall not be liable for the expenses of more than
one separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.


 


(e)           In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 9.2(b) is for any reason held to be
unenforceable as to an indemnified party in respect of any losses, claims,
damages or liabilities (or action- in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 9.2(b), 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 addition, no right of
contribution may be enforced by any party who shall have committed gross
negligence or willful misconduct in connection with the actions or omissions
that led to such liability against any party who was not guilty of such gross
negligence or willful misconduct in connection with the actions or omissions
that led to such liability. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) the applicable Lender’s 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;
(iii) the responsibilities and obligations of Borrower specified herein;
and (iv) 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)            The liabilities and obligations of
both Borrower and Lender under this Section 9.2 shall survive the
termination of this Agreement and the satisfaction and discharge of the Debt.


 


X.            DEFAULTS


 


Section 10.1         Event of Default. (a) Each of the following events
shall constitute an event of default hereunder (an “Event of  Default”):


 


(i)            if (A) the payment due on the
Maturity Date is not paid when due, (B) if any monthly installment of
interest due under the Note (other than the payment due on the Maturity Date)
is not paid on or prior to the fifth (5th)  calendar day of the month in which the applicable
Monthly Payment Date occurs (or, if such fifth (5th)  calendar day is not a Business Day, then on or prior
to the Business Day immediately preceding such fifth (5th) calendar day); provided
that it shall not be an Event of Default if a monthly installment of interest
is not paid when due if there are sufficient sums on deposit in the Debt
Service Account (as defined in the


 


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Cash Management Agreement) for payment of such amounts
and Lender’s access to such funds has not been inhibited or prevented in any
manner whatsoever due to circumstances or events which are directly or
indirectly caused by or otherwise relate to any actions or omissions of
Borrower or any of its Affiliates, 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;


 


(ii)           if any of the Taxes or Other Charges
are not paid when due, provided that it shall not be an Event of Default
if Taxes are not paid when due if there are sufficient sums on deposit in the
Tax Account (as defined in the Cash Management Agreement) for payment of such
amounts and Lender’s access to such funds has not been inhibited or prevented
in any manner whatsoever due to circumstances or events which are directly or
indirectly caused by or otherwise relate to any actions or omissions of
Borrower or any of its Affiliates;


 


(iii)          if the Policies are not kept in full
force and effect;


 


(iv)          if Borrower breaches or permits or
suffers a breach of Section 4.2.1


 


(v)           if any representation or warranty
made by Borrower herein or in any other Loan Document, or in any material
report, certificate, financial statement or other instrument, agreement or
document furnished to Lender shall have been false or misleading in any
material respect as of the date the representation or warranty was made and,
with respect to any such breach which is not the subject of any other
subsection of this Section 10.1(a) and which is capable of
being cured, Borrower fails to remedy such condition within ten (10) days
following notice to Borrower from Lender, in the case of any such breach which
can be cured by the payment of a sum of money, or within thirty (30) days
following notice from Lender in the case of any other such breach; provided, however,
that if such non-monetary breach is susceptible of cure but cannot reasonably
be cured within such 30-day period and provided further that Borrower shall
have commenced to cure such breach within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period
shall be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such breach, such additional period not to
exceed sixty (60) days plus time permitted for Excusable Delays;


 


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


 


(vii)         if a receiver, liquidator or trustee
shall be appointed for Borrower, any SPC Party or Guarantor or if Borrower, any
SPC Party or Guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, any SPC Party or
Guarantor, or if any proceeding for the dissolution or liquidation of Borrower,
any SPC Party or Guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and
not consented to by Borrower, any SPC Party or Guarantor, upon the same not
being discharged, stayed or dismissed within ninety (90) days;


 


87

















 


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


 


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


 


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


 


(xi)           if Borrower breaches any of the negative covenants contained in Section 4.2.12
hereof;


 


(xii)          intentionally omitted;


 


(xiii)         intentionally omitted;


 


(xiv)        if Guarantor breaches in any material
respect any covenant, warranty or representation contained in any guaranty
executed and delivered by Guarantor in connection with the Loan and such breach
is not cured to Lender’s satisfaction within fifteen (15) days of notice to
Guarantor from Lender;


 


(xv)         intentionally omitted;


 


(xvi)        if at any time during the term of the
Loan an Alteration Guaranty is delivered pursuant to the terms of this
Agreement and the guarantor thereunder (other than Guarantor) fails to maintain
an Investment Grade Rating (a “Downgrade Event”) and Borrower fails to
deliver (A) a replacement Alteration Guaranty in an amount equal to the
amount of the “Guaranteed Obligations” under such Alteration Guaranty from
Guarantor or a guarantor with an Investment Grade Rating or (B) Alteration
Security within ten (10) Business Days of the occurrence of the applicable
Downgrade Event;


 


(xvii)       intentionally omitted;


 


(xviii)      if Borrower shall continue to be in
Default under any of the other terms, covenants or conditions of this Agreement
or any other Loan Document not specified in subsections (i) to (xvii)
above, for ten (10) days after notice to Borrower from Lender, in the case
of any Default which can be cured by
the payment of a sum of money, or for  thirty
(30) days after notice from Lender in the case of any other Default; provided,
however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30-day period and provided further that
Borrower shall have commenced to cure such Default within such 30-day period
and thereafter diligently and expeditiously proceeds to cure the same, such
30-day period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such additional
period not to exceed sixty (60) days plus time permitted for Excusable Delays;
or


 


88

















 


(xix)         if any other such event shall occur or
condition shall exist, if the effect of such event or condition is to
accelerate the maturity of any portion of the Debt or to permit Lender to
accelerate the maturity of all or any portion of the Debt.


 


(b)           Upon the occurrence of an Event of
Default (other than an Event of Default
described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in and to the
Property, including, without limitation, declaring the Debt to be immediately
due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and the Property, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi), (vii) or (viii) above, the Debt and all
other obligations of Borrower hereunder and under the other Loan Documents
shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand,
anything contained herein or in any other Loan Document to the contrary
notwithstanding.


