exv10w3






Exhibit 10.3




 


LOAN AGREEMENT




Dated as
of November 14, 2006



Between



KBS SOUTHPARK COMMERCE CENTER II, LLC



as Borrower

And



GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.



as Lender



 







 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	1.	 	DEFINITIONS; PRINCIPLES OF CONSTRUCTION	 	 	1	 
	 
	 	 	1.1	 	Specific Definitions. The following terms have the meanings set forth below:	 	 	1	 
	 
	 	 	1.2	 	Index of Other Definitions. The following terms are defined in the
sections or Loan Documents indicated below:	 	 	13	 
	 
	 	 	1.3	 	Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the words
“hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement
as a whole and not to any particular provision, (iii) all definitions are equally
applicable to the singular and plural forms of the terms defined, (iv) the word
“including” means “including but not limited to,” and (v) accounting terms not
specifically defined herein shall be construed in accordance with GAAP	 	 	15	 
	 	 	 	 	 	 	 
	 	 	 	 
	2.	 	GENERAL LOAN TERMS	 	 	15	 
	 
	 	 	2.1	 	The Loan. Lender is making a loan (the “Loan”) to Borrower in
the original principal amount (the “Principal”) of $18,000,000, which shall
mature on the Stated Maturity Date. Borrower acknowledges that the proceeds
of the Loan are being and shall be used to (i) acquire the Property, (ii)
fund certain of the Subaccounts, and (iii) pay transaction costs. Any excess
proceeds may be used for any lawful purpose. No
amount repaid in respect of the Loan may be reborrowed 	 	 	15	 
	 
	 	 	2.2	 	Interest; Monthly Payments	 	 	15	 
	 
	 	 	 	 	2.2.1	 	Generally. From and after the date the Loan is funded, interest
on the unpaid Principal shall accrue at the Interest Rate and be
payable as hereinafter provided. On the date the Loan is funded,
Borrower shall pay interest on the unpaid Principal from the date
of funding through and including December 5, 2006. On January 6,
2007 and each Payment Date thereafter through and including
November 6, 2016, Borrower shall pay interest on the unpaid
Principal which has accrued through the last day of the Interest
Period immediately preceding such Payment Date (the “Monthly Debt
Service Payment Amount”). All accrued and unpaid interest
shall be due and payable on the Maturity Date. If the Loan is
repaid on any date other than on a Payment Date (whether prior to
or after the Stated Maturity Date), Borrower shall also pay
interest that would have accrued
	 	 	 	 






(i)









 






	 	 	 	 	 	 	 	 	 	 	 
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	 	 	 	 	 	 	on such repaid Principal to but not including the next Payment Date.
	 	 	15	 
	 
	 	 	 	 	2.2.2	 	Default Rate. After the occurrence and during the continuance of an
Event of Default, the entire unpaid Debt shall bear interest at the Default
Rate, and shall be payable upon demand from
time to time, to the extent permitted by applicable law.
	 	 	16	 
	 
	 	 	 	 	2.2.3	 	Taxes. Any and all payments by Borrower hereunder and under the other
Loan Documents shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on Lender’s
income, and franchise taxes imposed on Lender by the law or regulation of any
Governmental Authority (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to in this
Section 2.2.3 as “Applicable Taxes”). If Borrower shall be required by law
to deduct any Applicable Taxes from or in respect of any sum payable hereunder to
Lender, the following shall apply: (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.2.3), Lender
receives an amount equal to the sum it would have received had no such deductions
been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law. Payments pursuant to this Section
2.2.3 shall be made within ten (10) days after the date Lender makes written demand
therefor.
	 	 	16	 
	 
	 	 	 	 	2.2.4	 	New Payment Date. Lender shall have the right, to be exercised not more
than once during the term of the Loan, to change the Payment Date to a date other
than the sixth day of each month (a “New Payment Date”), on thirty (30) days’
written notice to Borrower; provided, however, that any such change in the Payment
Date: (i) shall not modify the amount of regularly scheduled monthly principal and
interest payments, except that the first payment of principal and interest payable
on the New Payment Date shall be accompanied by interest at the interest rate
herein provided for the period from the Payment
	 	 	 	 






(ii)









 






	 	 	 	 	 	 	 	 	 	 	 
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	 	 	 	 	 	 	Date in the month in which the New Payment Date first occurs to the New
Payment Date, and (ii) shall change the Stated Maturity Date to the New
Payment Date occurring in the month
set forth in the definition of Stated Maturity Date.
	 	 	16	 
	 
	 	 	2.3	 	Loan Repayment.	 	 	16	 
	 
	 	 	 	 	2.3.1	 	Repayment. Borrower shall repay the entire outstanding
principal balance of the Note in full on the Maturity Date, together with
interest thereon to (but excluding) the date of repayment and any other
amounts due and owing under the Loan Documents. Borrower shall have no
right to prepay or defease all or any portion of the Principal except in
accordance with Section 2.3.2 below, Section 2.3.3 below
and Section 2.4 below. Except during the continuance of an Event of
Default, all proceeds of any repayment, including any prepayments of the
Loan, shall be applied by Lender as follows in the following order of
priority: First, accrued and unpaid interest at the Interest Rate; Second,
to Principal; and Third, to and any other amounts then due and owing under
the Loan Documents. If prior to the Stated Maturity Date the Debt is
accelerated by reason of an Event of Default, then Lender shall be entitled
to receive, in addition to the unpaid Principal and accrued interest and
other sums due under the Loan Documents, an amount equal to the Yield
Maintenance Premium applicable to such Principal so accelerated. During the
continuance of an Event of Default, all proceeds of repayment, including
any payment or recovery on the Property (whether through foreclosure,
deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise
provided in the Loan Documents, be applied in such order and
in such manner as Lender shall elect in Lender’s discretion. 
	 	 	16	 
	 
	 	 	 	 	2.3.2	 	Mandatory Prepayments. The Loan is subject to mandatory
prepayment in certain instances of Insured Casualty or Condemnation (each a
“Casualty/Condemnation Prepayment”), in the manner and to the extent set
forth in Section 7.4.2 hereof. Each Casualty/Condemnation
Prepayment, after deducting Lender’s costs and expenses (including
reasonable attorneys’ fees and expenses) in connection with the settlement
or collection of the Proceeds or Award, shall be applied in the same manner
as repayments under Section 2.3.1 above, and if such
Casualty/Condemnation
	 	 	 	 






(iii)









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	Prepayment is made on any date other than a Payment Date,
then such Casualty/Condemnation Prepayment shall include
interest that would have accrued on the Principal prepaid to but
not including the next Payment Date, provided that a Secondary
Market Transaction has occurred. Provided that no Event of
Default is continuing, any such mandatory prepayment under
this Section 2.3.2 shall be without the payment of the Yield
Maintenance Premium. Notwithstanding anything to the
contrary contained herein, each Casualty/Condemnation
Prepayment shall be applied in inverse order of maturity and
shall not extend or postpone the due dates of the monthly
installments due under the Note or this Agreement, or change
the amounts of such installments.
	 	 	17	 
	 
	 	 	 	 	2.3.3	 	Defeasance 
	 	 	17	 
	 
	 	 	 	 	2.3.4	 	Optional Prepayments. From and after the second Payment Date prior
to the Stated Maturity Date (the “Permitted Prepayment Date”), Borrower shall have the
right to prepay the Loan in whole (but not in part), provided that Borrower gives
Lender at least fifteen (15) days’ prior written notice thereof. If any such
prepayment is not made on a Payment Date, Borrower shall also pay interest that would
have accrued on such prepaid Principal to, but not including, the next Payment Date.
Any such prepayment shall be made without payment of the Yield Maintenance Premium.
	 	 	19	 
	 
	 	 	2.4	 	Release of Property.	 	 	19	 
	 
	 	 	 	 	2.4.1	 	Release on Defeasance. If Borrower has elected to
defease the Note and the requirements of Section 2.3.3 above and
this Section 2.4 have been satisfied, the Property shall be
released from the Lien of the Mortgage and the Defeasance Collateral
pledged pursuant to the Security Agreement shall be the sole source of
collateral securing the Note. In connection with the release of the Lien,
Borrower shall submit to Lender, not less than thirty (30) days prior to
the Defeasance Date (or such shorter time as is acceptable to Lender in its
sole discretion), a release of Lien (and related Loan Documents) for
execution by Lender. Any such release shall be in a form appropriate in the
jurisdiction in which the Property is located and contain standard
provisions protecting the rights of the releasing lender. In connection
therewith, Borrower shall provide all
	 	 	 	 






(iv)









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	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
	 	 	19	 
	 
	 	 	 	 	2.4.2	 	Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of the Debt
in accordance herewith, release or, if requested by Borrower, assign to
Borrower’s designee (without any representation or warranty by and
without any recourse against Lender whatsoever), the Lien of the Loan
Documents if not
theretofore released.
	 	 	20	 
	 
	 	 	2.5	 	Payments and Computations.	 	 	20	 
	 
	 	 	 	 	2.5.1	 	Making of Payments. Each payment by Borrower shall be made in funds
settled through the New York Clearing House Interbank Payments System or other funds
immediately available to Lender by 11:00 a.m., New York City time, on the date such
payment is due, to Lender by deposit to such account as Lender may designate by
written notice to Borrower. Whenever any such payment shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business Day
thereafter. All such payments shall be made irrespective of, and without any
deduction, set-off or counterclaim whatsoever and are payable without relief from
valuation and appraisement laws and with all costs and charges incurred in the
collection or enforcement thereof, including attorneys’ fees and court costs
	 	 	20	 
	 
	 	 	 	 	2.5.2	 	Computations. Interest payable under the Loan Documents
shall be computed on the basis of the actual number of days
elapsed over a 360-day year
	 	 	20	 
	 
	 	 	 	 	2.5.3	 	Late Payment Charge. If any Principal, interest or other
sum due under any Loan Document is not paid by Borrower on the date on
which it is due other than the payment due on the Maturity Date, 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 (the
	 	 	 	 






(v)









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	“Late Payment Charge”), 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. Such amount shall be secured by the
Loan Documents.
	 	 	20	 
	 
	3.	 	CASH MANAGEMENT AND RESERVES	 	 	20	 
	 
	 	 	3.1	 	Cash Management Arrangements. Borrower shall cause all Rents
to be transmitted directly by tenants of the Property into an Eligible
Account (the “Clearing Account”) maintained by Borrower at a local bank
selected by Borrower, which shall at all times be an Eligible Institution
(the “Clearing Bank”) as more fully described in the Clearing Account
Agreement. A form of tenant direction letter for such purpose is attached
hereto as Schedule 1. Without in any way limiting the foregoing, all
Rents received by Borrower or Manager shall be deposited into the Clearing
Account within one (1) Business Day of receipt. Funds deposited into the
Clearing Account shall be swept by the Clearing Bank on a daily basis into
Borrower’s operating account at the Clearing Bank, unless a Cash Management
Period is continuing, in which event such funds shall be swept on a daily
basis into an Eligible Account at the Deposit Bank controlled by Lender (the
“Deposit Account”) and applied and disbursed in accordance with this
Agreement. Funds in the Deposit Account shall be invested at Lender’s
discretion only in Permitted Investments. Lender will also establish
subaccounts of the Deposit Account which shall at all times be Eligible
Accounts (and may be ledger or book entry accounts and not actual accounts)
(such subaccounts are referred to herein as “Subaccounts”). The Deposit
Account and any Subaccount will be under the sole control and dominion of
Lender, and Borrower shall have no right of withdrawal therefrom. Borrower
shall pay for all expenses of opening
and maintaining all of the above accounts.	 	 	20	 
	 
	 	 	3.2	 	[intentionally deleted]	 	 	21	 
	 
	 	 	3.3	 	Taxes and Insurance. Borrower shall pay to Lender on each
Payment Date (i) one-twelfth (1/12th) of the Taxes that Lender estimates will
be payable during the next twelve (12) months in order to accumulate with
Lender sufficient funds to pay all such Taxes at least thirty (30) days prior
to their respective due dates and (ii) one-twelfth (1/12th) of the Insurance
Premiums that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all	 	 	 	 






(vi)









 







	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 





	 	 	 	such Insurance Premiums at least thirty (30) days prior to the expiration of the
Policies. Such amounts will be transferred by Lender to a Subaccount (the “Tax
and Insurance Subaccount”). Provided that no Event of Default has occurred and
is continuing, Lender will (a) apply funds in the Tax and Insurance Subaccount
to payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Section 5.2 hereof and Section 7.1 hereof, provided
that Borrower has promptly supplied Lender with notices of all Taxes and
Insurance Premiums due, or (b) reimburse Borrower for such amounts upon
presentation of evidence of payment; subject, however, to Borrower’s right to
contest Taxes in accordance with Section 5.2 hereof. In making any
payment relating to Taxes and Insurance Premiums, Lender may do so according to
any bill, statement or estimate procured from the appropriate public office
(with respect to Taxes) or insurer or agent (with respect to Insurance
Premiums), 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 Lender determines in its reasonable judgment that the funds
in the Tax and Insurance Subaccount will be insufficient to pay (or in excess
of) the Taxes or Insurance Premiums next coming due, Lender may increase (or
decrease) the monthly contribution required to be made by
Borrower to the Tax and Insurance Subaccount.	 	 	21	 
	 
	 	3.4	 	Capital Expense Reserves. Borrower shall pay to Lender on each
Payment Date an amount sufficient to pay anticipated Approved Capital Expenses.
Lender will transfer such amounts into a Subaccount (the “Capital Reserve
Subaccount”). Additionally, upon thirty (30) days’ prior notice to Borrower, Lender
may reassess the amount of the monthly payment required under this Section
3.4 from time to time in its reasonable discretion (based upon its then current
underwriting standards). Provided that no Default or Event of Default has occurred
and is continuing, Lender shall disburse funds held in the Capital Reserve
Subaccount to Borrower, within fifteen (15) days after the delivery by Borrower to
Lender of a request therefor (but not more often than once per month), in
increments of at least $5,000 provided that (i) such disbursement is for an
Approved Capital Expense; (ii) Lender shall have (if it desires) verified (by an
inspection conducted at Borrower’s expense) performance of the work associated with
such Approved Capital Expense; and (iii) the request for disbursement is
accompanied by (A) an Officer’s Certificate certifying (1) that such





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	 	 	 	funds will be used to pay or reimburse Borrower for Approved Capital Expenses
and a description thereof, (2) that all outstanding trade payables (other than
those to be paid from the requested disbursement or those constituting Permitted
Indebtedness) have been paid in full, (3) that the same has not been the subject
of a previous disbursement, and (4) that all previous disbursements have been
used to pay the previously identified Approved Capital Expenses, (B) lien
waivers or other evidence of payment satisfactory to Lender, (C) at Lender’s
option, a title search for the Property indicating that the Property is free
from all Liens, claims and other encumbrances not previously approved by Lender
and (D) such other evidence as Lender shall reasonably request that the Approved
Capital Expenses at the Property to be funded by the requested disbursement have
been completed and are paid for or will be paid upon such disbursement to
Borrower. The foregoing obligations to fund and maintain the Capital Reserve
Subaccount shall be conditionally waived for so long as no Event of Default
shall have occurred hereunder. Upon the failure of the foregoing condition,
Lender may demand full compliance with the
provisions of this Section 3.4 for the remaining term of the Loan.	 	21	 
	 
	 	3.5	 	Rollover Reserve.	 	22	 






	 	3.5.1	 	For so long as an Event of Default is continuing, on the first
Payment after the occurrence of such Event of Default, and on each Payment
Date during the continuation of an Event of Default, Borrower shall pay to
Lender for transfer into a Subaccount (the “Rollover Reserve Subaccount”)
the sum of $16,800, subject to Section 3.12 below. All such funds
may be used to pay Approved Leasing Expenses as set forth below. Lender
shall refund to Borrower all amounts remaining on deposit in the Rollover
Reserve Subaccount when such Event of Default has been cured and no other
Event of Default has
occurred and is continuing.	 	22	 
	 
	 	3.5.2	 	At any time that funds are on deposit in the Rollover Reserve
Subaccount, Lender may, at Lender’s sole option, disburse funds held in the
Rollover Reserve Subaccount to Borrower, within fifteen (15) days after the
delivery by Borrower to Lender of a request therefor (but not more often
than once per month), in increments of at least $5,000, provided (i) such
disbursement is for an Approved Leasing Expense; (ii) Lender shall have (if
it desires) verified (by an inspection conducted at





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	 	 	 	Borrower’s expense) performance of any construction work associated with
such Approved Leasing Expense; and (iii) the request for disbursement is
accompanied by (A) an Officer’s Certificate certifying (1) that such
funds will be used only to pay (or reimburse Borrower for) Approved
Leasing Expenses and a description thereof, (2) that all outstanding
trade payables that are due and payable for the applicable Approved
Leasing Expense (other than those to be paid from the requested
disbursement or those constituting Permitted Indebtedness) have been
paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been used
only to pay (or reimburse Borrower for) the previously identified
Approved Leasing Expenses, and (B) reasonably detailed supporting
documentation as to the amount, necessity and purpose therefor	 	22	 
	 
	 	3.5.3	 	Borrower shall also pay to Lender for transfer into the
Rollover Reserve Subaccount all Lease Termination Payments received by
Borrower. Provided no Default or Event of Default is continuing, upon
Lender’s receipt of satisfactory evidence that all Approved Leasing
Expenses incurred in connection with re-tenanting the space that was the
subject of the termination (and any other expenses in connection with the
re-tenanting of the applicable space) have been paid in full (which
evidence may include (i) a letter or certification from the applicable
broker, if any, that all brokerage commissions payable in connection
therewith have been paid and (ii) an estoppel certificate executed by each
applicable tenant which certifies that all contingencies under such Lease
to the payment of full rent (including Borrower’s contribution to the cost
of any tenant improvement work) have been satisfied), any portion of the
applicable Lease Termination Payment (if any) remaining in the Rollover
Reserve Subaccount shall be disbursed to Borrower; provided, however, if a
Cash Management Period is then continuing, then no such funds shall be
disbursed to Borrower, and all such funds shall instead be deposited into
the Deposit
Account, to be applied in accordance with this Agreement	 	22	 






	 	3.6	 	Operating Expense Subaccount. During a Cash Management Period, on each
Payment Date, a portion of the Rents that have been deposited into the Deposit
Account during the immediately preceding Interest	 	 	 





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	 	 	 	Period in an amount equal to the monthly amount set forth in the
Approved Operating Budget for the following month as being
necessary for payment of Approved Operating Expenses at the Property
for such month, shall be transferred into a Subaccount for the payment
of Approved Operating Expenses (the “Operating Expense
Subaccount”). Provided no Event of Default has occurred and is
continuing, Lender shall disburse funds held in the Operating Expense
Subaccount to Borrower, within fifteen (15) days after delivery by
Borrower to Lender of a request therefor (but not more often than once
per month), in increments of at least $1,000, provided (i) such
disbursement is for an Approved Operating Expense; and (ii) such
disbursement is accompanied by (A) an Officer’s Certificate certifying
(1) that such funds will be used to pay Approved Operating Expenses and a description thereof, (2) that all outstanding trade payables (other
than those to be paid from the requested disbursement or those
constituting Permitted Indebtedness) that are due and payable have
been paid in full, (3) that the same has not been the subject of a
previous disbursement, and (4) that all previous disbursements have
been or will be used to pay the previously identified Approved
Operating Expenses, and (B) reasonably detailed documentation
satisfactory to Lender as to the amount, necessity and purpose therefor	 	23	 
	 
	 	3.7	 	Casualty/Condemnation Subaccount. Borrower shall pay, or cause to be paid,
to Lender all Proceeds or Awards due to any Casualty or Condemnation to be
transferred to a Subaccount (the “Casualty/Condemnation Subaccount”) in accordance
with the provisions of Article 7 hereof. All amounts in the
Casualty/Condemnation Subaccount shall disbursed in accordance with
the provisions of Article 7 hereof.	 	23	 
	 
	 	3.8	 	[Intentionally Omitted]	 	23	 
	 
	 	3.9	 	Cash Collateral Subaccount. If a Cash Management Period shall have
commenced, then on the immediately succeeding Payment Date and on each Payment Date
thereafter during the continuance of such Cash Management Period, all Available
Cash shall be paid to Lender as provided under Section 3.11(a) below, which
amounts shall be transferred by Lender into a Subaccount (the “Cash Collateral
Subaccount”) as cash collateral for the Debt. Any funds in the Cash Collateral
Account and not previously disbursed or applied shall be disbursed to Borrower upon
the termination of such Cash Management Period. Lender shall have the right, but
not the obligation, at any time








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	 	 	 	 	 	 	 	 	Page	 





	 	 	 	an Event of Default has occurred and is continuing, in its sole and absolute
discretion to apply all sums then on deposit in the Cash Collateral Subaccount
to the Debt, in such order and in such manner as Lender shall elect in its sole
and absolute discretion, including to make a prepayment of Principal (together
which the applicable Yield
Maintenance Premium applicable thereto).	 	23	 
	 
	 	3.10	 	Grant of Security Interest; Application of Funds. As security for
payment of the Debt and the performance by Borrower of all other terms, conditions
and provisions of the Loan Documents, Borrower hereby pledges and assigns to
Lender, and grants to Lender a security interest in, all Borrower’s right, title
and interest in and to all Rents and in and to all payments to or monies held in
the Clearing Account, the Deposit Account, all Subaccounts created pursuant to this
Agreement (collectively, the “Cash Management
Accounts”). Borrower hereby grants to
Lender a continuing security interest in, and agrees to hold in trust for the
benefit of Lender, all Rents in its possession prior to the (i) payment of such
Rents to Lender or (ii) deposit of such Rents into the Deposit Account. Borrower
shall not, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in any Cash Management Account, or permit any
Lien to attach thereto, or any levy to be made thereon, or any UCC Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto. This Agreement is, among other things, intended by the parties to
be a security agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account in any order and in any manner as Lender shall elect in Lender’s
discretion without seeking the appointment of a receiver and without adversely
affecting the rights of Lender to foreclose the Lien of the Mortgage or exercise
its other rights under the Loan Documents. Cash Management Accounts shall not
constitute trust funds and may be commingled with other monies held by Lender;
provided that Borrower shall be entitled to request Lender to open and maintain a
separate Deposit Account such that the funds with respect to the Property are not
commingled with other monies held by Lender so long as Borrower shall pay the costs
and expenses with respect to such Deposit Account. All interest which accrues on
the funds in any Cash Management Account (other than the Tax and Insurance
Subaccount) shall accrue for the benefit of Borrower and shall be taxable to
Borrower and shall be





(xi)









 






	 	 	 	 	 	 	 	 	 	 	 
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	 	 	 	added to and disbursed in the same manner and under the same
conditions as the principal sum on which said interest accrued. Upon
repayment in full of the Debt, all remaining funds in the Subaccounts,
if any, shall be promptly disbursed to Borrower	 	24	 
	 
	 	3.11	 	Property Cash Flow Allocation	 	24	 
	 
	 	3.12	 	Permitted REIT Distributions. Borrower’s right to receive Rents deposited
into the Deposit Account or any Subaccount or make Permitted REIT Distributions
shall be subject to the following terms and conditions in this Section
3.12. At least 14 days prior to the end of the then current Projection Period
(as defined below), Borrower shall deliver to Lender (a) written notice setting
forth an estimate of the REIT’s taxable income for the Property and the Permitted
REIT Operating Expenses (the “REIT Distribution
Notice”) for the immediate
succeeding period of no less than one fiscal quarter and no more than one fiscal
year (each, a “Projection Period”), which REIT Distribution Notice shall also set
forth the amount of cash flow from the Property needed to make Permitted REIT
Distributions related to such Projection Period, and (b) written confirmation from
Ernst & Young or another “Big 4” accounting firm that the estimate of the REIT’s
taxable income generated by the Property for the applicable Projection Period, as
reflected in the REIT Distribution Notice, is a reasonable estimate of the same,
all in form and substance reasonably acceptable to Lender. Such estimate shall be
based on (1) the REIT’s actual taxable income for the Property and the actual
Permitted REIT Operating Expenses for the then current calendar year and (2) the
REIT’s projected taxable income for the Property and the projected Permitted REIT
Operating Expenses for the remainder of such calendar year. Within 30 days
following the end of each fiscal quarter, Borrower shall deliver to Lender a
statement of the REIT’s actual taxable income for the Property and the actual
Permitted REIT Operating Expenses for the immediately ended fiscal quarter and
evidence supporting such statement and (A) if the Permitted REIT Distributions made
for such fiscal quarter exceeded the estimate set forth in the REIT Distribution
Notice applicable to such fiscal quarter, the estimate of the Permitted REIT
Distributions for the immediately succeeding fiscal quarter shall be adjusted to
reduce the estimated amount of the Permitted REIT Distributions by the amount of
such excess and (B) if the Permitted REIT Distributions made for such fiscal
quarter was less than the estimate set forth in the REIT Distribution




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	 	 	 	 	 	 	 	 	Page	 







	 	 	 	Notice applicable to such fiscal quarter, the estimate of the Permitted
REIT Distributions for the immediately succeeding fiscal quarter shall
be adjusted to increase the estimated amount of the Permitted REIT
Distributions by the amount of such shortfall. Notwithstanding
anything stated to the contrary in this Section 3, Lender acknowledges
and agrees that the funding of all reserves and other amounts under this
Section 3 are expressly subject to the provisions of
Section 3.11 and the
disbursement to Borrower of Permitted REIT Distributions as provided
therein.	 	26	 






	4.	 	REPRESENTATIONS AND WARRANTIES	 	26	 






	 	4.1	 	Organization; Special Purpose. Each of Borrower and Sole Member has
been duly organized and is validly existing and in good standing under the laws of the
state of its formation, with requisite power and authority, and all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to own its properties
and to transact the business in which it is now engaged. Each of Borrower and Sole
Member is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with its properties, business and
operations. Borrower is a Special Purpose Bankruptcy Remote Entity.	 	27	 
	 
	 	4.2	 	Proceedings; Enforceability. Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents. The Loan Documents have been duly executed and delivered by
Borrower and constitute legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and general principles of equity. The Loan
Documents are not subject to, and Borrower has not asserted, any right of
rescission, set-off, counterclaim or defense, including the defense of usury.
No exercise of any of the terms of the Loan Documents, or any right
thereunder, will
render any Loan Document unenforceable.	 	27	 
	 
	 	4.3	 	No Conflicts. The execution, delivery and performance of the
Loan Documents by Borrower and the transactions contemplated hereby will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
Lien (other than pursuant to the Loan Documents) upon any of the property of
Borrower pursuant to the terms of, any agreement or instrument to which
Borrower is a party or by which its property is





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	 	 	 	 	 	 	 	 	Page	 





	 	 	 	subject, nor will such action result in any violation of the provisions of
any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or any of its properties.
Borrower’s rights under the Licenses and the Management Agreement
will not be adversely affected by the execution and delivery of the Loan
Documents, Borrower’s performance thereunder, the recordation of the
Mortgage, or the exercise of any remedies by Lender. Any consent,
approval, authorization, order, registration or qualification of or with
any Governmental Authority required for the execution, delivery and
performance by Borrower of the Loan Documents has been obtained
and is in full force and effect.	 	27	 
	 
	 	4.4	 	Litigation. To Borrower’s Knowledge, there are no actions, suits or other
proceedings at law or in equity by or before any Governmental Authority now pending
or threatened against or affecting Borrower, Sole Member, or the Property, which,
if adversely determined, might
have a Material Adverse Effect	 	27	 
	 
	 	4.5	 	Agreements. Borrower is not a party to any agreement or instrument or
subject to any restriction which might have a Material Adverse Effect. Borrower is
not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or any
other agreement or instrument to which it is a party or by which it or the Property
is bound which might
have a Material Adverse Effect	 	27	 
	 
	 	4.6	 	Title. To Borrower’s Knowledge, Borrower has good, marketable and
indefeasible title in fee to the real property and good title to the balance of the
Property, free and clear of all Liens except the Permitted Encumbrances. All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable Legal
Requirements in connection with the transfer of the Property to Borrower have been
paid. The Mortgage when properly recorded in the appropriate records, together with
any UCC Financing Statements required to be filed in connection therewith, will
create (i) a valid, perfected first priority lien on the Borrower’s interest in the
Property and (ii) valid and perfected first priority security interests in and to,
and perfected collateral assignments of, all personalty (including the Leases), all
in accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances. All mortgage, recording, stamp, intangible or other similar
taxes required to be paid by any Person under applicable Legal





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	 	 	 	Requirements in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan
Documents have been paid. The Permitted Encumbrances will not
have a Material Adverse Effect. To Borrower’s Knowledge no
Condemnation or other proceeding has been commenced or, to
Borrower’s best knowledge, is contemplated with respect to all or part
of the Property or for the relocation of roadways providing access to
the Property. To Borrower’s Knowledge and except as set forth in the
Title Insurance Policy, there are no claims for payment for work, labor
or materials affecting the Property which are or may become a Lien
prior to, or of equal priority with, the Liens created by the Loan
Documents. To Borrower’s Knowledge, there are no outstanding
options to purchase or rights of first refusal affecting all or any portion
of the Property. To Borrower’s Knowledge, the survey for the Property
delivered to Lender does not fail to reflect any material matter affecting
the Property or the title thereto. Except as expressly set forth in the
survey for the Property delivered to Lender, to Borrower’s Knowledge,
all of the Improvements included in determining the appraised value of
the Property lie wholly within the boundaries and building restriction
lines of the Property, and no improvement on an adjoining property
encroaches upon the Property, and no easement or other encumbrance
upon the Property encroaches upon any of the Improvements, except
those insured against by the Title Insurance Policy. To Borrower’s
Knowledge, each parcel comprising the Property is a separate tax lot
and is not a portion of any other tax lot that is not a part of the Property.
Except as set forth in the Title Insurance Policy and to Borrower’s
Knowledge, there are no pending or proposed special or other
assessments for public improvements or otherwise affecting the
Property, or any contemplated improvements to the Property that may
result in such special or other assessments.	 	27	 
	 
	 	4.7	 	
No Bankruptcy Filing. Borrower is not contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency law or the liquidation of all or a major portion of its property (a “Bankruptcy Proceeding”),
and Borrower has no knowledge of any Person contemplating the filing of any such petition against it. In addition,
neither Borrower nor Sole Member has been a party to, or the subject of a Bankruptcy Proceeding for the past ten (10)
years.	 	28	 
	 
	 	4.8	 	Full and Accurate Disclosure. No statement of fact made by Borrower in any
Loan Documents contains any untrue statement of a






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	 	 	 	 	 	 	Page	 
	 	 	 	 	material fact or omits to state any material fact necessary to make
statements contained therein not misleading. There is no material fact
presently known to Borrower that has not been disclosed to Lender
which might have a Material Adverse Effect. All financial data,
including the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of Borrower and,
to Borrower’s Knowledge, the Property (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of Borrower and the Property as of the date of such reports,
and (iii) to the extent prepared by an independent certified public
accounting firm, have been prepared in accordance with GAAP
consistently applied throughout the periods covered, except as
disclosed therein. Borrower has no contingent liabilities, liabilities for
delinquent taxes, unusual forward or long-term commitments,
unrealized or anticipated losses from any unfavorable commitments or
any liabilities or obligations not expressly permitted by this Agreement.
Since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of
Borrower or, to Borrower’s Knowledge, the Property from that set forth
in said financial statements.
	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.9	 	Tax Filings. To the extent required, Borrower has filed (or has obtained
effective extensions for filing) all federal, state and local tax returns required
to be filed and have paid or made adequate provision for the payment of all
federal, state and local taxes, charges and assessments payable by Borrower.
Borrower believes that its tax returns (if any) properly reflect the income and
taxes of Borrower for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax
authority upon audit.
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.10	 	ERISA; No Plan Assets. As of the date hereof and throughout the Term (i)
Borrower is not and will not be an “employee benefit plan,” as defined in Section
3(3) of ERISA, (ii) none of the assets of Borrower constitutes or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101, (iii) Borrower is not and will not be a “governmental plan” within the
meaning of Section 3(32) of ERISA, and (iv) transactions by or with Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans. As of the date hereof,
neither Borrower, nor any member of a “controlled
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	group of corporations” (within the meaning of Section 414 of the Code)
maintains, sponsors or contributes to a “defined benefit plan” (within
the meaning of Section 3(35) of ERISA) or a “multiemployer pension
plan” (within the meaning of Section 3(37)(A) of ERISA).
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.11	 	Compliance. To Borrower’s Knowledge and except as set forth in the survey
and the zoning report for the Property delivered to Lender, Borrower and the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements (including with respect to parking and applicable zoning and
land use laws, regulations and ordinances). Borrower is not in default or violation
of any order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which might have a Material Adverse Effect. To Borrower’s Knowledge,
the Property is used exclusively as a first class office building and other
appurtenant and related uses. To Borrower’s Knowledge, in the event that all or any
part of the Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other ordinances
applicable thereto and without the necessity of obtaining any variances or special
permits. To Borrower’s Knowledge, no legal proceedings are pending or, to the
knowledge of Borrower, threatened with respect to the zoning of the Property.
Except as disclosed in the survey delivered to Lender and/or the title report
delivered to Lender, neither the zoning nor any other right to construct, use or
operate the Property is in any way dependent upon or related to any property other
than the Property. To Borrower’s Knowledge, all certifications, permits, licenses
and approvals, including certificates of completion and occupancy permits required
for the legal use, occupancy and operation of the Property (collectively, the
“Licenses”), have been obtained and are in full force and effect. To Borrower’s
Knowledge, the use being made of the Property is in conformity with the certificate
of occupancy issued for the Property and all other restrictions, covenants and
conditions
affecting the Property
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.12	 	Contracts. There are no service, maintenance or repair contracts affecting
the Property that are not terminable on one (1) month’s notice or less without
cause and without penalty or premium. All service, maintenance or repair contracts
affecting the Property have been entered into at arms-length in the ordinary course
of Borrower’s
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	business and provide for the payment of fees in amounts and upon
terms comparable to existing market rates
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.13	 	Federal Reserve Regulations; Investment Company Act. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
“margin stock” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose that would be inconsistent with
such Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document. Borrower is not (i)
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (ii) a
“holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii)
subject to any other federal or state law or regulation which purports to restrict
or
regulate its ability to borrow money.
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.14	 	Easements; Utilities and Public Access. To Borrower’s Knowledge, all
easements, cross easements, licenses, air rights and rights-of-way or other similar
property interests (collectively, “Easements”), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained, are
described in the Title Insurance Policy and are in full force and effect without
default thereunder. The Property has rights of access to public ways and is served
by water, sewer, sanitary sewer and storm drain facilities adequate to service it
for its intended uses. All public utilities necessary or convenient to the full use
and enjoyment of the Property are located in the public right-of-way abutting the
Property, and all such utilities are connected so as to serve the Property without
passing over other property absent a valid easement. All roads necessary for the
use of the Property for its current purpose have been completed and dedicated to
public use and accepted
by all Governmental Authorities
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.15	 	Physical Condition. The Property, including all Improvements, parking
facilities, systems, Equipment and landscaping, are in good condition, order and
repair in all material respects; to Borrower’s Knowledge, there exists no
structural or other material defect or damages to the Property, whether latent or
otherwise. Borrower has not received notice from any insurance company or bonding
company of any defect or inadequacy in the Property, or any part thereof, which
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	would adversely affect its insurability or cause the imposition of extraordinary
premiums or charges thereon or any termination of any policy of insurance or
bond. Except as disclosed in the survey delivered to Lender, to Borrower’s
Knowledge, no portion of the Property is located in an area as identified by the
Federal Emergency Management Agency as an area having special flood hazards. The
Improvements have suffered no material casualty or damage which has
not been fully repaired and the cost thereof fully paid.
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.16	 	Leases. To Borrower’s Knowledge, the rent roll attached hereto as
Schedule 3 (the “Rent Roll”) is true, complete and correct and the Property is not
subject to any Leases other than the Leases described in the Rent Roll or in the
title report delivered to Lender. Except as set forth on the Rent Roll or as
otherwise disclosed to Lender in writing: To Borrower’s Knowledge, (i) each Lease
is in full force and effect; (ii) the tenants under the Leases have accepted
possession of and are in occupancy of all of their respective demised premises,
have commenced the payment of rent under the Leases, and there are no offsets,
claims or defenses to the enforcement thereof; (iii) all rents due and payable
under the Leases have been paid and no portion thereof has been paid for any period
more than thirty (30) days in advance; (iv) the rent payable under each Lease is
the amount of fixed rent set forth in the Rent Roll, and there is no claim or basis
for a claim by the tenant thereunder for an adjustment to the rent; (v) no tenant
has made any claim against the landlord under any Lease which remains outstanding,
there are no defaults on the part of the landlord under any Lease, and no event has
occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) there is no present material default by the tenant
under any Lease; (vii) all security deposits under Leases are as set forth on the
Rent Roll and are held consistent with Section 3.8 hereof; (viii) Borrower
is the sole owner of the entire lessor’s interest in each Lease; (ix) each Lease is
the valid, binding and enforceable obligation of the Borrower and the applicable
tenant thereunder; (x) no Person has any possessory interest in, or right to
occupy, the Property except under the terms of the Lease; and (xi) each Lease is
subordinate to the Loan Documents, either pursuant to its terms or pursuant to a
subordination and attornment agreement. None of the Leases contains any option to
purchase or right of first refusal to purchase the Property or any part thereof.
Neither the Leases
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	nor the Rents have been assigned or pledged except to Lender, and no
other Person has any interest therein except the tenants thereunder
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.17	 	Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and
Borrower has received reasonably equivalent value in exchange for its obligations
under the Loan Documents. Giving effect to the transactions contemplated by the
Loan Documents, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the execution and delivery of the Loan Documents, exceed
Borrower’s total probable liabilities, including subordinated, unliquidated,
disputed or contingent liabilities, including the maximum amount of its contingent
liabilities or its debts as such debts become absolute and matured. Borrower’s
assets do not and, immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts
to be payable on or in respect of obligations of Borrower).
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.18	 	Ownership of Borrower. The sole managing member of Borrower is the Sole Member.
The direct membership interests in Borrower are owned
free and clear of all Liens, warrants, options and rights to purchase.
Borrower has no obligation to any Person to purchase,
repurchase or issue any ownership interest in it. The organizational
chart attached hereto as Schedule 4 is complete and accurate and
illustrates all Persons who have a direct or indirect ownership interest in
Borrower other than those Persons who have a direct or
indirect ownership in the REIT.
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.19	 	Purchase
Options. To Borrower’s Knowledge, neither the Property nor any
part thereof is subject to any purchase options or other similar
rights in favor of third parties.
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.20	 	Management Agreement. The Management Agreement is in full force and
effect. There is no default, breach or violation existing thereunder, and no event
has occurred (other than payments due but not yet delinquent) that, with the
passage of time or the giving of notice, or both, would constitute a default,
breach or violation thereunder, by
either party thereto.
	 	 	32	 