 


Section 10.2         Remedies. (a) Upon
the occurrence and during the 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 or any of
the other Loan Documents executed and delivered by, or applicable to, Borrower
or at law or in equity may be exercised by Lender at any time and from time to
time, whether or not all or any of the Debt shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to the Property. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Without limiting the generality of the foregoing, if an
Event of Default is continuing (i) Lender is not subject to any “one
action” or “election of remedies” law or rule, and (ii) all liens and
other rights, remedies or privileges provided to Lender shall remain in full
force and effect until Lender has exhausted all of its remedies against the
Property and the Mortgage has been foreclosed, sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in full.


 


(b)           Upon the occurrence and during the
continuance of an Event of Default, Lender shall have the right from time to
time to partially foreclose the Mortgage in any manner and for any amounts
secured by the Mortgage then due and payable as determined by Lender in its
sole discretion including, without limitation, the following circumstances: (i) in
the event Borrower defaults beyond any applicable grace period in the payment
of one or more scheduled payments of principal and interest, Lender may
foreclose the Mortgage to recover such delinquent payments, or (ii) in the
event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose the Mortgage to recover so much of
the principal balance of the Loan as Lender may accelerate and such other sums
secured by the Mortgage as Lender may elect. Notwithstanding one or more
partial foreclosures, the 


 


89

















 


Property shall remain subject to the Mortgage to
secure payment of sums secured by the Mortgage and not previously recovered.


 


(c)           Lender shall have the right from time
to time to sever the Note and the other Loan Documents into one or more
separate notes, mortgages and other security documents (the “Severed Loan
Documents”) in such denominations as Lender shall determine in its sole
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make
and execute all documents necessary or desirable to effect the aforesaid
severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; provided, however, Lender shall not make or execute any
such documents under such power until three (3) days after notice has been
given to Borrower by Lender of Lender’s intent to exercise its rights under
such power. 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. The Severed Loan Documents shall contain only
provisions which are substantially similar to those contained in the Loan
Documents (except to reflect reductions in principal) and which do not have any
material adverse effect on Borrower’s rights or obligations thereunder in any
material respect or increase Borrower’s monetary obligations thereunder in any
material respect or the operation of its business and any representations and
warranties contained in the Severed Loan Documents will be given by Borrower
only as of the date hereof.


 


(d)           Any amounts recovered from the
Property or any other collateral for the Loan after an Event of Default may be
applied by Lender toward the payment of any interest and/or principal of the
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; provided, however, that Borrower shall not be liable for
the misapplication of any amounts recovered and applied by Lender in its sole
discretion.


 


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


 


90

















 


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.


 


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


 


XI.           MISCELLANEOUS


 


Section 11.1         Successors and Assigns. All covenants, promises and agreements in
this Agreement shall inure to the benefit of the legal representatives,
successors and assigns of the parties hereto.


 


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


 


Section 11.3         Governing Law. (A) THIS AGREEMENT
WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY  LENDER AND ACCEPTED BY BORROWER IN
THE STATE OF NEW YORK, AND  THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE  DISBURSED FROM THE STATE
OF NEW YORK, WHICH STATE THE PARTIES  AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO
THE  UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS,  INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,  MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS  AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE  OBLIGATIONS ARISING
HEREUNDER AND THEREUNDER SHALL BE  GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE  STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED  IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS)  


 


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AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT  THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,  AND ENFORCEMENT OF THE
LIEN AND SECURITY INTEREST CREATED  PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS  (OTHER THAN WITH RESPECT
TO LIENS AND SECURITY INTERESTS IN  PROPERTY WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE
9  OF THE UCC (EXCLUDING
FIXTURES AND INCLUDING, WITHOUT  LIMITATION, THE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW
OF  THE JURISDICTION
APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS  9-301 THROUGH 9-307 OF
THE UCC AS IN EFFECT IN THE STATE OF NEW  YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW  OF THE STATE IN WHICH
THE PROPERTY IS LOCATED, IT BEING  UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW
OF  SUCH STATE, THE LAW OF
THE STATE OF NEW YORK SHALL GOVERN THE  CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN  DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR  THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY  CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS  THIS AGREEMENT, THE NOTE
AND THE OTHER LOAN DOCUMENTS, AND THIS  AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE  GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE  STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
YORK  GENERAL OBLIGATIONS LAW
EXCEPT AS SPECIFICALLY SET FORTH ABOVE.


 


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


 


CT CORPORATION


111 EIGHTH AVENUE, 13TH FLOOR


NEW YORK, NEW YORK 10011


 


AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS
BEHALF  SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH  SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN  NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID  AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED  OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL  BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON  


 


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BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE
OF  NEW YORK. BORROWER (I) SHALL
GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE  AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH  SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON  AND ADDRESS FOR SERVICE OF PROCESS), AND (II!) SHALL PROMPTLY  DESIGNATE
SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO  HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT  LEAVING A SUCCESSOR.


 


Section 11.4         Modification, Waiver in Writing. No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement or of any
other Loan Document, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to, or demand
on Borrower, shall entitle Borrower to any other or future notice or demand in
the same, similar or other circumstances. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY THE PARTIES HERETO CONCERNING LOANS AND OTHER
CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE PARTIES HERETO TO BE ENFORCEABLE.


 


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


 


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


 


93

















 


delivery by hand if delivered during business hours on
a Business Day (otherwise on the next Business Day), and (d) on the next
Business Day if sent by an overnight commercial courier, in each case addressed
to the parties as follows:


 


If to Lender:          Citigroup Global Markets
Realty Corp.


388
Greenwich Street, 19th Floor


New
York, New York 10013


Attention:         Jay
DeWaltoff


Facsimile
No.: (212) 816-8299


 


with a copy to:      Cadwalader,
Wickersham & Taft LLP


One
World Financial Center


New
York, New York 10281


Attention:         Steven
M. Herman, Esq.


Facsimile
No.: (212) 504-6666


 


If to Borrower:      c/o AmeriCold
Logistics, LLC


10
Glenlake Parkway, Suite 800


Atlanta,
Georgia 30328


Attention:       Chief
Financial Officer


Facsimile
No: (678) 441-6852


 


with a copy to:      c/o Crescent
Real Estate Equities


777
Main Street, Suite 2100


Fort
Worth, Texas 76102


Attention:         David
Dean, Executive Vice President — Law


Facsimile
No.: (817) 321-2929


 


with a copy to:      c/o Yucaipa
American Alliance Fund I, LP


9130
West Sunset Boulevard


Los
Angeles, California 90069


Attention:
Legal Department


Facsimile
No.: (310) 789-1791


 


with a copy to:      c/o Yucaipa
Corporate Initiatives Fund I, LP


9130
West Sunset Boulevard


Los
Angeles, California 90069


Attention:         Legal
Department


Facsimile
No.: (310) 789-1791


 


with a copy to:      c/o Vornado Realty Trust


888
Seventh Avenue


New
York, New York 10019


Attention:         Chief
Financial Officer


Facsimile
No.: (201) 843-2198


 


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with a copy to:      Sullivan &
Cromwell LLP


125
Broad Street


New
York, New York 10004


Attention:         Arthur
S. Adler, Esq.


Facsimile
No.: (212) 558-3588


 


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


 


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


 


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


 


Section 11.10       Preferences. 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 bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by Lender.


 


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


 


95














 


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


 


Section 11.13       Expenses; Indemnity. (a) Borrower shall pay or, if
Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for
all reasonable and customary out-of-pocket costs and expenses (including
reasonable attorneys’ fees and disbursements) incurred by Lender in connection
with (i) Borrower’s ongoing performance of and compliance with Borrower’s
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the date hereof,
including, without limitation, confirming compliance with environmental and
insurance requirements; (ii) Lender’s ongoing performance of and
compliance with all agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
date hereof; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Borrower; (iv) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to
Lender all required legal opinions, and other similar expenses incurred, in
creating and perfecting the Liens in favor of Lender pursuant to this Agreement
and the other Loan Documents; (v) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation or otherwise upon the occurrence and during the
continuance of an Event of Default, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; and (vi) enforcing any obligations of or
collecting any payments due from Borrower under this Agreement, the other Loan
Documents or with respect to the Property or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in
the nature of a “work-out” or of any insolvency or bankruptcy proceedings; provided, however,
that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence,
illegal acts, bad faith, fraud or willful misconduct of Lender. Any costs due
and payable to Lender which are not paid by Borrower within ten (10) days
after written demand therefore maybe paid to Lender pursuant to the Cash Management Agreement.


 


(b)           Borrower shall indemnify, defend and
hold harmless Lender and its officers, directors, agents, employees (and the
successors and assigns of the foregoing) (the “Lender Indemnitees”) from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, the reasonable fees
and disbursements of counsel for the Lender Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not the Lender Indemnitees shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against the Lender Indemnitees in any manner relating to or
arising out of (i) any breach by Borrower of its 


 


96

















 


obligations under, or any material misrepresentation
by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the
use or intended use of the proceeds of the Loan (collectively, the “Indemnified
Liabilities”);  provided, however, that Borrower
shall not have any obligation to the Lender Indemnitees hereunder to the extent
that such Indemnified Liabilities arise from the gross negligence, illegal
acts, bad faith, fraud or willful misconduct of the Lender Indemnitees. To the
extent that the undertaking to indemnify, defend and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by any Lender Indemnitees.


 


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


 


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


 


Section 11.16       No Joint Venture or Partnership; No
Third Party
Beneficiaries. (a) Borrower
and Lender intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein
is intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Property other than that of mortgagee, beneficiary or lender.


 


(b)           This Agreement and the other Loan
Documents are solely for the benefit of Lender and nothing contained in this
Agreement or the other Loan Documents shall be deemed to confer upon anyone
other than Lender any right to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of Lender and 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.


 


Section 11.17       Publicity. All news
releases, publicity or advertising
(other than any of the foregoing effectuated in connection with a
Securitization of all or any portion of the Loan by Lender) by each of Lender
or Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by 


 


97

















 


the Loan Documents, to Lender, Borrower or any of
their Affiliates shall be subject to the prior approval of Lender and (except
in connection with a Securitization of all or any portion of the Loan) Borrower
(except that no Lender approval shall be required for Borrower’s or its
Affiliate’s press release, if any, in connection with the execution and
delivery of this Agreement), which approval, in any case, shall not be
unreasonably withheld, conditioned or delayed.


 


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


 


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


 


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


 


Section 11.21       Brokers and Financial Advisors. Borrower and Lender each hereby represent
that it has not dealt independently of the other with any financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Each party shall indemnify,
defend and hold the other party harmless from and against any and all claims,
liabilities, costs and expenses of any kind 


 


98

















 


(including reasonable attorneys’ fees and expenses) in
any way relating to or arising from a claim by any Person that such Person
acted on behalf of such party in connection with the transactions contemplated
herein. The provisions of this Section 11.21 shall survive the
expiration and termination of this Agreement and the payment of the Debt.


 


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


 


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


 


(ii)           the gross negligence or willful
misconduct of Borrower;


 


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


 


(iv)          the removal or disposal of any portion
of the Property after an Event of Default other than in accordance with the
terms of the Loan Documents (including, without limitation, the Cash Management
Agreement);


 


99

















 


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


 


(vi)          any security deposits, advance
deposits or any other deposits collected with respect to the Property which are
not delivered to Lender upon a foreclosure of the Property or action in lieu
thereof, except to the extent any such 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; and


 


(vii)         Borrower’s indemnification of Lender
set forth in Section 9.2 hereof.


 


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
fails to obtain Lender’s prior consent to any subordinate financing or other
voluntary Lien encumbering the Property; (ii) Borrower fails to obtain
Lender’s prior consent to any assignment, transfer, or conveyance of the
Property or any interest therein as required by the Mortgage or this Agreement;
(iii) Borrower files a voluntary petition under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (iv) an Affiliate,
officer, director, trustee, or representative which controls, directly or
indirectly, Borrower files, or joins in the filing of, an involuntary petition
against Borrower under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited petitioning
creditors for any involuntary petition against Borrower from any Person; (v) intentionally
omitted; (vi) Borrower 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 Federal or state bankruptcy
or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any Person; (vii) any Affiliate,
officer, director, trustee, or representative which controls Borrower consents
to or acquiesces in or joins in an application for the appointment of a custodian,
receiver, trustee, or examiner for Borrower or any portion of the Property; (viii) Borrower
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 or (ix) Borrower, any SPC Party or any Borrower GP breaches any
of the representations, warranties or covenants, applicable to it under Section 3.1.24.


 


Section 11.23       Prior Agreements.  This Agreement and the other Loan Documents contain
the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.