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	 	 	 	 	 	 	Page	 
	 	 	4.21	 	Hazardous Substances. Except as set forth in the environmental reports obtained by
Lender in connection with the making of this Agreement, and to Borrower’s Knowledge, (i) the
Property is not in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or clean-up, including
the Comprehensive Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Emergency Planning and Community Right-to-Know Act of 1986,
the Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water
Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental clean-up statutes
(including with respect to Toxic Mold), any local law requiring related permits and licenses
and all amendments to and regulations in respect of the foregoing laws (collectively,
“Environmental Laws”); (ii) the Property is not subject to any private or governmental Lien or
judicial or administrative notice or action or inquiry, investigation or claim relating to
hazardous, toxic and/or dangerous substances, toxic mold or fungus of a type that may pose a
risk to human health or the environment or would negatively impact the value of the Property
(“Toxic Mold”) or any other substances or materials which are included under or regulated by
Environmental Laws (collectively, “Hazardous Substances”); (iii) no Hazardous Substances are
or have been (including the period prior to Borrower’s acquisition of the Property),
discharged, generated, treated, disposed of or stored on, incorporated in, or removed or
transported from the Property other than in compliance with all Environmental Laws; (iv) no
Hazardous Substances are present in, on or under any nearby real property which could migrate
to or otherwise affect the Property; (v) no Toxic Mold is on or about the Property which
requires remediation; (vi) no underground storage tanks exist on the Property and the Property
has never been used as a landfill; and (vii) there have been no environmental investigations,
studies, audits, reviews or other analyses conducted by or on behalf of Borrower which have
not been provided to Lender.
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.22	 	Name; Principal Place of Business. Borrower does not use and will not use
any trade name and has not done and will not do business under any name other than
its actual name set forth herein. The principal place of business of Borrower is
its primary address for notices as set
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	forth in
Section 6.1 hereof, and Borrower has no other place of
business.
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	 	4.23	 	Other Debt. There is no indebtedness with respect to the Property
or any excess cash flow or any residual interest therein, whether secured or unsecured,
other than Permitted Encumbrances and Permitted Indebtedness.
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	5.	 	COVENANTS	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.1	 	Existence. Each of Borrower and Sole Member shall (i) do or
cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, and franchises, (ii) continue to
engage in the business presently conducted by it, (iii) obtain and maintain
all Licenses, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent
required for the ownership, maintenance, management and operation of
the Property.
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.2	 	Taxes and Other Charges. Borrower shall pay all Taxes and
Other Charges as the same become due and payable, and deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes
and Other Charges have been so paid no later than thirty (30) days before
they would be delinquent if not paid (provided, however, that Borrower need
not pay such Taxes nor furnish such receipts for payment of Taxes paid by
Lender pursuant to Section 3.3 hereof). Borrower shall not suffer and
shall promptly cause to be paid and discharged any Lien against the Property,
and shall promptly pay for all utility services provided to the Property.
After prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application of any Taxes or
Other Charges, provided that (i) no Default or Event of Default has occurred
and is continuing, (ii) such proceeding shall suspend the collection of the
Taxes or such Other Charges, (iii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder, (iv)
no part of or interest in the Property will be in danger of being sold,
forfeited, terminated, canceled or lost, (v) Borrower shall have furnished
such security as may be required in the proceeding, to insure the payment of
any such Taxes or Other Charges, together with all interest and penalties
thereon, and (vi) Borrower shall promptly upon final determination thereof
pay the
	 	 	 	 






(xxii)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	 	 	 	amount of such Taxes or Other Charges, together with all costs, interest and penalties.
Lender may pay over any such security or part thereof held by Lender to the claimant
entitled thereto at any time when, in the judgment of Lender, the entitlement of such
claimant is established.
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.3	 	Access
to Property. Subject to the rights of tenants under
the Leases, Borrower shall permit agents, representatives,
consultants and employees of Lender to inspect the Property
or any part thereof at reasonable hours upon reasonable
advance notice
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.4	 	Repairs;
Maintenance and Compliance; Alterations.
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.4.1 Repairs; Maintenance and Compliance. Borrower shall at all times
maintain, preserve and protect all franchises and trade names, and Borrower shall
cause the Property to be maintained in a good and safe condition and repair and shall
not remove, demolish or alter the Improvements or Equipment (except for alterations
performed in accordance with Section 5.4.2 below and normal replacement of
Equipment with Equipment of equivalent value and functionality). Borrower shall
promptly comply with all Legal Requirements and immediately cure properly any
violation of a Legal Requirement. Borrower shall notify Lender in writing within two
(2) Business Days after Borrower first receives notice of any such non-compliance.
Borrower shall promptly repair, replace or rebuild any part of the Property that
becomes damaged, worn or dilapidated and shall complete and pay for any Improvements
at any time in the process of construction or repair 

	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 5.4.2 Alterations. Borrower may, without Lender’s consent,
perform alterations to the Improvements and Equipment which (i) do not
constitute a Material Alteration, (ii) do not adversely affect Borrower’s
financial condition or the value or Net Operating Income of the Property
and (iii) are in the ordinary course of Borrower’s business in operating
and maintaining the Property. Borrower shall not perform any Material
Alteration without Lender’s prior written consent, which consent shall not
be unreasonably withheld or delayed. Lender may, as a condition to giving
its consent to a Material Alteration, require that Borrower deliver to
Lender security for payment of the cost of such Material Alteration in an
amount in excess of $1,000,000 of the cost of the Material Alteration as
estimated by Lender. Upon substantial completion of the Material
Alteration,

	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	 Borrower shall provide evidence satisfactory to Lender that (i) the Material
Alteration was constructed in accordance with applicable Legal Requirements and
substantially in accordance with plans and specifications approved by Lender (which
approval shall not be unreasonably withheld or delayed), (ii) all contractors,
subcontractors, materialmen and professionals who provided work, materials or
services in connection with the Material Alteration have been paid in full and have
delivered unconditional releases of lien and (iii) all material Licenses necessary
for the use, operation and occupancy of the Material Alteration (other than those
which depend on the performance of tenant improvement work) have been issued.
Borrower shall reimburse Lender upon demand for all out-of-pocket costs and
expenses (including the reasonable fees of any architect, engineer or other
professional engaged by Lender) incurred by Lender in reviewing plans and
specifications or in making any determinations necessary to implement the
provisions of this Section 5.4.2

	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.5	 	Performance of Other Agreements. Borrower shall observe and perform in all material
respects each and every term to be observed or performed by it pursuant to the terms of any
agreement or instrument affecting or pertaining to the Property, including the Loan Documents
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.6	 	Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender
with respect to, and permit Lender, at its option, to participate in, any
proceedings before any Governmental Authority which may in
any way affect the rights of Lender under any Loan Document
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.7	 	Further Assurances. Borrower shall, at Borrower’s sole cost and expense,
(i) 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 Debt and/or for the better and more effective carrying out of the
intents and purposes of the Loan Documents, as Lender may reasonably require from
time to time; and (ii) upon Lender’s request therefor given from time to time after
the occurrence of any Default or Event of Default pay for (a) reports of UCC,
federal tax lien, state tax lien, judgment and pending litigation searches with
respect to Borrower and Sole Member and (b) searches of title to the Property, each
such search to be
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	conducted by search firms reasonably designated by Lender in each of
the locations reasonably designated by Lender.
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.8	 	Environmental Matters.
	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.8.1 Hazardous Substances. So long as Borrower owns or is in
possession of the Property, Borrower shall (i) keep the Property free from
Hazardous Substances and in compliance with all Environmental Laws, (ii)
promptly notify Lender if Borrower shall become aware that (A) any
Hazardous Substance is on or near the Property, (B) the Property is in
violation of any Environmental Laws or (C) any condition on or near the
Property shall pose a threat to the health, safety or welfare of humans and
(iii) remove such Hazardous Substances and/or cure such violations and/or
remove such threats, as applicable, as required by law, promptly after
Borrower becomes aware of same, at Borrower’s sole expense. Nothing herein
shall prevent Borrower from recovering such expenses from any other party
that may be liable for such removal or cure

	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.8.2 Environmental Monitoring.

	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.9	 	Title to the Property. Borrower will warrant and defend
the title to the Property, and the validity and priority
of all Liens granted or otherwise given to Lender under
the Loan Documents, subject only to Permitted
Encumbrances, against the claims of all Persons.
	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.10	 	Leases.
	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 5.10.1 Generally. Upon request, Borrower shall furnish Lender with
executed copies of all Leases then in effect. All renewals of Leases and
all proposed leases shall be arm’s length transactions
with bona fide, independent third-party tenants.

	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.10.2 Leasing. The following shall apply so long as (a) the Mezzanine
Loan is outstanding, or (b) an Event of Default is continuing: Borrower
shall not enter into a proposed Material Lease or a proposed renewal,
extension or modification of an existing Material Lease without the prior
written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, be unreasonably withheld or delayed. Prior to
seeking Lender’s consent to any Material Lease, Borrower shall deliver to
Lender a copy of such proposed lease (a “Proposed Material Lease”)
blacklined to show changes from the standard form of Lease approved by
Lender and then being used by Borrower. Lender shall approve or disapprove
each Proposed

	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	Material Lease or proposed renewal, extension or modification of an
existing Material Lease for which Lender’s approval is required under
this Agreement within five (5) Business Days of the submission by
Borrower to Lender of a written request for such approval, accompanied
by a final copy of the Proposed Material Lease or proposed renewal,
extension or modification of an existing Material Lease. If requested by
Borrower, Lender will grant conditional approvals of Proposed Material
Leases or proposed renewals, extensions or modifications of existing
Material Leases at any stage of the leasing process, from initial “term
sheet” through negotiated lease drafts, provided that Lender shall
retain the right to disapprove any such Proposed Material Lease or
proposed renewal, extension or modification of an existing Material
Lease, if subsequent to any preliminary approval material changes are
made to the terms previously approved by Lender, or additional material
terms are added that had not previously been considered and approved by
Lender in connection with such Proposed Material Lease or proposed
renewal, extension or modification of an existing Material Lease.
Provided that no Event of Default is continuing, if Borrower provides
Lender with a written request for approval (which written request shall
specifically refer to this Section 5.10.2 and shall explicitly
state in 14-point bold type that failure by Lender to approve or
disapprove within five (5) Business Days will constitute a deemed
approval) and Lender fails to reject the request in writing delivered to
Borrower within five (5) Business Days after receipt by Lender of the
request, the Proposed Material Lease or proposed renewal, extension or
modification of an existing Material Lease shall be deemed approved by
Lender, and Borrower shall be entitled to enter into such Proposed
Material Lease or proposed renewal, extension or modification of an
existing
Material Lease 

	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.10.3    Lease Execution and Modification.

	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.11	 	Estoppel Statement. After request by Lender, Borrower shall within ten
(10) days furnish Lender with a statement addressed to Lender, its successors and
assigns, duly acknowledged and certified, setting forth (i) the unpaid Principal,
(ii) the Interest Rate, (iii) the date installments of interest and/or Principal
were last paid, (iv) any offsets or defenses
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	to the payment of the Debt, and (v) that the Loan Documents are valid, legal and
binding obligations and have not been modified or if
modified, giving particulars of such modification.
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.12	 	Property Management
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.12.1 Management Agreement. Borrower shall (i) cause the Property to be
managed pursuant to the Management Agreement; (ii) promptly perform and
observe all of the covenants required to be performed and observed by it
under the Management Agreement and do all things necessary to preserve and
to keep unimpaired its rights thereunder; (iii) promptly notify Lender of
any default under the Management Agreement of which it is aware; (iv) if
requested, promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditure plan, and property improvement plan and
any other notice, report and estimate received by Borrower under the
Management Agreement; and (v) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement, the failure of which covenants
could cause a Material Adverse Effect. Without Lender’s prior written
consent (not to be unreasonably withheld), Borrower shall not (a)
surrender, terminate, cancel, extend or renew the Management Agreement or
otherwise replace the Manager or enter into any other management agreement
(except as provided below in this Section 5.12.1); (b) reduce or
consent to the reduction of the term of the Management Agreement; (c)
increase or consent to the increase of the amount of any charges under the
Management Agreement; (d) otherwise modify, change, supplement, alter or
amend in any material respect, or waive or release any of its rights and
remedies under, the Management Agreement; or (e) suffer or permit the
occurrence and continuance of a default beyond any applicable cure period
under the Management Agreement (or any successor management agreement) if
such default permits the Manager to terminate the Management Agreement (or
such successor management agreement). For so long as the Mezzanine Loan is
outstanding, Borrower may from time to time appoint, without Lender’s
consent, a successor manager to manage the Property, provided that (A)
Borrower

	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	provides to Lender prompt notice of such appointment and provides to Lender
such items and information regarding such appointment and successor manager as
Lender may reasonably request, (B) such successor manager has the management
expertise in managing properties similar in size and type to the Property
(provided, that such condition shall be deemed satisfied if the successor
manager is CB Richard Ellis, Jones Lang or PM Realty Group), (C) the property
management agreement with such successor manager provides compensation to the
manager at market rates for similar properties and otherwise contains economic
terms that are no less favorable to Borrower than such terms that were
contained in the property management agreement with the prior property manager,
and (D) such successor manager promptly executes a consent and subordination of
management agreement substantially in the form of the Consent and Subordination
of Manager of even date herewith executed and delivered by Manager to Lender.
After the Mezzanine Loan is paid in full, Borrower may from time to time
appoint, without Lender’s consent, a successor manager to manage the Property,
provided that (A) Borrower provides to Lender prompt notice of such appointment
and provides to Lender such items and information regarding such appointment
and successor manager as Lender may reasonably request, (B) the property
management agreement with such successor manager provides compensation to the
manager at market rates for similar properties, and (C) such successor manager
promptly executes a consent and subordination of management agreement
substantially in the form of the Consent and Subordination of Manager of even
date herewith executed and delivered by
Manager to Lender.

	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.12.2 Termination of Manager. If (i) an Event of Default shall be continuing,
or (ii) upon the gross negligence, malfeasance or willful misconduct of the
Manager, Borrower shall, at the request of Lender, terminate the Management
Agreement and replace Manager with a replacement manager acceptable to Lender in
Lender’s discretion and the applicable Rating Agencies on terms and conditions
satisfactory to Lender and the applicable Rating Agencies. Borrower’s failure to
appoint an acceptable manager within thirty (30) days after Lender’s

	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	request of Borrower to terminate the Management Agreement
shall constitute an immediate Event of Default.
	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.13	 	Special Purpose Bankruptcy Remote Entity. Borrower shall at all times be a
Special Purpose Bankruptcy Remote Entity. Borrower shall not directly or indirectly
make any change, amendment or modification to its organizational documents, or
otherwise take any action which could result in Borrower not being a Special
Purpose Bankruptcy Remote Entity. A “Special Purpose Bankruptcy Remote Entity”
shall have the meaning set forth on Schedule 5 hereto.
	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.14	 	Assumption in Non-Consolidation Opinion. Borrower and Sole Member shall
each conduct its business so that the assumptions (with respect to each Person)
made in that certain substantive non-consolidation opinion letter delivered by
Borrower’s counsel in connection with the Loan, shall be true
and correct in all respects.
	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.15	 	Change in Business or Operation of Property. Borrower shall not purchase
or own any real property other than the Property and shall not enter into any line
of business other than the ownership and operation of the Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance of
its present business or otherwise cease to operate the Property as a first class
office building property or terminate such business for any reason whatsoever
(other than temporary cessation in connection with
renovations to the Property)
	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.16	 	Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than termination of Leases in accordance herewith)
owed to Borrower by any Person, except for adequate consideration and in the
ordinary course of Borrower’s business.
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.17	 	Affiliate Transactions. Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of Borrower or any of the members 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
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.18	 	Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of the Property or seek any variance under any
existing zoning ordinance or use or permit the use of any portion of the
Property in any manner that could result in such use
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	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, which consent shall not be
unreasonably withheld or delayed.
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.19	 	No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of the Property (i) with any other real property constituting a
tax lot separate from the Property, and (ii) with any portion of the Property which
may be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to the Property
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.20	 	Principal Place of Business. Borrower shall not change its principal place
of business or chief executive office without first giving Lender
thirty (30) days’ prior notice
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.21	 	Change of Name, Identity or Structure. Borrower shall not change its name,
identity (including its trade name or names) or Borrower’s corporate, partnership
or other structure without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change and, in the case of a
change in Borrower’s structure that could result in Borrower not being a Special
Purpose Bankruptcy Remote Entity or result in a violation of the transfer
provisions of the Loan Documents, without first obtaining the prior written consent
of Lender. Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or maintain
the validity, perfection and priority of the security interest granted herein. At
the request of Lender, Borrower shall execute a certificate in form satisfactory to
Lender listing the trade names under which Borrower intends to operate the
Property, and representing and warranting that Borrower does business under no
other trade name with respect to the Property.
	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.22	 	Indebtedness. Borrower shall not create, incur or assume any indebtedness
other than (i) the Debt, and (ii) unsecured trade payables, unsecured capital
expenses and operating expenses incurred in the ordinary course of business
relating to the ownership and operation of the Property which (A) are not evidenced
by a note, (B) do not exceed, at any time, a maximum aggregate amount of three
percent (3%) of the original amount of the Principal (except that real estate taxes
and insurance premiums shall not be included in the calculation of such 3%
	 	 	 	 






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	 	 	 	 	 	 	Page	 
	 	 	 	 	threshold), and (C) are paid within sixty (60) days after the date
incurred (collectively, “Permitted Indebtedness”).
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.23	 	Licenses. Borrower shall not Transfer any License required for the
operation of the Property.
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.24	 	Compliance with Restrictive Covenants, Etc. Borrower will not enter into,
modify, waive in any material respect or release any Easements,
restrictive covenants or other Permitted Encumbrances, or suffer, consent
to or permit the foregoing, without Lender’s prior written consent, which
consent may be granted or denied in Lender’s reasonable
discretion.
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.25	 	ERISA.
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.25.1 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.

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.25.2 Borrower shall not maintain, sponsor, contribute to or become obligated
to contribute to, or suffer or permit any ERISA Affiliate of Borrower to,
maintain, sponsor, contribute to or become obligated to contribute to, any
Plan or any Welfare Plan or permit the assets of Borrower to become “plan
assets,” whether by operation of law or under regulations promulgated
under ERISA.

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.25.3 Borrower shall deliver to Lender such certifications or other evidence
from time to time throughout the Term, as requested by Lender in its sole
discretion, that (A) Borrower is not and does not maintain an “employee
benefit plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a “governmental plan” within the meaning of Section
3(32) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans;
and (C) the assets of Borrower do not constitute “plan assets” within the
meaning of 29 C.F.R. Section 2510.3-101.

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	5.26	 	Prohibited Transfers.
	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.26.1 Generally. Borrower shall not make, suffer or permit the occurrence
of any
Transfer other than a Permitted Transfer.

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.26.2
Transfer and Assumption.

	 	 	41	 







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	 	 	 	5.27	 	 	Liens. Without Lender’s prior written consent, Borrower shall not
create, incur, assume, permit or suffer to exist any Lien on all or any
portion of the Property or any direct or indirect legal or beneficial
ownership interest in Borrower or Sole Member, except Liens in favor
of Lender and Permitted Encumbrances, unless such Lien is bonded or
discharged within thirty (30) days after Borrower first receives notice
of such Lien.

	 	 	43	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	5.28	 	 	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.

	 	 	43	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	5.29	 	 	Expenses. Subject to Section 9.1.1(A), Borrower shall reimburse
Lender upon receipt of notice for all reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees and disbursements)
incurred by Lender or Servicer in connection with the Loan, including
(i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transactions contemplated
thereby and all the costs of furnishing all opinions by counsel for
Borrower; (ii) Borrower’s and Lender’s ongoing performance under and
compliance with the Loan Documents, including confirming
compliance with environmental and insurance requirements; (iii) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications of or under any
Loan Document and any other documents or matters requested by
Lender; (iv) filing and recording of any Loan Documents; (v) title
insurance, surveys, inspections and appraisals; (vi) the creation,
perfection or protection of Lender’s Liens in the Property and the Cash
Management Accounts (including fees and expenses for title and lien
searches, intangibles taxes, personal property taxes, Mortgage,
recording taxes, due diligence expenses, travel expenses, accounting
firm fees, costs of appraisals, environmental reports and Lender’s
Consultant, surveys and engineering reports); (vii) enforcing or
preserving any rights in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation,
in each case against, under or affecting Borrower, the Loan Documents,
the Property, or any other security given for the Loan; (viii) fees
	 	 	 	 






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	 	 	 	 	 	 	charged by Servicer or the Rating Agencies in connection with the
Loan or any modification thereof and (ix) enforcing any obligations of
or collecting any payments due from Borrower under any Loan
Document or with respect to the Property or in connection with any
refinancing or restructuring of the Loan in the nature of a “work-out”,
or any insolvency or bankruptcy proceedings. Any costs and expenses
due and payable by Borrower hereunder which are not paid by
Borrower within ten (10) days after demand may be paid from any
amounts in the Deposit Account, with notice thereof to Borrower. The
obligations and liabilities of Borrower under this Section 5.29 shall
survive the Term and the exercise by Lender of any of its rights or
remedies under the Loan Documents, including the acquisition of the
Property by foreclosure or a conveyance in lieu of foreclosure.
Notwithstanding the foregoing, in no event shall any of the costs and
expenses described in this Section 5.29 above include ongoing regular
servicing fees relating to the day-to-day servicing of the Loan, for
which Borrower shall not be charged.

	 	 	44	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	5.30	 	 	Indemnity. Borrower shall defend, indemnify and hold harmless
Lender and each of its Affiliates and their respective successors and
assigns, including the directors, officers, partners, members,
shareholders, participants, employees, professionals and agents of any
of the foregoing (including any Servicer) and each other Person, if any,
who Controls Lender, its Affiliates or any of the foregoing (each, an
“Indemnified Party”), 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 the reasonable fees and disbursements of
counsel for an Indemnified Party in connection with any investigative,
administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto, court costs
and costs of appeal at all appellate levels, investigation and laboratory
fees, consultant fees and litigation expenses), that may be imposed on,
incurred by, or asserted against any Indemnified Party (collectively, the
“Indemnified Liabilities”) in any manner, relating to or arising out of
or by reason of the Loan, including: (i) any breach by Borrower of its
obligations under, or any misrepresentation by Borrower contained in,
any Loan Document; (ii) the use or intended use of the proceeds of the
Loan; (iii) any information provided by or on behalf of Borrower, or
contained in any documentation approved by Borrower; (iv) ownership
	 	 	 	 






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	 	 	 	 	 	 	Page
	 	 	 	 	of the Mortgage, the Property or any interest therein, or receipt of any
Rents; (v) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (vi) any use, nonuse or condition in, on or about the
Property or on adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect
of the Property; (viii) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any
Hazardous Substance on, from or affecting the Property; (ix) any
personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance; (x) any
lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Substance; (xi) any violation of the
Environmental Laws which is based upon or in any way related to such
Hazardous Substance, including the costs and expenses of any
Remedial Work; (xii) any failure of the Property to comply with any
Legal Requirement; (xiii) any claim by brokers, finders or similar
persons claiming to be entitled to a commission in connection with any
Lease or other transaction involving the Property or any part thereof, or
any liability asserted against Lender with respect thereto; and (xiv) the
claims of any lessee of any portion of the Property or any Person acting
through or under any lessee or otherwise arising under or as a
consequence of any Lease; provided, however, that Borrower shall not
have any obligation to any Indemnified Party hereunder to the extent
that it is finally judicially determined that such Indemnified Liabilities
arise from the gross negligence, illegal acts, fraud or willful misconduct
of such Indemnified Party and provided, further, that Borrower shall
not have any obligation to any Indemnified Party to the extent that it is
finally judicially determined that such Indemnified Liability arises
solely from the failure of Lender or any third party or other respective
agents to comply with any applicable federal, state or other securities or
“blue sky” laws or regulations thereunder. Any amounts payable to any
Indemnified Party by reason of the application of this paragraph shall
be payable on demand and shall bear interest at the Default Rate from
the date loss or damage is sustained by any Indemnified Party until
paid. The obligations and liabilities of Borrower under this
Section 5.30 shall survive the Term and the exercise by Lender of any
	 	 






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	 	 	 	 	 	 	 	 	Page
	 

	 	 	 	 	 	of its rights or remedies under the Loan Documents, including the
acquisition of the Property by foreclosure or a conveyance in lieu of
foreclosure
	 	 	44	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	5.31	 	Patriot Act Compliance. Borrower will use its good faith and
commercially reasonable efforts to comply with the Patriot Act (as
defined below) and all applicable requirements of governmental
authorities having jurisdiction over Borrower and the Property,
including those relating to money laundering and terrorism. Lender
shall have the right to audit Borrower’s compliance with the Patriot Act
and all applicable requirements of governmental authorities having
jurisdiction over Borrower and the Property, including those relating to
money laundering and terrorism. In the event that Borrower fails to
comply with the Patriot Act or any such requirements of governmental
authorities, then Lender may, at its option, cause Borrower to comply
therewith and any and all reasonable costs and expenses incurred by
Lender in connection therewith shall be secured by the Mortgage and
the other Loan Documents and shall be immediately due and payable.
For purposes hereof, the term “Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001,
as the same may be amended from time to time, and corresponding
provisions of future laws
	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	5.32	 	Anti-Poaching Covenant. Borrower shall not, and Borrower shall not
permit any of its Affiliates to, persuade or solicit any tenant at the
Property to relocate to another property owned by an Affiliate of
Borrower without making all commercially reasonable efforts to retain
such tenant at the Property.
	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	NOTICES AND
REPORTING	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	6.1	 	Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a “Notice”)
shall be given in writing and shall be effective for all purposes if either
hand delivered with receipt acknowledged, or by a nationally
recognized overnight delivery service (such as Federal Express), or by
certified or registered United States mail, return receipt requested,
postage prepaid, or by facsimile and confirmed by facsimile answer
back, in each case addressed as follows (or to such other address or
Person as a party shall designate from time to time by notice to the
other party): If to Lender: Greenwich Capital Financial Products, Inc.,
600 Steamboat Road, Greenwich, Connecticut 06830, Attention:	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	Mortgage Loan Department, Telecopier (203) 618-2052, with a copy
to: Allen Matkins Leck Gamble Mallory & Natsis LLP, 515 South
Figueroa Street, Seventh Floor, Los Angeles, California 90071-3398,
Attention: Gregg J. Loubier, Esq., Telecopier: (213) 620-8816; if to
Borrower: c/o KBS Capital Advisors, 620 Newport Center Drive, Suite
1300, Newport Beach, CA 92660, Attention: Stacie Yamane,
Telecopier: (949) 417-6523, with a copy to: KBS Capital Advisors, 620
Newport Center Drive, Suite 1300, Newport Beach, CA 92660,
Attention: Walter Foster, Telecopier: (949) 417-6518. A notice shall
be deemed to have been given: in the case of hand delivery, at the time
of delivery; in the case of registered or certified mail, when delivered or
the first attempted delivery on a Business Day; in the case of overnight
delivery, upon the first attempted delivery on a Business Day; or in the
case of facsimile, upon the confirmation of such facsimile transmission

	 	 	46	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	6.2	 	 	Borrower Notices and Deliveries. Borrower shall (a) give prompt
	 	 	 	 
	 	 	 	 	 	 	written notice to Lender of: (i) any litigation, governmental
proceedings or claims or investigations pending or threatened against
Borrower or Sole Member which might materially adversely affect
Borrower’s or Sole Member’s condition (financial or otherwise) or
business or the Property; and (ii) any material adverse change in
Borrower’s or Sole Member’s condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower
has knowledge; and (b) furnish and provide to Lender: (i) any
Securities and Exchange Commission or other public filings, if any, of
Borrower, Sole Member, Manager, or any Affiliate of any of the
foregoing within two (2) Business Days of such filing and (ii) all
instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, reasonably requested, from time to
time, by Lender. In addition, after request by Lender (but no more
frequently than twice in any year), Borrower shall furnish to Lender
(x) within ten (10) days, a certificate addressed to Lender, its
successors and assigns reaffirming all representations and warranties of
Borrower set forth in the Loan Documents as of the date requested by
Lender or, to the extent of any changes to any such representations and
warranties, so stating such changes, and (y) during an Event of Default,
within thirty (30) days, tenant estoppel certificates addressed to Lender,
its successors and assigns from each tenant at the Property in form and
substance reasonably satisfactory to Lender.

	 	 	47	 






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	 	 	 	6.3	 	 	Financial
Reporting.	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	6.3.1	 	Bookkeeping. Borrower shall keep on a calendar year basis, in
accordance with GAAP, proper and accurate books, records and
accounts reflecting all of the financial affairs of Borrower and
all items of income and expense and any services, Equipment or
furnishings provided in connection with the operation of the
Property, whether such income or expense is realized by
Borrower, Manager or any Affiliate of Borrower. Lender shall
have the right from time to time during normal business hours
upon reasonable notice to examine such books, records and
accounts at the office of Borrower or other Person maintaining
them, and to make such copies or extracts thereof as Lender
shall desire. After an Event of Default, Borrower shall pay any
costs incurred by Lender to examine such books, records and
accounts, as Lender shall determine to be necessary or
appropriate in the protection of Lender’s interest.
	 	 	47	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	6.3.2	 	Annual Reports.
Borrower shall furnish to Lender annually,
within 120 days after each calendar year, a complete copy of the
REIT’s annual financial statements prepared in accordance to
GAAP audited by a “big four” accounting firm or another
independent certified public accountant (accompanied by an
unqualified opinion from such accounting firm or other
independent certified public accountant) reasonably acceptable
to Lender. In addition, Borrower shall furnish annual unaudited
financial statements of the Borrower, each in accordance with
GAAP and containing balance sheets and statements of profit
and loss for Borrower and the Property in such form that is
reasonably acceptable to Lender. Each such statement (x) shall
be in form and substance that is reasonably satisfactory to
Lender, (y) shall set forth the financial condition and the income
and expenses for the Property for the immediately preceding
calendar year, including statements of annual Net Operating
Income as well as (1) a list of tenants, if any, occupying more
than twenty percent (20%) of the rentable space of the Property,
(2) a breakdown showing (a) the year in which each Lease then
in effect expires, (b) the percentage of rentable space covered
by such Lease, (c) the percentage of base rent with respect to
which Leases shall expire in each such year, expressed both on
a per year and a cumulative basis and (z) shall be accompanied	 	 	 	 






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	 	 	 	 	 	 	by an Officer’s Certificate certifying that to the best of their
knowledge and belief (1) that such statement is true, correct,
complete and accurate and presents fairly the financial
condition of the Property and has been prepared in accordance
with GAAP and (2) whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has
existed and the action then being taken to remedy it.

	 	 	47	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	6.3.3	 	 	Monthly/Quarterly Reports. At any time prior to the date that
Lender sells its entire interest in the Loan Documents, Borrower
shall furnish to Lender within forty-five (45) days after the end
of each calendar month the following items: (i) monthly and
year-to-date operating statements, noting Net Operating Income
and other information necessary and sufficient under GAAP to
fairly represent the financial position and results of operation of
the Property during such calendar month, all in form that is
reasonably satisfactory to Lender; (ii) a balance sheet for such
calendar month; (iii) a comparison of the budgeted income and
expenses and the actual income and expenses for each month
and year-to-date for the Property, together with a detailed
explanation of any variances often percent (10%) or more
between budgeted and actual amounts for such period and year-to-date; (iv) a statement of the actual Capital Expenses made by
Borrower during each calendar month as of the last day of such
calendar month; (v) a statement that Borrower has not incurred
any indebtedness other than indebtedness permitted hereunder
or under the Senior Loan Documents; (vi) an aged receivables
report and (vii) rent rolls identifying the leased premises, names
of all tenants, units leased, monthly rental and all other charges
payable under each Lease, date to which paid, term of Lease,
date of occupancy, date of expiration, material special
provisions, concessions or inducements granted to tenants, and
a year-by-year schedule showing by percentage the rentable
area of the Improvements and the total base rent attributable to
Leases expiring each year) and a delinquency report for the
Property. Thereafter, Borrower shall furnish to Lender within
forty-five (45) days after the end of each calendar quarter the
following items: (i) quarterly and year-to-date operating
statements, noting Net Operating Income and other information
necessary and sufficient under GAAP to fairly represent the
	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	financial position and results of operation of the Property during
such calendar quarter, all in form that is reasonably satisfactory
to Lender; (ii) a balance sheet for such calendar quarter; (iii) a
comparison of the budgeted income and expenses and the actual
income and expenses for each quarter and year-to-date for the
Property, together with a detailed explanation of any variances
of ten percent (10%) or more between budgeted and actual
amounts for such period and year-to-date; (iv) a statement of the
actual Capital Expenses made by Borrower during each
calendar quarter as of the last day of such calendar quarter; (v) a
statement that Borrower has not incurred any indebtedness other
than indebtedness permitted hereunder; (vi) an aged receivables
report and (vii) rent rolls identifying the leased premises, names
of all tenants, units leased, monthly rental and all other charges
payable under each Lease, date to which paid, term of Lease,
date of occupancy, date of expiration, material special
provisions, concessions or inducements granted to tenants, and
a year-by-year schedule showing by percentage the rentable
area of the Improvements and the total base rent attributable to
Leases expiring each year) and a delinquency report for the
Property. Each such statement shall be accompanied by an
Officer’s Certificate certifying to the best of their knowledge
and belief (1) 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 (subject to normal year-end adjustments) and
(2) whether there exists a Default or an Event of Default, and if
so, the nature thereof, the period of time it has existed and the
action then being taken to remedy it.

	 	 	48	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	6.3.4	 	 	Other Reports. Borrower shall furnish to Lender, within ten
(10) Business Days after request, such further detailed
information with respect to the operation of the Property and the
financial affairs of Borrower, Sole Member or Manager as may
be reasonably requested by Lender or any applicable Rating
Agency.