 


Section 11.24       Servicer. 
(a) At
the option of Lender, the Loan may be serviced by a servicer (the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its 


 


100

















 


responsibilities under this Agreement and the other
Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing
Agreement”) between Lender and Servicer. Borrower shall not be responsible
for any set-up fees or any other initial costs relating to or arising under the
Servicing Agreement, or for the payment of any monthly servicing fee due to the
Servicer under the Servicing Agreement. Servicer shall, however, be entitled to
reimbursement of costs and expenses as and to the same extent (but without duplication)
as Lender is entitled thereto under the applicable provisions of this Agreement
and the other Loan Documents. In addition, subject to the express provisions
contained elsewhere in this Agreement (including provisions specifying either
an amount, or that no amount, should be payable), Borrower shall be responsible
for the payment of any customary and reasonable servicing fees charged in
connection with any requests made by Borrower during the term of the Loan,
including, but not limited to, approvals, consents, amendments or waivers
contemplated by this Agreement or otherwise.


 


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


 


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


 


(d)           Notwithstanding anything to the
contrary contained herein or in any other Loan Documents, unless the Loan is
being transferred to a “special servicer” or is then being “specially serviced”
(in which case Borrower may be required to deal with one primary Servicer and
one “special servicer”), Borrower shall be required to deal with only one
Servicer acting on behalf of all Persons comprising Lender (the “primary
Servicer”), with respect to any consents, approvals or notices required or
permitted from, or to, Servicer or Lender pursuant to the Loan Documents (it
being understood that such primary Servicer may need to consult with other
Persons that hold a portion of Lender’s rights and obligations under the Loan
or with the Rating Agencies in connection with any such consent, approval or
notice and that a so-called “special servicer” may act as such primary
Servicer). Lender may replace such primary Servicer with another primary
Servicer at any time in Lender’s sole discretion. As of the date hereof, Wachovia
Bank, N.A., in its capacity as servicer under a Servicing Agreement with
Lender, is hereby designated as the primary Servicer and unless and until
Borrower is notified by all Persons comprising Lender of a new primary
Servicer, Borrower shall be permitted to rely conclusively and irrevocably on
such designation.


 


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


 


Section 11.26       Creation of Security Interest.  Notwithstanding any other provision set forth in this
Agreement, the Note, the Mortgage or any of the other Loan Documents, Lender
may at any time create a security interest in all or any portion of its rights 


 


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under this Agreement, the Note, the Mortgage and any
other Loan Document (including, without limitation, the advances owing to it)
in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.


 


Section 11.27       Assignments and Participations.  (a) The Lender may assign to one or more Persons
other than (as long as no Event of Default has occurred and is continuing) any
Excluded Lender Transferee all or a portion of its rights and obligations under
this Loan Agreement (it being agreed that the foregoing shall not apply to the
holder of any Securities issued in a pooled-loan Securitization).


 


(b)           Lender may sell participations to one
or more Persons other than (as long as no Event of Default has occurred and is
continuing) any Excluded Lender Transferee in or to all or a portion of its
rights and obligations under this Loan Agreement (it being agreed that the foregoing
shall not apply to the holder of any Securities issued in a pooled-loan
Securitization); provided, however, that (i) Lender’s
obligations under this Loan Agreement shall remain unchanged, (ii) except
as otherwise provided in Section 2.5, Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) Lender shall remain the holder of any Note for all
purposes of this Loan Agreement and (iv) Borrower shall continue to deal
solely and directly with Lender in connection with Lender’s rights and
obligations under and in respect of this Loan Agreement and the other Loan
Documents.


 


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


 


(d)           Subject to acceptance and recording
thereof pursuant to paragraph (e) of this Section 11.27, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
Lender under this Agreement. Any assignment or transfer by Lender of rights or
obligations under this Agreement that does not comply with this Section 11.27
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with clause (b) of
this Section 11.27.


 


(e)           Lender or an agent of Lender shall
maintain a register (the “Register”) on which it will record the Loans
made hereunder, and each Assignment and Acceptance and participation. The
Register shall include the names and addresses of Lenders (including all
assignees, successors and Participants), and the commitment of, and principal
amount of the Loans owing to each such Lender. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower’s
obligations in respect of such Loans. If Lender sells an assignment or
participation in any Loan, it shall update the register to reflect such
assignment or participation.


 


(f) Notwithstanding anything contained herein to the contrary, as
long as no Event 


 


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of
Default shall have occurred and be continuing, no Lender or Participant shall
Transfer all or any portion of the Loan or any interest therein to an Excluded
Lender Transferee or permit or suffer any Transfer such that any portion of or
participation interest in the Loan will be held directly or indirectly by a
Person that is an Excluded Lender Transferee (it being agreed that the
foregoing shall not apply to the holder of any Securities issued in a
pooled-loan Securitization).


 


Section 11.28       Intentionally Omitted.


 


Section 11.29       Substitution. 
After the Closing Date, but prior to the Permitted Prepayment Date,
Borrower may obtain a release of the Lien of a Mortgage (and the related Loan
Documents) encumbering an Individual Property (a “Substituted Property”)
by substituting therefor another property of like kind and quality acquired by
Borrower (individually, a “Substitute Property” and collectively, the “Substitute
Properties”), provided that the following conditions precedent are
satisfied:


 


(a)           Lender shall have received at least
thirty (30) days prior written notice requesting the substitution and
identifying the Substitute Property and the Substituted Property.


 


(b)           The Allocated Loan Amount of the
Substituted Property, when taken together with the Allocated Loan Amounts of
all other Substituted Properties substituted pursuant to this Section 11.29,
does not exceed thirty percent (3 0%) of the original principal balance of the
Loan.


 


(c)           After giving effect to the proposed
substitution, no Event of Default shall be continuing.


 


(d)           The Substitute Property shall not
have suffered a Casualty or Condemnation which has not been fully restored.


 


(e)           If the Loan is part of a
Securitization, Lender shall have received an Appraisal of the Substitute
Property, dated no more than sixty (60) days prior to the substitution date,
prepared by a senior commercial appraiser of the American Appraisal Institute
acceptable to the Rating Agencies.


 


(f)            Intentionally omitted.


 


(g)           Lender shall have received a current
survey for the Substitute Property, certified to the title insurance company
and Lender and their respective successors and assigns, in substantially the
same form and content as the certification of the survey of the Substituted
Property prepared by a professional land surveyor licensed in the state in
which the Substitute Property is located and acceptable to the Rating Agencies,
in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys. Such survey shall reflect the same legal description
contained in the title insurance policy relating to such Substitute Property
and shall include, among other things, a metes and bounds description of the
real property comprising part of such Substitute Property (unless such real
property has been satisfactorily designated by lot number on a recorded plat).
The surveyor’s seal shall be affixed to
such survey and, if customary, such survey shall certify whether any
portion of the surveyed property or the improvements thereon is located in a “one-hundred-year
flood hazard area.”


 


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(h)           Lender shall have received a Phase I
environmental report acceptable to a reasonably prudent lender and, if
recommended under the Phase I environmental report, a Phase II environmental
report acceptable to a reasonably prudent lender, which concludes that the
Substitute Property does not contain any Hazardous Substances (as defined in
the Environmental Indemnity) requiring remediation under any Environmental Law
(as defined in the Environmental Indemnity) and is not subject to any known
risk of contamination from any off-site Hazardous Substance.


 


(i)            Lender shall have received a
Physical Conditions Report with respect to the Substitute Property stating that
the Substitute Property is in good condition and repair and free of damage or
waste. If the Physical Conditions Report recommends that any repairs be made
with respect to the Substitute Property, such Physical Conditions Report shall
include an estimate of the cost of such recommended repairs and, subject to the
terms and conditions set forth in Section 6.1.2, Borrower shall
deposit with Lender an amount equal to one hundred twenty-five percent (125%)
of such estimated cost in the event such estimated cost exceeds $50,000, which
deposit shall constitute “Required Repair Funds”, and shall be released to
Borrower in accordance with the provisions of Section 6.1.


 


(j)            Lender shall have received, evidence
satisfactory to a reasonably prudent lender that the Substitute Property and
its use comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and such
compliance shall be confirmed by delivery to Lender of report from the Planning
and Zoning Resource Corporation or such other similar consultant which in the
ordinary course of its business provides zoning analyses and reports to
institutional lenders.


 


(k)           Lender shall have received valid
certificates of insurance indicating that the requirements for the policies of
insurance required for an Individual Property hereunder have been satisfied
with respect to the Substitute Property and evidence of the payment of all
premiums payable for the existing policy period (or if such Substitute Property
is being added to Borrower’s existing policies, that such amounts have been
escrowed with Lender in accordance with the terms and conditions of Section 6.3).


 


(l)            The ownership interest in the
Substitute Property shall be fee simple absolute and not a ground leasehold
interest.


 


(m)          Intentionally omitted.


 


(n)           After giving effect to the
substitution, the Debt Service Coverage Ratio for the Loan for the Property
(excluding the Substituted Property and including the Substitute Property) is
not less than the greater of (i) the Debt Service Coverage Ratio as of the
Closing Date and (ii) the Debt Service Coverage Ratio for the trailing
twelve (12) full calendar months as of the date immediately preceding the
substitution; provided that, Borrower shall be permitted to defease a
portion of the Loan in accordance with Section 2.5.2 in
order to satisfy the Debt Service Coverage Ratio test set forth in this clause
(n).


 


(o)           (i) The Individual Loan-to-Value
Ratio of the Substitute Property is not greater than the lesser of the
Individual Loan-to-Value Ratio of the Substituted Property (A) as 


 


104

















 


of the Closing Date and (B) immediately prior to
the substitution, which determination, with respect to (x) the Substitute
Property, if based on an Appraisal pursuant to the definition of “Individual
Loan-to-Value Ratio”, shall be based on the Appraisal described in clause (e) above
and, (y) the Substituted Property, (I) if the determination is as of
the Closing Date and is based on an Appraisal pursuant to the definition of “Individual
Loan-to-Value Ratio”, shall be based on
the Appraisal delivered at closing and, (II) if the determination
is as of immediately prior to date of substitution and is based on an Appraisal
pursuant to the definition of “Individual Loan-to-Value Ratio”, shall be based
on a new Appraisal dated no earlier than ninety (90) days prior to such
substitution, or, (ii) if Borrower is unable to satisfy the foregoing test,
after giving effect to such substitution, the Loan-to-Value Ratio for the
Property (excluding the Substituted Property and including the Substitute
Property) is not greater than the lesser of (A) the Loan-to-Value Ratio as
of the Closing Date, which, if based on Appraisals pursuant to the definition
of “Loan-to-Value Ratio”, shall be based on the Appraisals delivered at
closing, and (B) the Loan-to-Value Ratio as of the date immediately
preceding such substitution, which, if based on Appraisals pursuant to the
definition of “Loan-to-Value Ratio”, shall be based on Appraisals dated no
earlier than ninety (90) days prior to the date of such substitution.


 


(p)           Lender shall have received an Officer’s
Certificate certifying that the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are true and correct
in all material respects on and as of the date of the substitution with respect
to the Substitute Property and, if the Loan is part of a Securitization, containing
any other representations and warranties with respect to the Substitute
Property as the Rating Agencies may require, such certificate to be in form and
substance satisfactory to the Rating Agencies.


 


(q)           Borrower shall (i) have
executed, acknowledged and delivered to Lender (A) a Mortgage, an
Assignment of Leases and two UCC-l Financing Statements with respect to the
Substitute Property, together with a letter from Borrower countersigned by a
title insurance company acknowledging receipt of such Mortgage, Assignment of
Leases and UCC-l Financing Statements and agreeing to record or file, as
applicable, such Mortgage, Assignment of Leases and one of the UCC-l Financing
Statements in the real estate records for the county in which the Substitute
Property is located and to file one of the UCC-1 Financing Statements in the
office of the Secretary of State (or other central filing office) of the state
of its organization, so as to effectively create upon such recording and filing
valid and enforceable Liens upon the Substitute Property, of the requisite
priority, in favor of Lender (or such other trustee as may be desired under
local law), subject only to the
Permitted Encumbrances and such other Liens as are  permitted pursuant to the Loan Documents and (B) an
Environmental Indemnity with respect to the Substitute Property and (ii) have
caused Guarantor to acknowledge and confirm its obligations under (A) any
guaranty executed and delivered by Guarantor in connection with the Loan and (B) the
Environmental Indemnity. The Mortgage, Assignment of Leases, UCC-1 Financing
Statements and Environmental Indemnity shall be the same in form and substance
as the counterparts of such documents executed and delivered with respect to
the Substituted Property subject to modifications reflecting the Substitute
Property as the Individual Property that is the subject of such documents and
such modifications reflecting the laws of the state in which the Substitute
Property is located as shall be recommended for similar transactions by the
counsel admitted to practice in such state and delivering the opinion as to the
enforceability of such documents required pursuant to subsection (u) below.
The Mortgage encumbering the