	 	 	49	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	6.3.5	 	 	Annual Budget. Borrower shall prepare and submit (or shall
cause Manager to prepare and submit) to Lender within thirty
(30) days after commencement of a Cash Management Period
and by November 30th of each year during the Term, for
	 	 	 	 






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	 	 	 	 	 	 	 	 	 	approval by Lender, which approval shall not be unreasonably
withheld or delayed, a proposed pro forma budget for the
Property for the succeeding calendar year (the “Annual
Budget”, and each Annual Budget approved by Lender is
referred to herein as the “Approved Annual Budget”)), and,
promptly after preparation thereof, any revisions to such Annual
Budget. The Annual Budget shall consist of (i) an operating
expense budget showing, on a month-by-month basis, in
reasonable detail, each line item of the Borrower’s anticipated
operating income and operating expenses (on a cash and accrual
basis), including amounts required to establish, maintain and/or
increase any monthly payments required hereunder (and once
such Annual Budget has been approved by Lender, such
operating expense budget shall be referred to herein as the
“Approved Operating Budget”), and (ii) a Capital Expense
budget showing, on a month-by-month basis, in reasonable
detail, each line item of anticipated Capital Expenses (and once
such Annual Budget has been approved by Lender, such Capital
Expense budget shall be referred to herein as the “Approved
Capital Budget”). Until such time that any Annual Budget has
been approved by Lender, the prior Approved Annual Budget
shall apply for all purposes hereunder (with such adjustments as
reasonably determined by Lender (including increases for any
non-discretionary expenses)).
	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7.	 	INSURANCE; CASUALTY; AND CONDEMNATION	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	7.1	 	 	Insurance.	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.1.1	 	Coverage. Borrower, at its sole cost, for the mutual benefit of
Borrower and Lender, shall obtain and maintain during the
Term the following policies of insurance:
	 	 	49	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.1.2	 	Policies. All
policies of insurance (the “Policies”) required
pursuant to Section 7.1.1 above shall (i) be issued by companies
approved by Lender and licensed to do business in the State,
with a claims paying ability rating of “A” or better by S&P (and
the equivalent by any other Rating Agency) (provided, however
for multi-layered policies, (A) if four (4) or less insurance
companies issue the Policies, then at least 75% of the insurance
coverage represented by the Policies must be provided by
insurance companies with a claims paying ability rating of “A”
or better by S&P (and the equivalent by any other Rating	 	 	 	 






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	 	 	 	 	 	 	Page
	 	 	 	 	Agency), with no carrier below “BBB” (and the equivalent by
any other Rating Agency) or (B) if five (5) or more insurance
companies issue the Policies, then at least sixty percent (60%)
of the insurance coverage represented by the Policies must be
provided by insurance companies with a claims paying ability
rating of “A” or better by S&P (and the equivalent by any other
Rating Agency), with no carrier below “BBB” (and the
equivalent by any other Rating Agency), or a rating of A:XV or
better in the current Best’s Insurance Reports; (ii) name Lender
and its successors and/or assigns as their interest may appear as
the mortgagee (in the case of property insurance), loss payee (in
the case of business interruption/loss of rents coverage) and an
additional insured (in the case of liability insurance);
(iii) contain (in the case of property insurance) a Non-Contributory Standard Mortgagee Clause and a Lender’s Loss
Payable Endorsement, or their equivalents, naming Lender as
the person to which all payments made by such insurance
company shall be paid; (iv) contain a waiver of subrogation
against Lender; (v) be assigned and the originals thereof
delivered to Lender; (vi) contain such provisions as Lender
deems reasonably necessary or desirable to protect its interest,
including (A) endorsements providing that neither Borrower,
Lender nor any other party shall be a co-insurer under the
Policies, (B) that Lender shall receive at least thirty (30) days’
prior written notice of any modification, reduction or
cancellation of any of the Policies, (C) an agreement whereby
the insurer waives any right to claim any premiums and
commissions against Lender, provided that the policy need not
waive the requirement that the premium be paid in order for a
claim to be paid to the insured and (D) providing that Lender is
permitted to make payments to effect the continuation of such
policy upon notice of cancellation due to non-payment of
premiums; (vii) in the event any insurance policy (except for
general public and other liability and workers compensation
insurance) shall contain breach of warranty provisions, such
policy shall provide that with respect to the interest of Lender,
such insurance policy shall not be invalidated by and shall
insure Lender regardless of (A) any act, failure to act or
negligence of or violation of warranties, declarations or
	 	 






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	 	 	 	 	 	 	 	 	 	conditions contained in such policy by any named insured,
(B) the occupancy or use of the premises for purposes more
hazardous than permitted by the terms thereof, or (C) any
foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Loan Documents; and (viii) be
satisfactory in form and substance to Lender and approved by
Lender as to amounts, form, risk coverage, deductibles, loss
payees and insureds. Borrower shall pay the premiums for such
Policies (the “Insurance Premiums”) as the same become due
and payable and furnish to Lender evidence of the renewal of
each of the Policies together with (unless such Insurance
Premiums have been paid by Lender pursuant to Section 3.3
hereof) receipts for or other evidence of the payment of the
Insurance Premiums reasonably satisfactory to Lender. If
Borrower does not furnish such evidence and receipts at least
thirty (30) days prior to the expiration of any expiring Policy,
then Lender may, but shall not be obligated to, procure such
insurance and pay the Insurance Premiums therefor, and
Borrower shall reimburse Lender for the cost of such Insurance
Premiums promptly on demand, with interest accruing at the
Default Rate. Borrower shall deliver to Lender a certified copy
of each Policy within thirty (30) days after its effective date.
Within thirty (30) days after request by Lender, Borrower shall
obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking
into consideration changes in the value of money over time,
changes in liability laws, changes in prudent customs and
practices, and the like
	 	 	51	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	7.2	 	 	Casualty.	 	 	52	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.2.1	 	Notice; Restoration. If the Property is damaged or destroyed,
in whole or in part, by fire or other casualty (a “Casualty”),
Borrower shall give prompt notice thereof to Lender.
Following the occurrence of a Casualty, Borrower, regardless of
whether insurance proceeds are available, shall promptly
proceed to restore, repair, replace or rebuild the Property in
accordance with Legal Requirements to be of at least equal
value and of substantially the same character as prior to such
damage or destruction.
	 	 	52	 






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	 	 	 	7.2.2	 	 	Settlement of Proceeds. If a Casualty covered by any of the
Policies (an “Insured Casualty”) occurs where the loss does not
exceed $250,000, provided no Event of Default has occurred
and is continuing, Borrower may settle and adjust any claim
without the prior consent of Lender; provided such adjustment
is carried out in a competent and timely manner, and Borrower
is hereby authorized to collect and receipt for the insurance
proceeds (the “Proceeds”). In the event of an Insured Casualty
where the loss equals or exceeds $250,000 (a “Significant
Casualty”), Lender may, in its sole discretion, settle and adjust
any claim without the consent of Borrower and agree with the
insurer(s) on the amount to be paid on the loss, and the Proceeds
shall be due and payable solely to Lender and held by Lender in
the Casualty/Condemnation Subaccount and disbursed in
accordance herewith. If Borrower or any party other than
Lender is a payee on any check representing Proceeds with
respect to a Significant Casualty, Borrower shall immediately
endorse, and cause all such third parties to endorse, such check
payable to the order of Lender. Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, coupled with an interest,
to endorse such check payable to the order of Lender. The
expenses incurred by Lender in the settlement, adjustment and
collection of the Proceeds shall become part of the Debt and
shall be reimbursed by Borrower to Lender upon demand.
Notwithstanding anything to the contrary contained herein, if in
connection with a Casualty any insurance carrier makes a
payment under a property insurance Policy that Borrower
proposes be treated as business or rental interruption insurance,
then, notwithstanding any designation (or lack of designation)
by the insurance carrier as to the purpose of such payment, as
between Lender and Borrower, such payment shall not be
treated as business or rental interruption insurance proceeds
unless Borrower has demonstrated to Lender’s satisfaction that
the remaining net Proceeds that will be received from the
property insurance carriers are sufficient to pay 100% of the
cost of fully restoring the Improvements or, if such net Proceeds
are to be applied to repay the Debt in accordance with the terms
hereof, that such remaining net Proceeds will be sufficient to
pay the Debt in full.

	 	 	53	 






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	 	 	 	7.3	 	 	Condemnation.	 	 	53	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.3.1	 	Notice; Restoration. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any
condemnation or eminent domain proceeding affecting the
Property (a “Condemnation”) and shall deliver to Lender copies
of any and all papers served in connection with such
Condemnation. Following the occurrence of a Condemnation,
Borrower, regardless of whether an Award is available, shall
promptly proceed to restore, repair, replace or rebuild the
Property in accordance with Legal Requirements to the extent
practicable to be of at least equal value and of substantially the
same character (and to have the same utility) as prior to such
Condemnation.
	 	 	53	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.3.2	 	Collection of Award. With respect any award or payment in
respect of a Condemnation (an “Award”) which is equal to or
less than $250,000, provided no Event of Default is continuing,
Borrower shall have exclusive power to collect, receive and
retain any such Award and to make any compromise,
adjustment or settlement in connection with such
Condemnation. With respect any Award which is greater that
$250,000, provided no Event of Default is continuing, Borrower
shall have exclusive power to collect, receive and retain any
such Award and to make any compromise, adjustment or
settlement in connection with such Condemnation, subject to
Lender’s approval which shall not be unreasonably withheld,
delayed or conditioned. At any time that an Event of Default is
continuing, Lender is hereby irrevocably appointed as
Borrower’s attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any such Award
and to make any compromise, adjustment or settlement in
connection with such Condemnation. Notwithstanding any
Condemnation (or any transfer made in lieu of or in anticipation
of such Condemnation), Borrower shall continue to pay the
Debt at the time and in the manner provided for in the Loan
Documents, and the Debt shall not be reduced unless and until
any Award shall have been actually received and applied by
Lender to expenses of collecting the Award and to discharge of
the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to	 	 	 	 






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	 	 	 	 	 	 	 	 	 	receive out of the Award interest at the rate or rates provided in
the Note. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of such Award, Lender
shall have the right, whether or not a deficiency judgment on
the Note shall be recoverable or shall have been sought,
recovered or denied, to receive all or a portion of the Award
sufficient to pay the Debt. Borrower shall cause any Award that
is payable to Borrower to be paid directly to Lender. Lender
shall hold such Award in the Casualty/Condemnation
Subaccount and disburse such Award in accordance with the
terms hereof.
	 	 	53	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	7.4	 	 	Application of Proceeds or Award	 	 	54	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	7.4.1	 	Application to Restoration. If an Insured Casualty or
Condemnation occurs where (i) the loss is in an aggregate
amount less than the fifteen percent (15%) of the unpaid
Principal; (ii) in the reasonable judgment of Lender, the
Property can be restored within six (6) months, and prior to six
(6) months before the Stated Maturity Date and prior to the
expiration of the rental or business interruption insurance with
respect thereto, to the Property’s pre-existing condition and
utility as existed immediately prior to such Insured Casualty or
Condemnation and to an economic unit not less valuable and
not less useful than the same was immediately prior to the
Insured Casualty or Condemnation, and after such restoration
will adequately secure the Debt; (iii) less than (x) thirty percent
(30%), in the case of an Insured Casualty or (y) fifteen percent
(15%), in the case of a Condemnation, of the rentable area of
the Improvements has been damaged, destroyed or rendered
unusable as a result of such Insured Casualty or Condemnation;
(iv) Leases demising in the aggregate at least sixty-five percent
(65%) of the total rentable space in the Property and in effect as
of the date of the occurrence of such Insured Casualty or
Condemnation remain in full force and effect during and after
the completion of the Restoration (hereinafter defined); and
(v) no Event of Default shall have occurred and be then
continuing, then the Proceeds or the Award, as the case may be
(after reimbursement of any expenses incurred by Lender), shall
be applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Property (the	 	 	 	 






(xlv)









 







	 	 	 	 	 	 	 	 	 	 	 
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	 	 	 	 	 	 	“Restoration”), in the manner set forth herein. Borrower shall
commence and diligently prosecute such Restoration.
Notwithstanding the foregoing, in no event shall Lender be
obligated to apply the Proceeds or Award to reimburse
Borrower for the cost of Restoration unless, in addition to
satisfaction of the foregoing conditions, both (x) Borrower shall
pay (and if required by Lender, Borrower shall deposit with
Lender in advance) all costs of such Restoration in excess of the
net amount of the Proceeds or the Award made available
pursuant to the terms hereof; and (y) Lender shall have received
evidence reasonably satisfactory to it that during the period of
the Restoration, the Rents will be at least equal to the sum of the
operating expenses and Debt Service and other reserve
payments required hereunder, as reasonably determined by
Lender.

	 	 	54	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	7.4.2	 	 	Application
to Debt. Except as provided in Section 7.4.1
above, any Proceeds and/or Award may, at the option of Lender
in its discretion, be applied to the payment of (i) accrued but
unpaid interest on the Note, (ii) the unpaid Principal and
(iii) other charges due under the Note and/or any of the other
Loan Documents, or applied to reimburse Borrower for the cost
of any Restoration, in the manner set forth in Section 7.4.3
below. Any such prepayment of the Loan shall be without any
Yield Maintenance Premium.

	 	 	55	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	7.4.3	 	 	Procedure for Application to Restoration. If Borrower is
entitled to reimbursement out of the Proceeds or an Award held
by Lender, such Proceeds or Award shall be disbursed from
time to time from the Casualty/Condemnation Subaccount upon
Lender being furnished with (i) evidence satisfactory to Lender
of the estimated cost of completion of the Restoration, (ii) a
fixed price or guaranteed maximum cost construction contract
for Restoration satisfactory to Lender, (iii) prior to the
commencement of Restoration, all immediately available funds
in addition to the Proceeds or Award that in Lender’s judgment
are required to complete the proposed Restoration, (iv) such
architect’s certificates, waivers of lien, contractor’s sworn
statements, title insurance endorsements, bonds, plats of survey,
permits, approvals, licenses and such other documents and
items as Lender may reasonably require and approve in
	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 

	 	 	 	 	 	Lender’s discretion, and (iv) all plans and specifications for such
Restoration, such plans and specifications to be approved by
Lender prior to commencement of any work. Lender may, at
Borrower’s expense, retain a consultant to review and approve
all requests for disbursements, which approval shall also be a
condition precedent to any disbursement. No payment made
prior to the final completion of the Restoration shall exceed
ninety percent (90%) of the value of the work performed from
time to time; funds other than the Proceeds or Award shall be
disbursed prior to disbursement of such Proceeds or Award; and
at all times, the undisbursed balance of such Proceeds or Award
remaining in the hands of Lender, together with funds deposited
for that purpose or irrevocably committed to the satisfaction of
Lender by or on behalf of Borrower for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay for
the cost of completion of the Restoration, free and clear of all
Liens or claims for Lien. Provided no Default or Event of
Default then exists, any surplus that remains out of the Proceeds
held by Lender after payment of such costs of Restoration shall
be paid to Borrower. Any surplus that remains out of the
Award received by Lender after payment of such costs of
Restoration shall, in the discretion of Lender, be retained by
Lender and applied to payment of the Debt or returned to
Borrower.
	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	DEFAULTS	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.1	 	Events of Default. An “Event of Default” shall exist with respect to
the Loan if any of the following shall occur:	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.2	 	Remedies.	 	 	57	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	8.2.1
	 	Acceleration. Upon the occurrence of an Event of Default
(other than an Event of Default described in paragraph (f) or (g)
of Section 8.1 above) and at any time and from time to time
thereafter, in addition to any other rights or remedies available
to it pursuant to the Loan Documents or at law or in equity,
Lender may 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 declaring the
Debt to be immediately due and payable (including unpaid
interest), Default Rate interest, Late Payment Charges, Yield
Maintenance Premium and any other amounts owing by	 	 	 	 






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	 	 	 	 	 	 	Borrower), without notice or demand; and upon any Event of
Default described in paragraph (f) or (g) of Section 8.1 above,
the Debt (including unpaid interest, Default Rate interest, Late
Payment Charges, Yield Maintenance Premium and any other
amounts owing by Borrower) shall immediately and
automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice
or demand, anything contained in any Loan Document to the
contrary notwithstanding.

	 	 	57	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	8.2.2	 	 	Remedies Cumulative. Upon the occurrence 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
the Loan Documents 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, or be automatically, 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. 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 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 in the Loan Documents.
Without limiting the generality of the foregoing, Borrower
agrees that if an Event of Default is continuing, (i) to the extent
permitted by applicable law, 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, the Mortgage has been
foreclosed, the Property has been sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in
full. To the extent permitted by applicable law, nothing
contained in any Loan Document shall be construed as requiring
Lender to resort to any portion of the Property for the
satisfaction of any of the Debt in preference or priority to any
	 	 	 	 







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	 	 	 	 	 	 	 	 	Page
	 

	 	 	 	 	 	other portion, and Lender may seek satisfaction out of the entire
Property or any part thereof, in its discretion.
	 	 	57	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	8.2.3
	 	 	 	[Intentionally Omitted]
	 	 	58	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	8.2.4
	 	 	 	Delay. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default, or the granting of any
indulgence or compromise by Lender shall impair any such remedy, right or power hereunder or 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 shall not be construed to be a waiver of any subsequent Default or Event of Default
or to impair any remedy, right or power consequent thereon. Notwithstanding any other provision of this Agreement, Lender
reserves the right to seek a deficiency judgment or preserve a deficiency claim in connection with the foreclosure of the
Mortgage to the extent necessary to foreclose on all or any portion of the Property, the Rents, the Cash Management
Accounts or any other collateral.
	 	 	58	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	8.2.5
	 	 	 	Lender’s Right to Perform. If Borrower fails to perform any covenant or obligation contained herein and such failure shall
continue for a period of five (5) Business Days after Borrower’s receipt of written notice thereof from Lender, without in
any way limiting Lender’s right to exercise any of its rights, powers or remedies as provided hereunder, or under any of the
other Loan Documents, Lender may, but shall have no obligation to, perform, or cause performance of, such covenant or
obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith
shall be payable by Borrower to Lender upon demand and if not paid shall be added to the Debt (and to the extent permitted
under applicable laws, secured by the Mortgage and other Loan Documents) and shall bear interest thereafter at the Default
Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to
Borrower of any such failure.
	 	 	58	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	SPECIAL PROVISIONS	 	 	58	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	9.1	 	Sale of Note and
Secondary Market Transaction.	 	 	58	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	9.1.1
	 	General; Borrower Cooperation. Lender shall have the right at any time and from time to time (i) to sell or otherwise transfer
the Loan or any portion thereof or the Loan Documents or any	 	 	 	 






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	 	 	 	 	interest therein to one or more investors, (ii) to sell participation
interests in the Loan to one or more investors (iii) to cause the
Loan to be split into two or more separate loans or (iv) to
securitize the Loan or any portion thereof in a single asset
securitization or a pooled loan securitization of rated single or
multi-class securities (the “Securities”) secured by or
evidencing ownership interests in the Note and the Mortgage
(each such sale, assignment, participation and/or securitization
is referred to herein as a “Secondary Market Transaction”). In
connection with any Secondary Market Transaction, Borrower
shall use all reasonable efforts and cooperate fully and in good
faith with Lender and otherwise 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 such Secondary Market
Transactions, including: (a) to (i) to provide such financial and
other information with respect to the Property, Borrower and its
Affiliates, Manager and any tenants of the Property, (ii) provide
business plans and budgets relating to the Property and
(iii) subject to the rights of tenants at the Property, perform or
permit or cause to be performed or permitted such site
inspection, appraisals, surveys, market studies, environmental
reviews and reports, engineering reports and other due diligence
investigations of the Property, as may be reasonably requested
from time to time by Lender or the Rating Agencies or as may
be necessary or appropriate in connection with a Secondary
Market Transaction or Exchange Act requirements (the items
provided to Lender pursuant to this paragraph (a) being called
the “Provided Information”), together, if customary, with
appropriate verification of and/or consents to the Provided
Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating
Agencies; (b) cause counsel to render opinions as to non-consolidation and any other opinion customary in securitization
transactions with respect to the Property, Borrower and its
Affiliates, which counsel and opinions shall be reasonably
satisfactory to Lender and the Rating Agencies; (c) make such
representations and warranties as of the closing date of any
Secondary Market Transaction with respect to the Property,
	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	Borrower and the Loan Documents as are customarily provided
in such transactions and as may be reasonably requested by
Lender or the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on
the date thereof, including the representations and warranties
made in the Loan Documents; (d) provide current certificates of
good standing and qualification with respect to Borrower and
Sole Member from appropriate Governmental Authorities; and
(e) execute such amendments to the Loan Documents and
Borrower’s organizational documents, as may be requested by
Lender or the Rating Agencies or otherwise to effect a
Secondary Market Transaction, provided that nothing contained
in this subsection (e) shall result in a material economic change
in the transaction; provided that notwithstanding anything to the
contrary in this Section 9.1.1 Borrower shall not be required to
(A) incur any out-of-pocket expense in connection with the
Secondary Market Transaction unless Lender agrees to pay for
such out of pocket expenses as they are incurred by Borrower
(including, without limitation, a change in the interest rate or
the stated maturity of the Loan), (B) agree to a modification of
any Loan Document that would have a material impact upon the
rights, liabilities, or responsibilities of Borrower, or (C) take
any actions that would impose a significant burden on
Borrower. Borrower’s cooperation obligations set forth herein
shall continue until the Loan has been paid in full.

	 	 	58	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.2	 	 	Use of Information. Borrower understands that all or any
portion of the Provided Information and the Required Records
may be included in disclosure documents in connection with a
Secondary Market Transaction, including a prospectus or
private placement memorandum (each, a “Disclosure
Document”) and may also be included in filings with the
Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the “Securities Act”), or the
Securities and Exchange Act of 1934, as amended (the
“Exchange Act”), or provided or made available to investors or
prospective investors in the Securities, the Rating Agencies, and
service providers or other parties relating to the Secondary
Market Transaction. If the Disclosure Document is required to
be revised, Borrower shall cooperate with Lender in updating
	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	the Provided Information or Required Records for inclusion or
summary in the Disclosure Document or for other use
reasonably required in connection with a Secondary Market
Transaction by providing all current information pertaining to
Borrower, Manager and the Property necessary to keep the
Disclosure Document accurate and complete in all material
respects with respect to such matters.

	 	 	59	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.3	 	 	Borrower Obligations Regarding Disclosure Documents. In
connection with a Disclosure Document, Borrower shall: (a) if
requested by Lender, certify in writing that Borrower has
carefully examined those portions of such Disclosure
Document, pertaining to Borrower, the Property, Manager and
the Loan, and that such portions do not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading;
and (b) indemnify (in a separate instrument of indemnity, if so
requested by Lender) (i) any underwriter, syndicate member or
placement agent (collectively, the “Underwriters”)
retained by
Lender or its issuing company affiliate (the
“Issuer”) in
connection with a Secondary Market Transaction, (ii) Lender
and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market
Transaction (the “Registration Statement”), and each of the
Issuer’s directors, each of its officers who have signed the
Registration Statement and each person or entity who controls
the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively
within (iii), the “GCM Group”), and each of its directors and
each person who controls each of the Underwriters, 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
(the“Liabilities”) to
which Lender, the GCM Group or the Underwriter Group may
become subject (including reimbursing all of them for any legal
or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the
Liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any of
	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	the Provided Information or in any of the applicable portions of
such sections of the Disclosure Document applicable to
Borrower, Manager, the Property or the Loan, or arise out of or
are based upon the omission or alleged omission to state therein
a material fact required to be stated in the applicable portions of
such sections or necessary in order to make the statements in the
applicable portions of such sections in light of the
circumstances under which they were made, not misleading;
provided, however, that Borrower shall not be required to
indemnify Lender for any Liabilities relating to untrue
statements or omissions which Borrower identified to Lender in
writing at the time of Borrower’s examination of such
Disclosure Document.

	 	 	60	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.4	 	 	Borrower Indemnity Regarding Filings. In connection with filings under the Exchange Act, Borrower shall (i) indemnify
Lender, the GCM Group and the Underwriter Group for any
Liabilities to which Lender, the GCM Group or the Underwriter
Group may become subject insofar as the Liabilities arise out of
or are based upon the omission or alleged omission to state in
the Provided Information a material fact required to be stated in
the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which
they were made not misleading and (ii) reimburse Lender, the
GCM Group or the Underwriter Group for any legal or other
expenses actually incurred by Lender, GCM Group or the
Underwriter Group in connection with defending or
investigating the Liabilities

	 	 	60	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.5	 	 	Indemnification Procedure. Promptly after receipt by an
indemnified party under Section 9.1.3 above or Section 9.1.4
above of notice of the commencement of any action for which a
claim for indemnification is to be made against Borrower, such
indemnified party shall notify Borrower in writing of such
commencement, but the omission to so notify Borrower will not
relieve Borrower from any liability that it may have to any
indemnified party hereunder except to the extent that failure to
notify causes prejudice to Borrower. If any action is brought
against any indemnified party, and it notifies Borrower of the
commencement thereof, Borrower will be entitled, jointly with
any other indemnifying party, to participate therein and, to the
	 	 	 	 






(liii)









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid
notice of commencement, to assume the defense thereof with
counsel satisfactory to such indemnified party in its discretion.
After notice from Borrower to such indemnified party under this
Section 9.1.5, Borrower shall not be responsible 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 Borrower and an indemnified
party, and any 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 Borrower, then 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 or parties.
Borrower shall not be liable for the expenses of more than one
separate counsel unless there are legal defenses available to it
that are different from or additional to those available to another
indemnified party.

	 	 	61	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.6	 	 	Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in Section 9.1.3 above or Section 9.1.4 above is for
any reason held to be unenforceable by an indemnified party in
respect of any Liabilities (or action in respect thereof) referred
to therein which would otherwise be indemnifiable under
Section 9.1.3 above or Section 9.1.4 above, Borrower shall
contribute to the amount paid or payable by the indemnified
party as a result of such 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
not guilty of such fraudulent misrepresentation. In determining
the amount of contribution to which the respective parties are
entitled, the following factors shall be considered: (i) the GCM
Group’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
	 	 	 	 






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	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it may not be equitable if the
amount of such contribution were determined by pro rata or per
capita allocation.

	 	 	61	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.7	 	 	[Intentionally Omitted]

	 	 	61	 
	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	9.1.8	 	 	Severance of Loan. Lender shall have the right, at any time
(whether prior to, in connection with, or after any Secondary
Market Transaction or for the purpose of enforcing Lender’s
rights and remedies under the Loan Documents), with respect to
all or any portion of the Loan, to modify, split and/or sever all
or any portion of the Loan as hereinafter provided. Without
limiting the foregoing, Lender may (i) cause the Note and the
Mortgage to be split into a first and second mortgage loan,
(ii) create one more senior and subordinate notes (i.e., an A/B or
A/B/C structure), (iii) create multiple components of the Note
or Notes (and allocate or reallocate the principal balance of the
Loan among such components) or (iv) otherwise sever the Loan
into two (2) or more loans secured by mortgages and by a
pledge of partnership or membership interests (directly or
indirectly) in Borrower (i.e., a senior loan/mezzanine loan
structure), in each such case, in whatever proportion and
whatever priority Lender determines; provided, however, in
each such instance the outstanding principal balance of all the
 Notes evidencing the Loan (or components of such Notes)
immediately after the effective date of such modification equals
the outstanding principal balance of the Loan immediately prior
to such modification and the weighted average of the interest
rates for all such Notes (or components of such Notes)
immediately after the effective date of such modification equals
the interest rate of the original Note immediately prior to such
modification. If requested by Lender, Borrower (and
Borrower’s constituent members, if applicable) shall execute
within two (2) Business Days after such request, such
documentation as Lender may reasonably request to evidence
and/or effectuate any such modification or severance. Borrower
shall not be required to (A) incur any out-of-pocket expense in
connection with any action taken pursuant to this Section 9.1.8
unless Lender agrees to pay for such out of pocket expenses as
	 	 	 	 






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	 	 	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	 	they are incurred by Borrower (including, without limitation, a
change in the interest rate or the stated maturity of the Loan),
(B) agree to a modification of any Loan Document that would
have a material impact upon the rights, liabilities, or
responsibilities of Borrower, or (C) take any actions that would
impose a significant burden on Borrower.

	 	 	61	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	10.	 	 	MISCELLANEOUS	 	 	 	 	62	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 10.1	 	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 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 and rights
under the 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 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 any Loan Document. The provisions of this
Section 10.1 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by any Loan
Document; (ii) impair the right of Lender to name Borrower as a party
defendant in any action or suit for foreclosure and sale under the
Mortgage; (iii) affect the validity or enforceability of any of the Loan
Documents or any guaranty made in connection with the Loan or any
of the rights and remedies of Lender thereunder; (iv) impair the right of
Lender to obtain the appointment of a receiver; (v) impair the
enforcement of the Assignment of Leases; (vi) constitute a prohibition
against Lender to commence any other appropriate action or proceeding
in order for Lender to fully realize the security granted by the Mortgage
or to exercise its remedies against the Property; or (vii) constitute a
waiver of the right of Lender to enforce the liability and obligation of
Borrower (but not any of Borrower’s constituent members, partners,
officers, directors or shareholders), by money judgment or otherwise, to
the extent of any loss, damage, cost, expense, liability, claim or other	 	 	 	 






(lvi)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	obligation incurred by Lender (including attorneys’ fees and costs
reasonably incurred) arising out of or in connection with the following
(all such liability and obligation of Borrower for any or all of the
following being referred to herein as “Borrower’s Recourse
Liabilities”):

	 	 	62	 
	 	 	 	 	 
	 	 	 	 
	 	10.2	 	 	Brokers and Financial Advisors. Borrower shall indemnify and hold
Lender harmless from and against any and all claims, liabilities, costs
and expenses (including attorneys’ fees, whether incurred in connection
with enforcing this indemnity or defending claims of third parties) of
any kind in any way relating to or arising from a claim by any Person
that such Person acted on behalf of Borrower in connection with the
transactions contemplated herein. Lender shall indemnify and hold
Borrower harmless from and against any and all claims, liabilities,
costs and expenses (including attorneys’ fees, whether incurred in
connection with enforcing this indemnity or defending claims of third
parties) of any kind in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Lender in connection
with the transactions contemplated herein. The provisions of this
Section 10.2 shall survive the expiration and termination of this
Agreement and the repayment of the Debt.

	 	 	64	 
	 	 	 	 	 
	 	 	 	 
	 	10.3	 	 	Retention of Servicer. Lender reserves the right to retain the Servicer
to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of
this Agreement, any pooling and servicing agreement or similar
agreement entered into as a result of a Secondary Market Transaction,
the Deposit Account Agreement or otherwise, together with such other
powers as are reasonably incidental thereto. Borrower shall pay any
reasonable fees and expenses of the Servicer (i) in connection with a
release of the Property (or any portion thereof), (ii) in connection with
an assumption or modification of the Loan, (iii) in connection with the
enforcement of the Loan Documents or (iv) in connection with any
other action or approval taken by Servicer hereunder on behalf of
Lender (which shall not include ongoing regular servicing fees relating
to the day-to-day servicing of the Loan, for which Borrower shall not
be charged).

	 	 	64	 
	 	 	 	 	 
	 	 	 	 
	 	10.4	 	 	Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the
Loan and the execution and delivery to Lender of the Note, and shall
	 	 	 	 






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	 	 	 	 	 	 	Page
	 	 	 	 	continue in full force and effect so long as any of the Debt is unpaid or
such longer period if expressly set forth in this Agreement. All
Borrower’s covenants and agreements in this Agreement shall inure to
the benefit of the respective legal representatives, successors and
assigns of Lender.

	 	 	64	 
	 	 	 	 	 
	 	 	 	 
	 	10.5	 	 	Lender’s Discretion. Whenever pursuant to this Agreement or any
other Loan Document, Lender exercises any right given to it to approve
or disapprove, or consent or withhold consent, or any arrangement or
term is to be satisfactory to Lender or is to be in Lender’s discretion, the
decision of Lender to approve or disapprove, to consent or withhold
consent, or to decide whether arrangements or terms are satisfactory or
not satisfactory, or acceptable or unacceptable or in Lender’s discretion
shall (except as is otherwise specifically herein provided) be in the
reasonable discretion of Lender.

	 	 	65	 
	 	 	 	 	 
	 	 	 	 
	 	10.6	 	 	Governing Law.

	 	 	65	 
	 	 	 	 	 
	 	 	 	 
	 	10.7	 	 	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. 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 any 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 the
Loan Documents, or to declare an Event of Default for failure to effect
prompt payment of any such other amount.

	 	 	65	 
	 	 	 	 	 
	 	 	 	 
	 	10.8	 	 	Trial by Jury. BORROWER AND LENDER HEREBY AGREE
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
	 	 	 	 






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	 	 	 	 	 	 	 	Page	 
	 	 	 	 	RIGHT BY JURY, AND WAIVE 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. EITHER
PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE OTHER.

	 	 	65	 
	 	 	 	 	 
	 	 	 	 
	 	10.9	 	 	Headings/Exhibits. The Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. The Exhibits
attached hereto, are hereby incorporated by reference as a part of the
Agreement with the same force and effect as if set forth in the body
hereof.

	 	 	66	 
	 	 	 	 	 
	 	 	 	 
	 	10.10	 	 	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.

	 	 	66	 
	 	 	 	 	 
	 	 	 	 
	 	10.11	 	 	Preferences. Upon the occurrence and continuance of an Event of
Default, 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 Debt. To the extent Borrower makes a payment to
Lender, or Lender receives proceeds of any collateral, which is in
whole or part 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 Debt 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. This provision shall survive
	 	 	 	 






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	 	 	 	 	 	 	 	Page	 
	 	 	 	 	the expiration or termination of this Agreement and the repayment of
the Debt.

	 	 	66	 
	 	 	 	 	 
	 	 	 	 
	 	10.12	 	 	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 any other Loan Document specifically and
expressly requires 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 no Loan Document
specifically and expressly requires the giving of notice by Lender to
Borrower.

	 	 	66	 
	 	 	 	 	 
	 	 	 	 
	 	10.13	 	 	Remedies of Borrower. If a claim or adjudication is made that Lender
or any of its agents, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any
Loan Document, Lender or any such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither
Lender nor its agents, including Servicer, shall be liable for any
monetary damages, and Borrower’s sole remedy shall be to commence
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. Borrower
specifically waives any claim against Lender and its agents, including
Servicer, with respect to actions taken by Lender or its agents on
Borrower’s behalf.

	 	 	66	 
	 	 	 	 	 
	 	 	 	 
	 	10.14	 	 	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, understandings and negotiations among or between such
parties, whether oral or written, are superseded by the terms of this
Agreement and the other Loan Documents.

	 	 	67	 
	 	 	 	 	 
	 	 	 	 
	 	10.15	 	 	Offsets, Counterclaims and Defenses. 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,
including Servicer, or otherwise offset any obligations to make
payments required under the Loan Documents.

	 	 	67	 
	 	 	 	 	 
	 	 	 	 
	 	10.16	 	 	Publicity. All news releases, publicity or advertising by Borrower or
its Affiliates through any media intended to reach the general public,
which refers to the Loan Documents, the Loan, Lender or any member
	 	 	 	 






(lx)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	 	 	 	 	of the GCM Group, a Loan purchaser, the Servicer or the trustee in a
Secondary Market Transaction, shall be subject to the prior written
approval of Lender, which approval shall not be unreasonably withheld.
Lender shall have the right to issue any of the foregoing without
Borrower’s approval. Notwithstanding anything stated to the contrary
in this Section 10.16, nothing contained in this Section 10.16 shall
prohibit or impair Borrower’s right to disclose information relating to
the Loan and/or the Loan Documents (a) to any due diligence
representatives and/or consultants that are engaged by, work for or are
acting on behalf of, any securities dealers and/or broker dealers
evaluating Borrower, (b) in connection with any filings (including any
amendment or supplement to any S-11 filing) with governmental
agencies (including the SEC) by the REIT, and (c) to any
broker/dealers in the REIT’s broker/dealer network and any of the REIT
investors.

	 	 	67	 
	 	 	 	 	 
	 	 	 	 
	 	10.17	 	 	No Usury. Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the
extent that it permits Lender to contract for, charge, take, reserve or
receive a greater amount of interest than under state law) and that this
Section 10.17 shall control every other agreement in the Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the
Note or any other Loan Document, or contracted for, charged, taken,
reserved or received with respect to the Debt, or if Lender’s exercise of
the option to accelerate the maturity of the Loan or any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower’s and Lender’s express
intent that all excess amounts theretofore collected by Lender shall be
credited against the unpaid Principal and all other Debt (or, if the Debt
has been or would thereby be paid in full, refunded to Borrower), and
the provisions of the Loan Documents immediately be deemed
reformed and the amounts thereafter collectible thereunder reduced,
without the necessity of the execution of any new document, so as to
comply with applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder. All sums paid or agreed
to be paid to Lender for the use, forbearance or detention of 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
	 	 	 	 






(lxi)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	 	 	 	 	Debt does not exceed the maximum lawful rate from time to time in
effect and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained in any Loan
Document, it is not the intention of Lender to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration

	 	 	67	 
	 	 	 	 	 
	 	 	 	 
	 	10.18	 	 	Conflict; Construction of Documents. 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 each is represented by separate counsel in
connection with the negotiation and drafting of the Loan Documents
and that the Loan Documents shall not be subject to the principle of
construing their meaning against the party that drafted them.

	 	 	68	 
	 	 	 	 	 
	 	 	 	 
	 	10.19	 	 	No Third Party Beneficiaries. The Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in any Loan
Document shall be deemed to confer upon anyone other than the
Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained therein.

	 	 	68	 
	 	 	 	 	 
	 	 	 	 
	 	10.20	 	 	Yield Maintenance Premium. Borrower acknowledges that
(a) Lender is making the Loan in consideration of the receipt by Lender
of all interest and other benefits intended to be conferred by the Loan
Documents and (b) if payments of Principal are made to Lender prior to
the Stated Maturity Date, for any reason whatsoever, whether
voluntary, as a result of Lender’s acceleration of the Loan after an
Event of Default, by operation of law or otherwise, Lender will not
receive all such interest and other benefits and may, in addition, incur
costs. For these reasons, and to induce Lender to make the Loan,
Borrower agrees that, except as expressly provided in Article 7 hereof,
all prepayments, if any, whether voluntary or involuntary, will be
accompanied by the Yield Maintenance Premium. Such Yield
Maintenance Premium shall be required whether payment is made by
Borrower, by a Person on behalf of Borrower, or by the purchaser at
any foreclosure sale, and may be included in any bid by Lender at such
sale. Borrower further acknowledges that (A) it is a knowledgeable
real estate developer and/or investor; (B) it fully understands the effect
of the provisions of this Section 10.20, as well as the other provisions
of the Loan Documents; (C) the making of the Loan by Lender at the
Interest Rate and other terms set forth in the Loan Documents are
sufficient consideration for Borrower’s obligation to pay a Yield
	 	 	 	 






(lxii)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	 	 	 	 	Maintenance Premium (if required); and (D) Lender would not make
the Loan on the terms set forth herein without the inclusion of such
provisions. Borrower also acknowledges that the provisions of this
Agreement limiting the right of prepayment and providing for the
payment of the Yield Maintenance Premium and other charges
specified herein were independently negotiated and bargained for, and
constitute a specific material part of the consideration given by
Borrower to Lender for the making of the Loan except as expressly
permitted hereunder.

	 	 	68	 
	 	 	 	 	 
	 	 	 	 
	 	10.21	 	 	Assignment. The Loan, the Note, the Loan Documents and/or
Lender’s rights, title, obligations and interests therein may be assigned
by Lender and any of its successors and assigns to any Person at any
time in its discretion, in whole or in part, whether by operation of law
(pursuant to a merger or other successor in interest) or otherwise. Upon
such assignment, all references to Lender in this Agreement and in any
Loan Document shall be deemed to refer to such assignee or successor
in interest and such assignee or successor in interest shall thereafter
stand in the place of Lender. Borrower may not assign its rights, title,
interests or obligations under this Agreement or under any of the Loan
Documents except in connection with a Transfer and Assumption
permitted hereunder.

	 	 	68	 
	 	 	 	 	 
	 	 	 	 
	 	10.22	 	 	Certain Additional Rights of Lender. Notwithstanding anything to
the contrary which may be contained in this Agreement, Lender shall
have:

	 	 	68	 
	 	 	 	 	 
	 	 	 	 
	 	10.23	 	 	Set-Off. In addition to any rights and remedies of Lender provided
by this Agreement and by law, following and during the
continuance of an Event of Default, Lender shall have the right,
without prior notice to Borrower, any such notice being expressly
waived by Borrower to the extent permitted by applicable law,
upon any amount becoming due and payable by Borrower
hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by Lender or any Affiliate thereof to or
for the credit or the account of Borrower.

	 	 	69	 






(lxiii)









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	 	10.24	 	 	Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so
executed and delivered shall be an original, but all
of which shall together constitute one and the same
instrument.

	 	 	70	 
	 	 	 	 	 
	 	 	 	 
	Schedule 1
	 	Form of Tenant Direction Letter
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	Schedule 2
	 	Exceptions to Representations and Warranties
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	Schedule 3
	 	Rent Roll
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	Schedule 4
	 	Organization of Borrower
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	Schedule 5
	 	Definition of Special Purpose Bankruptcy Remote Entity
	 	 	 	 







(lxiv)











 





LOAN AGREEMENT




     THIS LOAN AGREEMENT dated as of November 14, 2006 (as the same may be modified, supplemented,
amended or otherwise changed, this “Agreement”) is made between KBS SOUTHPARK COMMERCE CENTER II,
LLC, a Delaware limited liability company (together with its permitted successors and assigns,
“Borrower”), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (together with
its successors and assigns, “Lender”).



1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION




     1.1 Specific Definitions. The following terms have the meanings set forth
below:



          Affiliate: as to any Person, any other Person that, directly or indirectly, is in Control of,
is Controlled by or is under common Control with such Person or is a director or officer of such
Person or of an Affiliate of such Person.




          Allocated Share: shall mean at any time, and from time to time, an amount expressed as a
percentage which is calculated by dividing the cost basis of the Property by the cost basis of all
real property owned directly or indirectly by the REIT or the REIT Operating Partnership.




          Approved Asset Manager: An entity Controlled by Peter M. Bren or Charles J. Schreiber,
including KBS Capital Advisors LLC, or another entity reasonably acceptable to Lender.




          Approved Capital Expenses: Capital Expenses incurred by Borrower, provided that during a Cash
Management Period, such Capital Expenses shall either be (i) included in the Approved Capital
Budget for the current calendar month or (ii) approved by Lender.




          Approved Leasing Expenses: actual out-of-pocket expenses incurred by Borrower and payable to
third parties that are not Affiliates of Borrower in leasing space at the Property pursuant to
Leases entered into in accordance with the Loan Documents, including brokerage commissions and
tenant improvements, which expenses (i) are (A) specifically approved by Lender in connection with
approving the applicable Lease, (B) incurred in the ordinary course of business and on market
terms and conditions in connection with Leases which do not require Lender’s approval under the
Loan Documents, or (C) otherwise approved by Lender, which approval shall not be unreasonably
withheld or delayed, and (ii) are substantiated by executed Lease documents and brokerage
agreements.




          Approved Leasing Expenses: actual out-of-pocket expenses incurred by Borrower and payable to
third parties that are not Affiliates of Borrower in re-leasing space demised under a Lease at the
Property pursuant to replacement Leases entered into in accordance with the Loan Documents,
including brokerage commissions and tenant improvements.




 









 





          Approved Mezzanine Lender: (i) GCM or (ii) a “Qualified Transferee” (as such term is defined
in the Intercreditor Agreement between Lender and GCM), (iii) a successor holder of the Mezzanine
Loan that (A) prior to the occurrence of a Secondary Market Transaction, has been approved by
Lender acting reasonably or (B) after the occurrence of a Secondary Market Transaction, has
obtained a Rating Comfort Letter with respect to the transfer of the Mezzanine Loan to such holder
and has been approved by the Servicer or (iv) the lender under any other Approved Mezzanine Loan
that (A) prior to the occurrence of a Secondary Market Transaction, has been approved by Lender
acting reasonably or (B) after the occurrence of a Secondary Market Transaction, has been approved
by the Servicer and the Rating Agencies.



          Approved Mezzanine Loan:




          (i) the Mezzanine Loan;




          (ii) a loan from an Approved Mezzanine Lender to Mezzanine Loan Borrower, the proceeds of
which are used to refinance the Mezzanine Loan, provided that:
(A) such loan shall be secured by the same collateral as the Mezzanine Loan; (B) the new Approved
Mezzanine Lender and the Mezzanine Loan Documents evidencing and securing such loan shall have been
approved by (x) Lender in its reasonable discretion if such loan is made prior to the occurrence of
a Secondary Market Transaction or (y) by the Servicer and the Rating Agencies if such loan is made
after the occurrence of a Secondary Market Transaction; (C) such loan shall be in an amount and
have an interest rate that does not exceed the original principal amount and the interest rate of
the Mezzanine Loan, and shall otherwise be on terms and conditions that are not materially less
favorable to the Mezzanine Loan Borrower than the terms and conditions of the Mezzanine Loan; (D)
the term of such Approved Mezzanine Loan shall expire on the Stated Maturity Date; (E) the Approved
Mezzanine Lender shall enter into an intercreditor agreement in form and content substantially
similar to the intercreditor agreement entered into between the holder of the Loan and the holder
of the Mezzanine Loan; and (F) if such refinancing of the Mezzanine Loan occurs after a Secondary
Market Transaction, no such refinancing shall be permitted which would result in a downgrade,
qualification or withdrawal of any of the ratings of any of the Securities issued in such Secondary
Market Transaction; and




          (iii) a new loan from an Approved Mezzanine Lender to Mezzanine Loan Borrower, provided that:
(A) such loan shall be secured by the same or similar collateral as the Mezzanine Loan (including
a pledge of all membership interests in the Mezzanine Borrower);
(B) the new Approved Mezzanine Lender and the Mezzanine Loan Documents evidencing and securing such
loan shall have been approved by (x) Lender in its reasonable discretion if such loan is made prior
to the occurrence of a Secondary Market Transaction or (y) by the Servicer and the Rating Agencies
if such loan is made after the occurrence of a Secondary Market Transaction; (C) such loan shall be
in an amount and have an interest rate that does not exceed the original principal amount and the
interest rate of the Mezzanine Loan; (D) the term of such Approved Mezzanine Loan shall expire on
the Stated Maturity Date; (E) the Combined Debt Service Coverage Ratio for the Loan and the new
Mezzanine Loan shall be at least 1.00:1.00 determined by Lender in its reasonable discretion in
accordance with Lender’s and the Rating Agencies’ then current underwriting standards and
adjustments; (F) the Approved Mezzanine Lender shall enter into an intercreditor agreement
acceptable to (x) Lender if such Approved Mezzanine Loan is made prior to the occurrence of a
Secondary Market Transaction or (y) the








-2-









 







Servicer and the Rating Agencies if such Approved Mezzanine Loan is made after the occurrence of a
Secondary Market Transaction; and (G) if such Approved Mezzanine Loan is made after a Secondary
Market Transaction, no such Approved Mezzanine Loan shall be permitted which would result in a
downgrade, qualification or withdrawal of any of the ratings of any of the Securities issued in
such Secondary Market Transaction.




          Approved Operating Expenses: operating expenses incurred by Borrower which (i) are included
in the Approved Operating Budget for the current calendar month, (ii) are for real estate taxes,
insurance premiums, electric, gas, oil, water, sewer or other utility service to the Property or
(iii) have been approved by Lender, which approval shall not be unreasonably withheld.




          Available Cash: as of each Payment Date during the continuance of a Cash Management Period,
the amount of Rents, if any, remaining in the Deposit Account after the application of all of the
payments required under clauses (i) through (viii) of Section 3.11(a) hereof.




          Borrower’s Knowledge: the knowledge of Borrower or Sole Member or any of its respective
directors, officers, members or employees. Such Borrower or Sole Member or any of its respective
directors, officers, members or employees shall be deemed to have knowledge of any applicable fact
if (i) such Person has actual knowledge of such fact, or (ii) such Person has received a
notification of such fact.




          Business Day: any day other than a Saturday, Sunday or any day on which commercial banks in
New York, New York are authorized or required to close.




          Capital Expenses: expenses that are capital in nature or required under GAAP to be
capitalized.




          Cash Management Period: shall commence upon Lender giving notice to the Clearing Bank of the
occurrence of any of the following: (i) an Event of Default hereunder, or (ii) an Event of Default
(as such term is defined in the Mezzanine Loan Documents), or (iii) a default after the lapse of
any applicable notice and cure period under any Approved Mezzanine Loan other than the Mezzanine
Loan, and shall end upon Lender giving notice (and which Lender covenants to promptly give) to the
Clearing Bank that the sweeping of funds into the Deposit Account may cease, which notice Lender
shall give promptly after (1) the Loan and all other obligations under the Loan Documents and any
Approved Mezzanine Loan have been repaid in full, (2) with respect to the matters described in
clause (i) above, such Event of Default has been cured and no other Event of Default has occurred
and is continuing, and (3) with respect to the matters described in clause (ii) above, such Event
of Default has been cured and no other Event of Default has occurred and is continuing, (4) with
respect to the matters described in clause (iii) above, such default has been cured and no other
such default has occurred and is continuing.




          Code: 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.




-3-









 





          Control: with respect to any Person, either (i) ownership directly or indirectly of 49% or
more of all equity interests in such Person or (ii) the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such Person, through the
ownership of voting securities, by contract or otherwise.




          Debt: the unpaid Principal, all interest accrued and unpaid thereon, any Yield Maintenance
Premium and all other sums due to Lender in respect of the Loan or under any Loan Document.




          Debt Service: with respect to any particular period, the scheduled Principal and interest
payments due under the Note in such period.




          Combined Debt Service Coverage Ratio: as of any date, the ratio calculated by Lender of (i)
the Net Operating Income for the twelve (12)-month period ending with the most recently completed
calendar month to (ii) the aggregate of the Debt Service on the Loan anticipated to come due on
the Loan during the succeeding 12-month period and the scheduled principal and interest payments
anticipated to come due on the Approved Mezzanine Loan during the succeeding 12-month period.




          Default: the occurrence of any event under any Loan Document which, with the giving of notice
or passage of time, or both, would be an Event of Default.




          Default Rate: a rate per annum equal to the lesser of (i) the maximum rate permitted by
applicable law, or (ii) five percent (5%) above the Interest Rate, compounded monthly.




          Defeasance Collateral: U.S. Obligations, which provide payments (i) on or prior to, but as
close as possible to, all Payment Dates and other scheduled payment dates, if any, under the Note
after the Defeasance Date and up to and including the Stated Maturity Date, and (ii) in amounts
equal to or greater than the Scheduled Defeasance Payments.




          Deposit Bank: Wachovia Bank, National Association, or such other bank or depository selected
by Lender in its discretion.




          Eligible Account: a separate and identifiable account from all other funds held by the holding
institution that is either (i) an account or accounts (A) maintained with a federal or
state-chartered depository institution or trust company which complies with the definition of
Eligible Institution or (B) as to which Lender has received a Rating Comfort Letter from each of
the applicable Rating Agencies with respect to holding funds in such account, or (ii) a segregated
trust account or accounts maintained with the corporate trust department of a federal depository
institution or state chartered depository institution subject to regulations regarding fiduciary
funds on deposit similar to Title 12 of the Code of Federal Regulations §9.10(b), having in either
case corporate trust powers, acting in its fiduciary capacity, and a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and state authorities.
An Eligible Account will not be evidenced by a certificate of deposit, passbook or other
instrument.




-4-









 





          Eligible Institution: a depository institution insured by the Federal Deposit Insurance
Corporation the short term unsecured debt obligations or commercial paper of which are rated at
least A-1 by S&P, P-1 by Moody’s and F-1+ by Fitch, in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or 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” by Fitch and S&P and “Aa2” by Moody’s.




          ERISA: the Employment Retirement Income Security Act of 1974, as amended from time to time,
and the rules and regulations promulgated thereunder.




          ERISA Affiliate: all members of a controlled group of corporations and all trades and
business (whether or not incorporated) under common Control and all other entities which, together
with Borrower, are treated as a single employer under any or all of Section 414(b), (c),
(m) or (o) of the Code.




          Future Required Repairs: all repairs and capital improvements to the Property required to
maintain and operate the Property, required to comply with any Leases, or required to comply with
applicable law.




          GAAP: generally accepted accounting principles in the United States of America as of the date
of the applicable financial report.




          GCM: Greenwich Capital Financial Products, Inc.




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




          Interest Period: (i) the period from the date on which the Loan is funded through the first
day thereafter that is the fifth day of the next succeeding calendar month and (ii) each period
thereafter from the sixth day of each calendar month through the fifth day of the next succeeding
calendar month; except that the Interest Period, if any, that would otherwise commence before and
end after the Maturity Date shall end on the Maturity Date. Notwithstanding the foregoing, if
Lender exercises its right to change the Payment Date to a New Payment Date in accordance with
Section 2.2.4 hereof, then from and after such election, each Interest Period shall be the
period from the New Payment Date in each calendar month through the day immediately preceding the
next succeeding New Payment Date.




          Interest Rate: a rate of interest equal to 5.6725% per annum (or, when applicable pursuant to
this Agreement or any other Loan Document, the Default Rate).




          Leases: all leases and other agreements or arrangements heretofore or hereafter entered into
affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the
Property or the Improvements, including any guarantees, extensions, renewals, modifications or
amendments thereof and all additional remainders, reversions and other rights and estates
appurtenant thereunder.









-5-









 








          Lease Termination Payments: (i) all fees, penalties, commissions or other payments made to
Borrower in connection with or relating to the rejection, buy-out, termination, surrender or
cancellation of any Lease (including in connection with any bankruptcy proceeding), (ii) any
security deposits or proceeds of letters of credit held by Borrower in lieu of cash security
deposits, which Borrower is permitted to retain pursuant to the applicable provisions of any Lease
and (iii) any payments made to Borrower relating to unamortized tenant improvements and leasing
commissions under any Lease.




          Legal Requirements: statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower, any Loan Document or all
or part of the Property or the construction, ownership, use, alteration or operation thereof,
whether now or hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instrument, either of record or known to Borrower, at any time in force affecting
all or part of the Property.




          Lien: any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation,
easement, restrictive covenant, preference, assignment, security interest or any other
encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing,
on or affecting all or any part of the Property or any interest therein, or any direct or indirect
interest in Borrower or Sole Member, including 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.




          Loan Documents: this Agreement and all other documents, agreements and instruments now or
hereafter evidencing, securing or delivered to Lender in connection with the Loan, including the
following, each of which is dated as of the date hereof: (i) the Promissory Note or Promissory
Notes made by Borrower to Lender in the aggregate principal amount equal to the Loan (the “Note”),
(ii) the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by
Borrower (or the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing made by Borrower to a trustee, as the case may be) in favor of Lender which covers the
Property (the “Mortgage”), (iii) Assignment of Leases and Rents from Borrower to Lender, (iv)
Assignment of Agreements, Licenses, Permits and Contracts from Borrower to Lender, (v) the Deposit
Account Control Agreement (the “Clearing Account Agreement”) among Borrower, Lender, Manager and
Clearing Bank, and (vi) the Deposit Account Agreement (the “Deposit Account Agreement”) among
Borrower, Lender, Manager and the Deposit Bank; and as each of the foregoing may be (and each of
the foregoing defined terms shall refer to such documents as they may be) amended, restated,
replaced, severed, split, supplemented or otherwise modified from time to time (including pursuant
to Section 9.1.8 hereof).




          Management Agreement: the Property Management Agreement dated November 14, 2006 between
Borrower and Manager, pursuant to which Manager is to manage the Property, as same may be amended,
restated, replaced, supplemented or otherwise modified from time to time in accordance with
Section 5.12 hereof.









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          Manager: CB Richard Ellis, Inc., a Delaware corporation, or any successor, assignee or
replacement manager appointed by Borrower in accordance with Section 5.12 hereof.




          Material Adverse Effect: occurrence or existence of a condition or event which would have a
material adverse effect on (i) the business, profits, operations or financial condition of
Borrower, (ii) the ability of Borrower to pay any amounts under the Loan Documents as they become
due or (iii) the value of the Property.




          Material Alteration: any alteration affecting structural elements of the Property the cost of
which exceeds $1,000,000; provided, however, that in no event shall (i) any Future Required
Repairs, (ii) any tenant improvement work performed pursuant to any Lease existing on the date
hereof or entered into hereafter in accordance with the provisions of this Agreement, or (iii)
alterations performed as part of a Restoration, constitute a Material Alteration.




          Material Lease: all Leases which individually or in the aggregate with respect to the same
tenant and its Affiliates (i) cover more than 10,000 square feet of the Improvements or (ii) have
a term of more than five years (not taking into account any extension options).




          Maturity Date: the date on which the final payment of principal of the Note becomes due and
payable as therein provided, whether at the Stated Maturity Date, by declaration of acceleration,
or otherwise.




          Mezzanine Loan: that certain mezzanine loan in the principal amount of $5,200,000 made by GCM
to Mezzanine Loan Borrower concurrently with the Loan, and evidenced and secured by the Mezzanine
Loan Documents.




          Mezzanine Loan Borrower: KBS REIT Acquisition IV, LLC, a Delaware limited liability company.




          Mezzanine Loan Documents: (i) that certain Mezzanine Loan Agreement of even date herewith
between GCM and Mezzanine Loan Borrower, (ii) that certain Promissory Note of even date herewith in
the original principal amount of the Mezzanine Loan made by Mezzanine Loan Borrower and payable to
GCM (and any successor holder of the Mezzanine Loan), (iii) that certain Pledge and Security
Agreement of even date herewith made by Mezzanine Loan Borrower in favor of GCM, (iv) the Guaranty
of Recourse Obligations made by the REIT Operating Partnership, (v) each UCC Financing Statement
executed by Mezzanine Loan Borrower in favor of GCM in connection with the foregoing and (vi) any
other “Loan Document” as defined in the Mezzanine Loan Agreement referred to in clause (i) above,
as each of the foregoing may be modified, amended and restated from time to time in accordance with
the terms and provisions of the Intercreditor Agreement of even date herewith between Lender and
GCM. Without limiting the foregoing, the term Mezzanine Loan Documents shall also include all
documents, agreements or instruments evidencing, securing or delivered to an Approved Mezzanine
Lender in connection with any Approved Mezzanine Loan.




          Mezzanine Loan Liens: (i) the Liens in favor of the holder of the Mezzanine Loan created
pursuant to the Mezzanine Loan Documents and (ii) Liens on the membership interests held by
Mezzanine Loan Borrower in Borrower pursuant to any other Approved Mezzanine Loan.




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          Monthly Mezzanine Debt Service Payment: an amount equal to the scheduled payment of principal
and interest payable by Mezzanine Loan Borrower on the Mezzanine Loan.




          Net Operating Income: for any period, the net operating income of the Property determined in
accordance with GAAP.




          Officer’s Certificate: a certificate delivered to Lender by Borrower or the REIT, as the case
may be which is signed by an authorized person on behalf of such party.




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




          Payment Date: the sixth day of each calendar month or, upon Lender’s exercise of its right to
change the Payment Date in accordance with Section 2.2.4 hereof, the New Payment Date (in
either case, if such day is not a Business Day, the Payment Date shall be the first Business Day
thereafter).




          Permitted Encumbrances: (i) the Liens created by the Loan Documents, (ii) all Liens and other
matters disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes or Other Charges
not yet delinquent, (iv) any workers’, mechanics’ or other similar Liens on the Property provided
that any such Lien is bonded or discharged within sixty (60) days after Borrower first receives
notice of such Lien, (v) such other title and survey exceptions as Lender approves in writing in
Lender’s discretion, (vi) the Mezzanine Loan Liens and (vii) Liens incurred by REIT Operating
Partnership or any Person having any direct or indirect ownership interest in REIT Operating
Partnership.




          Permitted REIT Distributions: distributions (directly or indirectly) by Borrower to the REIT
to the extent that, if not distributed to the REIT:





          (i) the REIT would, as the result of the failure of Borrower to receive cash from the
Property, be unable to distribute all REIT taxable income with respect to the Property; or




          (ii) the REIT would, solely as a result of the failure of Borrower to receive cash
from the Property, fail to satisfy its obligations to pay the Permitted REIT Operating
Expenses after exhausting all other REIT resources available to pay such expenses.



          Permitted REIT Operating Expenses: the Allocated Share of all actual costs, expenses and/or
amounts incurred by, or payable or reimbursable by, the REIT or the REIT Operating Partnership for
any of the following: (a) charges and fees charged by banks, audit fees, tax preparation fees,
legal fees (not including any legal fees incurred by Borrower at the property level or in any
litigation or legal matter concerning Lender, including a bankruptcy filing affecting Borrower),
accounting consulting fees related to emerging technical pronouncements, tax consulting fees
relating to real estate investment trust issues, due diligence costs and fees arising from state
and local taxes, fees and expenses incurred in connection with annual corporate filings, and local,
state and federal income taxes, and (b) professional fees related to








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corporate structuring and/or filings, consulting fees and filing fees arising from SEC reporting
requirements including, without limitation, 10K filings, 10Q filings, and 8k filings, consulting
fees and other fees and costs related to Sarbanes – Oxley 404 compliance requirements.




          For purposes of calculating Permitted REIT Distributions, Permitted REIT Operating Expenses
(i) may be included in the calculation of Permitted REIT Distributions only to the extent that
funds are not available from resources of the REIT other than the Property to pay such Permitted
REIT Operating Expenses, (ii) shall include, without limitation, annual depreciation in an amount
not less than $605,000, and (iii) shall not exceed $75,000 in any calendar year.




          Permitted Transfers:





          (i) a Lease entered into in accordance with the Loan Documents; or




          (ii) a Permitted Encumbrance; or




          (iii) a Transfer and Assumption; or




          (iv) provided that no Default or Event of Default shall then exist, a transfer or
encumbrance of any indirect (but not any direct) interest in Borrower (including, without
limitation, the transfer or encumbrance of any interest in the REIT Operating Partnership,
KBS REIT Holdings LLC, or the REIT) provided that:




          (A) such transfer or encumbrance shall not (x) result in both Charles J.
Schreiber, Jr. and Peter M. Bren no longer Controlling the Approved Asset Manager or
(y) result in Approved Asset Manager no longer being the sole asset manager of the
REIT and solely responsible for the day-to-day management, operating, direction and
supervision of the operations and administration of the REIT and its assets pursuant
to that certain Advisory Agreement dated as of November 8, 2005, between Approved
Asset Manager and the REIT;




          (B) after giving effect to such Transfer, the REIT (or an Approved Mezzanine
Lender) shall continue to own at least 51% of all equity interests (direct or
indirect) in Borrower and the Approved Asset Manager shall continue to Control
Borrower; and




          (C) Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days prior
to the date of such Transfer.



          Person: any individual, corporation, partnership, limited liability company, joint venture,
estate, trust, unincorporated association, any other person or entity, and 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.




          Plan: (i) an employee benefit or other plan established or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate makes or is









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obligated to make contributions and (ii) which is subject to Title IV of ERISA or Section
302 of ERISA or Section 412 of the Code.




          Property: the parcel of real property and Improvements thereon owned by Borrower and
encumbered by the Mortgage; together with all rights pertaining to such real property and
Improvements, and all other collateral for the Loan as more particularly described in the Granting
Clauses of the Mortgage and referred to therein as the Trust Property. The Property is located in
Austin, Texas.




          Rating Agency: each of Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.
(“S&P”), Moody’s Investors Service, Inc. (“Moody’s”), and Fitch, Inc., a division of Fitch Ratings
Ltd. (“Fitch”) or any other nationally-recognized statistical rating organization to the extent
any of the foregoing have been engaged by Lender or its designee in connection with or in
anticipation of any Secondary Market Transaction.




          Rating Comfort Letter: a letter issued by each of the applicable Rating Agencies which
confirms that the taking of the action referenced to therein will not result in any qualification,
withdrawal or downgrading of any existing ratings of Securities created in a Secondary Market
Transaction.




          REIT: KBS Real Estate Investment Trust, Inc., a Maryland corporation.




          REIT Operating Partnership: KBS Limited Partnership, a Delaware limited partnership.




          Release Date: the earlier to occur of (i) the forty second (42nd) Payment Date of the Term
and (ii) 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 final Secondary
Market Transaction involving this Loan.




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




          Rents: all rents, rent equivalents, moneys payable as damages (including payments by reason of
the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of rent or rent equivalents,
royalties (including all oil and gas or other mineral royalties and bonuses), income, fees,
receivables, receipts, revenues, deposits (excluding security, utility and other deposits until
such deposits are forfeited to Borrower or Manager by the Person that made such deposit), accounts,
cash, issues, profits, charges for services rendered, and other payment and 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 and the Improvements, including all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or created out of the
sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of
the Property or rendering of services by Borrower, Manager or any of their agents or employees and
proceeds, if any, from business interruption or other loss of income insurance.




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          Scheduled Defeasance Payments: the Monthly Debt Service Payment Amount required under the
Note for all Payment Dates occurring after the Defeasance Date (including the outstanding
Principal balance on the Note as of the Stated Maturity Date).




          Security Agreement: a security agreement in form and substance satisfactory to Lender (in
Lender’s sole but good faith discretion) pursuant to which Borrower grants Lender a perfected,
first priority security interest in the Defeasance Collateral Account and the Defeasance
Collateral.




          Servicer: a servicer selected by Lender to service the Loan, including any “master servicer”
or “special servicer” appointed under the terms of any pooling and servicing agreement or similar
agreement entered into as a result of a Secondary Market Transaction.




          Sole Member: KBS REIT Acquisition IV LLC, a Delaware limited liability company, the sole
member of Borrower.




          State: the state in which the Property is located.




          Stated Maturity Date: December 6, 2016, as such date may be changed in accordance with
Section 2.2.4 hereof.




          Taxes: all real estate and personal property taxes, assessments, water rates or sewer rents,
maintenance charges, impositions, vault charges and license fees, now or hereafter levied or
assessed or imposed against all or part of the Property.




          Term: the entire term of this Agreement, which shall expire upon repayment in full of the
Debt and full performance of each and every obligation to be performed by Borrower pursuant to the
Loan Documents.




          Title Insurance Policy: the ALTA mortgagee title insurance policy in the form acceptable to
Lender issued with respect to the Property and insuring the Lien of the Mortgage.




          Transfer: (i) any sale, conveyance, transfer, lease or assignment, or the entry into any
agreement to sell, convey, transfer, lease or assign, whether by law or otherwise, of, on, in or
affecting (x) all or part of the Property (including any legal or beneficial direct or indirect
interest therein), (y) any direct or indirect interest in Borrower (including any profit
interest), or (z) any direct or indirect interest in Sole Member or (ii) any change of Control of
Borrower or Sole Member.




          For purposes hereof:




          (i) a Transfer of an interest in Borrower or Sole Member shall be deemed to include:




               (A) if Borrower or Sole Member or controlling shareholder of Borrower or Sole Member is a
corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation’s stock
(or the stock of any corporation directly or indirectly controlling such corporation by operation
of law or otherwise) or the creation or issuance of new stock in one or a








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series of transactions by which an aggregate of more than ten percent (10%) of such corporation’s
stock shall be vested in a party or parties who are not now stockholders or any change in the
Control of such corporation; and




               (B) if Borrower, Sole Member or controlling shareholder of Borrower or Sole Member is a
limited or general partnership, joint venture or limited liability company, the change, removal,
resignation or addition of a general partner, managing partner, limited partner, joint venturer or
member or the transfer of the partnership interest of any general partner, managing partner or
limited partner or the transfer of the interest of any joint venturer or member; and



          (ii) a change of Control of Borrower or Sole Member shall be deemed to have occurred if:




               (A) there is any change in the identity of any individual or entity or any group of
individuals or entities who have the right, by virtue of any partnership agreement, articles of
incorporation, by-laws, articles of organization, operating agreement or any other agreement, with
or without taking any formative action, to cause Borrower (or Sole Member) to take some action or
to prevent, restrict or impede Borrower (or Sole Member) from taking some action which, in either
case, Borrower (or Sole Member) could take or could refrain from taking were it not for the rights
of such individuals, or



               (B) the individual or entity or group of individuals or entities that Control Borrower (and
Sole Member) as described in clause (A) ever cease to own at least fifty-one percent (51%) of all
equity interests (direct or indirect) in Borrower (and Sole Member).



          UCC: the Uniform Commercial Code as in effect in the State or the state in which any of the
Cash Management Accounts are located, as the case may be.




          U.S.
Obligations: obligations that are “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, and, to the extent acceptable to the
applicable Rating Agencies, other non-callable government securities satisfying the REMIC
Provisions (hereinafter defined) (which may include so-called “agency securities” including (a)
Government National Mortgage Association (“GNMA”) straight pass-through certificates; (b)
fully-modified GNMA pass-through certificates; (c) Federal Home Loan Mortgage Corporation (“FHLMC”)
pass-through certificates; and (d) Federal National Mortgage Association (“FNMA”) straight
pass-through certificates), but only to the extent in each case (i) such obligations are not
subject to prepayment, call or early redemption, (ii) such obligations qualify as a “real estate
asset” under section 856(c)(4)(A) of the Code; and (iii) the interest income generated by such
obligations qualify as “interest on obligations secured by mortgages on real property or on
interests in real property” under section 856(c)(3)(B) of the Code. As used herein, “REMIC
Provisions” mean provisions of the federal income tax law relating to real estate mortgage
investment conduits, which appear at Sections 860A through 860G of Subchapter M of Chapter 1 of
Subtitle A of the Code, and related provisions, and temporary and final regulations and, to the
extent not inconsistent with such temporary and final regulations, proposed regulations, and
published rulings, notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.









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          Welfare Plan: an employee welfare benefit plan, as defined in Section 3(1) of ERISA.




          Yield Maintenance Premium: an amount which, when added to the outstanding Principal, would be
sufficient to purchase U.S. Obligations which provide payments (a) on or prior to, but as close as
possible to, all successive scheduled payment dates under this Agreement through the Stated
Maturity Date and (b) in amounts equal to the Monthly Debt Service Payment Amount required under
this Agreement through the Stated Maturity Date together with the outstanding principal balance of
the Note as of the Stated Maturity Date assuming all such Monthly Debt Service Payment Amounts are
made (including any servicing costs associated therewith). In no event shall the Yield Maintenance
Premium be less than zero.




     1.2 Index of Other Definitions. The following terms are defined in the sections
or Loan Documents indicated below:




“Annual Budget” - 6.3.5

“Applicable Taxes” - 2.2.3

“Approved Annual Budget” - 6.3.5

“Approved Capital Budget” - 6.3.5

“Approved Operating Budget” - 6.3.5

“Award” - 7.3.2

“Bankruptcy Proceeding” - 4.7

“Borrower’s Recourse Liabilities” - 10.1

“Capital Reserve Subaccount” - 3.4

“Cash Collateral Subaccount” - 3.9

“Cash Management Accounts” - 3.10

“Casualty” - 7.2.1

“Casualty/Condemnation Prepayment” - 2.3.2

“Casualty/Condemnation Subaccount” - 3.7

“Clearing Account” - 3.1

“Clearing Account Agreement” - 1.1 (Definition of Loan Documents)

“Clearing Bank” - 3.1

“Condemnation” - 7.3.1

“Defeasance Collateral Account” - 2.3.3

“Defeasance Event” - 2.3.3

“Defeasance Date” - 2.3.3

“Deposit Account” - 3.1

“Deposit Account Agreement” - 1.1 (Definition of Loan Documents)

“Disclosure Document” - 9.1.2

“Easements” - 4.14

“Endorsement” - 5.26

“Environmental Laws” - 4.21

“Equipment” - Mortgage

“Event of Default” - 8.1

“Exchange Act” - 9.1.2

“Fitch” - 1.1 (Definition of Rating Agency)

“GCM Group” - 9.1.3



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“Government Lists” - 5.31

“Hazardous Substances” - 4.21

“Improvements” - Mortgage

“Indemnified Liabilities” - 5.30

“Indemnified Party” - 5.30

“Independent Director” - Schedule 5

“Insurance Premiums” - 7.1.2

“Insured Casualty” - 7.2.2

“Issuer” - 9.1.3

“Late Payment Charge” - 2.5.3

“Lender’s Consultant” - 5.8.1

“Liabilities” - 9.1.3

“Licenses” - 4.11

“Loan” - 2.1

“Monthly Debt Service Payment Amount” - 2.2.1

“Moody’s” - 1.1 (Definition of Rating Agency)

“Mortgage” - 1.1 (Definition of Loan Documents)

“New Payment Date” - 2.2.4

“Note” - 1.1 (Definition of Loan Documents)

“Notice” - 6.1

“O & M Program” - 5.8.3

“OFAC”- 5.31

“Operating Expense Subaccount” - 3.6

“Patriot Act” - 5.31

“Patriot Act Offense” - 5.31

“Permitted Indebtedness” - 5.22

“Permitted Investments” - Deposit Account Agreement

“Permitted Prepayment Date” - 2.3.4

“Policies” - 7.1.2

“Principal” - 2.1

“Proceeds” - 7.2.2

“Projection Period” - 3.12

“Proposed Material Lease” - 5.10.2

“Provided Information” - 9.1.1

“Qualified Carrier” - 7.1.1

“Registration Statement” - 9.1.3

“REIT Distribution Notice” - 3.12

“Remedial Work” - 5.8.2

“REMIC Provisions” - 1.1 (Definition of U.S. Obligations)

“Rent Roll” - 4.16

“Required Records” - 6.3.

“Restoration” - 7.4.1

“Rollover Reserve Subaccount” - 3.5

“S&P” - 1.1 (Definition of Rating Agency)

“Secondary Market Transaction” - 9.1.1

“Securities” - 9.1.1




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“Securities Act” - 9.1.2

“Security Deposit Account” - 3.8

“Security Deposit Subaccount” - 3.8

“Significant Casualty” - 7.2.2

“Special Purpose Bankruptcy Remote Entity” - 5.13

“Springing Recourse Event” - 10.1

“Subaccounts” - 3.1

“Successor Borrower” - 2.3.3

“Tax and Insurance Subaccount” - 3.3

“Toxic Mold” - 4.21

“Transfer and Assumption” - 5.26

“Transferee Borrower” - 5.26

“Underwriter Group” - 9.1.3

“Underwriters” - 9.1.3




     1.3 Principles of Construction. Unless otherwise specified, (i) all references to
sections and schedules are to those in this Agreement, (ii) the words “hereof,” “herein” and
“hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular provision, (iii) all definitions are equally applicable to the singular and plural
forms of the terms defined, (iv) the word “including” means “including but not limited to,” and
(v) accounting terms not specifically defined herein shall be construed in accordance with GAAP.



2. GENERAL LOAN TERMS




     2.1 The Loan. Lender is making a loan (the “Loan”) to Borrower in the original
principal amount (the “Principal”) of $18,000,000, which shall mature on the Stated Maturity Date.
Borrower acknowledges that the proceeds of the Loan are being and shall be used to (i) acquire the
Property, (ii) fund certain of the Subaccounts, and (iii) pay transaction costs. Any excess
proceeds may be used for any lawful purpose. No amount repaid in respect of the Loan may be
reborrowed.



     2.2 Interest; Monthly Payments.



          2.2.1 Generally. From and after the date the Loan is funded, interest on the unpaid
Principal shall accrue at the Interest Rate and be payable as hereinafter provided. On the date the
Loan is funded, Borrower shall pay interest on the unpaid Principal from the date of funding
through and including December 5, 2006. On January 6, 2007 and each Payment Date thereafter through
and including November 6, 2016, Borrower shall pay interest on the unpaid Principal which has
accrued through the last day of the Interest Period immediately preceding such Payment Date (the
“Monthly Debt Service Payment Amount”). All accrued and unpaid interest shall be due and payable on
the Maturity Date. If the Loan is repaid on any date other than on a Payment Date (whether prior to
or after the Stated Maturity Date), Borrower shall also pay interest that would have accrued on
such repaid Principal to but not including the next Payment Date.




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          2.2.2 Default Rate. After the occurrence and during the continuance of an Event of
Default, the entire unpaid Debt shall bear interest at the Default Rate, and shall be payable upon
demand from time to time, to the extent permitted by applicable law.




          2.2.3 Taxes. Any and all payments by Borrower hereunder and under the other Loan
Documents shall be made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on Lender’s income, and franchise taxes imposed on Lender by the
law or regulation of any Governmental Authority (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to in this Section
2.2.3 as “Applicable Taxes”). If Borrower shall be required by law to deduct any Applicable
Taxes from or in respect of any sum payable hereunder to Lender, the following shall apply: (i)
the sum payable shall be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 2.2.3),
Lender receives an amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable law. Payments
pursuant to this Section 2.2.3 shall be made within ten (10) days after the date Lender
makes written demand therefor.




          2.2.4 New Payment Date. Lender shall have the right, to be exercised not more than
once during the term of the Loan, to change the Payment Date to a date other than the sixth day of
each month (a “New Payment Date”), on thirty (30) days’ written notice to Borrower; provided,
however, that any such change in the Payment Date: (i) shall not modify the amount of regularly
scheduled monthly principal and interest payments, except that the first payment of principal and
interest payable on the New Payment Date shall be accompanied by interest at the interest rate
herein provided for the period from the Payment Date in the month in which the New Payment Date
first occurs to the New Payment Date, and (ii) shall change the Stated Maturity Date to the New
Payment Date occurring in the month set forth in the definition of Stated Maturity Date.