 


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Substitute Property shall secure all amounts evidenced
by the Note, provided that in the event that the jurisdiction in which
the Substitute Property is located imposes a mortgage recording, intangibles or
similar tax and does not permit the allocation of indebtedness for the purpose
of determining the amount of such tax payable, the principal amount secured by
such Mortgage shall be equal to one hundred twenty-five percent (125%) of the Allocated Loan Amount
of the Substitute Property. The amount of the Loan allocated to the Substitute
Property (such amount being hereinafter referred to as the “Substitute
Allocated Loan Amount”) shall equal the Allocated Loan Amount of the
Substituted Property immediately prior to the substitution. Further, Lender
shall, in its reasonable discretion, provide an Allocated Capital Expenditure
Amount for the Substitute Property, which Allocated Capital Expenditure Amount
shall be equal to $0.03 per cubic foot of such Substitute Property and which,
when aggregated with the Allocated Capital Expenditure Amounts of each
remaining Individual Property, shall not exceed the Capital Expenditure Maximum
Amount. Schedule VI will be deemed to be modified to reflect any such
changes to the Allocated Loan Amount and Allocated Capital Expenditure Amount
for each Individual Property subsequent to a substitution.


 


(r)            Lender shall have received (i) unless
Borrower shall have elected to provide title insurance in an amount equal to
one hundred twenty-five percent (125%) of the Substitute Allocated Loan Amount
as set forth in clause (A) of Section 11.29(q), a “tie-in”
or similar endorsement, but only to the extent available in such jurisdiction,
to each title insurance policy insuring the Lien of an existing Mortgage (which
shall be tied in as of the Closing Date) with respect to such existing
Mortgages and as of the date of the substitution with respect to the title
insurance policy insuring the Lien of the Mortgage with respect to the
Substitute Property and (ii) a title insurance policy (or a marked, signed
and redated commitment to issue such title insurance policy) insuring the Lien
of the Mortgage encumbering the Substitute Property, issued by the title
company that issued the title insurance policies insuring the Lien of the
existing Mortgages and dated as of the date of the substitution, with
reinsurance and direct access agreements that replace such agreements issued in
connection with the title insurance policy insuring the Lien of the Mortgage
encumbering the Substituted Property. The title insurance policy issued with
respect to the Substitute Property shall (A) at Borrower’s option, provide
coverage in the amount of the Substitute Allocated Loan Amount if the “tie-in”
or similar endorsement described above is available or, in lieu of a tie-in
endorsement, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Allocated
Loan Amount, (B) insure Lender that the relevant Mortgage creates a valid
first lien on the Substitute Property encumbered thereby, free and clear of all
exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any endorsements), (C) contain such
endorsements and affirmative coverages reasonably  requested by Lender, but only to the extent the same
are available in the jurisdiction in which the Substitute Property is located,
and (D) name Lender as the insured. Lender also shall have received copies
of paid receipts or other evidence showing that all premiums in respect of such
endorsements and title insurance policies have been paid.


 


(s)           Lender shall have received (i) an
endorsement to the title insurance policy insuring the Lien of the Mortgage
encumbering the Substitute Property insuring that the Substitute Property constitutes
a separate tax lot or, if such an endorsement is not available in the state in
which the Substitute Property is located, a letter from the title insurance
company issuing such Title Insurance Policy stating that the Substitute Policy
constitutes a separate tax lot or (ii) a 


 


106

















 


letter from the appropriate taxing authority stating
that the Substitute Property constitutes a separate tax lot or other evidence
satisfactory to a reasonably prudent lender as to same.


 


(t)            Borrower shall deliver or cause to
be delivered to Lender (i) updates certified by Borrower of all
organizational documentation related to Borrower and/or the formation,
structure, existence, good standing and/or qualification to do business
delivered to Lender on the Closing Date; (ii) good standing certificates,
certificates of qualification to do business in the jurisdiction in which the
Substitute Property is located (if required in such jurisdiction); and (iii) resolutions
of Borrower authorizing the substitution and any actions taken in connection
with such substitution.


 


(u)           Lender shall have received the
following opinions of Borrower’s counsel: (i) an opinion or opinions of
counsel, admitted to practice under the laws of the state in which the
Substitute Property is located, stating that the Loan Documents governed by
such state law delivered with respect to the Substitute Property are valid and
enforceable in accordance with their terms, subject to the laws applicable to creditors’
rights and equitable principles, and that Borrower is qualified to do business
and in good standing under the laws of the jurisdiction where the Substitute
Property is located or that Borrower is not required by applicable law to
qualify to do business in such jurisdiction; (ii) an opinion of counsel
acceptable to the Rating Agencies, if the Loan is part of a Securitization, or
reasonably acceptable to the Lender, if the Loan is not part of a
Securitization, stating that the Loan Documents delivered with respect to the
Substitute Property pursuant to clause (i) above were duly
authorized, executed and delivered by such Borrower; (iii) an opinion of
counsel acceptable to, the Rating Agencies if the Loan is part of a
Securitization, or the Lender if the Loan is not part of a Securitization,
stating either (x) that subjecting the Substitute Property to the Lien of
the related Mortgage and the execution and delivery of the related Loan
Documents do not and will not affect or impair the ability of Lender to enforce
its remedies under all of the Loan Documents or (y) this Agreement, after
giving effect to the Loan Documents executed in connection with the
substitution, shall be enforceable in accordance with its terms; (iv) an
update of the Insolvency Opinion indicating that the substitution does not
affect the opinions set forth therein; and (v) if the Loan is part of a
Securitization, an opinion of counsel acceptable to the Rating Agencies that
the substitution does not constitute a “significant modification” of the Loan
under Section 1001 of the Code or otherwise cause a tax to be imposed on a
“prohibited transaction” by the REMIC Trust holding the Loan. Such opinions, to
the extent applicable, shall be substantially in the respective forms approved
by Lender in connection with the origination of the Loan, and shall contain
customary assumptions and qualifications.