     2.3 Loan Repayment.



          2.3.1 Repayment. Borrower shall repay the entire outstanding principal balance of the
Note in full on the Maturity Date, together with interest thereon to (but excluding) the date of
repayment and any other amounts due and owing under the Loan Documents. Borrower shall have no
right to prepay or defease all or any portion of the Principal except in accordance with
Section 2.3.2 below, Section 2.3.3 below and Section 2.4 below. Except
during the continuance of an Event of Default, all proceeds of any repayment, including any
prepayments of the Loan, shall be applied by Lender as follows in the following order of priority:
First, accrued and unpaid interest at the Interest Rate; Second, to Principal; and Third, to and
any other amounts then due and owing under the Loan Documents. If prior to the Stated Maturity Date
the Debt is accelerated by reason of an Event of Default, then Lender shall be entitled to receive,
in addition to the unpaid Principal and accrued interest and other sums due under the Loan
Documents, an amount equal to the Yield Maintenance Premium applicable to such Principal so
accelerated. During the continuance of an Event of Default, all proceeds of repayment, including
any payment or recovery on the Property (whether through foreclosure,









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deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents,
be applied in such order and in such manner as Lender shall elect in Lender’s discretion.




          2.3.2 Mandatory Prepayments. The Loan is subject to mandatory prepayment in certain
instances of Insured Casualty or Condemnation (each a “Casualty/Condemnation Prepayment”), in the
manner and to the extent set forth in Section 7.4.2 hereof. Each Casualty/Condemnation
Prepayment, after deducting Lender’s costs and expenses (including reasonable attorneys’ fees and
expenses) in connection with the settlement or collection of the Proceeds or Award, shall be
applied in the same manner as repayments under Section 2.3.1 above, and if such
Casualty/Condemnation Prepayment is made on any date other than a Payment Date, then such
Casualty/Condemnation Prepayment shall include interest that would have accrued on the Principal
prepaid to but not including the next Payment Date, provided that a Secondary Market Transaction
has occurred. Provided that no Event of Default is continuing, any such mandatory prepayment under
this Section 2.3.2 shall be without the payment of the Yield Maintenance Premium.
Notwithstanding anything to the contrary contained herein, each Casualty/Condemnation Prepayment
shall be applied in inverse order of maturity and shall not extend or postpone the due dates of the
monthly installments due under the Note or this Agreement, or change the amounts of such
installments.




          2.3.3 Defeasance




          
     (a) Conditions to Defeasance. Provided no Event of Default shall be continuing,
Borrower shall have the right after the Release Date and prior to the Permitted Prepayment Date to
voluntarily defease the entire amount of the Principal and obtain a release of the Lien of the
Mortgage by providing Lender with the Defeasance Collateral (a “Defeasance Event”), subject to the
satisfaction of the following conditions precedent:



          
          (i) Borrower shall give Lender not less than thirty (30) days
prior written notice specifying a Payment Date (the “Defeasance Date”) on which the Defeasance
Event is to occur.



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



          
          (iii) Borrower shall deposit the Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of subsections (b) and (c)
of this Section 2.3.3;



          
          (iv) Borrower shall execute and deliver to Lender a Security Agreement in respect of the
Defeasance Collateral Account and the 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, that (A) Lender has a legal
and valid perfected first priority security interest in the Defeasance Collateral Account and



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the Defeasance Collateral, and (B) a non-consolidation opinion with respect to the Successor
Borrower;



          
          (vi) if required by any Rating Agency, Borrower shall deliver to Lender and the Rating
Agencies a Rating Comfort Letter as to the Defeasance Event;



          
          (vii) Borrower shall deliver an Officer’s Certificate certifying that the requirements set
forth in this Section 2.3.3 have been satisfied;



          
          (viii) Borrower shall deliver a certificate of a nationally
recognized public accounting firm acceptable to Lender certifying that (A) the Defeasance
Collateral will generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments, (B) the revenue from the Defeasance Collateral will be applied within four (4) months of
receipt towards payments of Debt Service, (C) the securities that comprise the Defeasance
Collateral are not subject to prepayment, call or early redemption and (D) the interest income to
Borrower (or the Successor Borrower, if applicable) from the Defeasance Collateral will not in any
tax year exceed the interest expense associated with the defeased Loan;



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



          
          (x) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including Lender’s reasonable attorneys’ fees
and expenses and Rating Agency fees and expenses,



          
          (xi) if a securitization has occurred, Lender shall have received
an opinion of its counsel that is standard in commercial lending transactions and subject only to
customary qualifications, assumptions and exceptions opining, among other things, that 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 Defeasance Event pursuant to this Section 2.3.3, and



          
          (xii) All conditions with respect to the defeasance of any Approved Mezzanine Loan shall
have been satisfied.



          
     (b) Defeasance Collateral Account. On or before the date on which Borrower delivers
the 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. Lender will agree to cooperate with Borrower in structuring the defeasance such that the
securities can be held by a trust in which Lender is the beneficiary, provided that the same
satisfies all Rating Agency requirements and requirements of the REMIC Provisions applicable to the
defeasance. The Defeasance Collateral Account shall contain only (i) Defeasance Collateral, and
(ii) cash from interest and principal paid on the Defeasance Collateral. All cash from interest and
principal payments paid on the Defeasance Collateral shall be paid over to Lender on each Payment
Date and applied first to accrued and unpaid interest and then to Principal. Any cash from interest
and principal paid on the Defeasance Collateral not needed to pay accrued and unpaid interest or
Principal shall be retained in the Defeasance Collateral Account as additional collateral for the
Loan. Borrower shall cause the Eligible







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Institution at which the Defeasance Collateral is deposited to enter an agreement with Borrower
and Lender, satisfactory to Lender in its sole discretion, pursuant to which such Eligible
Institution shall agree to hold and distribute the Defeasance Collateral in accordance with this
Agreement. The Successor Borrower shall be the owner of the Defeasance Collateral Account and
shall report all income accrued on Defeasance Collateral for federal, state and local income tax
purposes in its income tax return. Borrower shall prepay all cost and expenses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall not in any way be liable
by reason of any insufficiency in the Defeasance Collateral Account.




               (c) Successor Borrower. In connection with a Defeasance Event under this Section
2.3.3, 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 Special
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 unless the Rating
Agencies shall require otherwise. Borrower shall transfer and assign all obligations, rights and
duties under and to the Defeased Note, together with the Defeasance Collateral to such Successor
Borrower. Such Successor Borrower shall assume the obligations under the Note and the Security
Agreement and Borrower shall be relieved of its obligations under such documents. Borrower shall
pay a minimum of $1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement. Borrower shall pay all costs and expenses
incurred by Lender, including Lender’s attorney’s fees and expenses, incurred in connection
therewith.



          2.3.4 Optional Prepayments. From and after the second Payment Date prior to the
Stated Maturity Date (the “Permitted Prepayment Date”), Borrower shall have the right to prepay
the Loan in whole (but not in part), provided that Borrower gives Lender at least fifteen (15)
days’ prior written notice thereof. If any such prepayment is not made on a Payment Date, Borrower
shall also pay interest that would have accrued on such prepaid Principal to, but not including,
the next Payment Date. Any such prepayment shall be made without payment of the Yield Maintenance
Premium.




     2.4 Release of Property.



          2.4.1 Release on Defeasance. If Borrower has elected to defease the Note and the
requirements of Section 2.3.3 above and this Section 2.4 have been satisfied, the
Property shall be released from the Lien of the Mortgage and the Defeasance Collateral pledged
pursuant to the Security Agreement shall be the sole source of collateral securing the Note. In
connection with the release of the Lien, Borrower shall submit to Lender, not less than thirty (30)
days prior to the Defeasance Date (or such shorter time as is acceptable to Lender in its sole
discretion), a release of Lien (and related Loan Documents) for execution by Lender. Any such
release shall be in a form appropriate in the jurisdiction in which the Property is located and
contain standard provisions protecting the rights of the releasing lender. In connection therewith,
Borrower shall provide all 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.




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          2.4.2 Release on Payment in Full. Lender shall, upon the written request and at the
expense of Borrower, upon payment in full of the Debt in accordance herewith, release or, if
requested by Borrower, assign to Borrower’s designee (without any representation or warranty by
and without any recourse against Lender whatsoever), the Lien of the Loan Documents if not
theretofore released.




     2.5 Payments and Computations.



          2.5.1 Making of Payments. Each payment by Borrower shall be made in funds settled
through the New York Clearing House Interbank Payments System or other funds immediately available
to Lender by 11:00 a.m., New York City time, on the date such payment is due, to Lender by deposit
to such account as Lender may designate by written notice to Borrower. Whenever any such payment
shall be stated to be due on a day that is not a Business Day, such payment shall be made on the
first Business Day thereafter. All such payments shall be made irrespective of, and without any
deduction, set-off or counterclaim whatsoever and are payable without relief from valuation and
appraisement laws and with all costs and charges incurred in the collection or enforcement thereof,
including attorneys’ fees and court costs.




          2.5.2 Computations. Interest payable under the Loan Documents shall be computed on
the basis of the actual number of days elapsed over a 360-day year.




          2.5.3 Late Payment Charge. If any Principal, interest or other sum due under any Loan
Document is not paid by Borrower on the date on which it is due other than the payment due on the
Maturity Date, 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 (the “Late Payment Charge”), 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.
Such amount shall be secured by the Loan Documents.




3. CASH MANAGEMENT AND RESERVES




     3.1 Cash Management Arrangements. Borrower shall cause all Rents to be
transmitted directly by tenants of the Property into an Eligible Account (the “Clearing Account”)
maintained by Borrower at a local bank selected by Borrower, which shall at all times be an
Eligible Institution (the “Clearing Bank”) as more fully described in the Clearing Account
Agreement. A form of tenant direction letter for such purpose is attached hereto as Schedule 1. Without in any way limiting the foregoing, all Rents received by Borrower or Manager shall
be deposited into the Clearing Account within one (1) Business Day of receipt. Funds deposited
into the Clearing Account shall be swept by the Clearing Bank on a daily basis into Borrower’s
operating account at the Clearing Bank, unless a Cash Management Period is continuing, in which
event such funds shall be swept on a daily basis into an Eligible Account at the Deposit Bank
controlled by Lender (the “Deposit Account”) and applied and disbursed in accordance with this
Agreement. Funds in the Deposit Account shall be invested at Lender’s discretion only in Permitted
Investments. Lender will also establish subaccounts of the Deposit Account which shall at all
times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts)
(such subaccounts are referred to herein as “Subaccounts”). The Deposit Account and any Subaccount
will be under the sole control and dominion of Lender, and Borrower shall have








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no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and
maintaining all of the above accounts.




     3.2 [intentionally deleted]



     3.3 Taxes and Insurance. Borrower shall pay to Lender on each Payment Date
(i) one-twelfth (1/12th) of the Taxes that Lender estimates will be payable during the next twelve
(12) months in order to accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates and (ii) one-twelfth (1/12th) of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all
such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies. Such
amounts will be transferred by Lender to a Subaccount (the “Tax and Insurance Subaccount”). Provided that no Event of Default has occurred and is continuing, Lender will (a) apply funds in
the Tax and Insurance Subaccount to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Section 5.2 hereof and Section 7.1 hereof, provided that
Borrower has promptly supplied Lender with notices of all Taxes and Insurance Premiums due, or (b)
reimburse Borrower for such amounts upon presentation of evidence of payment; subject, however, to
Borrower’s right to contest Taxes in accordance with Section 5.2 hereof. In making any
payment relating to Taxes and Insurance Premiums, Lender may do so according to any bill, statement
or estimate procured from the appropriate public office (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), 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 Lender determines in its reasonable judgment that the funds in the Tax and Insurance
Subaccount will be insufficient to pay (or in excess of) the Taxes or Insurance Premiums next
coming due, Lender may increase (or decrease) the monthly contribution required to be made by
Borrower to the Tax and Insurance Subaccount.



     The foregoing obligations to fund and maintain the Tax and Insurance Subaccount shall be
conditionally waived for so long as (A) Borrower timely pays such charges prior to delinquency and
Lender receives satisfactory evidence of such payment prior to delinquency and (B) no Event of
Default shall have occurred hereunder. Upon the failure of any of the foregoing conditions, Lender
may demand full compliance with the provisions of this Section 3.3(a) for the remaining
term of the Loan.



     3.4 Capital Expense Reserves. Borrower shall pay to Lender on each Payment Date an
amount sufficient to pay anticipated Approved Capital Expenses. Lender will transfer such amounts
into a Subaccount (the “Capital Reserve Subaccount”). Additionally, upon thirty (30) days’ prior
notice to Borrower, Lender may reassess the amount of the monthly payment required under this
Section 3.4 from time to time in its reasonable discretion (based upon its then current
underwriting standards). Provided that no Default or Event of Default has occurred and is
continuing, Lender shall disburse funds held in the Capital Reserve Subaccount to Borrower, within
fifteen (15) days after the delivery by Borrower to Lender of a request therefor (but not more
often than once per month), in increments of at least $5,000 provided that (i) such disbursement is
for an Approved Capital Expense; (ii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower’s expense) performance of the work associated with such Approved Capital
Expense; and (iii) the request for disbursement is accompanied by (A) an







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Officer’s Certificate certifying (1) that such funds will be used to pay or reimburse Borrower for
Approved Capital Expenses and a description thereof, (2) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those constituting Permitted
Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been used to pay the previously
identified Approved Capital Expenses, (B) lien waivers or other evidence of payment satisfactory
to Lender, (C) at Lender’s option, a title search for the Property indicating that the Property is
free from all Liens, claims and other encumbrances not previously approved by Lender and (D) such
other evidence as Lender shall reasonably request that the Approved Capital Expenses at the
Property to be funded by the requested disbursement have been completed and are paid for or will
be paid upon such disbursement to Borrower. The foregoing obligations to fund and maintain the
Capital Reserve Subaccount shall be conditionally waived for so long as no Event of Default shall
have occurred hereunder. Upon the failure of the foregoing condition, Lender may demand full
compliance with the provisions of this Section 3.4 for the remaining term of the Loan.




     3.5 Rollover Reserve.



          3.5.1 For so long as an Event of Default is continuing, on the first Payment after the
occurrence of such Event of Default, and on each Payment Date during the continuation of an Event
of Default, Borrower shall pay to Lender for transfer into a
Subaccount (the “Rollover Reserve Subaccount”) the sum of $16,800, subject to Section 3.12 below. All such funds may be used
to pay Approved Leasing Expenses as set forth below. Lender shall refund to Borrower all amounts
remaining on deposit in the Rollover Reserve Subaccount when such Event of Default has been cured
and no other Event of Default has occurred and is continuing.




          3.5.2 At any time that funds are on deposit in the Rollover Reserve Subaccount, Lender may, at
Lender’s sole option, disburse funds held in the Rollover Reserve Subaccount to Borrower, within
fifteen (15) days after the delivery by Borrower to Lender of a request therefor (but not more
often than once per month), in increments of at least $5,000, provided (i) such disbursement is for
an Approved Leasing Expense; (ii) Lender shall have (if it desires) verified (by an inspection
conducted at Borrower’s expense) performance of any construction work associated with such Approved
Leasing Expense; and (iii) the request for disbursement is accompanied by (A) an Officer’s
Certificate certifying (1) that such funds will be used only to pay (or reimburse Borrower for)
Approved Leasing Expenses and a description thereof, (2) that all outstanding trade payables that
are due and payable for the applicable Approved Leasing Expense (other than those to be paid from
the requested disbursement or those constituting Permitted Indebtedness) have been paid in full,
(3) that the same has not been the subject of a previous disbursement, and (4) that all previous
disbursements have been used only to pay (or reimburse Borrower for) the previously
identified Approved Leasing Expenses, and (B) reasonably detailed supporting documentation
as to the amount, necessity and purpose therefor.




          3.5.3 Borrower shall also pay to Lender for transfer into the Rollover Reserve Subaccount all
Lease Termination Payments received by Borrower. Provided no Default or Event of Default is
continuing, upon Lender’s receipt of satisfactory evidence that all Approved Leasing Expenses
incurred in connection with re-tenanting the space that was the subject of the




-22-









 




termination (and any other expenses in connection with the re-tenanting of the applicable space)
have been paid in full (which evidence may include (i) a letter or certification from the
applicable broker, if any, that all brokerage commissions payable in connection therewith have
been paid and (ii) an estoppel certificate executed by each applicable tenant which certifies that
all contingencies under such Lease to the payment of full rent (including Borrower’s contribution
to the cost of any tenant improvement work) have been satisfied), any portion of the applicable
Lease Termination Payment (if any) remaining in the Rollover Reserve Subaccount shall be disbursed
to Borrower; provided, however, if a Cash Management Period is then continuing, then no such funds
shall be disbursed to Borrower, and all such funds shall instead be deposited into the Deposit
Account, to be applied in accordance with this Agreement.




     3.6 Operating Expense Subaccount. During a Cash Management Period, on each Payment
Date, a portion of the Rents that have been deposited into the Deposit Account during the
immediately preceding Interest Period in an amount equal to the monthly amount set forth in the
Approved Operating Budget for the following month as being necessary for payment of Approved
Operating Expenses at the Property for such month, shall be transferred into a Subaccount for the
payment of Approved Operating Expenses (the “Operating Expense Subaccount”). Provided no Event
of Default has occurred and is continuing, Lender shall disburse funds held in the Operating
Expense Subaccount to Borrower, within fifteen (15) days after delivery by Borrower to Lender of a
request therefor (but not more often than once per month), in increments of at least $1,000,
provided (i) such disbursement is for an Approved Operating Expense; and (ii) such disbursement is
accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used to pay
Approved Operating Expenses and a description thereof, (2) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those constituting Permitted
Indebtedness) that are due and payable have been paid in full, (3) that the same has not been the
subject of a previous disbursement, and (4) that all previous disbursements have been or will be
used to pay the previously identified Approved Operating Expenses, and (B) reasonably detailed
documentation satisfactory to Lender as to the amount, necessity and purpose therefor.



     3.7 Casualty/Condemnation Subaccount. Borrower shall pay, or cause to be paid, to
Lender all Proceeds or Awards due to any Casualty or Condemnation to be transferred to a Subaccount
(the “Casualty/Condemnation Subaccount”) in accordance with the provisions of Article 7
hereof. All amounts in the Casualty/Condemnation Subaccount shall disbursed in accordance with
the provisions of Article 7 hereof.



     3.8 [Intentionally Omitted].



     3.9 Cash Collateral Subaccount. If a Cash Management Period shall have
commenced, then on the immediately succeeding Payment Date and on each Payment Date thereafter
during the continuance of such Cash Management Period, all Available Cash shall be paid to Lender
as provided under Section 3.11(a) below, which amounts shall be transferred by Lender into
a Subaccount (the “Cash Collateral Subaccount”) as cash collateral for the Debt. Any funds in the
Cash Collateral Account and not previously disbursed or applied shall be disbursed to Borrower upon
the termination of such Cash Management Period. Lender shall have the right, but not the
obligation, at any time an Event of Default has occurred and is continuing, in its sole and
absolute discretion to apply all sums then on deposit in the Cash








-23-









 







Collateral Subaccount to the Debt, in such order and in such manner as Lender shall elect in its
sole and absolute discretion, including to make a prepayment of Principal (together which the
applicable Yield Maintenance Premium applicable thereto).




     3.10 Grant of Security Interest; Application of Funds. As security for payment of the
Debt and the performance by Borrower of all other terms, conditions and provisions of the Loan
Documents, Borrower hereby pledges and assigns to Lender, and grants to Lender a security interest
in, all Borrower’s right, title and interest in and to all Rents and in and to all payments to or
monies held in the Clearing Account, the Deposit Account, all Subaccounts created pursuant to this
Agreement (collectively, the “Cash Management Accounts”). Borrower hereby grants to Lender a
continuing security interest in, and agrees to hold in trust for the benefit of Lender, all Rents
in its possession prior to the (i) payment of such Rents to Lender or (ii) deposit of such Rents
into the Deposit Account. Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Cash Management Account, or
permit any Lien to attach thereto, or any levy to be made thereon, or any UCC Financing Statements,
except those naming Lender as the secured party, to be filed with respect thereto. This Agreement
is, among other things, intended by the parties to be a security agreement for purposes of the UCC.
Upon the occurrence and during the continuance of an Event of Default, Lender may apply any sums in
any Cash Management Account in any order and in any manner as Lender shall elect in Lender’s
discretion without seeking the appointment of a receiver and without adversely affecting the rights
of Lender to foreclose the Lien of the Mortgage or exercise its other rights under the Loan
Documents. Cash Management Accounts shall not constitute trust funds and may be commingled with
other monies held by Lender; provided that Borrower shall be entitled to request Lender to open and
maintain a separate Deposit Account such that the funds with respect to the Property are not
commingled with other monies held by Lender so long as Borrower shall pay the costs and expenses
with respect to such Deposit Account. All interest which accrues on the funds in any Cash
Management Account (other than the Tax and Insurance Subaccount) shall accrue for the benefit of
Borrower and shall be taxable to Borrower and shall be added to and disbursed in the same manner
and under the same conditions as the principal sum on which said interest accrued. Upon repayment
in full of the Debt, all remaining funds in the Subaccounts, if any, shall be promptly disbursed to
Borrower.



     3.11 Property Cash Flow Allocation.



          
     (a) Notwithstanding anything stated to the contrary in this Agreement (but subject to
Section 3.11(c) below), all Rents deposited into the Deposit Account during the
immediately preceding Interest Period shall be applied on each Payment Date as follows in the
following order of priority:



          
          (i) First, at any time prior to the Maturity Date hereunder, to
Borrower to make Permitted REIT Distributions attributable to the immediately preceding Interest
Period, subject to Section 3.12 below. For so long as the Mezzanine Loan remains
outstanding at any time prior to the stated maturity date of the Mezzanine Loan, notwithstanding
that an Event of Default shall have occurred and be continuing, Rents deposited into the Deposit
Account shall be disbursed to Borrower to make Permitted REIT Distributions to the extent that
sufficient amounts are on deposit in the Deposit Account to fully fund payment of the Monthly







-24-









 







Debt Service Payment Amount (under subsection (iv) below) and the Monthly Mezzanine Debt Service
Payment Amount (under subsection (viii) below) without regard for the adequacy of all Rents then
on deposit in the Deposit Account to fully fund any prior amounts described in this Section
3.11(a), subsections (ii), (iii), (v), (vi) and (vii) below. No Rents shall be disbursed to
Borrower to make Permitted REIT Distributions for so long as the Mezzanine Loan remains
outstanding from and after the stated maturity date of the Mezzanine Loan.




          
          (ii) Second, (if the obligation to fund the Tax and Insurance
Subaccount is no longer waived by Lender pursuant to Section 3.3 hereof) to make payments
into the Tax and Insurance Subaccount as required under Section 3.3 hereof;



          
          (iii) Third, to pay the monthly portion of the fees charged by the Deposit Bank in
accordance with the Deposit Account Agreement;



          
          (iv) Fourth, to Lender to pay the Monthly Debt Service
Payment Amount due on such Payment Date (plus, if applicable, interest at the Default Rate and all
other amounts, other than those described under other clauses of this Section 3.11(a),
then due to Lender under the Loan Documents);



          
          (v) Fifth, (if the obligation to fund the Capital Reserve
Subaccount is no longer waived by Lender pursuant to Section 3.4 hereof) to make payments
into the Capital Reserve Subaccount as required under Section 3.4 hereof;



          
          (vi) Sixth, to make payments for Approved Operating Expenses as required under
Section 3.6 hereof;



          
          (vii) Seventh, to make payments into the Rollover Reserve Subaccount as required under
Section 3.5 hereof;



          
          (viii) Eighth, if the Mezzanine Loan (or any portion thereof) is
outstanding, to make payments in the amount of the Monthly Mezzanine Debt Service Payment into the
subordinate deposit account established under the Mezzanine Loan; and



          
          (ix) Ninth, if the Mezzanine Loan (or any portion thereof) is
outstanding, all remaining Available Cash on such Payment Date shall be deposited into the
subordinate deposit account established under the Mezzanine Loan or, if the Mezzanine Loan has
been paid in full, all remaining Available Cash on such Payment Date shall be deposited into the
Cash Collateral Subaccount in accordance with Section 3.9 hereof.



          
     (b) The failure of Borrower to make all of the payments required under clauses (ii) through
(viii) of Section 3.11(a) above in full on each Payment Date shall constitute an Event of
Default under this Agreement; provided, however, if adequate funds are available in the Deposit
Account for such payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.



          
     (c) Notwithstanding anything to the contrary contained in this Section 3.11,
after the occurrence of an Event of Default, Lender may apply all Rents deposited into the Deposit
Account and other proceeds of repayment (after disbursement to Borrower for







-25-









 







payment of any Permitted REIT Distribution then due and payable in accordance with the provisions
of Section 3.11(a)(i) above) to payment of amounts outstanding under the Loan Documents or
with respect to the Mezzanine Loan, in such order and in such manner as Lender shall elect.




               (d) Any funds in the Deposit Account and not previously disbursed or applied shall be
disbursed to Borrower upon termination of any applicable Cash Management Period.



     3.12 Permitted REIT Distributions. Borrower’s right to receive Rents deposited into
the Deposit Account or any Subaccount or make Permitted REIT Distributions shall be subject to the
following terms and conditions in this Section 3.12. At least 14 days prior to the end of
the then current Projection Period (as defined below), Borrower shall deliver to Lender (a) written
notice setting forth an estimate of the REIT’s taxable income for the Property and the Permitted
REIT Operating Expenses (the “REIT Distribution Notice”) for the immediate succeeding period of no
less than one fiscal quarter and no more than one fiscal year (each, a “Projection Period”), which
REIT Distribution Notice shall also set forth the amount of cash flow from the Property needed to
make Permitted REIT Distributions related to such Projection Period, and (b) written confirmation
from Ernst & Young or another “Big 4” accounting firm that the estimate of the REIT’s taxable
income generated by the Property for the applicable Projection Period, as reflected in the REIT
Distribution Notice, is a reasonable estimate of the same, all in form and substance reasonably
acceptable to Lender. Such estimate shall be based on (1) the REIT’s actual taxable income for the
Property and the actual Permitted REIT Operating Expenses for the then current calendar year and
(2) the REIT’s projected taxable income for the Property and the projected Permitted REIT Operating
Expenses for the remainder of such calendar year. Within 30 days following the end of each fiscal
quarter, Borrower shall deliver to Lender a statement of the REIT’s actual taxable income for the
Property and the actual Permitted REIT Operating Expenses for the immediately ended fiscal quarter
and evidence supporting such statement and (A) if the Permitted REIT Distributions made for such
fiscal quarter exceeded the estimate set forth in the REIT Distribution Notice applicable to such
fiscal quarter, the estimate of the Permitted REIT Distributions for the immediately succeeding
fiscal quarter shall be adjusted to reduce the estimated amount of the Permitted REIT Distributions
by the amount of such excess and (B) if the Permitted REIT Distributions made for such fiscal
quarter was less than the estimate set forth in the REIT Distribution Notice applicable to such
fiscal quarter, the estimate of the Permitted REIT Distributions for the immediately succeeding
fiscal quarter shall be adjusted to increase the estimated amount of the Permitted REIT
Distributions by the amount of such shortfall. Notwithstanding anything stated to the contrary in
this Section 3, Lender acknowledges and agrees that the funding of all reserves and other
amounts under this Section 3 are expressly subject to the provisions of Section
3.11 and the disbursement to Borrower of Permitted REIT Distributions as provided therein.



4. REPRESENTATIONS AND WARRANTIES



Borrower represents and warrants to Lender as of the date hereof that, except to the extent
(if any) disclosed on Schedule 2 hereto with reference to a specific Section of this Article
4:




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     4.1 Organization; Special Purpose. Each of Borrower and Sole Member has been duly
organized and is validly existing and in good standing under the laws of the state of its
formation, with requisite power and authority, and all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to own its properties and to transact the
business in which it is now engaged. Each of Borrower and Sole Member is duly qualified to do
business and is in good standing in each jurisdiction where it is required to be so qualified in
connection with its properties, business and operations. Borrower is a Special Purpose Bankruptcy
Remote Entity.



     4.2 Proceedings; Enforceability. Borrower has taken all necessary action to
authorize the execution, delivery and performance of the Loan Documents. The Loan Documents
have been duly executed and delivered by Borrower and constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their respective terms,
subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and general principles of equity. The Loan Documents are not subject to, and Borrower
has not asserted, any right of rescission, set-off, counterclaim or defense, including the defense
of usury. No exercise of any of the terms of the Loan Documents, or any right thereunder, will
render any Loan Document unenforceable.



     4.3 No Conflicts. The execution, delivery and performance of the Loan Documents by
Borrower and the transactions contemplated hereby will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, or result in the creation or
imposition of any Lien (other than pursuant to the Loan Documents) upon any of the property of
Borrower pursuant to the terms of, any agreement or instrument to which Borrower is a party or by
which its property is subject, nor will such action result in any violation of the provisions of
any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over
Borrower or any of its properties. Borrower’s rights under the Licenses and the Management
Agreement will not be adversely affected by the execution and delivery of the Loan Documents,
Borrower’s performance thereunder, the recordation of the Mortgage, or the exercise of any remedies
by Lender. Any consent, approval, authorization, order, registration or qualification of or with
any Governmental Authority required for the execution, delivery and performance by Borrower of the
Loan Documents has been obtained and is in full force and effect.



     4.4 Litigation. To Borrower’s Knowledge, there are no actions, suits or other
proceedings at law or in equity by or before any Governmental Authority now pending or threatened
against or affecting Borrower, Sole Member, or the Property, which, if adversely determined, might
have a Material Adverse Effect.



     4.5 Agreements. Borrower is not a party to any agreement or instrument or subject to
any restriction which might have a Material Adverse Effect. Borrower is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by
which it or the Property is bound which might have a Material Adverse Effect.



     4.6 Title. To Borrower’s Knowledge, Borrower has good, marketable
and indefeasible title in fee to the real property and good title to the balance of the Property,
free and clear of all Liens except the Permitted Encumbrances. All transfer taxes, deed stamps,
intangible



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taxes or other amounts in the nature of transfer taxes required to be paid by any Person under
applicable Legal Requirements in connection with the transfer of the Property to Borrower have
been paid. The Mortgage when properly recorded in the appropriate records, together with any UCC
Financing Statements required to be filed in connection therewith, will create (i) a valid,
perfected first priority lien on the Borrower’s interest in the Property and (ii) valid and
perfected first priority security interests in and to, and perfected collateral assignments of,
all personalty (including the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances. All mortgage, recording, stamp, intangible
or other similar taxes required to be paid by any Person under applicable Legal Requirements in
connection with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents have been paid. The Permitted Encumbrances will not have
a Material Adverse Effect. To Borrower’s Knowledge no Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is contemplated with respect to all or part of the
Property or for the relocation of roadways providing access to the Property. To Borrower’s
Knowledge and except as set forth in the Title Insurance Policy, there are no claims for payment
for work, labor or materials affecting the Property which are or may become a Lien prior to, or of
equal priority with, the Liens created by the Loan Documents. To Borrower’s Knowledge, there are
no outstanding options to purchase or rights of first refusal affecting all or any portion of the
Property. To Borrower’s Knowledge, the survey for the Property delivered to Lender does not fail
to reflect any material matter affecting the Property or the title thereto. Except as expressly
set forth in the survey for the Property delivered to Lender, to Borrower’s Knowledge, all of the
Improvements included in determining the appraised value of the Property lie wholly within the
boundaries and building restriction lines of the Property, and no improvement on an adjoining
property encroaches upon the Property, and no easement or other encumbrance upon the Property
encroaches upon any of the Improvements, except those insured against by the Title Insurance
Policy. To Borrower’s Knowledge, each parcel comprising the Property is a separate tax lot and is
not a portion of any other tax lot that is not a part of the Property. Except as set forth in the
Title Insurance Policy and to Borrower’s Knowledge, there are no pending or proposed special or
other assessments for public improvements or otherwise affecting the Property, or any contemplated
improvements to the Property that may result in such special or other assessments.




     4.7 No Bankruptcy Filing. Borrower is not contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency law or the liquidation of all or
a major portion of its property (a “Bankruptcy Proceeding”), and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it. In addition, neither Borrower nor
Sole Member has been a party to, or the subject of a Bankruptcy Proceeding for the past ten (10)
years.



     4.8 Full and Accurate Disclosure. No statement of fact made by Borrower in any Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein not misleading. There is no material fact
presently known to Borrower that has not been disclosed to Lender which might have a Material
Adverse Effect. All financial data, including the statements of cash flow and income and
operating expense, that have been delivered to Lender in respect of Borrower and, to Borrower’s
Knowledge, the Property (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of Borrower and the Property as of the date of such
reports, and



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(iii) to the extent prepared by an independent certified public accounting firm, have been
prepared in accordance with GAAP consistently applied throughout the periods covered, except as
disclosed therein. Borrower has no contingent liabilities, liabilities for delinquent taxes,
unusual forward or long-term commitments, unrealized or anticipated losses from any unfavorable
commitments or any liabilities or obligations not expressly permitted by this Agreement. Since the
date of such financial statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower or, to Borrower’s Knowledge, the Property from that
set forth in said financial statements.




     4.9 Tax Filings. To the extent required, Borrower has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns required to be filed and have paid
or made adequate provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower. Borrower believes that its tax returns (if any) properly reflect
the income and taxes of Borrower for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.



     4.10 ERISA; No Plan Assets. As of the date hereof and throughout the Term (i)
Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA,
(ii) none of the assets of Borrower constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is not and will not
be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (iv) transactions by or
with Borrower are not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans. As of the date hereof, neither
Borrower, nor any member of a “controlled group of corporations” (within the meaning of Section 414
of the Code) maintains, sponsors or contributes to a “defined benefit plan” (within the meaning of
Section 3(35) of ERISA) or a “multiemployer pension plan” (within the meaning of Section 3(37)(A)
of ERISA).



     4.11 Compliance. To Borrower’s Knowledge and except as set forth in the survey and the
zoning report for the Property delivered to Lender, Borrower and the Property and the use thereof
comply in all material respects with all applicable Legal Requirements (including with respect to
parking and applicable zoning and land use laws, regulations and ordinances). Borrower is not in
default or violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which might have a Material Adverse Effect. To Borrower’s Knowledge,
the Property is used exclusively as a first class office building and other appurtenant and related
uses. To Borrower’s Knowledge, in the event that all or any part of the Improvements are destroyed
or damaged, said Improvements can be legally reconstructed to their condition prior to such damage
or destruction, and thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any variances or special
permits. To Borrower’s Knowledge, no legal proceedings are pending or, to the knowledge of
Borrower, threatened with respect to the zoning of the Property. Except as disclosed in the survey
delivered to Lender and/or the title report delivered to Lender, neither the zoning nor any other
right to construct, use or operate the Property is in any way dependent upon or related to any
property other than the Property. To Borrower’s Knowledge, all certifications, permits, licenses
and approvals, including certificates of completion and occupancy permits required for the legal
use, occupancy and operation of the Property








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(collectively, the “Licenses”), have been obtained and are in full force and effect. To Borrower’s
Knowledge, the use being made of the Property is in conformity with the certificate of occupancy
issued for the Property and all other restrictions, covenants and conditions affecting the
Property.




     4.12 Contracts. There are no service, maintenance or repair contracts affecting the
Property that are not terminable on one (1) month’s notice or less without cause and without
penalty or premium. All service, maintenance or repair contracts affecting the Property have been
entered into at arms-length in the ordinary course of Borrower’s business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.



     4.13 Federal Reserve Regulations; Investment Company Act. No part of the proceeds
of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other
purpose that would be inconsistent with such Regulation U or any other regulation of such Board of
Governors, or for any purpose prohibited by Legal Requirements or any Loan Document. Borrower is
not (i) an “investment company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended; (ii) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended; or (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.



     4.14 Easements; Utilities and Public Access. To Borrower’s Knowledge, all
easements, cross easements, licenses, air rights and rights-of-way or other similar property
interests (collectively, “Easements”), if any, necessary for the full utilization
of the Improvements for their intended purposes have been obtained, are described in the Title
Insurance Policy and are in full force and effect without default thereunder. The Property has
rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service it for its intended uses. All public utilities necessary or
convenient to the full use and enjoyment of the Property are located in the public right-of-way
abutting the Property, and all such utilities are connected so as to serve the Property without
passing over other property absent a valid easement. All roads necessary for the use of the
Property for its current purpose have been completed and dedicated to public use and accepted by
all Governmental Authorities.



     4.15 Physical Condition. The Property, including all Improvements, parking
facilities, systems, Equipment and landscaping, are in good condition, order and repair in all
material respects; to Borrower’s Knowledge, there exists no structural or other material defect or
damages to the Property, whether latent or otherwise. Borrower has not received notice from any
insurance company or bonding company of any defect or inadequacy in the Property, or any part
thereof, which would adversely affect its insurability or cause the imposition of
extraordinary premiums or charges thereon or any termination of any policy of insurance or bond.
Except as disclosed in the survey delivered to Lender, to Borrower’s Knowledge, no portion of the
Property is located in an area as identified by the Federal Emergency Management Agency as an area
having special flood hazards. The Improvements have suffered no material casualty or damage which
has not been fully repaired and the cost thereof fully paid.



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     4.16 Leases. To Borrower’s Knowledge, the rent roll attached hereto as Schedule 3
(the “Rent Roll”) is true, complete and correct and the Property is not subject to any Leases other
than the Leases described in the Rent Roll or in the title report delivered to Lender. Except as
set forth on the Rent Roll or as otherwise disclosed to Lender in writing: To Borrower’s Knowledge,
(i) each Lease is in full force and effect; (ii) the tenants under the Leases have accepted
possession of and are in occupancy of all of their respective demised premises, have commenced the
payment of rent under the Leases, and there are no offsets, claims or defenses to the enforcement
thereof; (iii) all rents due and payable under the Leases have been paid and no portion thereof has
been paid for any period more than thirty (30) days in advance; (iv) the rent payable under each
Lease is the amount of fixed rent set forth in the Rent Roll, and there is no claim or basis for a
claim by the tenant thereunder for an adjustment to the rent; (v) no tenant has made any claim
against the landlord under any Lease which remains outstanding, there are no defaults on the part
of the landlord under any Lease, and no event has occurred which, with the giving of notice or
passage of time, or both, would constitute such a default; (vi) there is no present material
default by the tenant under any Lease; (vii) all security deposits under Leases are as set forth on
the Rent Roll and are held consistent with Section 3.8 hereof; (viii) Borrower is the sole
owner of the entire lessor’s interest in each Lease; (ix) each Lease is the valid, binding and
enforceable obligation of the Borrower and the applicable tenant thereunder; (x) no Person has any
possessory interest in, or right to occupy, the Property except under the terms of the Lease; and
(xi) each Lease is subordinate to the Loan Documents, either pursuant to its terms or pursuant to a
subordination and attornment agreement. None of the Leases contains any option to purchase or right
of first refusal to purchase the Property or any part thereof. Neither the Leases nor the Rents
have been assigned or pledged except to Lender, and no other Person has any interest therein except
the tenants thereunder.



     4.17 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and Borrower has
received reasonably equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total probable liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount of its contingent
liabilities or its debts as such debts become absolute and matured. Borrower’s assets do not and,
immediately following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed to be conducted.
Borrower does not intend to, and does not believe that it will, incur debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to pay such debts as
they mature (taking into account the timing and amounts to be payable on or in respect of
obligations of Borrower).



     4.18 Ownership of Borrower. The sole managing member of Borrower is the Sole Member.
The direct membership interests in Borrower are owned free and clear of all Liens, warrants,
options and rights to purchase. Borrower has no obligation to any Person to purchase, repurchase or
issue any ownership interest in it. The organizational chart attached hereto as Schedule 4 is
complete and accurate and illustrates all Persons who have a direct or indirect ownership interest
in Borrower other than those Persons who have a direct or indirect ownership in the REIT.



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     4.19 Purchase Options. To Borrower’s Knowledge, neither the Property nor any part
thereof is subject to any purchase options or other similar rights in favor of third parties.



     4.20 Management Agreement. The Management Agreement is in full force and effect.
There is no default, breach or violation existing thereunder, and no event has occurred (other than
payments due but not yet delinquent) that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation thereunder, by either party thereto.



     4.21 Hazardous Substances. Except as set forth in the environmental reports
obtained by Lender in connection with the making of this Agreement, and to Borrower’s Knowledge,
(i) the Property is not in violation of any Legal Requirement pertaining to or imposing liability
or standards of conduct concerning environmental regulation, contamination or clean-up, including
the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation
and Recovery Act, the Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous
Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air
Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the Occupational Safety and
Health Act, any state super-lien and environmental clean-up statutes (including with respect to
Toxic Mold), any local law requiring related permits and licenses and all amendments to and
regulations in respect of the foregoing laws (collectively, “Environmental Laws”); (ii) the
Property is not subject to any private or governmental Lien or judicial or administrative notice or
action or inquiry, investigation or claim relating to hazardous, toxic and/or dangerous substances,
toxic mold or fungus of a type that may pose a risk to human health or the environment or would
negatively impact the value of the Property (“Toxic Mold”) or any other substances or materials
which are included under or regulated by Environmental Laws (collectively, “Hazardous Substances”);
(iii) no Hazardous Substances are or have been (including the period prior to Borrower’s
acquisition of the Property), discharged, generated, treated, disposed of or stored on,
incorporated in, or removed or transported from the Property other than in compliance with all
Environmental Laws; (iv) no Hazardous Substances are present in, on or under any nearby real
property which could migrate to or otherwise affect the Property; (v) no Toxic Mold is on or about
the Property which requires remediation; (vi) no underground storage tanks exist on the Property
and the Property has never been used as a landfill; and (vii) there have been no environmental
investigations, studies, audits, reviews or other analyses conducted by or on behalf of Borrower
which have not been provided to Lender.



     4.22 Name; Principal Place of Business. Borrower does not use and will not use any
trade name and has not done and will not do business under any name other than its actual name set
forth herein. The principal place of business of Borrower is its primary address for notices as set
forth in Section 6.1 hereof, and Borrower has no other place of business.



     4.23 Other Debt. There is no indebtedness with respect to the Property or any excess
cash flow or any residual interest therein, whether secured or unsecured, other than Permitted
Encumbrances and Permitted Indebtedness.



All of the representations and warranties in this Article 4 and elsewhere in the Loan Documents
(i) shall survive for so long as any portion of the Debt remains owing to Lender and (ii) shall
be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or








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hereafter made by Lender or on its behalf, provided, however, that the representations,
warranties and covenants set forth in Section 4.21 above shall survive in
perpetuity.




5. COVENANTS



Until the end of the Term, Borrower hereby covenants and agrees with Lender that:




     5.1 Existence. Each of Borrower and Sole Member shall (i) do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its existence, rights, and
franchises, (ii) continue to engage in the business presently conducted by it, (iii) obtain and
maintain all Licenses, and (iv) qualify to do business and remain in good standing under the laws
of each jurisdiction, in each case as and to the extent required for the ownership, maintenance,
management and operation of the Property.



     5.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges as the
same become due and payable, and deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid no later than thirty (30)
days before they would be delinquent if not paid (provided, however, that Borrower need not pay
such Taxes nor furnish such receipts for payment of Taxes paid by Lender pursuant to Section
3.3 hereof). Borrower shall not suffer and shall promptly cause to be paid and discharged
any Lien against the Property, and shall promptly pay for all utility services provided to the
Property. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount
or validity or application of any Taxes or Other Charges, provided that (i) no Default or Event of
Default has occurred and is continuing, (ii) such proceeding shall suspend the collection of the
Taxes or such Other Charges, (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder, (iv) no part of or interest in the Property will be in danger of
being sold, forfeited, terminated, canceled or lost, (v) Borrower shall have furnished such
security as may be required in the proceeding, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon, and (vi) Borrower shall promptly upon
final determination thereof pay the amount of such Taxes or Other Charges, together with all costs,
interest and penalties. Lender may pay over any such security or part thereof held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such
claimant is established.



     5.3 Access to Property. Subject to the rights of tenants under the Leases, Borrower
shall permit agents, representatives, consultants and employees of Lender to inspect the Property
or any part thereof at reasonable hours upon reasonable advance notice.



     5.4 Repairs; Maintenance and Compliance; Alterations.



          5.4.1 Repairs; Maintenance and Compliance. Borrower shall at all times maintain,
preserve and protect all franchises and trade names, and Borrower shall cause the Property to be
maintained in a good and safe condition and repair and shall not remove, demolish or alter the
Improvements or Equipment (except for alterations performed in accordance with Section
5.4.2 below and normal replacement of Equipment with Equipment of equivalent value








-33-









 







and functionality). Borrower shall promptly comply with all Legal Requirements and immediately
cure properly any violation of a Legal Requirement. Borrower shall notify Lender in writing within
two (2) Business Days after Borrower first receives notice of any such non-compliance. Borrower
shall promptly repair, replace or rebuild any part of the Property that becomes damaged, worn or
dilapidated and shall complete and pay for any Improvements at any time in the process of
construction or repair.




          5.4.2 Alterations. Borrower may, without Lender’s consent, perform alterations to the
Improvements and Equipment which (i) do not constitute a Material Alteration, (ii) do not
adversely affect Borrower’s financial condition or the value or Net Operating Income of the
Property and (iii) are in the ordinary course of Borrower’s business in operating and maintaining
the Property. Borrower shall not perform any Material Alteration without Lender’s prior written
consent, which consent shall not be unreasonably withheld or delayed. Lender may, as a condition
to giving its consent to a Material Alteration, require that Borrower deliver to Lender security
for payment of the cost of such Material Alteration in an amount in excess of $1,000,000 of the
cost of the Material Alteration as estimated by Lender. Upon substantial completion of the
Material Alteration, Borrower shall provide evidence satisfactory to Lender that (i) the Material
Alteration was constructed in accordance with applicable Legal Requirements and substantially in
accordance with plans and specifications approved by Lender (which approval shall not be
unreasonably withheld or delayed), (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the Material Alteration
have been paid in full and have delivered unconditional releases of lien and (iii) all material
Licenses necessary for the use, operation and occupancy of the Material Alteration (other than
those which depend on the performance of tenant improvement work) have been issued. Borrower shall
reimburse Lender upon demand for all out-of-pocket costs and expenses (including the reasonable
fees of any architect, engineer or other professional engaged by Lender) incurred by Lender in
reviewing plans and specifications or in making any determinations necessary to implement the
provisions of this Section 5.4.2.




     5.5 Performance of Other Agreements. Borrower shall observe and perform in all
material respects each and every term to be observed or performed by it pursuant to the terms of
any agreement or instrument affecting or pertaining to the Property, including the Loan Documents.



     5.6 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with
respect to, and permit Lender, at its option, to participate in, any proceedings before any
Governmental Authority which may in any way affect the rights of Lender under any Loan Document.



     5.7 Further Assurances. Borrower shall, at Borrower’s sole cost and expense, (i)
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 Debt and/or for the better and more
effective carrying out of the intents and purposes of the Loan Documents, as Lender may reasonably
require from time to time; and (ii) upon Lender’s request therefor given from time to time after
the occurrence of any Default or Event of Default pay for (a) reports of UCC, federal tax lien,
state tax lien, judgment and pending litigation searches with respect to Borrower and



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Sole Member and (b) searches of title to the Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably designated by Lender.




     5.8 Environmental Matters.



          5.8.1 Hazardous Substances. So long as Borrower owns or is in possession of the
Property, Borrower shall (i) keep the Property free from Hazardous Substances and in compliance
with all Environmental Laws, (ii) promptly notify Lender if Borrower shall become aware that (A)
any Hazardous Substance is on or near the Property, (B) the Property is in violation of any
Environmental Laws or (C) any condition on or near the Property shall pose a threat to the health,
safety or welfare of humans and (iii) remove such Hazardous Substances and/or cure such violations
and/or remove such threats, as applicable, as required by law, promptly after Borrower becomes
aware of same, at Borrower’s sole expense. Nothing herein shall prevent Borrower from recovering
such expenses from any other party that may be liable for such removal or cure.




          5.8.2 Environmental Monitoring.




               (a) Borrower shall give prompt written notice to Lender of (i) any proceeding or
inquiry by any party (including any Governmental Authority) with respect to the presence of any
Hazardous Substance on, under, from or about the Property, (ii) all claims made or threatened by
any third party (including any Governmental Authority) against Borrower or the Property or any
party occupying the Property relating to any loss or injury resulting from any Hazardous Substance,
and (iii) Borrower’s discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Property that could cause the Property to be subject to any investigation or
cleanup pursuant to any Environmental Law. Upon becoming aware of the presence of mold or fungus at
the Property, Borrower shall (i) undertake an investigation to identify the source(s) of such mold
or fungus and, to the extent required by applicable law, shall develop and implement an appropriate
remediation plan to eliminate the presence of any Toxic Mold, (ii) perform or cause to be performed
all acts reasonably necessary for the remediation of any Toxic Mold (including taking any action
necessary to clean and disinfect any portions of the Property affected by Toxic Mold, including
providing any necessary moisture control systems at the Property), and (iii) provide evidence
reasonably satisfactory to Lender of the foregoing. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal or administrative proceedings or other
actions initiated with respect to the Property in connection with any Environmental Law or
Hazardous Substance, and Borrower shall pay all reasonable attorneys’ fees and disbursements
incurred by Lender in connection therewith.



               (b) If Lender, on its good faith judgment, determines that reasonable cause exists for the
performance of an environmental inspection or audit of the Property, at any time and from time to
time upon Lender’s request, Borrower shall provide such inspection or audit of the Property
prepared by a licensed hydrogeologist, licensed environmental engineer or qualified environmental
consulting firm approved by Lender assessing the presence or absence of Hazardous Substances on, in
or near the Property, and if Lender in its good faith judgment determines that reasonable cause
exists for the performance of such environmental inspection or audit, then the cost and expense of
such audit or inspection shall be paid by Borrower. Such



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inspections and audit may include soil borings and ground water monitoring. If Borrower fails to
provide any such inspection or audit within thirty (30) days after such request, Lender may order
same, and Borrower hereby grants to Lender and its employees and agents access to the Property and
a license to undertake such inspection or audit.




               (c) If any environmental site assessment report prepared in connection with such inspection or
audit recommends that an operations and maintenance plan be implemented for any Hazardous
Substance, whether such Hazardous Substance existed prior to the ownership of the Property by
Borrower, or presently exists or is reasonably suspected of existing, Borrower shall cause such
operations and maintenance plan to be prepared and implemented at its expense upon request of
Lender, to the extent required by applicable law, and with respect to any Toxic Mold, Borrower
shall, to the extent required by applicable law, take all action necessary to clean and disinfect
any portions of the Improvements affected by Toxic Mold in or about the Improvements, including
providing any necessary moisture control systems at the Property. If any investigation, site
monitoring, containment, cleanup, removal, restoration or other work of any kind is reasonably
necessary under an applicable Environmental Law (“Remedial Work”), Borrower shall commence all such
Remedial Work within thirty (30) days after written demand by Lender and thereafter diligently
prosecute to completion all such Remedial Work within such period of time as may be required under
applicable law. All Remedial Work shall be performed by licensed contractors approved in advance by
Lender and under the supervision of a consulting engineer approved by Lender which approval shall
not be unreasonably withheld or delayed. All costs of such Remedial Work shall be paid by Borrower,
including Lender’s reasonable attorneys’ fees and disbursements incurred in connection with the
monitoring or review of such Remedial Work. If Borrower does not timely commence and diligently
prosecute to completion the Remedial Work, Lender may (but shall not be obligated to) cause such
Remedial Work to be performed at Borrower’s expense. Notwithstanding the foregoing, Borrower shall
not be required to commence such Remedial Work within the above specified time period: (x) if
prevented from doing so by any Governmental Authority, (y) if commencing such Remedial Work within
such time period would result in Borrower or such Remedial Work violating any Environmental Law, or
(z) if Borrower, at its expense and after prior written notice to Lender, is contesting by
appropriate legal, administrative or other proceedings, conducted in good faith and with due
diligence, the need to perform Remedial Work. Borrower shall have the right to contest the need to
perform such Remedial Work, provided that, (1) Borrower is permitted by the applicable
Environmental Laws to delay performance of the Remedial Work pending such proceedings, (2) neither
the Property nor any part thereof or interest therein will be sold, forfeited or lost if Borrower
fails to promptly perform the Remedial Work being contested, and if Borrower fails to prevail in
contest, Borrower would thereafter have the opportunity to perform such Remedial Work, (3) Lender
would not, by virtue of such permitted contest, be exposed to any risk of any civil liability for
which Borrower has not furnished additional security as provided in clause (4) below, or to any
risk of criminal liability, and neither the Property nor any interest therein would be subject to
the imposition of any Lien for which Borrower has not furnished additional security as provided in
clause (4) below, as a result of the failure to perform such Remedial Work and (4) Borrower shall
have furnished to Lender additional security in respect of the Remedial Work being contested and
the loss or damage that may result from Borrower’s failure to prevail in such contest in such
amount as may be reasonably requested by Lender but in no event less than the cost of such Remedial
Work as







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estimated by Lender and Borrower or Lender’s Consultant and any loss or damage that may result
from Borrower’s failure to prevail in such contest.




               (d) Borrower shall not install or permit to be installed on the Property any underground
storage tank.



     5.9 Title to the Property. Borrower will warrant and defend the title to the Property,
and the validity and priority of all Liens granted or otherwise given to Lender under the Loan
Documents, subject only to Permitted Encumbrances, against the claims of all Persons.



     5.10 Leases.



          5.10.1 Generally. Upon request, Borrower shall furnish Lender with executed copies
of all Leases then in effect. All renewals of Leases and all proposed leases shall be arm’s length
transactions with bona fide, independent third-party tenants.




          5.10.2 Leasing. The following shall apply so long as (a) the Mezzanine Loan is
outstanding, or (b) an Event of Default is continuing: Borrower shall not enter into a proposed
Material Lease or a proposed renewal, extension or modification of an existing Material Lease
without the prior written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, be unreasonably withheld or delayed. Prior to seeking Lender’s consent to
any Material Lease, Borrower shall deliver to Lender a copy of such proposed lease (a “Proposed
Material Lease”) blacklined to show changes from the standard form of Lease approved by Lender and
then being used by Borrower. Lender shall approve or disapprove each Proposed Material Lease or
proposed renewal, extension or modification of an existing Material Lease for which Lender’s
approval is required under this Agreement within five (5) Business Days of the submission by
Borrower to Lender of a written request for such approval, accompanied by a final copy of the
Proposed Material Lease or proposed renewal, extension or modification of an existing Material
Lease. If requested by Borrower, Lender will grant conditional approvals of Proposed Material
Leases or proposed renewals, extensions or modifications of existing Material Leases at any stage
of the leasing process, from initial “term sheet” through negotiated lease drafts, provided that
Lender shall retain the right to disapprove any such Proposed Material Lease or proposed renewal,
extension or modification of an existing Material Lease, if subsequent to any preliminary approval
material changes are made to the terms previously approved by Lender, or additional material terms
are added that had not previously been considered and approved by Lender in connection with such
Proposed Material Lease or proposed renewal, extension or modification of an existing Material
Lease. Provided that no Event of Default is continuing, if Borrower provides Lender with a written
request for approval (which written request shall specifically refer to this Section 5.10.2
and shall explicitly state in 14-point bold type that failure by Lender to approve or disapprove
within five (5) Business Days will constitute a deemed approval) and Lender fails to reject the
request in writing delivered to Borrower within five (5) Business Days after receipt by Lender of
the request, the Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease shall be deemed approved by Lender, and Borrower shall be entitled to enter
into such Proposed Material Lease or proposed renewal, extension or modification of an existing
Material Lease.









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          5.10.3 Lease Execution and Modification.




               (a) In no event shall any Lease contain any option to purchase or any right of first
refusal to purchase. Borrower shall deliver to Lender copies of all Leases within thirty (30) days
after the execution of the Lease.



               (b) Borrower (i) shall observe and perform the material obligations imposed upon the lessor
under the Leases and shall not do or permit anything to impair the value of the Leases as security
for the Debt; (ii) shall promptly send copies to Lender of all notices of default that Borrower
shall send or receive under any Lease; (iii) shall enforce, in accordance with commercially
reasonable practices for properties similar to the Property, the terms, covenants and conditions in
the Leases to be observed or performed by the lessees, short of termination thereof; (iv) shall not
collect any of the Rents more than one (1) month in advance (other than security deposits); (v)
shall not execute any other assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (vi) shall not modify any Lease in a manner inconsistent with
Section 5.10; and (vii) shall not convey or transfer or suffer or permit a conveyance or
transfer of the Property so as to effect a merger of the estates and rights of, or a termination or
diminution of the obligations of, lessees under Leases.



     5.11 Estoppel Statement. After request by Lender, Borrower shall within ten (10)
days furnish Lender with a statement addressed to Lender, its successors and assigns, duly
acknowledged and certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii)
the date installments of interest and/or Principal were last paid, (iv) any offsets or defenses to
the payment of the Debt, and (v) that the Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such modification.



     5.12 Property Management.



          5.12.1 Management Agreement. Borrower shall (i) cause the Property to be
managed pursuant to the Management Agreement; (ii) promptly perform and observe all of the
covenants required to be performed and observed by it under the Management Agreement and do all
things necessary to preserve and to keep unimpaired its rights thereunder; (iii) promptly notify
Lender of any default under the Management Agreement of which it is aware; (iv) if requested,
promptly deliver to Lender a copy of each financial statement, business plan, capital expenditure
plan, and property improvement plan and any other notice, report and estimate received by Borrower
under the Management Agreement; and (v) promptly enforce the performance and observance of all of
the covenants required to be performed and observed by Manager under the Management Agreement, the
failure of which covenants could cause a Material Adverse Effect. Without Lender’s prior written
consent (not to be unreasonably withheld), Borrower shall not (a) surrender, terminate, cancel,
extend or renew the Management Agreement or otherwise replace the Manager or enter into any other
management agreement (except as provided below in this Section 5.12.1); (b) reduce or
consent to the reduction of the term of the Management Agreement; (c) increase or consent to the
increase of the amount of any charges under the Management Agreement; (d) otherwise modify, change,
supplement, alter or amend in any material respect, or waive or release any of its rights and
remedies under, the Management Agreement; or (e) suffer or permit the occurrence and continuance of
a default beyond any applicable cure period under the Management Agreement (or any successor
management








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agreement) if such default permits the Manager to terminate the Management Agreement (or such
successor management agreement). For so long as the Mezzanine Loan is outstanding, Borrower may
from time to time appoint, without Lender’s consent, a successor manager to manage the Property,
provided that (A) Borrower provides to Lender prompt notice of such appointment and provides to
Lender such items and information regarding such appointment and successor manager as Lender may
reasonably request, (B) such successor manager has the management expertise in managing properties
similar in size and type to the Property (provided, that such condition shall be deemed satisfied
if the successor manager is CB Richard Ellis, Jones Lang or PM Realty Group), (C) the property
management agreement with such successor manager provides compensation to the manager at market
rates for similar properties and otherwise contains economic terms that are no less favorable to
Borrower than such terms that were contained in the property management agreement with the prior
property manager, and (D) such successor manager promptly executes a consent and subordination of
management agreement substantially in the form of the Consent and Subordination of Manager of even
date herewith executed and delivered by Manager to Lender. After the Mezzanine Loan is paid in
full, Borrower may from time to time appoint, without Lender’s consent, a successor manager to
manage the Property, provided that (A) Borrower provides to Lender prompt notice of such
appointment and provides to Lender such items and information regarding such appointment and
successor manager as Lender may reasonably request, (B) the property management agreement with
such successor manager provides compensation to the manager at market rates for similar
properties, and (C) such successor manager promptly executes a consent and subordination of
management agreement substantially in the form of the Consent and Subordination of Manager of even
date herewith executed and delivered by Manager to Lender.




          5.12.2 Termination of Manager. If (i) an Event of Default shall be continuing, or (ii)
upon the gross negligence, malfeasance or willful misconduct of the Manager, Borrower shall, at the
request of Lender, terminate the Management Agreement and replace Manager with a replacement
manager acceptable to Lender in Lender’s discretion and the applicable Rating Agencies on terms and
conditions satisfactory to Lender and the applicable Rating Agencies. Borrower’s failure to appoint
an acceptable manager within thirty (30) days after Lender’s request of Borrower to terminate the
Management Agreement shall constitute an immediate Event of Default.




     5.13 Special Purpose Bankruptcy Remote Entity. Borrower shall at all times be a
Special Purpose Bankruptcy Remote Entity. Borrower shall not directly or indirectly make any
change, amendment or modification to its organizational documents, or otherwise take any action
which could result in Borrower not being a Special Purpose Bankruptcy Remote Entity. A “Special
Purpose Bankruptcy Remote Entity” shall have the meaning set forth on Schedule 5 hereto.



     5.14 Assumption in Non-Consolidation Opinion. Borrower and Sole Member shall each
conduct its business so that the assumptions (with respect to each Person) made in that certain
substantive non-consolidation opinion letter delivered by Borrower’s counsel in connection
with the Loan, shall be true and correct in all respects.



     5.15 Change in Business or Operation of Property. Borrower shall not purchase or own
any real property other than the Property and shall not enter into any line of business other




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than the ownership and operation of the Property, or make any material change in the scope
or nature of its business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business or otherwise cease to operate the
Property as a first class office building property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to the Property).




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



     5.17 Affiliate Transactions. Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of Borrower or any of the members 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.



     5.18 Zoning. Borrower shall not initiate or consent to any zoning reclassification of
any portion of the Property or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of the 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, which consent shall not be unreasonably withheld
or delayed.



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



     5.20 Principal Place of Business. Borrower shall not change its principal place of
business or chief executive office without first giving Lender thirty (30) days’ prior notice.



     5.21 Change of Name, Identity or Structure. Borrower shall not change its name,
identity (including its trade name or names) or Borrower’s corporate, partnership or other
structure without notifying Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in Borrower’s structure that could
result in Borrower not being a Special Purpose Bankruptcy Remote Entity or result in a violation of
the transfer provisions of the Loan Documents, without first obtaining the prior written consent of
Lender. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the
effective date of any such change, any financing statement or financing statement change required
by Lender to establish or maintain the validity, perfection and priority of the security interest
granted herein. At the request of Lender, Borrower shall execute a certificate in form satisfactory
to Lender listing the trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade name with respect to
the Property.



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     5.22 Indebtedness. Borrower shall not create, incur or assume any indebtedness other
than (i) the Debt, and (ii) unsecured trade payables, unsecured capital expenses and operating
expenses incurred in the ordinary course of business relating to the ownership and operation of the
Property which (A) are not evidenced by a note, (B) do not exceed, at any time, a maximum aggregate
amount of three percent (3%) of the original amount of the Principal (except that real estate taxes
and insurance premiums shall not be included in the calculation of such 3% threshold), and (C) are
paid within sixty (60) days after the date incurred (collectively, “Permitted Indebtedness”).



     5.23 Licenses. Borrower shall not Transfer any License required for the operation of
the Property.



     5.24 Compliance with Restrictive Covenants, Etc. Borrower will not enter into,
modify, waive in any material respect or release any Easements, restrictive covenants or other
Permitted Encumbrances, or suffer, consent to or permit the foregoing, without Lender’s prior
written consent, which consent may be granted or denied in Lender’s reasonable discretion.



     5.25 ERISA.



          5.25.1 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.




          5.25.2 Borrower shall not maintain, sponsor, contribute to or become obligated to contribute
to, or suffer or permit any ERISA Affiliate of Borrower to, maintain, sponsor, contribute to or
become obligated to contribute to, any Plan or any Welfare Plan or permit the assets of Borrower to
become “plan assets,” whether by operation of law or under regulations promulgated under ERISA.




          5.25.3 Borrower shall deliver to Lender such certifications or other evidence from time to
time throughout the Term, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an “employee benefit plan” as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(B) Borrower is not subject to state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (C) the assets of Borrower do not constitute “plan assets”
within the meaning of 29 C.F.R. Section 2510.3-101.




     5.26 Prohibited Transfers.



          5.26.1 Generally. Borrower shall not make, suffer or permit the occurrence of any
Transfer other than a Permitted Transfer.




          5.26.2 Transfer and Assumption.




               (a) Notwithstanding the foregoing and subject to the terms and satisfaction of all the
conditions precedent set forth in this Section 5.26.2, Borrower shall have a right to
Transfer the Property to another party (the “Transferee Borrower”) and have the



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Transferee Borrower assume all of Borrower’s obligations under the Loan Documents (collectively, a
“Transfer and Assumption”). Borrower may make a written application to Lender for Lender’s consent
to the Transfer and Assumption, subject to the conditions set forth in paragraphs (b) and (c) of
this Section 5.26.2. Together with such written application, Borrower will pay to Lender
the reasonable review fee then required by Lender. Borrower also shall pay on demand all of the
reasonable costs and expenses incurred by Lender, including reasonable attorneys’ fees and
expenses, and including the fees and expenses of Rating Agencies and other outside entities, in
connection with considering any proposed Transfer and Assumption, whether or not the same is
permitted or occurs.




               (b) Lender’s consent, which may be withheld in Lender’s reasonable discretion, to a
Transfer and Assumption shall be subject to the following conditions:



                    (i) No Event of Default has occurred and is continuing;



                    (ii) Borrower has submitted to Lender true, correct and
complete copies of any and all information and documents of any kind requested by Lender
concerning the Property, Transferee Borrower, replacement guarantors and indemnitors and Borrower;



                    (iii) Evidence satisfactory to Lender has been provided showing
that the Transferee Borrower and such of its Affiliates as shall be designated by Lender comply
and will comply with Section 5.13 hereof, as those provisions may be modified by Lender
taking into account the ownership structure of Transferee Borrower and its Affiliates;



                    (iv) If the Loan, by itself or together with other loans, has been
the subject of a Secondary Market Transaction, then Lender shall have received a Rating Comfort
Letter from the applicable Rating Agencies;



                    (v) If the Loan has not been the subject of a Secondary Market
Transaction, then Lender shall have determined in its reasonable discretion (taking into
consideration such factors as Lender may determine, including the attributes of the loan pool in
which the Loan might reasonably be expected to be securitized) that no rating for any securities
that would be issued in connection with such securitization will be diminished, qualified, or
withheld by reason of the Transfer and Assumption;



                    (vi) Borrower shall have paid all of Lender’s reasonable costs
and expenses in connection with considering the Transfer and Assumption, and shall have paid the
amount requested by Lender as a deposit against Lender’s costs and expenses in connection with the
effecting the Transfer and Assumption;



                    (vii) Borrower and the Transferee Borrower shall have indicated
in writing in form and substance reasonably satisfactory to Lender their readiness and ability to
satisfy the conditions set forth in subsection (c) below;



                    (viii) The identity, experience, financial condition and creditworthiness of
the Transferee Borrower shall be reasonably satisfactory to Lender;



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                    (ix) The proposed property manager and proposed Management Agreement shall be
satisfactory to Lender and the applicable Rating Agencies;



                    (x) All Approved Mezzanine Loans have been paid in full.



               (c) If Lender consents to the Transfer and Assumption, the Transferee Borrower and/or
Borrower as the case may be, shall immediately deliver the following to Lender:



                    (i) Borrower shall deliver to Lender an assumption fee in the
amount of (x) one-half percent (0.5%) of the then unpaid Principal for the first Transfer and
Assumption and (y) one percent (1%) of the then unpaid Principal for each Transfer and Assumption
thereafter;



                    (ii) Borrower and Transferee Borrower shall execute and
deliver to Lender any and all documents required by Lender, in form and substance required by
Lender, in Lender’s sole discretion;



                    (iii) Counsel to the Transferee Borrower shall deliver to Lender
opinions in form and substance satisfactory to Lender as to such matters as Lender shall
reasonably require, which may include opinions as to substantially the same matters and were
required in connection with the origination of the Loan (including a new substantive
non-consolidation opinion with respect to the Transferee Borrower);



                    (iv) Borrower shall cause to be delivered to Lender, an
endorsement (relating to the change in the identity of the vestee and execution and delivery of the
Transfer and Assumption documents) to the Title Insurance Policy in form and substance acceptable
to Lender, in Lender’s reasonable discretion (the “Endorsement”); and



                    (v) Borrower shall deliver to Lender a payment in the amount
of all remaining unpaid costs incurred by Lender in connection with the Transfer and Assumption,
including but not limited to, Lender’s reasonable attorneys fees and expenses, all recording fees,
and all fees payable to the title company for the delivery to Lender of the Endorsement.



     5.27 Liens. Without Lender’s prior written consent, Borrower shall not create, incur,
assume, permit or suffer to exist any Lien on all or any portion of the Property or any direct or
indirect legal or beneficial ownership interest in Borrower or Sole Member, except Liens in favor
of Lender and Permitted Encumbrances, unless such Lien is bonded or discharged within thirty (30)
days after Borrower first receives notice of such Lien.



     5.28 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.



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     5.29 Expenses. Subject to Section 9.1.1(A), Borrower shall reimburse Lender
upon receipt of notice for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred by Lender or Servicer in connection with the Loan,
including (i) the preparation, negotiation, execution and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby and all the costs of furnishing all opinions
by counsel for Borrower; (ii) Borrower’s and Lender’s ongoing performance under and compliance with
the Loan Documents, including confirming compliance with environmental and insurance requirements;
(iii) the negotiation, preparation, execution, delivery and administration of any consents,
amendments, waivers or other modifications of or under any Loan Document and any other documents or
matters requested by Lender; (iv) filing and recording of any Loan Documents; (v) title insurance,
surveys, inspections and appraisals; (vi) the creation, perfection or protection of Lender’s Liens
in the Property and the Cash Management Accounts (including fees and expenses for title and lien
searches, intangibles taxes, personal property taxes, Mortgage, recording taxes, due diligence
expenses, travel expenses, accounting firm fees, costs of appraisals, environmental reports and
Lender’s Consultant, surveys and engineering reports); (vii) enforcing or preserving any rights in
response to third party claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, the Loan Documents, the Property, or
any other security given for the Loan; (viii) fees charged by Servicer or the Rating Agencies in
connection with the Loan or any modification thereof and (ix) enforcing any obligations of or
collecting any payments due from Borrower under any Loan Document or with respect to the Property
or in connection with any refinancing or restructuring of the Loan in the nature of a “work-out”,
or any insolvency or bankruptcy proceedings. Any costs and expenses due and payable by Borrower
hereunder which are not paid by Borrower within ten (10) days after demand may be paid from any
amounts in the Deposit Account, with notice thereof to Borrower. The obligations and liabilities
of Borrower under this Section 5.29 shall survive the Term and the exercise by Lender of
any of its rights or remedies under the Loan Documents, including the acquisition of the Property
by foreclosure or a conveyance in lieu of foreclosure. Notwithstanding the foregoing, in no event
shall any of the costs and expenses described in this Section 5.29 above include ongoing
regular servicing fees relating to the day-to-day servicing of the Loan, for which Borrower shall
not be charged.



     5.30 Indemnity. Borrower shall defend, indemnify and hold harmless Lender and each
of its Affiliates and their respective successors and assigns, including the directors, officers,
partners, members, shareholders, participants, employees, professionals and agents of any of the
foregoing (including any Servicer) and each other Person, if any, who Controls Lender, its
Affiliates or any of the foregoing (each, an “Indemnified Party”), 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 the reasonable fees and
disbursements of counsel for an Indemnified Party in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not Lender shall be
designated a party thereto, court costs and costs of appeal at all appellate levels, investigation
and laboratory fees, consultant fees and litigation expenses), that may be imposed on, incurred by,
or asserted against any Indemnified Party (collectively, the “Indemnified Liabilities”) in any
manner, relating to or arising out of or by reason of the Loan, including: (i) any breach by
Borrower of its obligations under, or any misrepresentation by Borrower contained in, any Loan
Document; (ii) the use or intended use of the proceeds of the Loan; (iii) any information provided
by or on behalf of Borrower, or contained in any documentation approved by



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Borrower; (iv) ownership of the Mortgage, the Property or any interest therein, or receipt of any
Rents; (v) any accident, injury to or death of persons or loss of or damage to property occurring
in, on or about the Property or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (vi) any use, nonuse or condition in, on or about the Property or
on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (vii)
performance of any labor or services or the furnishing of any materials or other property in
respect of the Property; (viii) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance on, from or
affecting the Property; (ix) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Substance; (x) any lawsuit brought
or threatened, settlement reached, or government order relating to such Hazardous Substance; (xi)
any violation of the Environmental Laws which is based upon or in any way related to such
Hazardous Substance, including the costs and expenses of any Remedial Work; (xii) any failure of
the Property to comply with any Legal Requirement; (xiii) any claim by brokers, finders or similar
persons claiming to be entitled to a commission in connection with any Lease or other transaction
involving the Property or any part thereof, or any liability asserted against Lender with respect
thereto; and (xiv) the claims of any lessee of any portion of the Property or any Person acting
through or under any lessee or otherwise arising under or as a consequence of any Lease; provided,
however, that Borrower shall not have any obligation to any Indemnified Party hereunder to the
extent that it is finally judicially determined that such Indemnified Liabilities arise from the
gross negligence, illegal acts, fraud or willful misconduct of such Indemnified Party and
provided, further, that Borrower shall not have any obligation to any Indemnified Party to the
extent that it is finally judicially determined that such Indemnified Liability arises solely from
the failure of Lender or any third party or other respective agents to comply with any applicable
federal, state or other securities or “blue sky” laws or regulations thereunder. Any amounts
payable to any Indemnified Party by reason of the application of this paragraph shall be payable
on demand and shall bear interest at the Default Rate from the date loss or damage is sustained by
any Indemnified Party until paid. The obligations and liabilities of Borrower under this
Section 5.30 shall survive the Term and the exercise by Lender of any of its rights or
remedies under the Loan Documents, including the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure.




     5.31 Patriot Act Compliance. Borrower will use its good faith and commercially
reasonable efforts to comply with the Patriot Act (as defined below) and all applicable
requirements of governmental authorities having jurisdiction over Borrower and the Property,
including those relating to money laundering and terrorism. Lender shall have the right to audit
Borrower’s compliance with the Patriot Act and all applicable requirements of governmental
authorities having jurisdiction over Borrower and the Property, including those relating to money
laundering and terrorism. In the event that Borrower fails to comply with the Patriot Act or any
such requirements of governmental authorities, then Lender may, at its option, cause Borrower to
comply therewith and any and all reasonable costs and expenses incurred by Lender in connection
therewith shall be secured by the Mortgage and the other Loan Documents and shall be immediately
due and payable. For purposes hereof, the term “Patriot Act” means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT) Act of 2001, as the same may be amended from time to time, and corresponding provisions of
future laws.



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               (a) Neither Borrower nor any member of Borrower or member or partner of such member nor to
Borrower’s Knowledge, any owner of a direct or indirect interest in Borrower (a) is listed on any
Government Lists (as defined below), (b) is a person who has been determined by competent authority
to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations of OFAC (as defined
below) or in any enabling legislation or other Presidential Executive Orders in respect thereof,
(c) has been previously indicted for or convicted of any felony involving a crime or crimes of
moral turpitude or for any Patriot Act Offense (as defined below), or (d) is currently under
investigation by any governmental authority for alleged criminal activity. For purposes hereof, the
term “Patriot Act Offense” means any violation of the criminal laws of the United States of America
or of any of the several states, or that would be a criminal violation if committed within the
jurisdiction of the United States of America or any of the several states, relating to terrorism or
the laundering of monetary instruments, including any offense under (a) the criminal laws against
terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy Act, as amended,
(d) the Money Laundering Control Act of 1986, as amended, or the (e) Patriot Act. “Patriot Act
Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to
commit, a Patriot Act Offense. For purposes hereof, the term “Government Lists” means (i) the
Specially Designated Nationals and Blocked Persons Lists maintained by Office of Foreign Assets
Control (“OFAC”), (ii) any other list of terrorists, terrorist organizations or narcotics
traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified
Borrower in writing is now included in “Governmental Lists”, or (iii) any similar lists maintained
by the United States Department of State, the United States Department of Commerce or any other
government authority or pursuant to any Executive Order of the President of the United States of
America that Lender notified Borrower in writing is now included in “Governmental Lists”.