 


(v)           To the extent such escrows would be
required pursuant to the terms and conditions set forth in Article VI,
Borrower shall have paid, or escrowed with Lender, all Basic Carrying Costs
relating to the Substitute Property, including without limitation, (i) accrued
but unpaid insurance premiums relating to each of the Individual Properties and
the Substitute Property, and (ii) currently due and payable Taxes
(including any in arrears) relating to each of the Individual Properties and
the Substitute Property and (iii) currently due and payable maintenance
charges and other impositions relating to each of the Individual Properties and
Substitute Property after taking into account Reserve Funds held in connection
with the Substituted Property and available as Reserve Funds for the Substitute
Property.


 


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(w)          Lender shall have received such other
amendments and modifications to this Agreement and the other Loan Documents as
would be requested by a reasonably prudent lender originating commercial loans
for securitization similar to the Loan in order to reflect and effect the
substitution and to protect and preserve the Liens and security interests of
Lender in the Substitute Property.


 


(x)            Lender shall have received such
other and further approvals, opinions, documents and information in connection
with the substitution as requested by the Rating Agencies if the Loan is part
of a Securitization.


 


(y)           If the Loan is part of a
Securitization, Borrower shall have delivered to Lender a Rating Agency
Confirmation with respect to the substitution.


 


(z)            Borrower shall convey the
Substituted Property to another Person other than an SPC Party.


 


(aa)         Borrower shall submit to Lender for its
review, not less than fifteen (15) days
prior to the date of such substitution, a release of Lien (and related Loan
Documents) for the Substituted Property to be executed by Lender. Such release
shall be in a form appropriate for the jurisdiction in which the Substituted
Property is located and that contains standard provisions protecting the rights
of the releasing lender. In addition, Borrower shall provide all other
documentation that a reasonably prudent lender originating commercial loans for
securitization similar to the Loan would require to be delivered by Borrower in
connection with such release, together with an Officer’s Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements,
and (ii) will effect such release in accordance with the terms of this
Agreement.


 


(bb)         Borrower shall deliver an Officer’s
Certificate certifying that the requirements set forth in this Section 11.29
have been satisfied.


 


(cc)         Borrower shall have paid or reimbursed
Lender for all reasonable out-of-pocket costs and expenses incurred by Lender
(including, without limitation, reasonable attorneys fees and disbursements) in
connection with the substitution. Borrower shall have paid all recording
charges, filing fees, taxes or other expenses (including, without limitation,
mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. If the Loan is part of a Securitization, Borrower
shall have paid all costs and expenses of the Rating Agencies incurred in
connection with the substitution.


 


(dd)         Upon the satisfaction of the foregoing
conditions precedent, Lender will release its Lien from the Substituted
Property (or assign such Lien, as applicable) and the Substitute Property shall
be deemed to be an Individual Property for purposes of this Agreement and the
Substitute Allocated Loan Amount with respect to such Substitute Property shall
be deemed to be the Allocated Loan Amount with respect to such Substitute
Property for all purposes hereunder.


 


Following the substitution
of a Substituted Property in exchange for a Substitute Property in accordance
with this Section 11.29, Lender shall adjust (if applicable) the
amounts thereafter required to be deposited by Borrower into the Reserve Funds
to reflect amounts required solely 


 


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for the remaining Individual
Properties and the Substitute Property after giving effect to such substitution.


 


Section 11.30       Partial Release — Expansion.  (a)  Provided
no Event of Default  shall
have occurred and remain uncured and provided that the intended use, at
the time of the transfer of the Expansion Parcel is not for purposes
incompatible with the use and operation of the applicable Individual Property
as a dry and/or cold storage warehouse facility (it being agreed that the use
of the Expansion Parcel as a dry and/or cold storage warehouse facility is not
incompatible with the use and operation of the remainder of the applicable
Individual Property as a dry and/or cold storage warehouse facility), Borrower
shall have the right at any time and from time to time prior to the Maturity
Date to obtain a release of the lien of the Mortgage (and related Loan
Documents) as to an Expansion Parcel upon satisfaction of the following
conditions precedent:


 


(i)            Borrower shall provide Lender not
less than thirty (30) days’ notice (or a shorter period of time if permitted by
Lender in its sole discretion) specifying the date (the “Expansion Date”)
on which the partial release is to occur provided, however,
that Borrower may postpone the Expansion Date from time to time as long as the
extended date is at least ten (10) Business Days after Notice of such
extension;


 


(ii)           Lender shall have received an Officer’s
Certificate certifying (A) that the proposed use of the Expansion Parcel
would not be incompatible with a dry and/or cold storage warehouse facility on
the remainder of the applicable Individual Property, (B) that the excess of Gross Revenue over Operating Expenses for the
Individual Property immediately after the proposed release after taking
into account the proposed use of the Expansion Parcel will not be less than the
excess of Gross Revenue over Operating Expenses for the Individual Property
immediately before the proposed release and (C) that the proposed use of
the Expansion Parcel will not have a material adverse effect on the income and
expense at the Individual Property, together with evidence reasonably acceptable
to Lender in support of such conclusions;


 


(iii)          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 if a Securitization of any portion
of the Loan has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a
result of the partial release pursuant to this Section 11.30


 


(iv)          Borrower shall have delivered to
Lender evidence that Borrower has complied with all requirements of and
obtained all approvals required under any Leases with Major Tenants and the
Operating Agreements applicable to the release of the Expansion Parcel and that
the partial release does not violate any of the provisions of any Leases with
Major Tenants and the Operating Agreements provided, however,
that an Officer’s Certificate to that effect shall be sufficient evidence of
such compliance and obtaining of such approvals as to Leases which are not
Major Leases;


 


(v)           Borrower shall have delivered to
Lender (A) at Borrower’s option, (x) an endorsement to the Title Insurance
Policy, (y) an opinion of counsel (from counsel reasonably 


 