     5.32 Anti-Poaching Covenant. Borrower shall not, and Borrower shall not permit any of
its Affiliates to, persuade or solicit any tenant at the Property to relocate to another property
owned by an Affiliate of Borrower without making all commercially reasonable efforts to retain
such tenant at the Property.



6. NOTICES AND REPORTING




     6.1 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document (a “Notice”) shall be given in writing and
shall be effective for all purposes if either hand delivered with receipt acknowledged, or by a
nationally recognized overnight delivery service (such as Federal Express), or by certified or
registered United States mail, return receipt requested, postage prepaid, or by facsimile and
confirmed by facsimile answer back, in each case addressed as follows (or to such other address or
Person as a party shall designate from time to time by notice to the other party): If to Lender:
Greenwich Capital Financial Products, Inc., 600 Steamboat Road, Greenwich, Connecticut 06830,
Attention: Mortgage Loan Department, Telecopier (203) 618-2052, with a copy to: Allen Matkins Leck
Gamble Mallory & Natsis LLP, 515 South Figueroa Street, Seventh Floor, Los Angeles, California
90071-3398, Attention: Gregg J. Loubier, Esq., Telecopier: (213) 620-8816; if to Borrower: c/o KBS
Capital Advisors, 620 Newport Center Drive, Suite 1300, Newport Beach, CA 92660, Attention: Stacie
Yamane, Telecopier: (949) 417-6523, with a copy to: KBS Capital Advisors, 620 Newport Center Drive,
Suite 1300, Newport Beach, CA 92660, Attention: Walter



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Foster, Telecopier: (949) 417-6518. A notice shall be deemed to have been given: in the case of
hand delivery, at the time of delivery; in the case of registered or certified mail, when delivered
or the first attempted delivery on a Business Day; in the case of overnight delivery, upon the
first attempted delivery on a Business Day; or in the case of facsimile, upon the confirmation of
such facsimile transmission.




     6.2 Borrower Notices and Deliveries. Borrower shall (a) give prompt written notice to
Lender of: (i) any litigation, governmental proceedings or claims or investigations pending or
threatened against Borrower or Sole Member which might materially adversely affect Borrower’s or
Sole Member’s condition (financial or otherwise) or business or the Property; and (ii) any material
adverse change in Borrower’s or Sole Member’s condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which Borrower has knowledge; and (b) furnish and
provide to Lender: (i) any Securities and Exchange Commission or other public filings, if any, of
Borrower, Sole Member, Manager, or any Affiliate of any of the foregoing within two (2) Business
Days of such filing and (ii) all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other insurance reports and
agreements, reasonably requested, from time to time, by Lender. In addition, after request by
Lender (but no more frequently than twice in any year), Borrower shall furnish to Lender (x) within
ten (10) days, a certificate addressed to Lender, its successors and assigns reaffirming all
representations and warranties of Borrower set forth in the Loan Documents as of the date requested
by Lender or, to the extent of any changes to any such representations and warranties, so stating
such changes, and (y) during an Event of Default, within thirty (30) days, tenant estoppel
certificates addressed to Lender, its successors and assigns from each tenant at the Property in
form and substance reasonably satisfactory to Lender.



     6.3 Financial Reporting.



          6.3.1 Bookkeeping. Borrower shall keep on a calendar year basis, in
accordance with GAAP, proper and accurate books, records and accounts reflecting all of the
financial affairs of Borrower and all items of income and expense and any services, Equipment or
furnishings provided in connection with the operation of the Property, whether such income or
expense is realized by Borrower, Manager or any Affiliate of Borrower. Lender shall have the right
from time to time during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or other Person maintaining them, and to make such
copies or extracts thereof as Lender shall desire. After an Event of Default, Borrower shall pay
any costs incurred by Lender to examine such books, records and accounts, as Lender shall determine
to be necessary or appropriate in the protection of Lender’s interest.




          6.3.2 Annual Reports. Borrower shall furnish to Lender annually, within 120 days
after each calendar year, a complete copy of the REIT’s annual financial statements prepared in
accordance to GAAP audited by a “big four” accounting firm or another independent certified public
accountant (accompanied by an unqualified opinion from such accounting firm or other independent
certified public accountant) reasonably acceptable to Lender. In addition, Borrower shall furnish
annual unaudited financial statements of the Borrower, each in accordance with GAAP and
containing balance sheets and statements of profit and loss for Borrower and the Property in such
form that is reasonably acceptable to Lender. Each such statement (x) shall be in form and
substance that is reasonably satisfactory to Lender, (y) shall




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set forth the financial condition and the income and expenses for the Property for the immediately
preceding calendar year, including statements of annual Net Operating Income as well as (1) a list
of tenants, if any, occupying more than twenty percent (20%) of the rentable space of the
Property, (2) a breakdown showing (a) the year in which each Lease then in effect expires, (b) the
percentage of rentable space covered by such Lease, (c) the percentage of base rent with respect
to which Leases shall expire in each such year, expressed both on a per year and a cumulative
basis and (z) shall be accompanied by an Officer’s Certificate certifying that to the best of
their knowledge and belief (1) that such statement is true, correct, complete and accurate and
presents fairly the financial condition of the Property and has been prepared in accordance with
GAAP and (2) whether there exists a Default or Event of Default, and if so, the nature thereof,
the period of time it has existed and the action then being taken to remedy it.




          6.3.3 Monthly/Quarterly Reports. At any time prior to the date that Lender sells its
entire interest in the Loan Documents, Borrower shall furnish to Lender within forty-five (45) days
after the end of each calendar month the following items: (i) monthly and year-to-date operating
statements, noting Net Operating Income and other information necessary and sufficient under GAAP
to fairly represent the financial position and results of operation of the Property during such
calendar month, all in form that is reasonably satisfactory to Lender; (ii) a balance sheet for
such calendar month; (iii) a comparison of the budgeted income and expenses and the actual income
and expenses for each month and year-to-date for the Property, together with a detailed explanation
of any variances of ten percent (10%) or more between budgeted and actual amounts for such period
and year-to-date; (iv) a statement of the actual Capital Expenses made by Borrower during each
calendar month as of the last day of such calendar month; (v) a statement that Borrower has not
incurred any indebtedness other than indebtedness permitted hereunder or under the Senior Loan
Documents; (vi) an aged receivables report and (vii) rent rolls identifying the leased premises,
names of all tenants, units leased, monthly rental and all other charges payable under each Lease,
date to which paid, term of Lease, date of occupancy, date of expiration, material special
provisions, concessions or inducements granted to tenants, and a year-by-year schedule showing by
percentage the rentable area of the Improvements and the total base rent attributable to Leases
expiring each year) and a delinquency report for the Property. Thereafter, Borrower shall furnish
to Lender within forty-five (45) days after the end of each calendar quarter the following items:
(i) quarterly and year-to-date operating statements, noting Net Operating Income and other
information necessary and sufficient under GAAP to fairly represent the financial position and
results of operation of the Property during such calendar quarter, all in form that is reasonably
satisfactory to Lender; (ii) a balance sheet for such calendar quarter; (iii) a comparison of the
budgeted income and expenses and the actual income and expenses for each quarter and year-to-date
for the Property, together with a detailed explanation of any
variances of ten percent (10%) or more
between budgeted and actual amounts for such period and year-to-date; (iv) a statement of the
actual Capital Expenses made by Borrower during each calendar quarter as of the last day of such
calendar quarter; (v) a statement that Borrower has not incurred any indebtedness other than
indebtedness permitted hereunder; (vi) an aged receivables report and (vii) rent rolls identifying
the leased premises, names of all tenants, units leased, monthly rental and all other charges
payable under each Lease, date to which paid, term of Lease, date of occupancy, date of expiration,
material special provisions, concessions or inducements granted to tenants, and a year-by-year
schedule showing by percentage the rentable area of the Improvements and the total base rent
attributable to Leases expiring each year) and a delinquency report for the Property. Each such
statement shall be




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accompanied by an Officer’s Certificate certifying to the best of their knowledge and belief (1)
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
(subject to normal year-end adjustments) and (2) whether there exists a Default or an Event of
Default, and if so, the nature thereof, the period of time it has existed and the action then being
taken to remedy it.




          6.3.4 Other Reports. Borrower shall furnish to Lender, within ten (10) Business
Days after request, such further detailed information with respect to the operation of the Property
and the financial affairs of Borrower, Sole Member or Manager as may be reasonably requested by
Lender or any applicable Rating Agency.




          6.3.5 Annual Budget. Borrower shall prepare and submit (or shall cause Manager to
prepare and submit) to Lender within thirty (30) days after commencement of a Cash Management
Period and by November 30th of each year during the Term, for approval by Lender, which approval
shall not be unreasonably withheld or delayed, a proposed pro forma budget for the Property for the
succeeding calendar year (the “Annual Budget”, and each Annual Budget approved by Lender is
referred to herein as the “Approved Annual Budget”)), and, promptly after preparation thereof, any
revisions to such Annual Budget. The Annual Budget shall consist of (i) an operating expense
budget showing, on a month-by-month basis, in reasonable detail, each line item of the Borrower’s
anticipated operating income and operating expenses (on a cash and accrual basis), including
amounts required to establish, maintain and/or increase any monthly payments required hereunder
(and once such Annual Budget has been approved by Lender, such operating expense budget shall be
referred to herein as the “Approved Operating Budget”), and (ii) a Capital Expense budget showing,
on a month-by-month basis, in reasonable detail, each line item of anticipated Capital Expenses
(and once such Annual Budget has been approved by Lender, such Capital Expense budget shall be
referred to herein as the “Approved Capital
Budget”). Until such time that any Annual Budget has
been approved by Lender, the prior Approved Annual Budget shall apply for all purposes hereunder
(with such adjustments as reasonably determined by Lender (including increases for any
non-discretionary expenses)).




7. INSURANCE; CASUALTY; AND CONDEMNATION 




     7.1 Insurance.



          7.1.1 Coverage. Borrower, at its sole cost, for the mutual benefit of Borrower
and Lender, shall obtain and maintain during the Term the following policies of insurance:




               (a) Property insurance insuring against loss or damage customarily included under so called
“all risk” or “special form” policies including fire, lightning, vandalism, and malicious
mischief, boiler and machinery and, if required by Lender, flood and/or earthquake coverage and
subject to subsection (j) below, coverage for damage or destruction caused by the acts of
“Terrorists” (or such policies shall have no exclusion from coverage with respect thereto) and
such other insurable hazards as, under good insurance practices, from time to time are insured
against for other property and buildings similar to the premises in nature, use, location, height,
and type of construction. Such insurance policy shall also insure for ordinance



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of law coverage, costs of demolition and increased cost of construction in amounts satisfactory to
Lender. Each such insurance policy shall (i) be in an amount equal to 100% of the then replacement
cost of the Improvements without deduction for physical depreciation, (ii) have deductibles no
greater than $10,000 per occurrence, (iii) be paid annually in advance and (iv) be on a
replacement cost basis and contain either no coinsurance or, if coinsurance, an agreed amount
endorsement, and shall cover, without limitation, all tenant improvements and betterments that
Borrower is required to insure on a replacement cost basis. Lender shall be named Mortgagee and
Loss Payee on a Standard Mortgagee Endorsement.




               (b) Flood insurance if following the date hereof any part of the Property is located in an
area now or hereafter designated by the Federal Emergency Management Agency as a Zone “A” & “V”
Special Hazard Area, or such other similar Special Hazard Area. Such policy shall (i) be in an
amount equal to (A) 100% of the full replacement cost of the Improvements on the Property (without
any deduction for depreciation) or (B) such other amount as agreed to by Lender and (ii) have a
maximum permissible deductible of $3,000. Without limiting Lender’s rights to require flood
insurance in the future if any part of the Property is located in any such designated area, Lender
hereby acknowledges that as of the date hereof such flood insurance is not required.



               (c) Public liability insurance, including (i) “Commercial General Liability Insurance”,
(ii) “Owned”, “Hired” and “Non Owned Auto Liability”; and (iii) umbrella liability coverage for
personal injury, bodily injury, death, accident and property damage, such insurance providing in
combination no less than containing minimum limits per occurrence of $2,000,000 and $4,000,000 in
the aggregate for any policy year with no deductible or self insured retention; together with at
least $25,000,000 excess and/or umbrella liability insurance for any and all claims. The policies
described in this subsection shall also include coverage for elevators, escalators, independent
contractors, “Contractual Liability” (covering, to the maximum extent permitted by law, Borrower’s
obligation to indemnify Lender as required under this Agreement and the other Loan Documents),
“Products” and “Completed Operations Liability” coverage.



               (d) Rental loss and/or business interruption insurance (i) with Lender being named as “Lender
Loss Payee”, (ii) in an amount equal to 100% of the projected Rents from the Property during the
period of restoration; and (iii) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it was at prior to the
loss, or the expiration of twelve (12) months from the date that the Property is repaired or
replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy
may expire prior to the end of such period. The amount of such insurance shall be increased from
time to time during the Term as and when the estimated or actual Rents increase.



               (e) Comprehensive boiler and machinery insurance covering all mechanical and electrical
equipment against physical damage, rent loss and improvements loss and covering, without
limitation, all tenant improvements and betterments that Borrower is required to insure pursuant to
the lease on a replacement cost basis and in an amount equal to the



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lesser of (i) $2,000,000 and (ii) 100% of the full replacement cost of the Improvements on such
Property (without any deduction for depreciation).



               (f) Worker’s compensation and disability insurance with respect to any employees of Borrower,
as required by any Legal Requirement.



               (g) During any period of repair or restoration, builder’s “all-risk” insurance on the so
called completed value basis in an amount equal to not less than the full insurable value of the
Property, against such risks (including fire and extended coverage and collapse of the Improvements
to agreed limits) as Lender may request, in form and substance acceptable to Lender.



               (h) Coverage to compensate for ordinance of law, the cost of demolition and the increased
cost of construction in an amount satisfactory to Lender.



               (i) Such other insurance (including environmental liability insurance, earthquake insurance,
mine subsidence insurance and windstorm insurance) as may from time to time be reasonably required
by Lender in order to protect its interests. Without limiting Lender’s rights to require
earthquake insurance in the future Lender hereby acknowledges that as of the date hereof such
earthquake insurance is not required.



               (j) Notwithstanding anything in subsection (a) above to the contrary, Borrower shall be
required to obtain and maintain coverage in its property insurance Policy (or by a separate
Policy) against loss or damage by terrorist acts in an amount equal to 100% of the “Full
Replacement Cost” of the Property; provided that such coverage is available. In the event that
such coverage with respect to terrorist acts is not included as part of the “all risk” property
policy required by subsection (a) above, Borrower shall, nevertheless be required to obtain
coverage for terrorism (as stand alone coverage) (expressly excluding any loss due to flood caused
by terrorist acts) in an amount equal to 100% of the “Full Replacement Cost” of the Property;
provided that such coverage is available. Borrower shall obtain the coverage required under this
subsection (j) from a carrier which otherwise satisfies the rating criteria specified in
Section 7.1.2 below (a “Qualified Carrier”) or in the event that such coverage is not
available from a Qualified Carrier, Borrower shall obtain such coverage from the highest rated
insurance company providing such coverage.



     7.1.2 Policies. All policies of insurance (the “Policies”) required pursuant to
Section 7.1.1 above shall (i) be issued by companies approved by Lender and licensed to do
business in the State, with a claims paying ability rating of “A” or better by S&P (and the
equivalent by any other Rating Agency) (provided, however for multi-layered policies, (A) if four
(4) or less insurance companies issue the Policies, then at least 75% of the insurance coverage
represented by the Policies must be provided by insurance companies with a claims paying ability
rating of “A” or better by S&P (and the equivalent by any other Rating Agency), with no carrier
below “BBB” (and the equivalent by any other Rating Agency) or (B) if five (5) or more insurance
companies issue the Policies, then at least sixty percent (60%) of the insurance coverage
represented by the Policies must be provided by insurance companies with a claims paying ability
rating of “A” or better by S&P (and the equivalent by any other Rating Agency), with no carrier
below “BBB” (and the equivalent by any other Rating Agency), or a rating of



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A:XV or better in the current Best’s Insurance Reports; (ii) name Lender and its successors and/or
assigns as their interest may appear as the mortgagee (in the case of property insurance), loss
payee (in the case of business interruption/loss of rents coverage) and an additional insured (in
the case of liability insurance); (iii) contain (in the case of property insurance) a
Non-Contributory Standard Mortgagee Clause and a Lender’s Loss Payable Endorsement, or their
equivalents, naming Lender as the person to which all payments made by such insurance company
shall be paid; (iv) contain a waiver of subrogation against Lender; (v) be assigned and the
originals thereof delivered to Lender; (vi) contain such provisions as Lender deems reasonably
necessary or desirable to protect its interest, including (A) endorsements providing that neither
Borrower, Lender nor any other party shall be a co-insurer under the Policies, (B) that Lender
shall receive at least thirty (30) days’ prior written notice of any modification, reduction or
cancellation of any of the Policies, (C) an agreement whereby the insurer waives any right to
claim any premiums and commissions against Lender, provided that the policy need not waive the
requirement that the premium be paid in order for a claim to be paid to the insured and (D)
providing that Lender is permitted to make payments to effect the continuation of such policy upon
notice of cancellation due to non-payment of premiums; (vii) in the event any insurance policy
(except for general public and other liability and workers compensation insurance) shall contain
breach of warranty provisions, such policy shall provide that with respect to the interest of
Lender, such insurance policy shall not be invalidated by and shall insure Lender regardless of
(A) any act, failure to act or negligence of or violation of warranties, declarations or
conditions contained in such policy by any named insured, (B) the occupancy or use of the premises
for purposes more hazardous than permitted by the terms thereof, or (C) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Loan Documents; and (viii)
be satisfactory in form and substance to Lender and approved by Lender as to amounts, form, risk
coverage, deductibles, loss payees and insureds. Borrower shall pay the premiums for such Policies
(the “Insurance Premiums”) as the same become due and payable and furnish to Lender evidence of
the renewal of each of the Policies together with (unless such Insurance Premiums have been paid
by Lender pursuant to Section 3.3 hereof) receipts for or other evidence of the payment of
the Insurance Premiums reasonably satisfactory to Lender. If Borrower does not furnish such
evidence and receipts at least thirty (30) days prior to the expiration of any expiring Policy,
then Lender may, but shall not be obligated to, procure such insurance and pay the Insurance
Premiums therefor, and Borrower shall reimburse Lender for the cost of such Insurance Premiums
promptly on demand, with interest accruing at the Default Rate. Borrower shall deliver to Lender a
certified copy of each Policy within thirty (30) days after its effective date. Within thirty (30)
days after request by Lender, Borrower shall obtain such increases in the amounts of coverage
required hereunder as may be reasonably requested by Lender, taking into consideration changes in
the value of money over time, changes in liability laws, changes in prudent customs and practices,
and the like.



     7.2 Casualty.



          7.2.1 Notice; Restoration. If the Property is damaged or destroyed, in whole or
in part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice thereof to
Lender. Following the occurrence of a Casualty, Borrower, regardless of whether insurance proceeds
are available, shall promptly proceed to restore, repair, replace or rebuild the Property in
accordance with Legal Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.




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          7.2.2 Settlement of Proceeds. If a Casualty covered by any of the Policies (an
“Insured Casualty”) occurs where the loss does not exceed $250,000, provided no Event of Default
has occurred and is continuing, Borrower may settle and adjust any claim without the prior consent
of Lender; provided such adjustment is carried out in a competent and timely manner, and Borrower
is hereby authorized to collect and receipt for the insurance proceeds (the “Proceeds”). In the
event of an Insured Casualty where the loss equals or exceeds $250,000 (a “Significant Casualty”),
Lender may, in its sole discretion, settle and adjust any claim without the consent of Borrower
and agree with the insurer(s) on the amount to be paid on the loss, and the Proceeds shall be due
and payable solely to Lender and held by Lender in the Casualty/Condemnation Subaccount and
disbursed in accordance herewith. If Borrower or any party other than Lender is a payee on any
check representing Proceeds with respect to a Significant Casualty, Borrower shall immediately
endorse, and cause all such third parties to endorse, such check payable to the order of Lender.
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to
endorse such check payable to the order of Lender. The expenses incurred by Lender in the
settlement, adjustment and collection of the Proceeds shall become part of the Debt and shall be
reimbursed by Borrower to Lender upon demand. Notwithstanding anything to the contrary contained
herein, if in connection with a Casualty any insurance carrier makes a payment under a property
insurance Policy that Borrower proposes be treated as business or rental interruption insurance,
then, notwithstanding any designation (or lack of designation) by the insurance carrier as to the
purpose of such payment, as between Lender and Borrower, such payment shall not be treated as
business or rental interruption insurance proceeds unless Borrower has demonstrated to Lender’s
satisfaction that the remaining net Proceeds that will be received from the property insurance
carriers are sufficient to pay 100% of the cost of fully restoring the Improvements or, if such
net Proceeds are to be applied to repay the Debt in accordance with the terms hereof, that such
remaining net Proceeds will be sufficient to pay the Debt in full.




     7.3 Condemnation.



          7.3.1 Notice; Restoration. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any condemnation or eminent domain proceeding affecting the
Property (a “Condemnation”) and shall deliver to Lender copies of any and all papers served in
connection with such Condemnation. Following the occurrence of a Condemnation, Borrower,
regardless of whether an Award is available, shall promptly proceed to restore, repair, replace or
rebuild the Property in accordance with Legal Requirements to the extent practicable to be of at
least equal value and of substantially the same character (and to have the same utility) as prior
to such Condemnation.




          7.3.2 Collection of Award. With respect any award or payment in respect of a
Condemnation (an “Award”) which is equal to or less than $250,000, provided no Event of Default is
continuing, Borrower shall have exclusive power to collect, receive and retain any such Award and
to make any compromise, adjustment or settlement in connection with such Condemnation. With
respect any Award which is greater that $250,000, provided no Event of Default is continuing,
Borrower shall have exclusive power to collect, receive and retain any such Award and to make any
compromise, adjustment or settlement in connection with such Condemnation, subject to Lender’s
approval which shall not be unreasonably withheld, delayed or conditioned. At any time that an
Event of Default is continuing, Lender is hereby irrevocably




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appointed as Borrower’s attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any such Award and to make any compromise, adjustment or settlement in
connection with such Condemnation. Notwithstanding any Condemnation (or any transfer made in lieu
of or in anticipation of such Condemnation), Borrower shall continue to pay the Debt at the time
and in the manner provided for in the Loan Documents, and the Debt shall not be reduced unless and
until any Award shall have been actually received and applied by Lender to expenses of collecting
the Award and to discharge of the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the Award interest at
the rate or rates provided in the Note. If the Property is sold, through foreclosure or otherwise,
prior to the receipt by Lender of such Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall be recoverable or shall have been sought, recovered or
denied, to receive all or a portion of the Award sufficient to pay the Debt. Borrower shall cause
any Award that is payable to Borrower to be paid directly to Lender. Lender shall hold such Award
in the Casualty/Condemnation Subaccount and disburse such Award in accordance with the terms
hereof.




     7.4 Application of Proceeds or Award.



          7.4.1 Application to Restoration. If an Insured Casualty or Condemnation occurs where
(i) the loss is in an aggregate amount less than the fifteen percent (15%) of the unpaid Principal;
(ii) in the reasonable judgment of Lender, the Property can be restored within six (6) months, and
prior to six (6) months before the Stated Maturity Date and prior to the expiration of the rental
or business interruption insurance with respect thereto, to the Property’s pre-existing condition
and utility as existed immediately prior to such Insured Casualty or Condemnation and to an
economic unit not less valuable and not less useful than the same was immediately prior to the
Insured Casualty or Condemnation, and after such restoration will adequately secure the Debt; (iii)
less than (x) thirty percent (30%), in the case of an Insured Casualty or (y) fifteen percent
(15%), in the case of a Condemnation, of the rentable area of the Improvements has been damaged,
destroyed or rendered unusable as a result of such Insured Casualty or Condemnation; (iv) Leases
demising in the aggregate at least sixty-five percent (65%) of the total rentable space in the
Property and in effect as of the date of the occurrence of such Insured Casualty or Condemnation
remain in full force and effect during and after the completion of the Restoration (hereinafter
defined); and (v) no Event of Default shall have occurred and be then continuing, then the Proceeds
or the Award, as the case may be (after reimbursement of any expenses incurred by Lender), shall be
applied to reimburse Borrower for the cost of restoring, repairing, replacing or rebuilding the
Property (the “Restoration”), in the manner set forth herein. Borrower shall commence and
diligently prosecute such Restoration. Notwithstanding the foregoing, in no event shall Lender be
obligated to apply the Proceeds or Award to reimburse Borrower for the cost of Restoration unless,
in addition to satisfaction of the foregoing conditions, both (x) Borrower shall pay (and if
required by Lender, Borrower shall deposit with Lender in advance) all costs of such Restoration in
excess of the net amount of the Proceeds or the Award made available pursuant to the terms hereof;
and (y) Lender shall have received evidence reasonably satisfactory to it that during the period of
the Restoration, the Rents will be at least equal to the sum of the operating expenses and Debt
Service and other reserve payments required hereunder, as reasonably determined by Lender.




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          7.4.2 Application to Debt. Except as provided in Section 7.4.1 above, any
Proceeds and/or Award may, at the option of Lender in its discretion, be applied to the payment of
(i) accrued but unpaid interest on the Note, (ii) the unpaid Principal and (iii) other charges due
under the Note and/or any of the other Loan Documents, or applied to reimburse Borrower for the
cost of any Restoration, in the manner set forth in Section 7.4.3 below. Any such
prepayment of the Loan shall be without any Yield Maintenance Premium.




          7.4.3 Procedure for Application to Restoration. If Borrower is entitled to
reimbursement out of the Proceeds or an Award held by Lender, such Proceeds or Award shall be
disbursed from time to time from the Casualty/Condemnation Subaccount upon Lender being furnished
with (i) evidence satisfactory to Lender of the estimated cost of completion of the Restoration,
(ii) a fixed price or guaranteed maximum cost construction contract for Restoration satisfactory to
Lender, (iii) prior to the commencement of Restoration, all immediately available funds in addition
to the Proceeds or Award that in Lender’s judgment are required to complete the proposed
Restoration, (iv) such architect’s certificates, waivers of lien, contractor’s sworn statements,
title insurance endorsements, bonds, plats of survey, permits, approvals, licenses and such other
documents and items as Lender may reasonably require and approve in Lender’s discretion, and
(iv) all plans and specifications for such Restoration, such plans and specifications
to be approved by Lender prior to commencement of any work. Lender may, at Borrower’s expense,
retain a consultant to review and approve all requests for disbursements, which approval shall also
be a condition precedent to any disbursement. No payment made prior to the final completion of the
Restoration shall exceed ninety percent (90%) of the value of the work performed from time to time;
funds other than the Proceeds or Award shall be disbursed prior to disbursement of such Proceeds or
Award; and at all times, the undisbursed balance of such Proceeds or Award remaining in the hands
of Lender, together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall be at least sufficient
in the reasonable judgment of Lender to pay for the cost of completion of the Restoration, free and
clear of all Liens or claims for Lien. Provided no Default or Event of Default then exists, any
surplus that remains out of the Proceeds held by Lender after payment of such costs of Restoration
shall be paid to Borrower. Any surplus that remains out of the Award received by Lender after
payment of such costs of Restoration shall, in the discretion of Lender, be retained by Lender and
applied to payment of the Debt or returned to Borrower.




8. DEFAULTS




     8.1 Events of Default. An “Event of Default” shall exist with respect to the
Loan if any of the following shall occur:



               (a) any Monthly Debt Service Payment Amount is not paid when due or any portion of the Debt
is otherwise not paid within ten (10) days of the due date (other than amounts due on the Maturity
Date and except to the extent a shorter grace period is expressly provided for in the Loan
Documents with respect to the applicable payment) or any other amount under Section 3.11(a)(ii) through (ix) hereof is not paid in full on each Payment Date (provided, however, if
adequate funds are available in the Deposit Account for such payments, the failure by the Deposit
Bank to allocate such funds into the appropriate Subaccounts shall not constitute an Event of
Default);



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               (b) any of the Taxes are not paid when due, subject to Borrower’s right to contest Taxes in
accordance with Section 5.2 hereof except to the extent sums sufficiently to pay such Taxes
have been deposited with Lender in accordance with this Agreement;



               (c) the Policies are not kept in full force and effect, or are not delivered to Lender upon
request;



               (d) a Transfer other than a Permitted Transfer occurs;



               (e) any material representation or warranty made by Borrower or in any Loan Document, or in
any report, certificate, financial statement or other instrument, agreement or document furnished
by Borrower in connection with any Loan Document, shall be false or misleading in any material
respect as of the date the representation or warranty was made; provided, however, as to any such
false or misleading representation or warranty or statement which can be true and correct by
reasonable action of Borrower and which false or misleading representation or warranty was made
unintentionally, Borrower shall have a period of thirty (30) days following written notice to
Borrower to undertake and complete all action necessary to make such representation, warranty or
statement true and correct in all material respects (except that Borrower shall not have the
benefit of this grace period if such false or misleading representation or warranty has already
caused a Material Adverse Effect).



               (f) Borrower or Sole Member shall make an assignment for the benefit of creditors, or shall
generally not be paying its debts as they become due;



               (g) a receiver, liquidator or trustee shall be appointed for Borrower or Sole Member; or
Borrower or Sole Member shall be adjudicated a bankrupt or insolvent; or 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 or
Sole Member, as the case may be; or any proceeding for the dissolution or liquidation of Borrower
or Sole Member shall be instituted; provided, however, if such appointment, adjudication, petition
or proceeding was involuntary and not consented to by Borrower or Sole Member, as the case may be,
only upon the same not being discharged, stayed or dismissed within ninety (90) days;



               (h) Borrower
breaches any covenant contained in Sections 5.12.1 (a) - (f),
5.13 (to the extent any breach under Section 5.13 could cause Borrower to be
consolidated with any other Person in a bankruptcy or similar
proceeding), 5.15, 5.22, 5.25 or 5.28 hereof;



               (i) except as expressly permitted hereunder, the actual or threatened alteration,
improvement, demolition or removal of all or any portion of the Improvements without the prior
written consent of Lender;



               (j) an Event of Default as defined or described elsewhere in this Agreement or in any other
Loan Document occurs; or any other event shall occur or condition shall exist, if the effect of
such event or condition is to accelerate or to permit Lender to accelerate the maturity of any
portion of the Debt subject to any applicable notice and cure periods expressly provided therein;



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               (k) a default occurs under any term, covenant or provision set forth herein or in any other
Loan Document which specifically contains a notice requirement or grace period and such notice
has been given and such grace period has expired;



               (1) any of the assumptions contained in any substantive non-consolidation opinion,
delivered to Lender by Borrower’s counsel in connection with the Loan or otherwise hereunder,
were not true and correct as of the date of such opinion or thereafter became untrue or
incorrect;



               (m) a default shall be continuing under any of the other terms, covenants or conditions of
this Agreement or any other Loan Document not otherwise specified in this Section 8.1, for
ten (10) business 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 thirty (30)-day period, and Borrower shall have
commenced to cure such default within such thirty (30)-day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30)-day period shall be extended for an
additional period of time as is reasonably necessary for Borrower in the exercise of due diligence
to cure such default, such additional period not to exceed ninety (90) days.



     8.2 Remedies.



          8.2.1 Acceleration. Upon the occurrence of an Event of Default (other than an Event of
Default described in paragraph (f) or (g) of Section 8.1 above) and at any time and from time to
time thereafter, in addition to any other rights or remedies available to it pursuant to the Loan
Documents or at law or in equity, Lender may 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 declaring the Debt to be immediately due and payable (including unpaid
interest), Default Rate interest, Late Payment Charges, Yield Maintenance Premium and any other
amounts owing by Borrower), without notice or demand; and upon any Event of Default described in
paragraph (f) or (g) of Section 8.1 above, the Debt (including unpaid interest, Default
Rate interest, Late Payment Charges, Yield Maintenance Premium and any other amounts owing by
Borrower) shall immediately and automatically become due and payable, without notice or demand, and
Borrower hereby expressly waives any such notice or demand, anything contained in any Loan Document
to the contrary notwithstanding.




          8.2.2 Remedies Cumulative. Upon the occurrence 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 the Loan Documents 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, or be automatically, 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. 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
discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Lender permitted by




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law, equity or contract or as set forth in the Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the extent
permitted by applicable law, 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, the Mortgage has been foreclosed, the Property has been sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in full. To the extent permitted by
applicable law, nothing contained in any Loan Document shall be construed as requiring Lender to
resort to any portion of the Property for the satisfaction of any of the Debt in preference or
priority to any other portion, and Lender may seek satisfaction out of the entire Property or any
part thereof, in its discretion.




          8.2.3 [Intentionally Omitted]




          8.2.4 Delay. No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default, or the granting of any indulgence or compromise by Lender shall impair
any such remedy, right or power hereunder or 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 shall not be construed to be a waiver of any subsequent
Default or Event of Default or to impair any remedy, right or power consequent thereon.
Notwithstanding any other provision of this Agreement, Lender reserves the right to seek a
deficiency judgment or preserve a deficiency claim in connection with the foreclosure of the
Mortgage to the extent necessary to foreclose on all or any portion of the Property, the Rents, the
Cash Management Accounts or any other collateral.




          8.2.5 Lender’s Right to Perform. If Borrower fails to perform any covenant or
obligation contained herein and such failure shall continue for a period of five (5) Business Days
after Borrower’s receipt of written notice thereof from Lender, without in any way limiting
Lender’s right to exercise any of its rights, powers or remedies as provided hereunder, or under
any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause
performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and
fines of Lender incurred or paid in connection therewith shall be payable by Borrower to Lender
upon demand and if not paid shall be added to the Debt (and to the extent permitted under
applicable laws, secured by the Mortgage and other Loan Documents) and shall bear interest
thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to Borrower of any such failure.




9. SPECIAL PROVISIONS




     9.1 Sale of Note and Secondary Market Transaction.



          9.1.1 General; Borrower Cooperation. Lender shall have the right at any time and from
time to time (i) to sell or otherwise transfer the Loan or any portion thereof or the Loan
Documents or any interest therein to one or more investors, (ii) to sell participation interests
in the Loan to one or more investors (iii) to cause the Loan to be split into two or more separate
loans or (iv) to securitize the Loan or any portion thereof in a single asset securitization or a
pooled loan securitization of rated single or multi-class securities (the “Securities”) secured by
or




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evidencing ownership interests in the Note and the Mortgage (each such sale, assignment,
participation and/or securitization is referred to herein as a “Secondary Market Transaction”). In
connection with any Secondary Market Transaction, Borrower shall use all reasonable efforts and
cooperate fully and in good faith with Lender and otherwise 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 such Secondary Market Transactions,
including: (a) to (i) to provide such financial and other information with respect to the Property,
Borrower and its Affiliates, Manager and any tenants of the Property, (ii) provide business plans
and budgets relating to the Property and (iii) subject to the rights of tenants at the Property,
perform or permit or cause to be performed or permitted such site inspection, appraisals, surveys,
market studies, environmental reviews and reports, engineering reports and other due diligence
investigations of the Property, as may be reasonably requested from time to time by Lender or the
Rating Agencies or as may be necessary or appropriate in connection with a Secondary Market
Transaction or Exchange Act requirements (the items provided to Lender pursuant to this paragraph
(a) being called the “Provided Information”), together, if customary, with appropriate verification
of and/or consents to the Provided Information through letters of auditors or opinions of counsel
of independent attorneys acceptable to Lender and the Rating Agencies; (b) cause counsel to render
opinions as to non-consolidation and any other opinion customary in securitization transactions
with respect to the Property, Borrower and its Affiliates, which counsel and opinions shall be
reasonably satisfactory to Lender and the Rating Agencies; (c) make such representations and
warranties as of the closing date of any Secondary Market Transaction with respect to the Property,
Borrower and the Loan Documents as are customarily provided in such transactions and as may be
reasonably requested by Lender or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the representations and
warranties made in the Loan Documents; (d) provide current certificates of good standing and
qualification with respect to Borrower and Sole Member from appropriate Governmental Authorities;
and (e) execute such amendments to the Loan Documents and Borrower’s organizational documents, as
may be requested by Lender or the Rating Agencies or otherwise to effect a Secondary Market
Transaction, provided that nothing contained in this subsection (e) shall result in a material
economic change in the transaction; provided that notwithstanding anything to the contrary in this
Section 9.1.1 Borrower shall not be required to (A) incur any out-of-pocket expense in
connection with the Secondary Market Transaction unless Lender agrees to pay for such out of pocket
expenses as they are incurred by Borrower (including, without limitation, a change in the interest
rate or the stated maturity of the Loan), (B) agree to a modification of any Loan Document that
would have a material impact upon the rights, liabilities, or responsibilities of Borrower, or (C)
take any actions that would impose a significant burden on Borrower. Borrower’s cooperation
obligations set forth herein shall continue until the Loan has been paid in full.




          9.1.2 Use of Information. Borrower understands that all or any portion of the
Provided Information and the Required Records may be included in disclosure documents in
connection with a Secondary Market Transaction, including a prospectus or private placement
memorandum (each, a “Disclosure Document”) and may also be included in filings with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”),
or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made
available to investors or prospective investors in the Securities, the




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Rating Agencies, and service providers or other parties relating to the Secondary Market
Transaction. If the Disclosure Document is required to be revised, Borrower shall cooperate with
Lender in updating the Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a Secondary Market
Transaction by providing all current information pertaining to Borrower, Manager and the Property
necessary to keep the Disclosure Document accurate and complete in all material respects with
respect to such matters.




          9.1.3 Borrower Obligations Regarding Disclosure Documents.
In connection with a Disclosure Document, Borrower shall: (a) if requested by Lender, certify in
writing that Borrower has carefully examined those portions of such Disclosure Document,
pertaining to Borrower, the Property, Manager and the Loan, and that such portions do not contain
any untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which they were made, not
misleading; and (b) indemnify (in a separate instrument of indemnity, if so requested by Lender)
(i) any underwriter, syndicate member or placement agent (collectively, the “Underwriters”)
retained by Lender or its issuing company affiliate (the “Issuer”) in connection with a Secondary
Market Transaction, (ii) Lender and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market Transaction (the “Registration Statement”),
and each of the Issuer’s directors, each of its officers who have signed the Registration
Statement and each person or entity who controls the Issuer or the Lender within the meaning of
Section 15 of the Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
“GCM Group”), and each of its directors and each person who controls each of the Underwriters,
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 (the
“Liabilities”) to which Lender, the GCM Group or the Underwriter Group may become subject
(including reimbursing all of them for any legal or other expenses actually incurred in connection
with investigating or defending the Liabilities) insofar as the Liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact contained in any
of the Provided Information or in any of the applicable portions of such sections of the
Disclosure Document applicable to Borrower, Manager, the Property or the Loan, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to be
stated in the applicable portions of such sections or necessary in order to make the statements in
the applicable portions of such sections in light of the circumstances under which they were made,
not misleading; provided, however, that Borrower shall not be required to indemnify Lender for any
Liabilities relating to untrue statements or omissions which Borrower identified to Lender in
writing at the time of Borrower’s examination of such Disclosure Document.




          9.1.4 Borrower Indemnity Regarding Filings. In connection with filings under the
Exchange Act, Borrower shall (i) indemnify Lender, the GCM Group and the Underwriter Group for any
Liabilities to which Lender, the GCM Group or the Underwriter Group may become subject insofar as
the Liabilities arise out of or are based upon the omission or alleged omission to state in the
Provided Information a material fact required to be stated in the Provided Information in order to
make the statements in the Provided Information, in light of the circumstances under which they
were made not misleading and (ii) reimburse Lender, the GCM Group or the Underwriter Group for any
legal or other expenses actually incurred by




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Lender, GCM Group or the Underwriter Group in connection with defending or investigating the
Liabilities.




          9.1.5 Indemnification Procedure. Promptly after receipt by an indemnified party
under Section 9.1.3 above or Section 9.1.4 above of notice of the commencement of
any action for which a claim for indemnification is to be made against Borrower, such indemnified
party shall notify Borrower in writing of such commencement, but the omission to so notify Borrower
will not relieve Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to Borrower. If any action is brought
against any indemnified party, and it notifies Borrower of the commencement thereof, Borrower 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 of commencement, to assume the defense thereof with counsel
satisfactory to such indemnified party in its discretion. After notice from Borrower to such
indemnified party under this Section 9.1.5, Borrower shall not be responsible 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 Borrower and an indemnified party, and any 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 Borrower, then 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 or
parties. Borrower shall not be liable for the expenses of more than one separate counsel unless
there are legal defenses available to it that are different from or additional to those available
to another indemnified party.




          9.1.6 Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.1.3 above or
Section 9.1.4 above is for any reason held to be unenforceable by an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise
be indemnifiable under Section 9.1.3 above or Section 9.1.4 above, Borrower shall
contribute to the amount paid or payable by the indemnified party as a result of such 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 not guilty of such fraudulent misrepresentation. In determining
the amount of contribution to which the respective parties are entitled, the following factors
shall be considered: (i) the GCM Group’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; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and Borrower hereby agree that it may not
be equitable if the amount of such contribution were determined by pro rata or per capita
allocation.




          9.1.7
[Intentionally Omitted]




          9.1.8 Severance of Loan. Lender shall have the right, at any time (whether prior to,
in connection with, or after any Secondary Market Transaction or for the purpose of enforcing
Lender’s rights and remedies under the Loan Documents), with respect to all or any




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portion of the Loan, to modify, split and/or sever all or any portion of the Loan as hereinafter
provided. Without limiting the foregoing, Lender may (i) cause the Note and the Mortgage to be
split into a first and second mortgage loan, (ii) create one more senior and subordinate notes
(i.e., an A/B or A/B/C structure), (iii) create multiple components of the Note or Notes (and
allocate or reallocate the principal balance of the Loan among such components) or (iv) otherwise
sever the Loan into two (2) or more loans secured by mortgages and by a pledge of partnership or
membership interests (directly or indirectly) in Borrower (i.e., a senior loan/mezzanine loan
structure), in each such case, in whatever proportion and whatever priority Lender determines;
provided, however, in each such instance the outstanding principal balance of all the Notes
evidencing the Loan (or components of such Notes) immediately after the effective date of such
modification equals the outstanding principal balance of the Loan immediately prior to such
modification and the weighted average of the interest rates for all such Notes (or components of
such Notes) immediately after the effective date of such modification equals the interest rate of
the original Note immediately prior to such modification. If requested by Lender, Borrower (and
Borrower’s constituent members, if applicable) shall execute within two (2) Business Days after
such request, such documentation as Lender may reasonably request to evidence and/or effectuate any
such modification or severance. Borrower shall not be required to (A) incur any out-of-pocket
expense in connection with any action taken pursuant to this Section 9.1.8 unless Lender
agrees to pay for such out of pocket expenses as they are incurred by Borrower (including, without
limitation, a change in the interest rate or the stated maturity of the Loan), (B) agree to a
modification of any Loan Document that would have a material impact upon the rights, liabilities,
or responsibilities of Borrower, or (C) take any actions that would impose a significant burden on
Borrower.




10. MISCELLANEOUS




     10.1 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 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 and rights under the 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 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 any Loan Document. The provisions of this Section 10.1 shall not, however,
(i) constitute a waiver, release or impairment of any obligation evidenced or secured by any Loan
Document; (ii) impair the right of Lender to name Borrower as a party defendant in any action or
suit for foreclosure and sale under the Mortgage; (iii) affect the validity or enforceability of
any of the Loan Documents or any guaranty made in connection with the Loan or any of the rights
and remedies of Lender thereunder; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the Assignment of Leases; (vi) constitute a prohibition
against Lender to commence any other appropriate action or proceeding in order for Lender to fully
realize the security granted by the Mortgage or to exercise its remedies against the Property; or
(vii) constitute a waiver of the right of Lender to enforce the liability and obligation



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of Borrower (but not any of Borrower’s constituent members, partners, officers, directors or
shareholders), 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 the following (all such liability and
obligation of Borrower for any or all of the following being referred to herein as “Borrower’s Recourse Liabilities”):




               (a) fraud or intentional misrepresentation by Borrower or Sole Member in connection
with obtaining the Loan;



               (b) intentional waste of the Property or any portion thereof, or after an Event of Default the
removal or disposal of any portion of the Property;



               (c) any Proceeds paid by reason of any Insured Casualty or any Award received in connection
with a Condemnation or other sums or payments attributable to the Property to the extent not
applied in accordance with the provisions of the Loan Documents (except to the extent that Borrower
did not have the legal right, because of a bankruptcy, receivership or similar judicial proceeding,
to direct disbursement of such sums or payments);



               (d) all Rents of the Property received or collected by or on behalf of the Borrower after an
Event of Default and not applied to payment of Principal and interest due under the Note, and to
the payment of actual and reasonable operating expenses of the Property, as they become due or
payable (except to the extent that such application of such funds is prevented by bankruptcy,
receivership, or similar judicial proceeding in which Borrower is legally prevented from directing
the disbursement of such sums);



               (e) misappropriation (including failure to turn over to Lender on demand following an Event of
Default) of tenant security deposits and rents collected in advance;



               (f) the failure to pay Taxes or Insurance Premiums, provided Borrower shall not be
liable to the extent funds to pay such amounts are available in the Tax and Insurance Subaccount
and Lender failed to pay same;



               (g) the failure to pay transfer fees and charges due Lender under the Loan Documents in
connection with any subordinate financing or any transfer of all or any part of the Property, or
any interest therein, from Borrower to Borrower’s transferee, or transfer of beneficial interest in
Borrower; or



               (h) the breach of any representation, warranty, covenant or indemnification in any Loan
Document concerning Environmental Laws or Hazardous Substances, including Section 4.21
hereof and Section 5.8 hereof, and clauses (viii) through (xi) of Section 5.30 hereof.


Notwithstanding anything to the contrary in this Agreement 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 U.S. 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




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the Debt in accordance with the Loan Documents, and (B) Lender’s agreement not to pursue personal
liability of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no further
force and effect, and the Debt shall be fully recourse to Borrower (but not any of Borrower’s other
constituent members, partners, officers, directors or shareholders) in the event that one or more
of the following occurs (each, a “Springing Recourse Event”): (i) an Event of Default described in
Section 8.1(d) hereof shall have occurred (solely as a result of a voluntary Transfer), or
(ii) a breach of the covenants set forth in Section 5.13 hereof, or (iii) Borrower’s
voluntary commencement of proceedings to be adjudicated bankrupt or insolvent; Borrower’s consent
to the institution of bankruptcy or insolvency proceedings against it; Borrower’s filing of a
petition seeking, or consent to, reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency; Borrower’s consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of Borrower or a
substantial part of Borrower’s property; Borrower’s assignment for the benefit of creditors; or the
filing of an involuntary petition in bankruptcy or insolvency proceedings against Borrower by any
principal of or owner of any interest in Borrower or any affiliate of or party related to Borrower
(but excluding any owner or affiliate that indirectly owns or is affiliated with Borrower solely
from its ownership of shares in the REIT).




     10.2 Brokers and Financial Advisors. Borrower shall indemnify and hold Lender
harmless from and against any and all claims, liabilities, costs and expenses (including attorneys’
fees, whether incurred in connection with enforcing this indemnity or defending claims of third
parties) of any kind in any way relating to or arising from a claim by any Person that such Person
acted on behalf of Borrower in connection with the transactions contemplated herein. Lender shall
indemnify and hold Borrower harmless from and against any and all claims, liabilities, costs and
expenses (including attorneys’ fees, whether incurred in connection with enforcing this indemnity
or defending claims of third parties) of any kind in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Lender in connection with the transactions
contemplated herein. The provisions of this Section 10.2 shall survive the expiration
and termination of this Agreement and the repayment of the Debt.



     10.3 Retention of Servicer. Lender reserves the right to retain the Servicer to act
as its agent hereunder with such powers as are specifically delegated to the Servicer by Lender,
whether pursuant to the terms of this Agreement, any pooling and servicing agreement or similar
agreement entered into as a result of a Secondary Market Transaction, the Deposit Account Agreement
or otherwise, together with such other powers as are reasonably incidental thereto. Borrower shall
pay any reasonable fees and expenses of the Servicer (i) in connection with a release of the
Property (or any portion thereof), (ii) in connection with an assumption or modification of the
Loan, (iii) in connection with the enforcement of the Loan Documents or (iv) in connection with any
other action or approval taken by Servicer hereunder on behalf of Lender (which shall not include
ongoing regular servicing fees relating to the day-to-day servicing of the Loan, for which Borrower
shall not be charged).



     10.4 Survival. This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall survive the making
by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in
full force and effect so long as any of the Debt is unpaid or such longer period if expressly set



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forth in this Agreement. All Borrower’s covenants and agreements in this Agreement shall inure to
the benefit of the respective legal representatives, successors and assigns of Lender.




     10.5 Lender’s Discretion. Whenever pursuant to this Agreement or any other Loan
Document, Lender exercises any right given to it to approve or disapprove, or consent or withhold
consent, or any arrangement or term is to be satisfactory to Lender or is to be in Lender’s
discretion, the decision of Lender to approve or disapprove, to consent or withhold consent, or to
decide whether arrangements or terms are satisfactory or not satisfactory, or acceptable or
unacceptable or in Lender’s discretion shall (except as is otherwise specifically herein provided)
be in the reasonable discretion of Lender.



     10.6 Governing Law.



     THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER 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 AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST
EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.



     10.7 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.
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 any 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 the Loan Documents, or to declare an Event of Default for failure to effect
prompt payment of any such other amount.



     10.8 Trial by Jury. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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



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ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.




     10.9 Headings/Exhibits. The Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose. The Exhibits attached hereto, are hereby incorporated by reference as a part of the
Agreement with the same force and effect as if set forth in the body hereof.



     10.10 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.



     10.11 Preferences. Upon the occurrence and continuance of an Event of Default,
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 Debt. To the extent Borrower makes a payment to Lender,
or Lender receives proceeds of any collateral, which is in whole or part 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 Debt 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. This provision shall survive the expiration or
termination of this Agreement and the repayment of the Debt.



     10.12 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 any other Loan
Document specifically and expressly requires 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 no Loan Document specifically and expressly
requires the giving of notice by Lender to Borrower.



     10.13 Remedies of Borrower. If a claim or adjudication is made that Lender or any of
its agents, including Servicer, has acted unreasonably or unreasonably delayed acting in any case
where by law or under any Loan Document, Lender or any such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents,
including Servicer, shall be liable for any monetary damages, and Borrower’s sole remedy shall be
to commence 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. Borrower specifically waives any claim against Lender and its agents,
including Servicer, with respect to actions taken by Lender or its agents on Borrower’s behalf.




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     10.14 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, understandings and negotiations among or between
such parties, whether oral or written, are superseded by the terms of this Agreement and the other
Loan Documents.



     10.15 Offsets, Counterclaims and Defenses. 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, including Servicer, or otherwise offset any obligations to make
payments required under the Loan Documents.



     10.16 Publicity. All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public, which refers to the Loan
Documents, the Loan, Lender or any member of the GCM Group, a Loan purchaser, the Servicer or the
trustee in a Secondary Market Transaction, shall be subject to the prior written approval of
Lender, which approval shall not be unreasonably withheld. Lender shall have the right to issue any
of the foregoing without Borrower’s approval. Notwithstanding anything stated to the contrary in
this Section 10.16, nothing contained in this Section 10.16 shall prohibit or
impair Borrower’s right to disclose information relating to the Loan and/or the Loan Documents (a)
to any due diligence representatives and/or consultants that are engaged by, work for or are acting
on behalf of, any securities dealers and/or broker dealers evaluating Borrower, (b) in connection
with any filings (including any amendment or supplement to any S-11 filing) with governmental
agencies (including the SEC) by the REIT, and (c) to any broker/dealers in the REIT’s broker/dealer
network and any of the REIT investors.



     10.17 No Usury. Borrower and Lender intend at all times to comply with applicable
state law or applicable United States federal law (to the extent that it permits Lender to
contract for, charge, take, reserve or receive a greater amount of interest than under state law)
and that this Section 10.17 shall control every other agreement in the Loan Documents. If
the applicable law (state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for, charged, taken,
reserved or received with respect to the Debt, or if Lender’s exercise of the option to accelerate
the maturity of the Loan or any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is Borrower’s and Lender’s express
intent that all excess amounts theretofore collected by Lender shall be credited against the
unpaid Principal and all other Debt (or, if the Debt has been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Loan Documents immediately be deemed reformed and
the amounts thereafter collectible thereunder reduced, without the necessity of the execution of
any new document, so as to comply with applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder. All sums paid or agreed to be paid to Lender for
the use, forbearance or detention of 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 Debt does not exceed the
maximum lawful rate from time to time in effect and applicable to the Debt for so long as the Debt
is outstanding. Notwithstanding anything to the contrary contained in any Loan Document, it is not
the intention of Lender to accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the time of such acceleration.



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     10.18 Conflict; Construction of Documents. 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 each is represented by separate counsel in
connection with the negotiation and drafting of the Loan Documents and that the Loan Documents
shall not be subject to the principle of construing their meaning against the party that drafted
them.



     10.19 No Third Party Beneficiaries. The Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in any Loan Document shall be deemed to confer upon
anyone other than the Lender and Borrower any right to insist upon or to enforce the performance
or observance of any of the obligations contained therein.



     10.20 Yield Maintenance Premium. Borrower acknowledges that (a) Lender is making the
Loan in consideration of the receipt by Lender of all interest and other benefits intended to be
conferred by the Loan Documents and (b) if payments of Principal are made to Lender prior to the
Stated Maturity Date, for any reason whatsoever, whether voluntary, as a result of Lender’s
acceleration of the Loan after an Event of Default, by operation of law or otherwise, Lender will
not receive all such interest and other benefits and may, in addition, incur costs. For these
reasons, and to induce Lender to make the Loan, Borrower agrees that, except as expressly provided
in Article 7 hereof, all prepayments, if any, whether voluntary or involuntary, will be
accompanied by the Yield Maintenance Premium. Such Yield Maintenance Premium shall be required
whether payment is made by Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale. Borrower further
acknowledges that (A) it is a knowledgeable real estate developer and/or investor; (B) it fully
understands the effect of the provisions of this Section 10.20, as well as the other
provisions of the Loan Documents; (C) the making of the Loan by Lender at the Interest Rate and
other terms set forth in the Loan Documents are sufficient consideration for Borrower’s obligation
to pay a Yield Maintenance Premium (if required); and (D) Lender would not make the Loan on the
terms set forth herein without the inclusion of such provisions. Borrower also acknowledges that
the provisions of this Agreement limiting the right of prepayment and providing for the payment of
the Yield Maintenance Premium and other charges specified herein were independently negotiated and
bargained for, and constitute a specific material part of the consideration given by Borrower to
Lender for the making of the Loan except as expressly permitted hereunder.



     10.21 Assignment. The Loan, the Note, the Loan Documents and/or Lender’s rights,
title, obligations and interests therein may be assigned by Lender and any of its successors and
assigns to any Person at any time in its discretion, in whole or in part, whether by operation of
law (pursuant to a merger or other successor in interest) or otherwise. Upon such assignment, all
references to Lender in this Agreement and in any Loan Document shall be deemed to refer to such
assignee or successor in interest and such assignee or successor in interest shall thereafter stand
in the place of Lender. Borrower may not assign its rights, title, interests or obligations under
this Agreement or under any of the Loan Documents except in connection with a Transfer and
Assumption permitted hereunder.



     10.22 Certain Additional Rights of Lender. Notwithstanding anything to the contrary
which may be contained in this Agreement, Lender shall have:






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          (i) the right to routinely consult with Borrower’s management regarding the significant
business activities and business and financial developments of Borrower, provided, however, that
such consultations shall not include discussions of environmental compliance programs or disposal
of hazardous substances. Consultation meetings should occur on a regular basis (no less frequently
than quarterly) with Lender having the right to call special meetings at any reasonable times;




          (ii) the right, in accordance with the terms of this Agreement, to examine the books and
records of Borrower at any time upon reasonable notice;




          (iii) the right, in accordance with the terms of this Agreement, to receive monthly, quarterly
and year-end financial reports, including balance sheets, statements of income, shareholder’s
equity and cash flow, a management report and schedules of outstanding indebtedness;




          (iv) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict financing to be obtained with respect to the Property
so long as any portion of the Debt remains outstanding;




          (v) the right, without restricting any other right of Lender under this Agreement or the
other Loan Documents (including any similar right), to restrict, upon the occurrence of an Event
of Default, Borrower’s payments of management, consulting, director or similar fees to Affiliates
of Borrower from the Rents;




          (vi) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any operating budget and/or capital budget of Borrower;




          (vii) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any acquisition by Borrower of any other significant
property (other than personal property required for the day to day operation of the Property); and




          (viii) the right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict the transfer of interests in Borrower held by its
members, and the right to restrict the transfer of interests in such member, except for any
transfer that is a Permitted Transfer.



The rights described above may be exercised directly or indirectly by any Person that owns
substantially all of the ownership interests in Lender. The provisions of this Section are intended
to satisfy the requirement of management rights for purposes of the Department of Labor “plan
assets” regulation 29 C.F.R., Section 2510.3-101.




     10.23 Set-Off. In addition to any rights and remedies of Lender provided by this
Agreement and by law, following and during the continuance of an Event of Default, Lender shall
have the right, without prior notice to Borrower, any such notice being expressly waived by
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by
Borrower hereunder (whether at the stated maturity, by







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acceleration or otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate
thereof to or for the credit or the account of Borrower.




     10.24 Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.



[Remainder of Page Intentionally Left Blank]




-70-









 





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



	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	KBS SOUTHPARK COMMERCE CENTER II,
	 	 	LLC, a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	KBS REIT ACQUISITION IV, LLC,
	 	 	 	 	a Delaware limited liability company,
	 	 	 	 	its sole member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	KBS Limited Partnership,
	 	 	 	 	 	 	a Delaware limited partnership,
	 	 	 	 	 	 	its sole member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	KBS REAL ESTATE	 	 
	 	 	 	 	 	 	 	 	INVESTMENT TRUST,	 	 
	 	 	 	 	 	 	 	 	INC., a Maryland	 	 
	 	 	 	 	 	 	 	 	corporation,	 	 
	 	 	 	 	 	 	 	 	general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Charles J. Schreiber, Jr.
 

	 	 
	 

	 	 	 	 	 	 	 	 	 	Charles J. Schreiber, Jr.	 	 
	 

	 	 	 	 	 	 	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	GREENWICH CAPITAL FINANCIAL
	 	 	PRODUCTS, INC., a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Gary E. Swon
	 	 	 	 	   
	 	 	 	 	Name:	 	Gary E. Swon
	 	 	 	 	Title:	 	 Managing Director






-71-









 





Schedule 1




Form of Notice to Tenants



[BORROWER’S NAME AND ADDRESS]



                    , 200     



Certified Mail

Return Receipt Requested




[Name and Address of Tenant]





			
	     Re:	 	Lease of Space at                                     
                    ,                     (the “Building”)





Ladies and Gentlemen:




     The undersigned is the owner of the Building and the landlord under your lease of space in
the Building (your “Lease”).



     By this letter, you are hereby directed (1) to make all checks, in payment of rent and other
sums due to the landlord under your Lease, payable to the order of “[Borrower] for the benefit of Greenwich Capital Financial Products, Inc., as beneficiary, Account No.                      ” , and (2) to deliver such checks or otherwise make such payments to the following address:



[Name and Address of Clearing Bank]



     The foregoing direction is irrevocable, except with the written consent of our mortgagee,
Greenwich Capital Financial Products, Inc. (or its successors or assigns), notwithstanding any
future contrary request or direction from the undersigned or any other person (other than
Greenwich Capital Financial Products, Inc. (or its successors or assigns). Thank you for your
cooperation.



	 	 	 	 	 	 	 	 	 

	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	[BORROWER]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	   
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 
 	 	 
	 

	 	 	 	 	 	 
 	 	 





Schedule 1








 









 








Schedule 2




Exceptions to Representations and Warranties




None



Schedule 2




 









 







Schedule 3




Rent Roll



Schedule 3



 









 







	 	 	 	 	 	 	 	 	 	 	 

	Database:

	 	TIC_PROD
	 	Rent Roll
	 	Page:
	 	 	2	 
	Bldg Status:

	 	Active only
	 	SOUTHPARK COMMERCE CENTER II
	 	Date:
	 	 	10/11/2006	 
	 

	 	 	 	10/1/2006
	 	Time:
	 	09:38 AM







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	GLA	 	Monthly	 	 	Annual	 	Monthly	 	 	Expense	 	Monthly	 	 	
                                         
Future Rent Increases
                                         	 
	Bldg Id-Suit Id	 	Occupant Name	 	Rent Start	 	 	Expiration	 	Sqft	 	Base Rent	 	 	Rate PSF	 	Cost Recovery	 	 	Stop	 	Other Income	 	 	Cat	 	Date	 	Monthly Amount	 	PSF	 
	 	 
	Totals:
	 	Occupied Sqft:	 	 	93.33%	 	 	9 Units	 	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	 	2 Units	 	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total SOUTHPARK COMMERCE CENTER II:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Occupied Sqft:	 	 	93.33%	 	 	9 Units	 	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	 	2 Units	 	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grand Total:
	 	Occupied Sqft:	 	 	93.33%	 	 	9 Units	 	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	 	2 Units	 	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







 









 






	 	 	 	 	 	 	 	 	 	 	 

	Database:

	 	TIC_PROD
	 	Rent Roll
	 	Page:
	 	 	2	 
	Bldg Status:

	 	Active only
	 	SOUTHPARK COMMERCE CENTER II
	 	Date:
	 	 	10/11/2006	 
	 

	 	 	 	10/1/2006
	 	Time:
	 	09:38 AM








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	GLA	 	Monthly	 	Annual	 	Monthly	 	Expense	 	Monthly	 	
                                         
Future Rent Increases
                                         
	Bldg Id-Suit Id	 	Occupant Name	 	Rent Start	 	Expiration	 	Sqft	 	Base Rent	 	Rate PSF	 	Cost Recovery	 	Stop	 	Other Income	 	Cat	 	Date	 	Monthly Amount	 	PSF
	 
	Totals:
	 	Occupied Sqft:	 	 	93.33%	 	9 Units	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	2 Units	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total SOUTHPARK COMMERCE

CENTER II:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Occupied Sqft:	 	 	93.33%	 	9 Units	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	2 Units	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grand Total:
	 	Occupied Sqft:	 	 	93.33%	 	9 Units	 	 	347,312	 	 	138,791.32	 	 	 	 	 	 	58,155.30	 	 	 	 	 	 	36,368.70	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leased/Unoccupied Sqft:	 	 	 	 	 	0 Units	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Vacant Sqft:	 	 	6.67%	 	2 Units	 	 	24,813	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total Sqft:	 	 	 	 	 	11 Units	 	 	372,125	 	 	138,791.32	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







 














 





Schedule 4




Organization of Borrower



Schedule 4



 









 





KBS SOUTHPARK COMMERCE CENTER II, LLC OWNERSHIP STRUCTURE


















 





Schedule 5




Definition of Special Purpose Bankruptcy Remote Entity


A “Special Purpose Bankruptcy Remote Entity” means (x) a limited liability company that is a Single
Member Bankruptcy Remote LLC or (y) a corporation, limited partnership or limited liability company
which at all times since its formation and at all times thereafter





          (i) was and will be organized solely for the purpose of (A) owning the Property
or (B) acting as a general partner of the limited partnership that owns the Property or
member of the limited liability company that owns the Property;




          (ii) has not engaged and will not engage in any business unrelated to (A) the
ownership of the Property, (B) acting as general partner of the limited partnership that
owns the Property or (C) acting as a member of the limited liability company that owns the
Property, as applicable;




          (iii) has not had and will not have any assets other than those related to the
Property or its partnership or member interest in the limited partnership or limited
liability company that owns the Property, as applicable;




          (iv) has not engaged, sought or consented to and will not engage in, seek or
consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale
(except as expressly permitted by this Agreement), transfer of partnership or membership
interests or the like, or amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation or operating agreement (as
applicable);




          (v) [Intentionally Omitted];




          (vi) [Intentionally Omitted];




          (vii) if such entity is a limited liability company, has and will have at least
one member that has been and will be a Special Purpose Bankruptcy Remote Entity that has
been and will be a corporation or a limited liability company and such corporation or
limited liability company is the managing member of such limited liability company;




          (viii) if such entity is a limited liability company, has and will have articles of
organization, a certificate of formation and/or an operating agreement, as applicable,
providing that (A) such entity will dissolve only upon the bankruptcy of the managing
member, (B) the vote of a majority-in-interest of the remaining members is sufficient to
continue the life of the limited liability company in the event of such bankruptcy of the
managing member and (C) if the vote of a majority-in-interest of the remaining members to
continue the life of the limited liability company following the bankruptcy of the managing
member is not obtained, the limited liability company may



Schedule 5





-1-









 









not liquidate the Property without the consent of the applicable Rating Agencies for as long as the
Loan is outstanding;




          (ix) has not, and without the unanimous consent of all of its partners, directors or
members (including all Independent Directors), as applicable, will not, with respect to itself or
to any other entity in which it has a direct or indirect legal or beneficial ownership interest (A)
file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief from debts or the
protection of debtors generally, (B) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or
any portion of such entity’s properties, (C) make any assignment for the benefit of such entity’s
creditors or (D) take any action that might cause such entity to become insolvent;




          (x) has remained and will remain solvent and has maintained and will maintain adequate
capital in light of its contemplated business operations;




          (xi) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;




          (xii) has maintained and will maintain its accounts, books and records separate from any
other Person and will file its own tax returns;




          (xiii) has maintained and will maintain its books, records, resolutions and agreements as
official records;




          (xiv) has not commingled and will not commingle its funds or assets with those of any other
Person;




          (xv) has held and will hold its assets in its own name;




          (xvi) has conducted and will conduct its business in its name,




          (xvii) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other Person;




          (xviii) has paid and will pay its own liabilities, including the salaries of its own
employees, out of its own funds and assets;




          (xix) has observed and will observe all partnership, corporate or limited liability company
formalities, as applicable;




          (xx) has maintained and will maintain an arm’s-length relationship with its Affiliates;




          (xxi) (a) if such entity owns the Property, has and will have no indebtedness other than
Permitted Indebtedness, or (b) if such entity acts as the general partner of a limited partnership
which owns the Property, has and will have no



Schedule 5





-2-









 









indebtedness other than unsecured trade payables in the ordinary course of business relating to
acting as general partner of the limited partnership which owns the Property which (1) do not
exceed, at any time, $100,000 and (2) are paid within sixty (60) days of the date incurred, or (c)
if such entity acts as a managing member of a limited liability company which owns the Property,
has and will have no indebtedness other than unsecured trade payables in the ordinary course of
business relating to acting as a member of the limited liability company which owns the Property
which (1) do not exceed, at any time, $100,000 and (2) are paid within sixty (60) days of the date
incurred;




          (xxii) has not and will not assume or guarantee or become obligated for the debts of any
other Person or hold out its credit as being available to satisfy the obligations of any other
Person except for the Loan;




          (xxiii) has not and will not acquire obligations or securities of its partners, members or
shareholders;




          (xxiv) has allocated and will allocate fairly and reasonably shared expenses, including
shared office space, and uses separate stationery, invoices and checks;




          (xxv) except in connection with the Loan, has not pledged and will not pledge its assets for
the benefit of any other Person;




          (xxvi) has held itself out and identified itself and will hold itself out and identify itself
as a separate and distinct entity under its own name and not as a division or part of any other
Person;




          (xxvii) has maintained 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
other Person;




          (xxviii)
has not made and will not make loans to any Person;




          (xxix) has not identified and will not identify its partners, members or shareholders, or any
Affiliate of any of them, as a division or part of it;




          (xxx) has not entered into or been a party to, and will not enter into or be a party to, any
transaction with its partners, members, shareholders or Affiliates except in the ordinary course of
its business and on terms which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arm’s-length transaction with an unrelated third party;




          (xxxi) has and will have no obligation to indemnify its partners, officers, directors, members
or Special Members, as the case may be, or has such an obligation that is fully subordinated to the
Debt and will not constitute a claim against it if cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation; and



Schedule 5




-3-









 






          (xxxii) will consider the interests of its creditors in connection with all corporate,
partnership or limited liability actions, as applicable.


“Independent Director” means (x) in the case of a Single Member Bankruptcy Remote LLC: a natural
person selected by Borrower and reasonably satisfactory to Lender who shall not have been at the
time of such individual’s appointment as an Independent Director of the Single Member Bankruptcy
Remote LLC, does not thereafter become while serving as an Independent Director (except pursuant to
an express provision in the Single Member Bankruptcy Remote LLC’s limited liability company
agreement providing for the Independent Director to become a Special Member (defined below) upon
the sole member of such Single Member Bankruptcy Remote LLC ceasing to be a member in such Single
Member Bankruptcy Remote LLC) and shall not have been at any time during the preceding five (5)
years (i) a shareholder/partner/member of, or an officer or employee of, Borrower or any of its
shareholders, subsidiaries or Affiliates, (ii) a director (other than as an Independent Director)
of any shareholder, subsidiary or Affiliate of Borrower, (iii) a customer of, or supplier to,
Borrower or any of its shareholders, subsidiaries or Affiliates, (iv) a Person who Controls any
such shareholder, supplier or customer, or (v) a member of the immediate family of any such
shareholder/director/partner/member, officer, employee, supplier or customer or of any director of
Borrower (other than as an Independent Director); and (y) in the case of a corporation, an
individual selected by Borrower and reasonably satisfactory to Lender who shall not have been at
the time of such individual’s appointment as a director, does not thereafter become while serving
as an Independent Director and shall not have been at any time during the preceding five (5) years
(i) a shareholder/partner/member of, or an officer, employee, consultant, agent or advisor of,
Borrower or any of its shareholders, subsidiaries, members or Affiliates, (ii) a director of any
shareholder, subsidiary, member, or Affiliate of Borrower other than Borrower’s general partner or
managing member, (iii) a customer of, or supplier to, Borrower or any of its shareholders,
subsidiaries or Affiliates that derives more than 10% of its purchases or income from its
activities with Borrower or any Affiliate of Borrower, (iv) a Person who Controls any such
shareholder, supplier or customer, or (v) a member of the immediate family (including a grandchild
or sibling) of any such shareholder/director/partner/member, officer, employee, supplier or
customer or of any other director of Borrower’s general partner or managing member. The Independent
Director for the Loan shall not be the same person as any director (including any Independent
Director) associated with the Mezzanine Loan Borrower.



“Single
Member Bankruptcy Remote LLC” means a limited liability company organized under the laws of
the State of Delaware which at all times since its formation and at all times thereafter (i)
complies with the following clauses of the definition of Special Purpose Bankruptcy Remote Entity
above: (i)(A), (ii)(A), (iii), (iv), (ix), (x), (xi) and (xiii) through (xxxii); (ii) has
maintained and will maintain its accounts, books and records separate from any other person; (iii)
has and will have an operating agreement which provides that the business and affairs of Borrower
shall be managed by or under the direction of a board of one or more directors designated by Sole
Member, and at all times there shall be at least one (1) duly appointed Independent Director on the
board of directors, and the board of directors will not take any action requiring the unanimous
affirmative vote of 100% of the members of its board of directors unless, at the time of such
action there is at least one (1) member of the board of directors who is an Independent Director,
and all of the directors and all Independent Directors shall have participated in such vote (the
Independent Director of the Borrower shall not be the same person




Schedule 5







-4-









 







as any director (including any Independent Director) associated with the Mezzanine Loan Borrower;
(iv) has and will have an operating agreement which provides that, as long as any portion of the
Debt remains outstanding, (A) upon the occurrence of any event that causes Sole Member to cease to
be a member of Borrower (other than (x) upon an assignment by Sole Member of all of its limited
liability company interest in Borrower and the admission of the transferee, if permitted pursuant
to the organizational documents of Borrower and the Loan Documents, or (y) the resignation of Sole
Member and the admission of an additional member of Borrower, if permitted pursuant to the
organizational documents of Borrower and the Loan Documents), the person acting as an Independent
Director of Borrower shall, without any action of any Person and simultaneously with Sole Member
ceasing to be a member of Borrower, automatically be admitted as the sole member of Borrower (the
“Special Member”) and shall preserve and continue the existence of Borrower without dissolution,
(B) no Special Member may resign or transfer its rights as Special Member unless (x) a successor
Special Member has been admitted to Borrower as a Special Member, and (y) such successor Special
Member has also accepted its appointment as an Independent Director and (C) except as expressly
permitted pursuant to the terms of this Agreement, Sole Member may not resign and no additional
member shall be admitted to Borrower; (v) has and will have an operating agreement which provides
that, as long as any portion of the Debt remains outstanding, (A) Borrower shall be dissolved, and
its affairs shall be would up only upon the first to occur of the following: (x) the termination of
the legal existence of the last remaining member of Borrower or the occurrence of any other event
which terminates the continued membership of the last remaining member of Borrower in Borrower
unless the business of Borrower is continued in a mariner permitted by its operating agreement or
the Delaware Limited Liability Company Act (the
“Act”) or (y) the entry of a decree of judicial
dissolution under Section 18-802 of the Act; (B) upon the occurrence of any event that causes the
last remaining member of Borrower to cease to be a member of Borrower or that causes Sole Member to
cease to be a member of Borrower (other than (x) upon an assignment by Sole Member of all of its
limited liability company interest in Borrower and the admission of the transferee, if permitted
pursuant to the organizational documents of Borrower and the Loan Documents, or (y) the resignation
of Sole Member and the admission of an additional member of Borrower, if permitted pursuant to the
organizational documents of Borrower and the Loan Documents), to the fullest extent permitted by
law, the personal representative of such member shall be authorized to, and shall, within 90 days
after the occurrence of the event that terminated the continued membership of such member in
Borrower, agree in writing to continue the existence of Borrower and to the admission of the
personal representative or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the continued membership of
such member in Borrower; (C) the bankruptcy of Sole Member or a Special Member shall not cause such
member or Special Member, respectively, to cease to be a member of Borrower and upon the occurrence
of such an event, the business of Borrower shall continue without dissolution; (D) in the event of
dissolution of Borrower, Borrower shall conduct only such activities as are necessary to wind up
its affairs (including the sale of the assets of Borrower in an orderly manner), and the assets of
Borrower shall be applied in the manner, and in the order of
priority, set forth in Section 18-804
of the Act; and (E) to the fullest extent permitted by law, each of Sole Member and the Special
Members shall irrevocably waive any right or power that they might have to cause Borrower or any of
its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the
assets of Borrower, to compel any sale of all or any




Schedule 5





-5-









 







portion of the assets of Borrower pursuant to any applicable law or to file a complaint or to
institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or
termination of Borrower.




Schedule 5




-6-









 








Schedule 6




[not utilized]



Schedule 6




-1-