109

















 


acceptable to Lender) or (z) a certificate of an
architect (from an architect reasonably acceptable to Lender and licensed to
practice in the State), indicating that the Expansion Parcel has been legally
subdivided for zoning lot purposes from the remainder of the Individual
Property pursuant to a zoning lot subdivision in accordance with applicable
law, (B) at Borrower’s option, (x) an endorsement to the Title
Insurance Policy, (y) an opinion of counsel (from counsel reasonably
acceptable to Lender) or (z) a certificate of an architect (from an
architect reasonably acceptable to Lender and licensed to practice in the
State), indicating that the balance of the Individual Property separately
conforms to and is in material compliance with all applicable Legal
Requirements and constitutes one or more separate tax lots, (C) a
certificate from an architect or engineer (licensed to practice in the State
and reasonably acceptable to Lender) to the effect that the Expansion Parcel is
not necessary for the use of the remainder of the Individual Property in the
manner in which it is then being used, including, without limitation, for
support, access, driveways, parking, utilities or drainage flows (after giving
effect to any easements therefor reserved over the Expansion Parcel for the
benefit of the remainder of the Individual Property) and (D) an Officer’s
Certificate with supporting documentation indicating that either (y) sufficient
parking remains on the remainder of the Individual Property to comply with all
Leases of such remainder and with all Operating Agreements and which is
adequate for the proper use and enjoyment of the balance of the Individual
Property or (z) reservations of parking (in favor of such remainder) in
the Expansion Parcel are sufficient (when added to parking otherwise available
to the remainder) to comply with all Leases of such remainder and with all
Operating Agreements and which are adequate for the proper use and enjoyment of
the remainder of the Individual Property;


 


(vi)          Lender shall have received a Officer’s
Certificate certifying that any improvements proposed to be built on the
Expansion Parcel will not adversely affect the operation of the remainder of
the Individual Property (after giving effect to any easements reserved or
granted for the benefit of such remainder or the Expansion Parcel);


 


(vii)         Lender shall have received an Appraisal
of the Individual Property (using an income method of valuation (it being
agreed that in conducting such valuation any income that might be derived from
the sale or subsequent use of such Expansion Parcel shall not be included))
dated no more than ninety (90) days prior to the proposed Expansion Date by an
appraiser (which appraiser shall be reasonably acceptable to Lender),
indicating an appraised value of the Individual Property after the release,
both before and after construction of improvements to be built on the Expansion
Parcel, equal to or greater than the greater of (y) one hundred percent
(100%) of the value of such Individual Property immediately prior to the
release or (z) one hundred percent (100%) of the Allocated Loan Amount for
such Individual Property on the Expansion Date;


 


(viii)        Borrower shall have delivered a metes
and bounds description of the Expansion Parcel and a survey of the Expansion
Parcel and the remainder of the Individual Property which would be standard in
commercial lending transactions;


 


(ix)           Borrower shall have delivered to
Lender on the date of the release an endorsement to the policy or policies of
title insurance insuring the Mortgage on such Individual Property reflecting
the release and (A) insuring Lender’s interest in any easements created in
connection with the Release and (B) confirming no change in the priority
of the Mortgage on the 


 


110

















 


remainder of the Individual Property or in the amount
of the insurance or the coverage under the policy or policies;


 


(x)            Borrower shall deliver to Lender an
Officer’s Certificate certifying that the requirements set forth in this Section 11.30
have been satisfied; and


 


(xi)           Borrower shall pay all out-of-pocket
costs and expenses of Lender incurred in connection with the partial release,
including Lender’s reasonably attorneys’ fees and expenses.


 


(b)           If Borrower shall provide a Letter of
Credit to Lender on the Expansion Date as additional security for the Loan, the
amount of the Loan equal to the amount of the Letter of Credit shall be added
to the appraised value of the remainder of the Property after the release for
the purposes of doing the comparison in Section 11 .30(a)(vii).


 


(c)           If Borrower has elected to release
the Expansion Parcel and the requirements of this Section 11.30
have been satisfied, the Expansion Parcel shall be released from the Lien of
the Mortgage (and related Loan Documents) and Lender shall consent and
subordinate the Lien of the Mortgage thereto. In connection with the release of
the Lien, Borrower shall submit to Lender, not less than thirty (30) days prior
to the Expansion Date (or such shorter time as is reasonably acceptable to
Lender), a release of Lien (and related Loan Documents) for execution by
Lender. Such 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 a releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer’s Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements,
and (ii) will effect such release in accordance with the terms of this
Agreement. Borrower shall pay all costs, taxes and expenses associated with the
release of the Lien of the Mortgage, including Lender’s reasonable attorneys’
fees. Borrower shall cause title to the Expansion Parcel so released from the
Lien of the Mortgage to be transferred to and held by a Person other than
Borrower.


 


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111

















 


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


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIGROUP GLOBAL MARKETS REALTY 

  CORP., a New York corporation 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay Dewaltoff

  
	
   

  	
   

  	
  Name: Jay Dewaltoff

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  



 

















 


	
   

  	
  PROPCO:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ART MORTGAGE BORROWER
  PROPCO 

  2006-3 L.P., 

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ART MORTGAGE BORROWER
  PROPCO GP 

  2006-3 LLC, a Delaware limited liability company, its general partner 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ART FIRST MEZZANINE
  BORROWER 

  PROPCO 2006-3 L P , a Delaware limited
  partnership, its sole equity member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  ART FIRST MEZZANINE 

  BORROWER PROPCO GP 2006-3 

  LLC, a Delaware limited liability 

  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  AMERICOLD REALTY 

  TRUST, a Maryland real 

  estate investment trust, its 

  sole equity member 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Anthony Cossentino

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  



 

















 


	
   

  	
  OPCO:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ART MORTGAGE BORROWER OPCO
  

  2006-3 L.P., 

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ART MORTGAGE BORROWER OPCO
  GP 

  2006-3 LLC, a Delaware limited liability company, its general partner 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ART FIRST MEZZANINE
  BORROWER 

  OPCO 2006-3 L P , a Delaware 

  limited partnership, its sole 

  equity member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ART FIRST MEZZANINE 

  BORROWER OPCO GP 2006-3 

  LLC, a Delaware limited liability 

  company, its general partner 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  AMERICOLD REALTY 

  TRUST, a Maryland real 

  estate investment trust, its 

  sole equity member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Anthony Cossentino

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title: